EXHIBIT 4.1


 


VITESSE
SEMICONDUCTOR CORPORATION

AMENDED AND RESTATED 2001 STOCK INCENTIVE PLAN


 


1.                                       Purposes of Plan.  The
purposes of this 2001 Stock Incentive Plan are to attract and retain the best
available personnel for positions of substantial responsibility, to provide
additional incentive to Employees, Consultants and Directors of the Company and
its Subsidiaries and to promote the success of the Company’s business. Awards
granted under the Plan may be incentive stock options (as defined under Section 422
of the Code) or non-statutory stock options, as determined by the Administrator
at the time of grant of an option and subject to the applicable provisions of Section 422
of the Code and the regulations promulgated thereunder, and any other awards
selected by the Administrator to be granted under the plan from time to time.


 


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


 


“Administrator” means the Board or any Committee selected to
administer the Plan, in accordance with Section 4 of the Plan.


 


“Award” means an Option or any other award selected by the
Committee to be granted under this Plan. “Board” means the Board of Directors
of the Company.


 


“Change in Control Event” means (i) a consolidation or
merger of the Company with or into any other entity or entities, or the
effectuation by the Company of a transaction or series of related transactions
in which more than 50% of the voting power of the Company is disposed of, or (ii) a
sale, conveyance or disposition of all or substantially all the assets of the
corporation.


 


“Code” means the Internal Revenue Code of 1986, as amended from
time to time, and any successor thereto.


 


“Committee” means a Committee, if any, appointed by the Board in
accordance with paragraph (a) of Section 4 of the Plan.


 


“Common Stock” means the Common Stock, no par value per share,
of the Company. “Company” means Vitesse Semiconductor Corporation, a Delaware
corporation.


 


“Consultant” means any person, including an advisor, who is
engaged by the Company or any Parent or Subsidiary to render services and is
compensated for such services, provided the term Consultant shall not include
Directors who are not compensated for their services or are paid only a
Director’s fee by the Company.


 


“Continuous Status as an Employee or Consultant” means the
absence of any interruption or termination of service as an Employee or
Consultant. Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case of: (i) any leave of absence approved
by the Administrator, including sick leave, military leave, or any other
personal leave; provided, however, that for purposes of Incentive Stock Options
any such leave may not exceed ninety (90) days, unless reemployment upon the
expiration of such leave is guaranteed by contract (including certain Company
policies) or statute; or (ii) transfers between locations of the Company
or between the Company, its Parent, its Subsidiaries, or its successor.


 

















 


“Director” shall mean a member of the Board.


 


“Disability” means total and permanent disability, as defined in
Section 22(e)(3) of the Code.


 


“Employee” means any person, including Officers and Directors,
employed by the Company, Parent or any Subsidiary. The payment of Directors’
fees by the Company shall not be sufficient to constitute “employment” by the
Company.


 


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


 


“Fair Market Value” means, as of any date the value of Common
Stock determined as follows:


 


(a)                                  If the Common Stock is listed on any
established stock exchange or a national market system, including without
limitation the National Market System of the National Association of Securities
Dealers, Inc. Automated Quotation (“NASDAQ”) System, the Fair Market Value
of a Share of Common Stock shall be the closing sales price for such stock (or
the closing bid, if no sales were reported) as quoted on such exchange (or, if
listed on more than one exchange, the exchange with the greatest volume of
trading in Common Stock) or system on the day of determination, as reported in
the Wall Street Journal or such other source as the Administrator deems
reliable;


 


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


 


(c)                                  In the absence of an established market for
the Common Stock, the Fair Market Value thereof shall be determined in good
faith by the Administrator.


 


(d)                                 Notwithstanding anything in the foregoing to
the contrary, with respect to grants of options on days when the relevant
exchange, system or quoting security dealer is closed, Fair Market Value of a
Share of Common Stock may be calculated as otherwise determined in this Section 2
but on the last market day prior to the day of determination.


 


“Incentive Stock Option” means an Option that satisfies the
provisions of Section 422 of the Code.


 


“Issued Shares” means, for any fiscal year, the number of shares
of the Company’s Common Stock outstanding on the last day of the fiscal year,
plus any shares reacquired by the Company during the preceding fiscal year.


 


“Nonstatutory Stock Option” means an Option that is not an
Incentive Stock Option.


 


“Officer” means an officer of the Company within the meaning of Section 16
of the Exchange Act and the rules and regulations promulgated thereunder.


 


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


 


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“Optioned Stock” means the Common Stock subject to an Option.


 


“Optionee” means an Employee, Director or Consultant who holds
an Option.


 


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


 


“Parent” corporation shall have the meaning defined in Section 424(e) of
the Code.


 


“Participant” means a holder of an Award under this Plan.


 


“Plan” means this 2001 Stock Option Plan.


 


“Share” means a share of the Common Stock, as adjusted in
accordance with Section 10 of the Plan.


 


“Substitute Awards” shall mean awards granted in assumption of,
or in substitution for, outstanding awards previously granted by a company
acquired by the Company or with which the Company combines.


 


“Subsidiary” corporation shall have the meaning defined in Section 424(f) of
the Code.


 


In addition, the terms “Rule 16b-3” and “Applicable
Laws,” the term “10% Stockholder,” and the term “Tax Date” shall have the
meanings set forth, respectively, in Sections 4, 7 and 8 below.


 


3.                                       Stock Subject to the Plan.


 


(a)                                  Subject to the provisions of Section 10
of the Plan, the maximum aggregate number of Shares which may be subject to
Awards under the Plan is Forty Nine Million Five Hundred Thirty Four Thousand
Three Hundred Twenty Eight (49,534,328) shares.


 


(b)                                 The Shares may be authorized, but unissued,
or reacquired Common Stock.


 


(c)                                  If an Award should expire or become
unexercisable or otherwise forfeited for any reason without having been
exercised in full or settled in stock, the unpurchased Shares which were
subject thereto shall, unless the Plan shall have been terminated, become
available for other Awards under the Plan. If the Company reacquires Shares
which were issued pursuant to the exercise of an Option, such Shares shall not
become available for future grant under the Plan.


 


(d)                                 Shares underlying Substitute Awards shall not
reduce the number of Shares remaining available for issuance under the Plan.


 


4.                                       Administration of the Plan.


 


(a)                                  Composition of Administrator.


 


(i)                                     Administration With Respect to Directors. With respect to grants of Awards to Outside
Directors of the Company, the Plan shall be administered by the Board.


 


(ii)                                  Administration With Respect to Consultants
and Other Employees. With
respect to grants of Awards to Employees or Consultants of the Company, the
Plan shall be administered by (A) the Board or (B) a Committee 


 


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designated by the Board intended to satisfy the requirements of Rule 16b-3
of the Exchange Act and Section 162(m) of the Code, which Committee
shall be constituted in such a manner as to satisfy the Applicable Laws.


 


(iii)                               Multiple Administrative Bodies.  If
permitted by Rule 16b-3 and by the Applicable Laws, the Plan may (but need
not) be administered by different administrative bodies with respect to
Directors, non-Director Officers, and Employees and Consultants who are neither
Directors nor Officers.


 


(iv)                              General.  Once a Committee has been
appointed pursuant to subsection (i) or (ii) of this Section 4(a),
such Committee shall continue to serve in its designated capacity until otherwise
directed by the Board. From time to time the Board may increase the size of any
Committee and appoint additional members thereof, remove members (with or
without cause) and appoint new members in substitution therefore, fill
vacancies (however caused) or remove all members of the Committee and
thereafter directly administer the Plan, all to the extent permitted by the
Applicable Laws, and, in the case of a Committee appointed under subsection (i) hereof,
to the extent permitted by Rule 16b-3 as it applies to a plan intended to
qualify thereunder as a discretionary plan.


 


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


 


(i)                                     to determine the Fair Market Value of the
Common Stock, in accordance with Section 2 of the Plan;


 


(ii)                                  to select the Officers, Consultant and
Employees to whom Awards may from time to time be granted hereunder;


 


(iii)                               to determine whether and to what extent
Options are granted hereunder;


 


(iv)                              to determine the number of shares of Common
Stock to be covered by each such Option granted hereunder;


 


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


 


(vi)                              to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any Award granted hereunder
(including, but not limited to, whether such Option is an Incentive Stock
Option or a Nonstatutory Stock Option, the exercise price and any restriction
or limitation, or any vesting acceleration or waiver of forfeiture restrictions
regarding any Option or other award and/or the shares of Common Stock relating
thereto, based in each case on such factors as the Administrator shall
determine, in its sole discretion) and to provide for the grant of Awards other
than Options on terms determined in their discretion; provided, however, that
in the event of a merger or asset sale, the applicable provisions of Section 10
of the Plan shall govern vesting acceleration;


 


(vii)                           to determine whether and under what
circumstances an Option may be settled in cash instead of Common Stock;


 


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(viii)                        to reduce the exercise price of any Option to
the then current Fair Market Value if the Fair Market Value of the Common Stock
covered by such Option shall have declined since the date the Option was
granted;


 


(ix)                                to interpret the Plan;


 


(x)                                   to prescribe, amend and rescind rules and
regulations relating to the Plan;


 


(xi)                                with the consent of the holder thereof, to
modify or amend each Option;


 


(xii)                             to accelerate the vesting of Awards; and


 


(xiii)                          to make all other determinations deemed
necessary or advisable for the administration of the Plan.


 


(c)                                  Powers of the Board with respect to Directors. 
Subject to the provisions and restrictions of the Plan, the Board shall
have the authority, in its discretion: (i) to determine, upon review of
relevant information and in accordance with Section 2 of the Plan, the
Fair Market Value of the Common Stock; (ii) to interpret the Plan; (iii) to
prescribe, amend and rescind rules and regulations relating to the Plan; (iv) to
authorize any person to execute on behalf of the Company any instrument
required to effectuate the grant of an Award previously granted hereunder; (v) to
accelerate the vesting of Awards; and (vi) to make all other
determinations deemed necessary or advisable for the administration of the
Board.


 


(d)                                 Effect of Administrator’s Decision.  All
decisions, determinations and interpretations of the Administrator shall be
final and binding on all Optionees.


 


5.                                       Eligibility.


 


(a)                                  Eligibility for Employees and Consultants. 
Nonstatutory Stock Options and other Awards may be granted to Employees
and Consultants. Incentive Stock Options may be granted only to Employees. An
Optionee who has been granted an Option may, if he or she is otherwise
eligible, be granted additional Options.


 


(b)                                 Eligibility for Outside Directors. 
Awards may be granted to Outside Directors. All Options shall be
automatically granted in accordance with the terms set forth in Section 7
hereof. An Outside Director who has been granted an Option may, if he or she is
otherwise eligible, be granted an additional Option or Options in accordance
with such provisions.


 


(c)                                  No Employment Agreement. 
Neither the Plan nor any Option agreement shall confer upon any Optionee
any right with respect to continuation of employment by or service as a
Director or Consultant to the Company, no shall it interfere in any way with
the Optionee’s right or the Company’s right to terminate the Optionee’s
employment or other relationship at any time.


 


(d)                                 Limitation on Grants.  No
Employee shall be granted, in any fiscal year of the Company, Options to
purchase more than 2,500,000 Shares.


 


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6.                                       Term of Plan.  The
Plan shall become effective upon the earlier to occur of its adoption by the
Board or its approval by the stockholders of the Company. It shall continue in
effect for a term of ten (10) years unless sooner terminated under Section 12
of the Plan.  Nothing with respect to
this amendment and restatement of the Plan shall be deemed to have changed the
term of the plan.


 


7.                                       Options.


 


(a)                                  Grants with respect to Outside Directors.  All
grants of Options to Outside Directors hereunder shall be automatic and
non-discretionary and shall be made strictly in accordance with the following
provisions:


 


(i)                                     No person shall have any discretion to select
which Outside Directors shall be granted Options or to determine the number of
Shares to be covered by Options granted to Outside Directors.


 


(ii)                                  During the term of the Plan, each Outside
Director shall automatically receive an Option to purchase 40,000 Shares (the “Annual
Option”) on each January 1 following the approval of this Plan.


 


(iii)                               Unless otherwise provided for by the Board,
each Outside Director who is nominated or elected to the Board during the term
of the Plan shall receive an Option to purchase 75,000 Shares on the date of
such election or nomination (the “New Director Grant”). Notwithstanding the
foregoing, the Board shall have the authority to grant a pro rata portion of
the New Director Grant to reflect the portion of the year served or to
determine that the New Director Grant is not necessary.


 


(iv)                              The terms of each Option granted hereunder
shall be as follows:


 


(A)                              the term of the Option shall be ten (10) years;
and


 


(B)                                the Option shall be exercisable only while
the Outside Director remains a Director of the Company, except as set forth in Section 7(e) hereof;
and


 


(C)                                the exercise price per Share shall be 100% of
the Fair Market Value per Share on the date of grant of the Option or as
otherwise calculated pursuant to Section 2 of the Plan; and


 


(D)                               the Option shall be fully exercisable as of
one year and one day following the date of grant, so long as the Optionee
remains a Director, except as set forth in Section 7(e) hereof.


 


(v)                                 In the event that any Option granted under the
Plan would cause the number of Shares subject to outstanding Options plus the
number of Shares previously purchased upon exercise of Options to exceed the
number of authorized Shares under Section 3 hereof, then each such
automatic grant shall be for that number of Shares determined by dividing the
total number of Shares remaining available for grant by the number of Outside
Directors on the automatic grant date. No further grants shall be made until
such time, if any, as additional Shares become available for grant under the
Plan through action of the 


 


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stockholders to increase the number of Shares which may be issued under
the Plan or through cancellation or expiration of Options previously granted
hereunder.


 


(b)                                 Grants with respect to Employees and
Consultants.  The Administrator, in its discretion, may
grant Options to eligible participants and shall determine whether such Options
shall be Incentive Stock Options or Nonstatutory Stock Options. Each Option
shall be evidenced by a written Option agreement which shall expressly identify
the Options as Incentive Stock Options or as Nonstatutory Stock Options, and be
in such form and contain such provisions as the Administrator shall from time
to time deem appropriate. Without limiting the foregoing, the Administrator
may, at any time, or from time to time, authorize the Company, with the consent
of the respective recipients, to issue Options in exchange for the surrender
and cancellation of any or all outstanding Options.


 


(c)                                  Terms and Conditions of Option Agreements.


 


(i)                                     Exercise Price; Number of Shares.  The
per Share exercise price for the Shares issuable upon exercise of an Option
shall be such price as is determined by the Administrator. The Option agreement
shall specify the number of Shares to which it pertains.


 


(ii)                                  Waiting Period; Exercisability; Term.  At
the time an Option is granted, the Administrator will determine the terms and
conditions to be satisfied before Shares may be purchased, including the dates
on which Shares subject to the Option may first be purchased or the conditions
which must be satisfied prior to the purchase. The Administrator may specify
that an Option may not be exercised until the completion of the service period
specified at the time of grant. (Any such period is referred to herein as the “waiting
period.”) At the time an Option is granted, the Administrator shall fix the
period within which the Option may be exercised, which shall not be less than
the waiting period, if any, nor more than ten (10) years from the date of
grant.


 


(iii)                               Form of Payment.  The
consideration to be paid for the Shares to be issued upon exercise of an
Option, including the method of payment, shall be determined by the
Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist entirely of (1) cash, (2) check,
(3) promissory note, (4) other Shares which (x) in the case of
Shares acquired upon exercise of an Option, have been owned by the Optionee for
more than six months on the date of surrender and (y) have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the
Shares as to which said Option shall be exercised, (5) delivery of a
properly executed exercise notice together with irrevocable instructions to a
broker to promptly deliver to the Company the amount of sale or loan proceeds
required to pay the exercise price, (6) any combination of the foregoing
methods of payment, or (7) such other consideration and method of payment
for the issuance of Shares to the extent permitted under Applicable Laws.


 


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(iv)                              Special Incentive Stock Option Provisions.  In
addition to the foregoing, Options granted under the Plan which are intended to
be Incentive Stock Options under Section 422 of the Code shall be subject
to the following terms and conditions:


 


(A)                              Exercise Price.  The
per share exercise price for the Shares issuable uponexercise of the Option
shall be no less than 100% of the Fair Market Value of Common Stock, determined
as of the date of the grant of the Option.


 


(B)                                Dollar Limitation.  To
the extent that the aggregate Fair Market Value of (i) the Shares with
respect to which Options designated as Incentive Stock Options plus (ii) the
shares of stock of the Company, Parent and any Subsidiary with respect to which
other incentive stock options are exercisable for the first time by an Optionee
during any calendar year under all plans of the Company and any Parent and
Subsidiary exceeds $100,000, such Options shall be treated as Nonstatutory
Stock Options.  For purposes of the
preceding sentence, (i) Options shall be taken into account in the order
in which they were granted, and (ii) the Fair Market Value of the Shares
shall be determined as of the time the Option or other incentive stock option
is granted.


 


(C)                                General.  Except as modified by the
preceding provisions of this subsection 7(a)(iv) and except as otherwise
limited by Section 422 of the Code, all of the provisions of the Plan
shall be applicable to the Incentive Stock Options granted hereunder.


 


(v)                                 10% Stockholder.  If
any Optionee to whom an Incentive Stock Option is to be granted pursuant to the
provisions of the Plan is, on the date of grant, the owner of Common Stock (as
determined under Section 424(d) of the Code) possessing more than 10%
of the total combined voting power of all classes of stock of the Company or
any Subsidiary (a “10% Stockholder”), then the following special provisions
shall be applicable to the Option granted to such individual:


 


(A)                              The per Share Option price of Shares subject
to such Incentive Stock Option shall not be less than 110% of the Fair Market
Value of Common Stock on the date of grant; and


 


(B)                                The Option shall not have a term in excess of
five (5) years from the date of grant.


 


(vi)                              Rule 16b-3. 
Grants of options to Directors, Officers and 10% Stockholders must
comply with the applicable provisions of Rule 16b-3 and such Options shall
contain such additional conditions or restrictions, if any, as may be required
by Rule 16b-3 to be in the written Option Agreement in order to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect
to Plan transactions.


 


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(vii)                           Other Provisions.  Each
Option granted under the Plan may contain such other terms, provisions, and
conditions not inconsistent with the Plan as may be determined by the
Administrator.


 


(viii)                        Buyout Provisions.  The
Administrator may at any time offer to buy out, for a payment in cash or
Shares, an Option previously granted, based on such terms and conditions as the
Administrator shall establish and communicate to the Optionee at the time that
such offer is made. Any such cash offer made to an Officer or Director shall
comply with the provisions of Rule 16b-3 relating to cash settlement of
stock appreciation rights. This provision is intended only to clarify the
powers of the Administrator and shall not in any way be deemed to create any
rights on the part of Optionees to buyout offers or payments.


 


(d)                                 Method of Exercise.


 


(i)                                     Exercisability.  Any
Option granted hereunder shall be exercisable at such times and under such
conditions as determined by the Administrator and as shall be permissible under
the terms of the Plan.


 


(ii)                                  No Fractional Shares.  An
Option may not be exercised for a fraction of a Share.


 


(iii)                               Procedure for Exercise; Rights as a
Stockholder.  An Option shall be deemed to be exercised
when the Company receives: (i) written notice of such exercise in
accordance with the terms of the Option from the person entitled to exercise
the Option and (ii) full payment for the Shares with respect to which the
Option is exercised. Full payment may consist of any consideration and method
of payment allowable under subsection 7(c)(iii) of the Plan, as authorized
by the Administrator (and, in the case of an Incentive Stock Option, determined
at the time of grant) and permitted by the Option Agreement. Shares issued upon
exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or
any other rights as a stockholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. No adjustment will be made
for a dividend or other right for which the record date is prior to the date
the stock certificate is issued, except as provided in Section 10 of the
Plan.


 


(iv)                              Effect of Exercise. 
Exercise of an Option in any manner shall result in a decrease in the number
of Shares which thereafter shall be available, both for purposes of the Plan
and for sale under the Option, by the number of Shares as to which the Option
is exercised.


 


(e)                                  Effect of Termination.


 


(i)                                     Termination of Status as a Director.  If
an Outside Director ceases to serve as a Director, he or she may, but only
within three (3) months after the date he or she ceases to be a Director
of the Company, exercise his or her Option to the extent that he or she was
entitled to exercise it at the date of such 


 


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termination. Notwithstanding the foregoing, in no event may the Option
be exercised after its ten year term has expired. To the extent that he or she
was not entitled to exercise an Option at the date of such termination, of if
he or she does not exercise such Option (which he or she was entitled to
exercise) within the time specified herein, the Option shall terminate.


 


(ii)                                  Termination of Employment or Consulting
Relationship.  In the event an Optionee’s Continuous Status
as an Employee or Consultant terminates (other than upon the Optionee’s death
or disability), the Optionee may exercise his or her Option, but only within
such period of time not to exceed six (6) months as is determined by the
Administrator (with such determination being made at the time of grant and not
exceeding ninety (90) days in the case of an Incentive Stock Option) from the
date of such termination, and only to the extent that the Optionee was entitled
to exercise it at the date of such termination (but in no event later than the
expiration of the term of such Option as set forth in the Option Agreement).
If, at the date of termination, the Optionee is not entitled to exercise his or
her entire Option, the Shares covered by the unexercisable portion of the
Option shall be returned to the Plan as of the termination date. If, after
termination, the Optionee does not exercise his or her Option within the time
specified herein, the Option shall terminate, and all remaining Shares covered
by such Option shall be returned to the Plan at the end of such period.


 


(iii)                               Disability of Optionee.  In
the event an Optionee’s Continuous Status as an Employee or Consultant
terminates as a result of the Optionee’s Disability, the Optionee may exercise
his or her Option, but only within six (6) months from the date of such
termination, and only to the extent that the Optionee was entitled to exercise
it at the date of such termination (but in no event later than the expiration
of the term of such Option as set forth in the Option Agreement). If, at the
date of termination due to Disability, the Optionee is not entitled to exercise
his or her entire Option, the Shares covered by the unexercisable portion of
the Option shall be returned to the Plan as of the date of Disability. If,
after such termination, the Optionee does not exercise his or her Option within
the time specified herein, the Option shall terminate, and all remaining Shares
covered by such Option shall be returned to the Plan at the end of such period.


 


(iv)                              Death of Optionee. In the event of an Optionee’s death, the
Optionee’s estate or a person who acquired the right to exercise the deceased
Optionee’s Option by bequest or inheritance may exercise the Option, but only
within six (6) months following the date of death, and only to the extent
that the Optionee was entitled to exercise it at the date of death (but in no
event later than the expiration of the term of such Option as set forth in the
Option Agreement). If, at the time of death, the Optionee was not entitled to
exercise his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall be returned to the Plan as of the date of death.
If, after death, the Optionee’s estate or a person who acquired the right to
exercise the Option by bequest or inheritance does not exercise the Option
within the time specified herein, the Option shall 


 


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terminate, and the Shares covered by such Option shall be returned to
the Plan at the end of such period.


 


(f)                                    Early Exercise. Options may, but need not, include a
provision whereby the Optionee may elect at any time before the Optionee’s
Continuous Service terminates to exercise the Option as to any part of all of
the shares of Common Stock subject to the Option prior to the full vesting of
the Option. Any unvested shares of Common Stock so purchased may be subject to
a repurchase option in favor of the Company or to any other restriction the
Board determines to be appropriate.


 


8.                                       Stock Withholding to Satisfy
Withholding Tax Obligations.


 


(a)                                  Ability to Use Stock for Withholding.  At
the discretion of the Administrator, Optionees may satisfy withholding
obligations as provided in this Section 8. When an Optionee incurs tax
liability in connection with the exercise of an Option, which tax liability is
subject to tax withholding under applicable tax laws, and the Optionee is
obligated to pay the Company an amount required to be withheld under applicable
tax laws, the Optionee may satisfy the withholding tax obligation by electing
to have the Company withhold from the Shares to be issued upon exercise of the
Option that number of Shares having a Fair Market Value equal to the amount
required to be withheld. The Fair Market Value of the Shares to be withheld
shall be determined on the date that the amount of tax to be withheld is to be
determined (“Tax Date”).


 


(b)                                 Election to Have Stock Withheld. All elections by an Optionee to have Shares
withheld for this purpose shall be made in writing in a form acceptable to the
Administrator and shall be subject to the following restrictions:


 


(i)                                     the election must be made on or prior to the
applicable Tax Date;


 


(ii)                                  once made, the election shall be irrevocable
as to the particular Shares of the Option as to which the election is made
(unless otherwise permitted by applicable tax regulations under the Code);


 


(iii)                               all elections shall be subject to the consent
or disapproval of the Administrator; and


 


(iv)                              if the Optionee is a Director, Officer or 10%
Stockholder, the election must comply with the applicable provisions of Rule 16b-3
and shall be subject to such additional conditions or restrictions as may be
required thereunder to qualify for the maximum exemption from Section 16
of the Exchange Act with respect to Plan transactions.


 


(c)                                  Section 83(b) Election. In the event the election to have Shares
withheld is made by an Optionee, no election is filed under Section 83(b) of
the Code and the Tax Date is deferred under Section 83 of the Code, the
Optionee shall receive the full number of Shares with respect to which the
Option is exercised but such Optionee shall be unconditionally obligated to
tender back to the Company the proper number of Shares on the Tax Date.


 


9.                                       Limitations on Transfer. 
Options granted under this Plan, and any interest therein, shall not be
transferable or assignable by the Optionee, and may not be subject to
execution, attachment or similar process, otherwise than by will or by the laws
of descent and 


 


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distribution
or pursuant to a qualified domestic relations order as defined by the Code or
Title I of the Employee Retirement Income Security Act, or the rules thereunder.
The designation of a beneficiary by an Optionee does not constitute a transfer.
An Option shall be exercisable during the lifetime of the Optionee only by the
Optionee; provided, however, that Nonstatutory Stock Options held by an
Optionee may be transferred to such family members, trusts and charitable
institutions as the Administrator, in its sole discretion, shall approve,
unless otherwise restricted from such transfer under the terms of the grant.


 


10.                                 Adjustments Upon Changes in
Capitalization or Merger.


 


(a)                                  Stock Splits and Similar Events. Subject to
any required action by the stockholders of the Company, the number of Shares
covered by each outstanding Award, and the number of Shares which have been
authorized for issuance under the Plan but as to which no Awards have yet been
granted or which have been returned to the Plan upon cancellation or expiration
of an Option, as well as the price per Share covered by each outstanding
Option, shall be proportionately adjusted for any increase or decrease in the
number of issued Shares resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of the Common Stock, or any
other increase or decrease in the aggregate number of issued Shares effected
without receipt of consideration by the Company; provided, however, that
conversion of any convertible securities of the Company shall not be deemed for
this purpose to have been “effected without receipt of consideration”. Such
adjustment shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive.


 


(b)                                 Dissolution or Liquidation.   In
the event of the proposed dissolution or liquidation of them Company, all
outstanding Awards will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Board. The Board may, in the
exercise of its sole discretion in such instances, declare that any Award shall
terminate as of a date fixed by the Board and give each Optionee the right to
exercise his or her Award as to all or any part of the Optioned Stock,
including Shares as to which the Option would not otherwise be exercisable.


 


(c)                                  Change in Control.  In
the event of a Change in Control Event, the Administrator or the Board, as
appropriate, may, in its discretion, provide that any outstanding Award shall
become fully vested, free of restrictions, and payable to the holder of such
Award.  The Administrator or the Board,
as appropriate, may take such action with respect to all Awards then
outstanding or only with respect to certain specific awards identified by the
Administrator or the Board, as appropriate, in the circumstances.


 


(d)                                 No Other Adjustments. 
Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of Shares subject to an Award.


 


11.                                 Time of Granting Options. The date
of grant of an Award shall, for all purposes, be the date on which the
Administrator makes the determination granting such Award. To the extent that
grants are made by the Compensation Committee, all grants will be made at a
meeting of the Compensation Committee. Except with respect to Options granted
to new employees, all Options granted pursuant to the Plan shall be granted
during a Trading Window 


 


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Period
as defined by the Company’s Insider Trading Policy. Notice of the determination
shall be given to each Employee or Consultant to whom an Award is so granted
within a reasonable time after the date of such grant.


 


12.                                 Amendment and Termination of the
Plan.


 


(a)                                  Amendment and Termination.  The
Board may at any time amend, alter, suspend, or terminate the Plan. The Company
shall obtain stockholder approval of any Plan amendment in such a manner and to
such a degree as is to the extent necessary and desirable to comply with Rule 16b-3
under the Exchange Act or Section 422 of the Code (or any other applicable
law or regulation, including the requirements of any exchange or quotation
system on which the Common Stock is) in such a manner and to such a degree as
is listed or quoted in such a manner and to such a degree as is required by
such law or regulation.


 


(b)                                 Effect of Amendment or Termination.  No
amendment, alteration, suspension or termination of the Plan shall impair the
rights of any Participant with respect to Awards already granted unless
mutually agreed otherwise between the Participant and the Administrator, which
agreement must be in writing signed by the Participant and the Company.


 


13.                                 Conditions Upon Issuance of
Shares.


 


(a)                                  Compliance with Laws. 
Shares shall not be issued upon exercise of an Option or the vesting of
an Award unless such exercise and the issuance and delivery of such Shares
pursuant thereto shall comply with all relevant provisions of law, including,
without limitation, the Securities Act of 1933, as amended, the Exchange Act,
the rules and regulations promulgated thereunder, state securities laws
and the requirements of any stock exchange or quotation system upon which the
Shares may then be listed or quoted, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.


 


(b)                                 Investment Intent.  As a
condition to the exercise of an Option or the issuance of Shares upon exercise
of an Option, the Company may require the person exercising such Option 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.


 


(c)                                  No Company Liability. 
Inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company’s counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the non-issuance or sale of
such Shares as to which such requisite authority shall not have been obtained.


 


(d)                                 Grants Exceeding Allotted Shares.  If
the Stock covered by an Award exceeds, as of the date of grant, the number of
Shares which may be issued under the Plan without additional stockholder
approval, such Option shall be void with respect to such excess stock, unless
stockholder approval of an amendment sufficiently increasing the number of
Shares subject to the Plan to permit full exercise or settlement of the Award
is timely obtained in accordance with Section 15 of the Plan.


 


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


 


15.                                 Stockholder Approval.


 


                                                (a)                                  Requirement.  Continuance of the Plan shall be subject to
approval by the stockholders of the Company within twelve (12) months before or
after the date the Plan is adopted as provided in Section 6 and at or
prior to the first annual meeting of stockholders held subsequent to the first
granting of an Option hereunder.  Such
stockholder approval shall be obtained in the manner and to the degree that is
required under applicable federal and state laws.


 


                                                (b)                                 Manner of Solicitation.  Approval of the Plan by the
stockholders of the Company shall be solicited substantially in accordance with
Section 14(a) of the Exchange Act and the rules and regulations
promulgated thereunder.


 


Effective:  September 15,2008


 


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