Exhibit
10.5


 


A123
SYSTEMS, INC.


 


2009
STOCK INCENTIVE PLAN


 


1.             Purpose


 


The purpose of this 2009 Stock Incentive Plan (the “Plan”) of A123
Systems, Inc., a Delaware  corporation
(the “Company”), is to advance the interests of the Company’s stockholders by enhancing
the Company’s ability to attract, retain and motivate persons who are expected
to make important contributions to the Company and by providing such persons
with equity ownership opportunities and performance-based incentives that are
intended to better align the interests of such persons with those of the
Company’s stockholders.  Except where the
context otherwise requires, the term “Company” shall include any of the Company’s
present or future parent or subsidiary corporations as defined in Sections 424(e)
or (f) of the Internal Revenue Code of 1986, as amended, and any regulations
promulgated thereunder (the “Code”) and any other business venture (including,
without limitation, joint venture or limited liability company) in which the
Company has a controlling interest, as determined by the Board of Directors of
the Company (the “Board”).


 


2.             Eligibility


 


All of the Company’s employees, officers, directors, consultants and
advisors are eligible to be granted options, stock appreciation rights (“SARs”),
restricted stock, restricted stock units (“RSUs”) and other stock-based awards
(each, an “Award”) under the Plan.  Each
person who receives an Award under the Plan is deemed a “Participant”.


 


3.             Administration and Delegation


 


(a)           Administration by Board of Directors. 
The Plan will be administered by the Board.  The Board shall have authority to grant
Awards and to adopt, amend and repeal such administrative rules, guidelines and
practices relating to the Plan as it shall deem advisable.  The Board may construe and interpret the
terms of the Plan and any Award agreements entered into under the Plan.  The Board may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or any Award in the manner
and to the extent it shall deem expedient to carry the Plan into effect and it
shall be the sole and final judge of such expediency.  All decisions by the Board shall be made in
the Board’s sole discretion and shall be final and binding on all persons
having or claiming any interest in the Plan or in any Award.  No director or person acting pursuant to the
authority delegated by the Board shall be liable for any action or
determination relating to or under the Plan made in good faith.


 


(b)           Appointment of Committees.  To the extent permitted by
applicable law, the Board may delegate any or all of its powers under the Plan
to one or more committees or subcommittees of the Board (a “Committee”).  All references in the Plan to the “Board”
shall mean the Board or a Committee of the Board or the officers referred to in
Section 3(c) to the


 

















 


extent
that the Board’s powers or authority under the Plan have been delegated to such
Committee or officers.


 


(c)           Delegation to Officers. 
To the extent permitted by applicable law, the Board may delegate to one
or more officers of the Company the power to grant Awards (subject to any
limitations under the Plan) to employees or officers of the Company or any of
its present or future subsidiary corporations and to exercise such other powers
under the Plan as the Board may determine, provided that the Board shall fix
the terms of the Awards to be granted by such officers (including the exercise
price of such Awards, which may include a formula by which the exercise price
will be determined) and the maximum number of shares subject to Awards that the
officers may grant; provided further, however, that no officer shall be
authorized to grant Awards to any “executive officer” of the Company (as
defined by Rule 3b-7 under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) or to any “officer” of the Company (as defined by Rule 16a-1
under the Exchange Act).


 


4.             Stock Available for Awards


 


(a)           Number of Shares. 
Subject to adjustment under Section 10, Awards may be made under the
Plan for up to the number of shares of common stock, $.001 par value per share,
of the Company (the “Common Stock”) that is equal to the sum of:


 


(1)           3,000,000 shares of Common Stock; plus


 


(2)           such additional number of shares of
Common Stock (up to 500,000 shares) as is equal to the sum of (x) the number of
shares of Common Stock reserved for issuance under the Company’s 2001 Stock
Incentive Plan (the “Existing Plan”) that remain available for grant under the
Existing Plan immediately prior to the closing of the Company’s initial public
offering and (y) the number of shares of Common Stock subject to awards granted
under the Existing Plan which awards expire, terminate or are otherwise
surrendered, canceled, forfeited or repurchased by the Company at their
original issuance price pursuant to a contractual repurchase right (subject,
however, in the case of Incentive Stock Options (as hereinafter defined) to any
limitations of the Code); plus


 


(3)           in fiscal years 2010, 2011 and 2012, an
annual increase to be added on the first day of each such fiscal year equal to
the lesser of (i) 5,000,000 shares of Common Stock, (ii) 5% of the outstanding
shares on such date or (iii) an amount determined by the Board.


 


Notwithstanding
clause (3) above, in no event shall the number of shares available under this
Plan be increased as set forth in clause (3) to the extent such increase, in
addition to any other increases proposed by the Board in the number of shares
available for issuance under all other employee or director stock plans, would
result in the total number of shares then available for issuance under all
employee and director stock plans exceeding 30% of the outstanding shares of
the Company on the first day of the applicable fiscal year.


 


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If any
Award expires or is terminated, surrendered or canceled without having been
fully exercised, is forfeited in whole or in part (including as the result of
shares of Common Stock subject to such Award being repurchased by the Company
at the original issuance price pursuant to a contractual repurchase right), is
settled in cash or otherwise results in any Common Stock not being issued, the
unused Common Stock covered by such Award shall again be available for the
grant of Awards under the Plan.  Further,
shares of Common Stock delivered (either by actual delivery or attestation) to
the Company by a Participant to exercise an Award or to satisfy any applicable
tax withholding obligation (including shares retained from the Award creating
the tax obligation) shall be added to the number of shares of Common Stock
available for the grant of Awards under the Plan.  However, in the case of Incentive Stock
Options (as hereinafter defined), the foregoing provisions shall be subject to
any limitations under the Code.  Shares
issued under the Plan may consist in whole or in part of authorized but
unissued shares or treasury shares.


 


(b)           Per-Participant Limit. Subject to adjustment under Section 10,
the maximum number of shares of Common Stock with respect to which Awards may
be granted to any Participant under the Plan shall be 1,000,000 per calendar
year.  For purposes of the foregoing
limit, the combination of an Option in tandem with a SAR (as each is hereafter
defined) shall be treated as a single Award. 
The per-Participant limit described in this Section 4(b) shall be
construed and applied consistently with Section 162(m) of the Code or any
successor provision thereto, and the regulations thereunder (“Section 162(m)”).


 


(c)           Substitute Awards. 
In connection with a merger or consolidation of an entity with the
Company or the acquisition by the Company of property or stock of an entity,
the Board may grant Awards in substitution for any options or other stock or
stock-based awards granted by such entity or an affiliate thereof.  Substitute Awards may be granted on such
terms as the Board deems appropriate in the circumstances, notwithstanding any
limitations on Awards contained in the Plan. 
Substitute Awards shall not count
against the overall share limit set forth in Section 4(a), except as may be
required by reason of Section 422 and related provisions of the Code.


 


5.             Stock Options


 


(a)           General.  The Board may
grant options to purchase Common Stock (each, an “Option”) and determine the
number of shares of Common Stock to be covered by each Option, the exercise
price of each Option and the conditions and limitations applicable to the
exercise of each Option, including conditions relating to applicable federal or
state securities laws, as it considers necessary or advisable.  An Option that is not intended to be an
Incentive Stock Option (as hereinafter defined) shall be designated a “Nonstatutory
Stock Option”.


 


(b)           Incentive Stock Options. 
An Option that the Board intends to be an “incentive stock option” as
defined in Section 422 of the Code (an “Incentive Stock Option”) shall only be
granted to employees of A123 Systems, Inc., any of A123 Systems Inc.’s present
or future parent or subsidiary corporations as defined in Sections 424(e) or (f)
of the Code, and any other entities the employees of which are eligible to
receive Incentive Stock Options under the Code, and shall be subject to and
shall be construed consistently with the requirements of Section 422 of the 


 


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Code.  The Company shall have no liability to a
Participant, or any other party, if an Option (or any part thereof) that is
intended to be an Incentive Stock Option is not an Incentive Stock Option or
for any action taken by the Board, including without limitation the conversion
of an Incentive Stock Option to a Nonstatutory Stock Option.


 


(c)           Exercise Price. 
The Board shall establish the exercise price of each Option and specify
the exercise price in the applicable option agreement. The exercise price shall
be not less than 100% of the Fair Market Value (as defined below) on the date
the Option is granted; provided that if the Board approves the grant of an
Option with an exercise price to be determined on a future date, the exercise
price shall be not less than 100% of the Fair Market Value on such future date.


 


(d)           Duration of Options. 
Each Option shall be exercisable at such times and subject to such terms
and conditions as the Board may specify in the applicable option agreement.


 


(e)           Exercise of Option. 
Options may be exercised by delivery to the Company of a written notice
of exercise signed by the proper person or by any other form of notice
(including electronic notice) approved by the Board together with payment in
full as specified in Section 5(f) for the number of shares for which the Option
is exercised.  Shares of Common Stock
subject to the Option will be delivered by the Company as soon as practicable
following exercise.


 


(f)            Payment Upon Exercise. 
Common Stock purchased upon the exercise of an Option granted under the
Plan shall be paid for as follows:


 


(1)           in cash or by check, payable to the order
of the Company;


 


(2)           except as may otherwise be provided in
the applicable option agreement, by (i) delivery of an irrevocable and unconditional
undertaking by a creditworthy broker to deliver promptly to the Company
sufficient funds to pay the exercise price and any required tax withholding or (ii)
delivery by the Participant to the Company of a copy of irrevocable and
unconditional instructions to a creditworthy broker to deliver promptly to the
Company cash or a check sufficient to pay the exercise price and any required
tax withholding;


 


(3)           to the extent provided for in the
applicable option agreement or approved by the Board, in its sole discretion,
by delivery (either by actual delivery or attestation) of shares of Common
Stock owned by the Participant valued at their fair market value as determined
by (or in a manner approved by) the Board (“Fair Market Value”), provided (i) such
method of payment is then permitted under applicable law, (ii) such Common
Stock, if acquired directly from the Company, was owned by the Participant for
such minimum period of time, if any, as may be established by the Board in its
discretion and (iii) such Common Stock is not subject to any repurchase,
forfeiture, unfulfilled vesting or other similar requirements;


 


(4)           to the extent permitted by applicable law
and provided for in the applicable option agreement or approved by the Board,
in its sole discretion, by (i) delivery of a 


 


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promissory note of the Participant to the Company on terms determined
by the Board, or (ii) payment of such other lawful consideration as the Board
may determine; or


 


(5)           by any combination of the above permitted
forms of payment.


 


6.             Stock Appreciation Rights.


 


(a)           General.  The Board may
grant Awards consisting of SARs entitling the holder, upon exercise, to receive
an amount of Common Stock or cash or a combination thereof (such form to be
determined by the Board) determined in whole or in part by reference to
appreciation, from and after the date of grant, in the fair market value of a
share of Common Stock over the exercise price established pursuant to Section 6(c).  The date as of which such appreciation is
determined shall be the exercise date.


 


(b)           Grants. 
SARs may be granted in tandem with, or independently of, Options granted
under the Plan.


 


(1)           Tandem Awards. 
When SARs are expressly granted in tandem with Options, (i) the SAR will
be exercisable only at such time or times, and to the extent, that the related
Option is exercisable (except to the extent designated by the Board in
connection with a Reorganization Event and will be exercisable in accordance
with the procedure required for exercise of the related Option; (ii) the SAR
will terminate and no longer be exercisable upon the termination or exercise of
the related Option, except to the extent designated by the Board in connection
with a Reorganization Event and except that a SAR granted with respect to less
than the full number of shares covered by an Option will not be reduced until
the number of shares as to which the related Option has been exercised or has
terminated exceeds the number of shares not covered by the SAR; (iii) the
Option will terminate and no longer be exercisable upon the exercise of the
related SAR; and (iv) the SAR will be transferable only with the related
Option.


 


(2)           Independent SARs.  A SAR not expressly granted in tandem with an Option
will become exercisable at such time or times, and on such conditions, as the
Board may specify in the SAR Award.


 


(c)           Exercise Price. 
The Board shall establish the exercise price of each SAR and specify it
in the applicable SAR agreement.  The
exercise price shall not be less than 100% of the Fair Market Value on the date
the SAR is granted; provided that if the Board approves the grant of a SAR with
an exercise price to be determined on a future date, the exercise price shall
be not less than 100% of the Fair Market Value on such future date.


 


(d)           Duration of SARs. 
Each SAR shall be exercisable at such times and subject to such terms
and conditions as the Board may specify in the applicable SAR agreement.


 


(e)           Exercise of SARs. 
SARs may be exercised by delivery to the Company of a written notice of
exercise signed by the proper person or by any other form of notice (including 


 


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electronic
notice) approved by the Board, together with any other documents required by
the Board.


 


7.             Restricted Stock; Restricted Stock Units.


 


(a)           General.  The Board may
grant Awards entitling recipients to acquire shares of Common Stock (“Restricted
Stock”), subject to the right of the Company to repurchase all or part of such
shares at their issue price or other stated or formula price (or to require
forfeiture of such shares if issued at no cost) from the recipient in the event
that conditions specified by the Board in the applicable Award are not
satisfied prior to the end of the applicable restriction period or periods
established by the Board for such Award. 
Instead of granting Awards for Restricted Stock, the Board may grant
Awards entitling the recipient to receive shares of Common Stock or cash to be
delivered at the time such Award vests (“Restricted Stock Units”) (Restricted
Stock and Restricted Stock Units are each referred to herein as a “Restricted
Stock Award”).


 


(b)           Terms and Conditions for All Restricted
Stock Awards.  The Board shall determine the terms and
conditions of a Restricted Stock Award, including the conditions for vesting
and repurchase (or forfeiture) and the issue price , if any.


 


(c)           Additional Provisions
Relating to Restricted Stock.


 


(1)           Dividends.  Participants holding shares of Restricted
Stock will be entitled to all ordinary cash dividends paid with respect to such
shares, unless otherwise provided by the Board. 
Unless otherwise provided by the Board, if any dividends or
distributions are paid in shares, or consist of a dividend or distribution to holders of Common Stock
other than an ordinary cash dividend, the
shares, cash or other property will be subject to the same restrictions on
transferability and forfeitability as the shares of Restricted Stock with
respect to which they were paid. Each dividend payment will be made no later
than the end of the calendar year in which the dividends are paid to
shareholders of that class of stock or, if later, the 15th day of the third
month following the date the dividends are paid to shareholders of that class
of stock.


 


(2)           Stock Certificates. 
The Company may require that any stock certificates issued in respect of
shares of Restricted Stock shall be deposited in escrow by the Participant,
together with a stock power endorsed in blank, with the Company (or its
designee).  At the expiration of the
applicable restriction periods, the Company (or such designee) shall deliver
the certificates no longer subject to such restrictions to the Participant or
if the Participant has died, to the beneficiary designated, in a manner
determined by the Board, by a Participant to receive amounts due or exercise
rights of the Participant in the event of the Participant’s death (the “Designated
Beneficiary”).  In the absence of an
effective designation by a Participant, “Designated Beneficiary” shall mean the
Participant’s estate.


 


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(d)           Additional Provisions Relating to
Restricted Stock Units.


 


(1)           Settlement.  Upon the
vesting of and/or lapsing of any other restrictions (i.e., settlement) with
respect to each Restricted Stock Unit, the Participant shall be entitled to
receive from the Company one share of Common Stock or an amount of cash equal
to the Fair Market Value of one share of Common Stock, as provided in the
applicable Award agreement.  The Board
may, in its discretion, provide that settlement of Restricted Stock Units shall
be deferred, on a mandatory basis or at the election of the Participant in a
manner that complies with Code Section 409A.


 


(2)           Voting Rights. 
A Participant shall have no voting rights with respect to any Restricted
Stock Units.


 


(3)           Dividend Equivalents. 
To the extent provided by the Board, in its sole discretion, a grant of
Restricted Stock Units may provide Participants with the right to receive an
amount equal to any dividends or other distributions declared and paid on an
equal number of outstanding shares of Common Stock (“Dividend Equivalents”).  Dividend Equivalents may be paid currently or
credited to an account for the Participants, may be settled in cash and/or
shares of Common Stock and may be subject to the same restrictions on transfer
and forfeitability as the Restricted Stock Units with respect to which paid, as
determined by the Board in its sole discretion, subject in each case to such
terms and conditions as the Board shall establish, in each case to be set forth
in the applicable Award agreement.


 


8.             Other Stock-Based Awards


 


Other Awards of shares of Common Stock, and other Awards that are
valued in whole or in part by reference to, or are otherwise based on, shares
of Common Stock or other property, may be granted hereunder to Participants (“Other
Stock-Based Awards”), including without limitation Awards entitling recipients
to receive shares of Common Stock to be delivered in the future.  Such Other Stock-Based Awards shall also be
available as a form of payment in the settlement of other Awards granted under
the Plan or as payment in lieu of compensation to which a Participant is
otherwise entitled.  Other Stock-Based
Awards may be paid in shares of Common Stock or cash, as the Board shall
determine.  Subject to the provisions of
the Plan, the Board shall determine the terms and conditions of each Other
Stock-Based Award, including any purchase price applicable thereto.


 


9.             Adjustments for Changes in Common Stock
and Certain Other Events.


 


(a)           Changes in Capitalization. 
In the event of any stock split, reverse stock split, stock dividend,
recapitalization, combination of shares, reclassification of shares, spin-off
or other similar change in capitalization or event, or any dividend or
distribution to holders of Common Stock other than an ordinary cash dividend, (i)
the number and class of securities available under this Plan, (ii) the
per-Participant limit set forth in Section 4(b), (iii) the number and class of
securities and exercise price per share of each outstanding Option and each
Option issuable under Section 6, (iv) the share- and per-share provisions and
the exercise price of each SAR, (v) the number of shares subject to and the
repurchase price per share subject to each outstanding Restricted Stock Award,
and (vi) the share- and per-share-related provisions and the 


 


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purchase
price, if any, of each outstanding Other Stock-Based Award, shall be equitably
adjusted by the Company (or substituted Awards may be made, if applicable) in
the manner determined by the Board. 
Without limiting the generality of the foregoing, in the event the
Company effects a split of the Common Stock by means of a stock dividend and
the exercise price of and the number of shares subject to an outstanding Option
are adjusted as of the date of the distribution of the dividend (rather than as
of the record date for such dividend), then an optionee who exercises an Option
between the record date and the distribution date for such stock dividend shall
be entitled to receive, on the distribution date, the stock dividend with
respect to the shares of Common Stock acquired upon such Option exercise,
notwithstanding the fact that such shares were not outstanding as of the close
of business on the record date for such stock dividend.


 


(b)           Reorganization Events.


 


(1)           Definition.  A “Reorganization
Event” shall mean:  (a) any merger or
consolidation of the Company with or into another entity as a result of which
all of the Common Stock of the Company is converted into or exchanged for the
right to receive cash, securities or other property or is cancelled, (b) any
exchange of all of the Common Stock of the Company for cash, securities or
other property pursuant to a share exchange transaction or (c) any liquidation
or dissolution of the Company.


 


(2)           Consequences of a Reorganization Event on
Awards Other than Restricted Stock Awards.  In connection
with a Reorganization Event, the Board may take any one or more of the
following actions as to all or any (or any portion of) outstanding Awards other
than Restricted Stock Awards on such terms as the Board determines:  (i) provide that Awards shall be assumed, or
substantially equivalent Awards shall be substituted, by the acquiring or
succeeding corporation (or an affiliate thereof), (ii) upon written notice to a
Participant, provide that the Participant’s unexercised Awards will terminate
immediately prior to the consummation of such Reorganization Event unless
exercised by the Participant within a specified period following the date of
such notice, (iii) provide that outstanding Awards shall become exercisable,
realizable, or deliverable, or restrictions applicable to an Award shall lapse,
in whole or in part prior to or upon such Reorganization Event, (iv) in the
event of a Reorganization Event under the terms of which holders of Common
Stock will receive upon consummation thereof a cash payment for each share
surrendered in the Reorganization Event (the “Acquisition Price”), make or
provide for a cash payment to a Participant equal to the excess, if any, of (A)
the Acquisition Price times the number of shares of Common Stock subject to the
Participant’s Awards (to the extent the exercise price does not exceed the
Acquisition Price) over (B) the aggregate exercise price of all such
outstanding Awards and any applicable tax withholdings, in exchange for the
termination of such Awards, (v) provide that, in connection with a liquidation
or dissolution of the Company, Awards shall convert into the right to receive
liquidation proceeds (if applicable, net of the exercise price thereof and any
applicable tax withholdings) and (vi) any combination of the foregoing.  In taking any of the actions permitted under
this Section 10(b), the Board shall not be obligated by the Plan to treat all
Awards, all Awards held by a Participant, or all Awards of the same type,
identically.


 


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For purposes of clause (i) above, an Option shall be
considered assumed if, following consummation of the Reorganization Event, the
Option confers the right to purchase, for each share of Common Stock subject to
the Option immediately prior to the consummation of the Reorganization Event,
the consideration (whether cash, securities or other property) received as a
result of the Reorganization Event by holders of Common Stock for each share of
Common Stock held immediately prior to the consummation of the Reorganization
Event (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding shares of
Common Stock); provided, however, that if the consideration received as a
result of the Reorganization Event is not solely common stock of the acquiring
or succeeding corporation (or an affiliate thereof), the Company may, with the
consent of the acquiring or succeeding corporation, provide for the
consideration to be received upon the exercise of Options to consist solely of
common stock of the acquiring or succeeding corporation (or an affiliate
thereof) equivalent in value (as determined by the Board) to the per share
consideration received by holders of outstanding shares of Common Stock as a
result of the Reorganization Event.


 


(3)           Consequences of a Reorganization Event on
Restricted Stock Awards.  Upon the occurrence of a
Reorganization Event other than a liquidation or dissolution of the Company,
the repurchase and other rights of the Company under each outstanding
Restricted Stock Award shall inure to the benefit of the Company’s successor
and shall, unless the Board determines otherwise, apply to the cash, securities
or other property which the Common Stock was converted into or exchanged for
pursuant to such Reorganization Event in the same manner and to the same extent
as they applied to the Common Stock subject to such Restricted Stock
Award.  Upon the occurrence of a
Reorganization Event involving the liquidation or dissolution of the Company,
except to the extent specifically provided to the contrary in the instrument
evidencing any Restricted Stock Award or any other agreement between a
Participant and the Company, all restrictions and conditions on all Restricted
Stock Awards then outstanding shall automatically be deemed terminated or
satisfied.


 


10.           General Provisions Applicable to Awards


 


(a)           Transferability of Awards. 
Except as the Board may otherwise determine or provide in an Award,
Awards shall not be sold, assigned, transferred, pledged or otherwise
encumbered by the person to whom they are granted, either voluntarily or by
operation of law, except by will or the laws of descent and distribution or,
other than in the case of an Incentive Stock Option, pursuant to a qualified domestic
relations order, and, during the life of the Participant, shall be exercisable
only by the Participant.  References to a
Participant, to the extent relevant in the context, shall include references to
authorized transferees.


 


(b)           Documentation. 
Each Award shall be evidenced in such form (written, electronic or
otherwise) as the Board shall determine. 
Each Award may contain terms and conditions in addition to those set
forth in the Plan.


 


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(c)           Board Discretion. 
Except as otherwise provided by the Plan, each Award may be made alone
or in addition or in relation to any other Award.  The terms of each Award need not be
identical, and the Board need not treat Participants uniformly.


 


(d)           Termination of Status. 
The Board shall determine the effect on an Award of the disability,
death, termination or other cessation of employment, authorized leave of
absence or other change in the employment or other status of a Participant and
the extent to which, and the period during which, the Participant, or the
Participant’s legal representative, conservator, guardian or Designated
Beneficiary, may exercise rights under the Award.


 


(e)           Withholding. 
The Participant must satisfy all applicable federal, state, and local or
other income and employment tax withholding obligations before the Company will
deliver stock certificates or otherwise recognize ownership of Common Stock
under an Award.  The Company may decide
to satisfy the withholding obligations through additional withholding on salary
or wages.  If the Company elects not to
or cannot withhold from other compensation, the Participant must pay the
Company the full amount, if any, required for withholding or have a broker
tender to the Company cash equal to the withholding obligations.  Payment of withholding obligations is due
before the Company will issue any shares on exercise or release from forfeiture
of an Award or, if the Company so requires, at the same time as is payment of
the exercise price unless the Company determines otherwise.  If provided for in an Award or approved by
the Board in its sole discretion, a Participant may satisfy such tax
obligations in whole or in part by delivery (either by actual delivery or
attestation) of shares of Common Stock, including shares retained from the
Award creating the tax obligation, valued at their Fair Market Value; provided,
however, except as otherwise provided by the Board, that the total tax
withholding where stock is being used to satisfy such tax obligations cannot
exceed the Company’s minimum statutory withholding obligations (based on
minimum statutory withholding rates for federal and state tax purposes,
including payroll taxes, that are applicable to such supplemental taxable
income).  Shares used to satisfy tax
withholding requirements cannot be subject to any repurchase, forfeiture,
unfulfilled vesting or other similar requirements.


 


(f)            Amendment of Award.


 


(1)           The Board may amend, modify or terminate
any outstanding Award, including but not limited to, substituting therefor
another Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option.  The Participant’s consent to
such action shall be required unless (i) the Board determines that the action,
taking into account any related action, would not materially and adversely
affect the Participant’s rights under the Plan or (ii) the change is permitted
under Section 9 hereof.


 


(2)           The Board may, without stockholder
approval, amend any outstanding Award granted under the Plan to provide an
exercise price per share that is lower than the then-current exercise price per
share of such outstanding Award.  The
Board may also, without stockholder approval, cancel any outstanding award
(whether or not granted under the Plan) and grant in substitution therefor new
Awards under the Plan covering the same or a different 


 


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number of shares
of Common Stock and having an exercise price per share lower than the
then-current exercise price per share of the cancelled award.


 


(g)           Conditions on Delivery of Stock. 
The Company will not be obligated to deliver any shares of Common Stock
pursuant to the Plan or to remove restrictions from shares previously delivered
under the Plan until (i) all conditions of the Award have been met or removed
to the satisfaction of the Company, (ii) in the opinion of the Company’s
counsel, all other legal matters in connection with the issuance and delivery
of such shares have been satisfied, including any applicable securities laws
and any applicable stock exchange or stock market rules and regulations, and (iii)
the Participant has executed and delivered to the Company such representations
or agreements as the Company may consider appropriate to satisfy the
requirements of any applicable laws, rules or regulations.


 


(h)           Acceleration. 
The Board may at any time provide that any Award shall become
immediately exercisable in full or in part, free of some or all restrictions or
conditions, or otherwise realizable in full or in part, as the case may be.


 


11.           Miscellaneous


 


(a)           No Right To Employment or Other Status. 
No person shall have any claim or right to be granted an Award, and the
grant of an Award shall not be construed as giving a Participant the right to
continued employment or any other relationship with the Company.  The Company expressly reserves the right at
any time to dismiss or otherwise terminate its relationship with a Participant
free from any liability or claim under the Plan, except as expressly provided
in the applicable Award.


 


(b)           No Rights As Stockholder. 
Subject to the provisions of the applicable Award, no Participant or
Designated Beneficiary shall have any rights as a stockholder with respect to
any shares of Common Stock to be distributed with respect to an Award until
becoming the record holder of such shares.


 


(c)           Effective Date and Term of Plan. 
The Plan shall become effective on the date on which it is adopted by
the Board.  No Awards shall be granted
under the Plan after the expiration of 10 years from the earlier of (i) the
date on which the Plan was adopted by the Board or (ii) the date the Plan was
approved by the Company’s stockholders, but Awards previously granted may extend
beyond that date.


 


(d)           Amendment of Plan. 
The Board may amend, suspend or terminate the Plan or any portion
thereof at any time provided that (i) to the extent required by Section 162(m),
no Award granted to a Participant that is intended to comply with Section 162(m)
after the date of such amendment shall become exercisable, realizable or
vested, as applicable to such Award, unless and until such amendment shall have
been approved by the Company’s stockholders if required by Section 162(m) (including
the vote required under Section 162(m)); and (ii) no amendment that would
require stockholder approval under the rules of the NASDAQ Stock Market may be
made effective unless and until such amendment shall have been approved by the 


 


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Company’s
stockholders.  In addition, if at any
time the approval of the Company’s stockholders is required as to any other
modification or amendment under Section 422 of the Code or any successor
provision with respect to Incentive Stock Options, the Board may not effect
such modification or amendment without such approval.  Unless otherwise specified in the amendment,
any amendment to the Plan adopted in accordance with this Section 11(d) shall
apply to, and be binding on the holders of, all Awards outstanding under the
Plan at the time the amendment is adopted, provided the Board determines,
taking into account any related action, that such amendment does not materially
and adversely affect the rights of Participants under the Plan.  No Award shall be made that is conditioned
upon stockholder approval of any amendment to the Plan.


 


(e)           Provisions for Foreign Participants. 
The Board may modify Awards granted to Participants who are foreign
nationals or employed outside the United States or establish subplans or
procedures under the Plan to recognize differences in laws, rules, regulations
or customs of such foreign jurisdictions with respect to tax, securities,
currency, employee benefit or other matters.


 


(f)            Compliance with Code Section 409A. 
Except as provided in individual Award agreements initially or by
amendment, if and to the extent any portion of any payment, compensation or
other benefit provided to a Participant in connection with his or her
employment termination is determined to constitute “nonqualified deferred
compensation” within the meaning of Section 409A of the Code and the
Participant is a specified employee as defined in Section 409A(a)(2)(B)(i) of
the Code, as determined by the Company in accordance with its procedures, by
which determination the Participant (through accepting the Award) agrees that
he or she is bound, such portion of the payment, compensation or other benefit
shall not be paid before the day that is six months plus one day after the date
of “separation from service” (as determined under Code Section 409A (the “New
Payment Date”), except as Code Section 409A may then permit.


 


The Company makes no representations or warranty and
shall have no liability to the Participant or any other person if any
provisions of or payments, compensation or other benefits under the Plan are
determined to constitute nonqualified deferred compensation subject to Code
Section 409A but do not to satisfy the conditions of that section.


 


(g)           Limitations on Liability. 
Notwithstanding any other provisions of the Plan, no individual acting
as a director, officer, other employee, or agent of the Company will be liable
to any Participant, former Participant, spouse, beneficiary, or any other
person for any claim, loss, liability, or expense incurred in connection with
the Plan, nor will such individual be personally liable with respect to the
Plan because of any contract or other instrument he or she executes in his or
her capacity as a director, officer, other employee, or agent of the
Company.  The Company will indemnify and
hold harmless each director, officer, other employee, or agent of the Company
to whom any duty or power relating to the administration or interpretation of
the Plan has been or will be delegated, against any cost or expense (including
attorneys’ fees) or liability (including any sum paid in settlement of a claim
with the Board’s approval) arising out of any act or omission to act concerning
this Plan unless arising out of such person’s own fraud or bad faith.


 


(h)           Governing Law. 
The provisions of the Plan and all Awards made hereunder shall be
governed by and interpreted in accordance with the laws of the State of
Delaware, excluding 


 


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choice-of-law
principles of the law of such state that would require the application of the
laws of a jurisdiction other than such state.


 


 


Adopted by the Board of
Directors on August 17, 2009.


Adopted by the
stockholders on                             , 2009.


 


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