exv10w7






EXHIBIT 10.7




CPM HOLDINGS, INC.

2004 EQUITY INCENTIVE PLAN




     1. Purposes of the Plan. The purposes of the CPM Holdings, Inc. 2004 Equity Incentive
Plan are to attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees and Directors and to promote the
success of the Company’s business. Options granted under the Plan may be Incentive Stock Options
or Non-Qualified Stock Options, as determined by the Administrator at the time of grant. Shares of
Restricted Stock may also be awarded under the Plan. The Plan shall be effective as of December
31, 2003 (the “Effective Date”).



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




     (a) “Administrator” means the Board or the Committee responsible for conducting
the general administration of the Plan, as applicable, in accordance with Section 4 hereof.




     (b) “Applicable Laws” means the requirements relating to the administration of
stock option plans 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 is listed or
quoted and the applicable laws of any foreign country or jurisdiction where Options are
granted or shares of Restricted Stock are awarded under the Plan.




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




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




     (e) “Change in Control” shall mean (i) a merger or consolidation of the Company
with any other person or entity (other than a wholly-owned subsidiary of the Company) other
than (A) a merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving entity) 50% or
more of the combined voting power of voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation or (B) a merger or
consolidation affected to implement a recapitalization of the Company (or similar
transaction); (ii) the sale of 50% or more of the voting securities of the Company in a
single transaction or a series of related transactions; or (iii) a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the Company of all
or substantially all of its assets.




     (f) “Committee” means the Compensation Committee of the Board or other
committee appointed by the Board in accordance with Section 4 hereof; provided that if no
Compensation Committee exists and no other committee has been appointed in accordance with
Section 4, then the full Board shall serve as the Committee.



 









 






     (g) “Common Stock” means the Common Stock of the Company, par value $0.001 per
share.




     (h) “Company” means CPM Holdings, Inc., a Delaware corporation.




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




     (j) “Effective Date” shall have the meaning set forth in Section 1.




     (k) “Employee” means any person, including an officer or Director, who is an
employee (as defined in accordance with Section 3401(c) of the Code) of the Company or any
Parent or Subsidiary of the Company. A Service Provider shall not cease to be an Employee
in the case of (i) any leave of absence approved by the Company or (ii) transfers between
locations of the Company or between the Company, its Parent, any Subsidiary, or any
successor. For purposes of Incentive Stock Options, no such leave may exceed ninety (90)
days, unless reemployment upon expiration of such leave is guaranteed by statute or
contract. Neither service as a Director nor payment of a director’s fee by the Company
shall be sufficient, by itself, to constitute “employment” by the Company.




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




     (m) “Fair Market Value” means, as of any date, the value of a share of Common
Stock determined as follows:




     (i) If the Common Stock is listed on any established stock exchange or a
national market system, including, without limitation, the Nasdaq National Market or
The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall
be the closing sales price for a share of such stock (or the closing bid, if no
sales were reported) as quoted on such exchange or system for the last market
trading day prior to the time of determination, as reported in The Wall Street
Journal or such other source as the Administrator deems reliable;




     (ii) If the Common Stock is regularly quoted by a recognized securities dealer
but selling prices are not reported, its Fair Market Value shall be the mean between
the high bid and low asked prices for a share of the Common Stock on the last market
trading day prior to the day of determination; or




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




     (n) “Holder” means a person who has been granted an Option or Restricted Stock
award or who holds Shares acquired pursuant to a Restricted Stock award or the exercise of
an Option.




     (o) “Incentive Stock Option” means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and which is designated
as an Incentive Stock Option by the Administrator.



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     (p) “Independent Director” means a Director who is not an Employee of the
Company.




     (q) “Non-Qualified Stock Option” means an Option (or portion thereof) that is
not designated as an Incentive Stock Option by the Administrator, or which is designated as
an Incentive Stock Option by the Administrator but fails to qualify as an incentive stock
option within the meaning of Section 422 of the Code.




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




     (s) “Option Agreement” means a written agreement between the Company and a
Holder evidencing the terms and conditions of an individual Option grant. The Option
Agreement is subject to the terms and conditions of the Plan.




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




     (u) “Plan” means the CPM Holdings, Inc. 2004 Equity Incentive Plan, as amended
from time to time.




     (v) “Public Trading Date” means the first date upon which Common Stock of the
Company is listed (or approved for listing) upon notice of issuance on any exchange or
designated (or approved for designation) upon notice of issuance as a national market
security on an interdealer quotation system.




     (w) “Restricted Stock” means Shares acquired pursuant to the exercise of an
unvested Option in accordance with Section 10(h) below or pursuant to a Restricted Stock
award granted under Section 12 below.




     (x) “Rule 16b-3” means that certain Rule 16b-3 under the Exchange Act, as such
Rule may be amended from time to time.




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




     (z) “Securities Act” means the Securities Act of 1933, as amended.




     (aa) “Service Provider” means an Employee or Director.




     (bb) “Share” means a share of Common Stock, as adjusted in accordance with
Section 13 below.




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



     3. Stock Subject to the Plan. Subject to the provisions of Section 13 of the Plan,
the shares of stock subject to Options or Restricted Stock awards shall be Common Stock. Subject
to the provisions of Section 13 of the Plan, the maximum aggregate number of Shares which may be
issued upon exercise of such Options or granted as Restricted Stock awards is 125,000;



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provided, however, that, notwithstanding the foregoing, the maximum number of Shares that may
be granted as Restricted Stock awards is 45,000; and, provided, further, that, notwithstanding the
foregoing, the maximum number of Shares that may be received upon exercise of Options is 80,000.
Shares issued upon exercise of Options or awarded as Restricted Stock may be authorized but
unissued, or reacquired Shares. If an Option expires or becomes unexercisable without having been
exercised in full, the unpurchased Shares which were subject thereto shall become available for
future grant or sale under the Plan (unless the Plan has terminated). Shares which are delivered
by the Holder or withheld by the Company upon the exercise of an Option or upon the grant, sale or
vesting of a Restricted Stock award under the Plan, in payment of the exercise price thereof or tax
withholding thereon, may again be optioned, granted or awarded hereunder, subject to the
limitations of this Section 3. If Shares of Restricted Stock are forfeited by the Holder to the
Company such Shares shall become available for future Restricted Stock awards under the Plan.
Notwithstanding the provisions of this Section 3, no Shares may again be optioned, granted or
awarded if such action would cause an Incentive Stock Option to fail to qualify as an Incentive
Stock Option under Code Section 422.




     4. Administration of the Plan.




     (a) Administrator. The Plan shall be administered by the Committee. The
Committee shall have the power to delegate to a subcommittee any of the administrative
powers the Committee is authorized to exercise (and references in this Plan to the Committee
shall thereafter be to such subcommittee), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to time by the
Board. Notwithstanding the foregoing, however, from and after the Public Trading Date, a
Committee of the Board shall administer the Plan and the Committee shall consist solely of
two or more Independent Directors each of whom is both an “outside director,” within the
meaning of Section 162(m) of the Code, and a “non-employee director” within the meaning of
Rule 16b-3. Within the scope of such authority, the Board or the Committee may (i) delegate
to a committee of one or more members of the Board who are not Independent Directors the
authority to grant awards under the Plan to eligible persons who are either (A) not then
“covered employees,” within the meaning of Section 162(m) of the Code and are not expected
to be “covered employees” at the time of recognition of income resulting from such award or
(B) not persons with respect to whom the Company wishes to comply with Section 162(m) of the
Code and/or (ii) delegate to a committee of one or more members of the Board who are not
“non-employee directors,” within the meaning of Rule 16b-3, the authority to grant awards
under the Plan to eligible persons who are not then subject to Section 16 of the Exchange
Act. The Board may abolish the Committee at any time and revest in the Board the
administration of the Plan. Appointment of Committee members shall be effective upon
acceptance of appointment. Committee members may resign at any time by delivering written
notice to the Board. Vacancies in the Committee may only be filled by the Board.




     (b) Powers of the Administrator. Subject to the provisions of the Plan
(including without limitation Section 4(c)) and the specific duties delegated by the Board
to the Committee, and subject to the approval of any relevant authorities, the Administrator
shall have the authority in its discretion to:



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     (i) Select the Service Providers to whom Options may be granted and Restricted
Stock may be awarded from time to time hereunder;




     (ii) Determine the number of Shares to be covered by each such award granted
hereunder;




     (iii) Approve forms of agreement for use under the Plan;




     (iv) Determine the terms and conditions of any Option or Restricted Stock award
granted hereunder (such terms and conditions include, but are not limited to, the
exercise price, the time or times when Options or Restricted Stock may vest or be
exercised (which may be based on performance criteria), any vesting acceleration or
waiver of forfeiture restrictions, and any restriction or limitation regarding any
Option or Restricted Stock award or the Common Stock relating thereto, based in each
case on such factors as the Administrator, in its sole discretion, shall determine);




     (v) Prescribe, amend and rescind rules and regulations relating to the Plan,
including rules and regulations relating to sub-plans established for the purpose of
qualifying for preferred tax treatment under foreign tax laws;




     (vi) Following the Public Trading Date, allow Holders to satisfy withholding
tax obligations by electing to have the Company withhold from the Shares to be
issued upon exercise of an Option or upon the grant, sale or vesting of any
Restricted Stock award that number of Shares having a Fair Market Value equal to the
minimum amount required to be withheld based on the statutory withholding rates for
federal and state tax purposes that apply to supplemental taxable income. 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. All elections by Holders to have
Shares withheld for this purpose shall be made in such form and under such
conditions as the Administrator may deem necessary or advisable; and




     (vii) Construe and interpret the terms of the Plan and awards granted pursuant
to the Plan and to exercise such powers and perform such acts as the Administrator
deems necessary or desirable to promote the best interests of the Company which are
not in conflict with the provisions of the Plan.




     (c) Notwithstanding Section 4(b) 80,000 Shares shall be reserved for issuance upon the
exercise of Options granted to Service Providers, as follows:




     (i) Options to purchase 40,000 Shares shall be granted pursuant to the Plan
with an exercise price equal to 100% of the Fair Market Value per Share as of the
date of grant and shall be subject to performance-based vesting (the
“Performance % Options”). As of the Effective Date (A) Options to purchase
not less than 90% of the Shares subject to the Performance Options shall be granted
to those certain individuals named on Exhibit A hereto; and (B) Options to
purchase the remaining 10% of the Shares subject to the Performance Options shall be



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granted other Service Providers designated by the Committee. The terms and
conditions of each such Option shall be set forth in a written Incentive Stock
Option Agreement entered into by and between the Company and the Holder in
substantially the form attached hereto as Exhibit A-1.




     (ii) Options to purchase 40,000 Shares shall be granted pursuant to the Plan
with an exercise price equal to 100% of the Fair Market Value per Share as of the
date of grant and shall be subject to service-based vesting (the “Service
Options”). As of the Effective Date (A) Options to purchase not less than 90%
of the Shares subject to the Service Options shall be granted to those individual
executives named on Exhibit B hereto; and (B) Options to purchase the
remaining 10% of the Shares subject to the Service Options shall be granted other
Service Providers designated by the Committee. The terms and conditions of each
such Option shall be set forth in a written Incentive Stock Option Agreement entered
into by and between the Company and the Holder in substantially the form attached
hereto as Exhibit B-1.




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



     5. Eligibility. Non-Qualified Stock Options and Restricted Stock awards may be
granted to Service Providers. Incentive Stock Options may be granted only to Employees. If
otherwise eligible, an Employee or Director who has been granted an Option or Restricted Stock
awards may be granted additional Options or Restricted Stock.



     6. Limitations.




     (a) Each Option shall be designated by the Administrator in the Option Agreement as
either an Incentive Stock Option or a Non-Qualified Stock Option. However, notwithstanding
such designations, to the extent that the aggregate Fair Market Value of Shares subject to a
Holder’s Incentive Stock Options and other incentive stock options granted by the Company,
any Parent or Subsidiary, which become exercisable for the first time during any calendar
year (under all plans of the Company or any Parent or Subsidiary) exceeds $100,000, such
excess Options or other options shall be treated as Non-Qualified Stock Options. For
purposes of this Section 6(a), Incentive Stock Options shall be taken into account in the
order in which they were granted, and the Fair Market Value of the Shares shall be
determined as of the time of grant.




     (b) Neither the Plan, any Option nor any Restricted Stock shall confer upon a Holder
any right with respect to continuing the Holder’s employment with the Company, nor shall
they interfere in any way with the Holder’s right or the Company’s right to terminate such
employment relationship at any time, with or without cause.




     (c) No Service Provider shall be granted, in any calendar year, Options or Restricted
Stock to purchase more than 50,000 Shares; provided, however, that the foregoing limitation
shall not apply prior to the Public Trading Date and, following the Public Trading Date, the
foregoing limitation shall not apply until the earliest of: (i) the



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first material modification of the Plan (including any increase in the number of shares
reserved for issuance under the Plan in accordance with Section 3); (ii) the issuance of all
of the shares of Common Stock reserved for issuance under the Plan; (iii) the expiration of
the Plan; (iv) the first meeting of stockholders at which Directors of the Company are to be
elected that occurs after the close of the third calendar year following the calendar year
in which occurred the first registration of an equity security of the Company under Section
12 of the Exchange Act; or (v) such other date required by Section 162(m) of the Code and
the rules and regulations promulgated thereunder. The foregoing limitation shall be
adjusted proportionately in connection with any change in the Company’s capitalization as
described in Section 13. For purposes of this Section 6(c), if an Option is canceled in the
same calendar year it was granted (other than in connection with a transaction described in
Section 13), the canceled Option will be counted against the limit set forth in this Section
6(c). For this purpose, if the exercise price of an Option is reduced, the transaction
shall be treated as a cancellation of the Option and the grant of a new Option.



     7. Term of Plan. The Plan shall become effective upon the Effective Date and shall
continue in effect until it is terminated under Section 15 of the Plan. No Options or Restricted
Stock may be issued under the Plan after the tenth (10th) anniversary of the Effective Date.



     8. Term of Option. The term of each Option shall be stated in the Option Agreement;
provided, however, that the term shall be no more than ten (10) years from the date of grant
thereof. In the case of an Incentive Stock Option granted to a Holder who, at the time the Option
is granted, owns (or is treated as owning under Code Section 424) stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the term of the Option shall be five (5) years from the date of grant or such shorter
term as may be provided in the Option Agreement.



     9. Option Exercise Price and Consideration.




     (a) The per share exercise price for the Shares to be issued upon exercise of an Option
shall be such price as is determined by the Administrator; provided, however, that in the
case of an Incentive Stock Option (i) granted to an Employee who, at the time of grant of
such Option, owns (or is treated as owning under Code Section 424) stock representing more
than ten percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the per Share exercise price shall be no less than one hundred ten
percent (110%) of the Fair Market Value per Share on the date of grant, and (ii) granted to
any other Employee, the per Share exercise price shall be no less than one hundred percent
(100%) of the Fair Market Value per Share on the date of grant. Notwithstanding the
foregoing, Options may be granted in substitution of outstanding options with a per Share
exercise price other than as required above pursuant to a merger or other corporate
transaction.




     (b) 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). Such
consideration may consist of (i) cash; (ii) check; (iii) with the consent of the



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Administrator (and at such time or times as the Administrator may prescribe), other
Shares which (A) in the case of Shares acquired from the Company, have been owned by the
Holder for more than six (6) months on the date of surrender, and (B) have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the Shares as to
which such Option shall be exercised; (iv) after the Public Trading Date and with the
consent of the Administrator (A) surrendered Shares then issuable upon exercise of the
Option having a Fair Market Value on the date of exercise equal to the aggregate exercise
price of the Option or exercised portion thereof, or (B) delivery of a notice that the
Holder has placed a market sell order with a broker with respect to Shares then issuable
upon exercise of the Options and that the broker has been directed to pay a sufficient
portion of the net proceeds of the sale to the Company in satisfaction of the Option
exercise price, provided, that payment of such proceeds is then made to the Company upon
settlement of such sale; or (v) with the consent of the Administrator, any combination of
the foregoing methods of payment.



     10. Exercise of Option.




     (a) Vesting; Fractional Exercises. Options granted hereunder shall be vested
and exercisable according to the terms hereof at such times and under such conditions as
determined by the Administrator and set forth in the Option Agreement. An Option may not be
exercised for a fraction of a Share.




     (b) Deliveries upon Exercise. All or a portion of an exercisable Option shall
be deemed exercised upon delivery of all of the following to the Secretary of the Company or
his or her office:




     (i) A written or electronic notice complying with the applicable rules
established by the Administrator stating that the Option, or a portion thereof, is
exercised. The notice shall be signed by the Holder or other person then entitled
to exercise the Option or such portion of the Option;




     (ii) Such representations and documents as the Administrator, in its absolute
discretion, deems necessary or advisable to effect compliance with Applicable Laws.
The Administrator may, in its absolute discretion, also take whatever additional
actions it deems appropriate to effect such compliance, including, without
limitation, placing legends on share certificates and issuing stop transfer notices
to agents and registrars;




     (iii) Upon the exercise of all or a portion of an unvested Option pursuant to
Section 10(h), a Restricted Stock purchase agreement in a form determined by the
Administrator and signed by the Holder or other person then entitled to exercise the
Option or such portion of the Option; and




     (iv) In the event that the Option shall be exercised pursuant to Section 10(f)
by any person or persons other than the Holder, appropriate proof of the right of
such person or persons to exercise the Option.



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     (c) Conditions to Delivery of Share Certificates. The Company shall not be
required to issue or deliver any certificate or certificates for Shares purchased upon the
exercise of any Option or portion thereof prior to fulfillment of all of the following
conditions:




     (i) The admission of such Shares to listing on all stock exchanges on which
such class of stock is then listed;




     (ii) The completion of any registration or other qualification of such Shares
under any state or federal law, or under the rulings or regulations of the
Securities and Exchange Commission or any other governmental regulatory body which
the Administrator shall, in its absolute discretion, deem necessary or advisable;




     (iii) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Administrator shall, in its absolute
discretion, determine to be necessary or advisable;




     (iv) The lapse of such reasonable period of time following the exercise of the
Option as the Administrator may establish from time to time for reasons of
administrative convenience; and




     (v) The receipt by the Company of full payment for such Shares, including
payment of any applicable withholding tax, which in the discretion of the
Administrator may be in the form of consideration used by the Holder to pay for such
Shares under Section 9(b).




     (d) Termination of Relationship as a Service Provider. If a Holder ceases to
be a Service Provider other than by reason of the Holder’s disability or death, such Holder
may exercise his or her Option within such period of time as is specified in the Option
Agreement to the extent that the Option is vested on the date of termination (but in no
event later than the expiration of the term of the Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the Option shall
remain exercisable for three (3) months following the Holder’s termination. If, on the date
of termination, the Holder is not vested as to his or her entire Option, the Shares covered
by the unvested portion of the Option immediately cease to be issuable under the Option and
shall again become available for issuance under the Plan. If, after termination, the Holder
does not exercise his or her Option within the time period specified herein, the Option
shall terminate, and the Shares covered by such Option shall again become available for
issuance under the Plan.




     (e) Disability of Holder. If a Holder ceases to be a Service Provider as a
result of the Holder’s disability, the Holder may exercise his or her Option within such
period of time as is specified in the Option Agreement to the extent the Option is vested on
the date of termination (but in no event later than the expiration of the term of such
Option as set forth in the Option Agreement). In the absence of a specified time in the
Option Agreement, the Option shall remain exercisable for twelve (12) months following



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the Holder’s termination. If such disability is not a “disability” as such term is
defined in Section 22(e)(3) of the Code, in the case of an Incentive Stock Option such
Incentive Stock Option shall automatically cease to be treated as an Incentive Stock Option
and shall be treated for tax purposes as a Non-Qualified Stock Option from and after the day
which is three (3) months and one (1) day following such termination. If, on the date of
termination, the Holder is not vested as to his or her entire Option, the Shares covered by
the unvested portion of the Option shall immediately cease to be issuable under the Option
and shall again become available for issuance under the Plan. If, after termination, the
Holder does not exercise his or her Option within the time specified herein, the Option
shall terminate, and the Shares covered by such Option shall again become available for
issuance under the Plan.




     (f) Death of Holder. If a Holder dies while a Service Provider, the Option may
be exercised within such period of time as is specified in the Option Agreement (but in no
event later than the expiration of the term of such Option as set forth in the Notice of
Grant), by the Holder’s estate or by a person who acquires the right to exercise the Option
by bequest or inheritance, but only to the extent that the Option is vested on the date of
death. In the absence of a specified time in the Option Agreement, the Option shall remain
exercisable for twelve (12) months following the Holder’s termination. If, at the time of
death, the Holder is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall immediately cease to be issuable under the Option and
shall again become available for issuance under the Plan. The Option may be exercised by
the executor or administrator of the Holder’s estate or, if none, by the person(s) entitled
to exercise the Option under the Holder’s will or the laws of descent or distribution. If
the Option is not so exercised within the time specified herein, the Option shall terminate,
and the Shares covered by such Option shall again become available for issuance under the
Plan.




     (g) Regulatory Extension. A Holder’s Option Agreement may provide that if the
exercise of the Option following the termination of the Holder’s status as a Service
Provider (other than upon the Holder’s death or Disability) would be prohibited at any time
solely because the issuance of shares would violate the registration requirements under the
Securities Act, then the Option shall terminate on the earlier of (i) the expiration of the
term of the Option set forth in Section 8 or (ii) the expiration of a period of three (3)
months after the termination of the Holder’s status as a Service Provider during which the
exercise of the Option would not be in violation of such registration requirements.




     (h) Early Exercisability. The Administrator may provide in the terms of a
Holder’s Option Agreement that the Holder may, at any time before the Holder’s status as a
Service Provider terminates, exercise the Option in whole or in part prior to the full
vesting of the Option; provided, however, that subject to Section 20, Shares acquired upon
exercise of an Option which has not fully vested may be subject to any forfeiture, transfer
or other restrictions as the Administrator may determine in its sole discretion.



     11. Transferability.



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     (a) Except as otherwise provided in Section 11(b):




     (i) No Option awarded under the Plan may be sold, pledged, assigned or
transferred in any manner other than by will or the laws of descent and
distribution, unless and until such Option has been exercised, or the shares
underlying such Option have been issued, and all restrictions applicable to such
shares have lapsed;




     (ii) Except as otherwise provided in that applicable Restricted Stock purchase
agreement, no shares of Restricted Stock may be sold, pledged, assigned or
transferred in any manner other than by will or the laws of descent and distribution
unless and until and all restrictions applicable to such shares of Restricted Stock
(under the Restricted Stock purchase agreement or any other written stockholders or
similar agreement) have lapsed;




     (iii) No Option or Restricted Stock award or interest or right therein shall be
liable for the debts, contracts or engagements of the Holder or his successors in
interest or shall be subject to disposition by transfer, alienation, anticipation,
pledge, encumbrance, assignment or any other means whether such disposition be
voluntary or involuntary or by operation of law by judgment, levy, attachment,
garnishment or any other legal or equitable proceedings (including bankruptcy), and
any attempted disposition thereof shall be null and void and of no effect, except to
the extent that such disposition is permitted by the preceding sentence; and




     (iv) During the lifetime of the Holder, only he may exercise an Option (or any
portion thereof) granted to him under the Plan; after the death of the Holder, any
exercisable portion of an Option may, prior to the time when such portion becomes
unexercisable under the Plan or the applicable Option Agreement, be exercised by his
personal representative or by any person empowered to do so under the deceased
Holder’s will or under the then applicable laws of descent and distribution.




     (b) Notwithstanding Section 11(a), the Administrator, in its sole discretion, may
determine to permit a Holder to transfer a Non-Qualified Stock Option to any one or more
Permitted Transferees (as defined below), subject to the following terms and conditions: (i)
a Non-Qualified Stock Option transferred to a Permitted Transferee shall not be assignable
or transferable by the Permitted Transferee other than by will or the laws of descent and
distribution; (ii) any Non-Qualified Stock Option which is transferred to a Permitted
Transferee shall continue to be subject to all the terms and conditions of the Non-Qualified
Stock Option as applicable to the original Holder, other than the ability to further
transfer the Non-Qualified Stock Option (including any requirement that the Holder execute a
stockholders or similar agreement as a condition to exercising the Non-Qualified Stock
Option); and (iii) the Holder and the Permitted Transferee shall execute any and all
documents requested by the Administrator, including, without limitation, documents to (A)
confirm the status of the transferee as a Permitted Transferee, (B) satisfy any requirements
for an exemption for the transfer under applicable federal and



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state securities laws and (C) evidence the transfer. For purposes of this Section
11(b), “Permitted Transferee” shall mean, with respect to a Holder, any child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, any person sharing the Holder’s household
(other than a tenant or employee), a trust in which these persons (or the Holder) control
the management of assets, and any other entity in which these persons (or the Holder) own
more than fifty percent of the voting interests, or any other transferee specifically
approved by the Administrator after taking into account any state or federal tax or
securities laws applicable to transferable Non-Qualified Stock Options.



     12. Restricted Stock Awards.




     (a) Subject to Section 12(e), Restricted Stock awards may be issued either alone, in
addition to, or in tandem with Options granted under the Plan and/or cash awards made
outside of the Plan. After the Administrator determines that it will offer Restricted Stock
awards under the Plan, it shall, subject to Section 12(e), advise the offeree in writing of
the terms, conditions and restrictions related to the offer, including the number of Shares
that such person shall be entitled to purchase, the price, if any, to be paid, and the time
within which such person must accept such offer. The offer shall be accepted by execution
of a Restricted Stock purchase agreement in the form determined by the Administrator.




     (b) Subject to Section 12(e), the purchase price, if any, for Shares repurchased by the
Company pursuant to such repurchase right and the rate at with such repurchase right or
forfeiture condition shall lapse shall be determined by the Administrator in its sole
discretion, and shall be set forth in the Restricted Stock purchase agreement.




     (c) Subject to Section 12(e), the Restricted Stock purchase agreement shall contain
such other terms, provisions and conditions not inconsistent with the Plan as may be
determined by the Administrator in its sole discretion.




     (d) Except as may otherwise be provided in the Restricted Stock purchase agreement
(which prior to a Public Trading Date shall include, without limitation, restrictions on the
receipt of dividends and voting rights), once shares of Restricted Stock have been awarded
to a Holder, the purchaser shall have rights equivalent to those of a shareholder and shall
be a shareholder when his or her purchase is entered upon the records of the duly authorized
transfer agent of the Company. No adjustment shall be made for a dividend or other right
for which the record date is prior to the date the Restricted Stock is awarded, except as
provided in Section 13 of the Plan.




     (e) As of the Effective Date, all Shares reserved for awards of Restricted Stock shall
be awarded pursuant to the Plan to those individuals set forth on Exhibit C hereto.
The terms and conditions of each such Restricted Stock award shall be set forth in a written
Restricted Stock Agreement entered into by and between the Company and the Holder in
substantially the form attached hereto as Exhibit C-1.



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     13. Adjustments upon Changes in Capitalization, Merger or Asset Sale.




     (a) In the event that the Board determines that any dividend or other distribution
(whether in the form of cash, Common Stock, other securities, or other property),
recapitalization, reclassification, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase, liquidation,
dissolution, or sale, transfer, exchange or other disposition of all or substantially all of
the assets of the Company, or exchange of Common Stock or other securities of the Company,
issuance of warrants or other rights to purchase Common Stock or other securities of the
Company, or other similar corporate transaction or event (including without limitation any
Change in Control), in the Board’s sole discretion, affects the Common Stock such that an
adjustment is determined by the Board to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available under the
Plan or with respect to any Option, Restricted Stock award, then the Board shall, in such
manner as it may deem equitable, adjust any or all of:




     (i) The number and kind of shares of Common Stock (or other securities or
property) with respect to which Options or Restricted Stock awards may be granted or
awarded (including, but not limited to, adjustments of the limitations in Section 3
on the maximum number and kind of shares which may be issued and adjustments of the
maximum number of Shares that may be purchased by any Holder in any calendar year
pursuant to Section 6(c));




     (ii) The number and kind of shares of Common Stock (or other securities or
property) subject to outstanding Options or Restricted Stock awards; and




     (iii) The grant or exercise price with respect to any Option or Restricted
Stock.




     (b) In the event of any transaction or event described in Section 13(a), the Board, in
its sole and absolute discretion, and on such terms and conditions as it deems appropriate,
either by the terms of the Option or Restricted Stock award or by action taken prior to the
occurrence of such transaction or event and either automatically or upon the Holder’s
request, is hereby authorized to take any one or more of the following actions whenever the
Board determines that such action is appropriate in order to prevent dilution or enlargement
of the benefits or potential benefits intended to be made available under the Plan or with
respect to any Option or Restricted Stock award granted or issued under the Plan or to
facilitate such transaction or event:




     (i) To provide for either the purchase of any such Option or Restricted Stock
award for an amount of cash equal to the amount that could have been obtained upon
the exercise of such Option or realization of the Holder’s rights had such Option or
Restricted Stock award been currently exercisable or payable or fully vested or the
replacement of such Option or Restricted Stock award with other rights or property
selected by the Board in its sole discretion;



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     (ii) To provide that such Option shall be exercisable as to all shares covered
thereby, notwithstanding anything to the contrary in the Plan or the provisions of
such Option award;




     (iii) To provide that such Option or Restricted Stock award be assumed by the
successor or survivor corporation, or a parent or subsidiary thereof, or shall be
substituted for by similar options, rights or awards covering the stock of the
successor or survivor corporation, or a parent or subsidiary thereof, with
appropriate adjustments as to the number and kind of shares and prices;




     (iv) To make adjustments in the number and type of shares of Common Stock (or
other securities or property) subject to outstanding Options and Restricted Stock
awards, and/or in the terms and conditions of (including the grant or exercise
price), and the criteria included in, outstanding Options or Restricted Stock awards
which may be granted in the future; and




     (v) To provide that immediately upon the consummation of such event, such
Option or Restricted Stock award shall not be exercisable and shall terminate;
provided, that for a specified period of time prior to such event, such Option or
Restricted Stock award shall be exercisable as to all Shares covered thereby, and
the restrictions imposed under an Option Agreement or Restricted Stock purchase
agreement upon some or all Shares may be terminated and, in the case of Restricted
Stock, some or all shares of such Restricted Stock may cease to be subject to
repurchase, notwithstanding anything to the contrary in the Plan or the provisions
of such Option or Restricted Stock purchase agreement.




     (c) Subject to Section 3, the Board may, in its discretion, include such further
provisions and limitations in any Option or Restricted Stock agreement or certificate, as it
may deem equitable and in the best interests of the Company.




     (d) The existence of the Plan, any Option Agreement or Restricted Stock purchase
agreement and the Options or Restricted Stock granted hereunder shall not affect or restrict
in any way the right or power of the Company or the stockholders of the Company to make or
authorize any adjustment, recapitalization, reorganization or other change in the Company’s
capital structure or its business, any merger or consolidation of the Company, any issue of
stock or of options, warrants or rights to purchase stock or of bonds, debentures, preferred
or prior preference stocks whose rights are superior to or affect the Common Stock or the
rights thereof or which are convertible into or exchangeable for Common Stock, or the
dissolution or liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a similar character
or otherwise.



     14. Time of Granting Options and Restricted Stock Awards. The date of grant of an
Option or Restricted Stock awards shall, for all purposes, be the date on which the Administrator
makes the determination granting such Option or Restricted Stock award, or such other date as is
determined by the Administrator. Notice of the determination shall be given to each Employee



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to whom an Option or Restricted Stock award is so granted within a reasonable time after the
date of such grant.




     15. Amendment and Termination of the Plan.




     (a) Amendment and Termination. The Board may at any time wholly or partially
amend, alter, suspend or terminate the Plan. However, without approval of the Company’s
stockholders given within twelve (12) months before or after the action by the Board, no
action of the Board may, except as provided in Section 13, increase the limits imposed in
Section 3 on the maximum number of Shares which may be issued under the Plan or extend the
term of the Plan under Section 7.




     (b) Stockholder Approval. The Board shall obtain stockholder approval of any
Plan amendment (i) to the extent necessary and desirable to comply with Applicable Laws and
(ii) except with respect to amendments required by changes in Applicable Laws, in all events
prior to the Public Trading Date.




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



     16. Stockholder Approval. The Plan will be submitted for the approval of the
Company’s stockholders within twelve (12) months after the Effective Date. Options or Restricted
Stock awards may be granted or awarded prior to such stockholder approval, provided that such
Options or Restricted Stock awards shall not be exercisable, shall not vest and the restrictions
thereon shall not lapse prior to the time when the Plan is approved by the stockholders.



     17. Inability to Obtain Authority. The inability of the Company to obtain authority
from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of
any liability in respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.



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



     19. Information to Holders and Purchasers. To the extent required by any Applicable
Laws, the Company shall provide to each Holder and to each individual who acquires Shares pursuant
to the Plan, not less frequently than annually during the period such Holder or purchaser has one
or more Options or Restricted Stock awards outstanding, and, in the case of an individual who
acquires Shares pursuant to the Plan, during the period such individual owns such Shares, copies of
annual financial statements. Notwithstanding the preceding sentence, the Company



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shall not be required to provide such statements to key employees whose duties in connection
with the Company assure their access to equivalent information.




     20. Repurchase Provisions. The Administrator in its discretion may provide that the
Company may repurchase Shares acquired upon exercise of an Option or pursuant to a Restricted Stock
award upon a Holder’s termination as a Service Provider; provided, that any such repurchase right
shall be set forth in the applicable Option Agreement or Restricted Stock purchase agreement or in
another agreement referred to in such agreement.



     21. Investment Intent. The Company may require a Plan participant, as a condition of
exercising or acquiring stock under any Option or Restricted Stock award, (i) to give written
assurances satisfactory to the Company as to the participant’s knowledge and experience in
financial and business matters and/or to employ a purchaser representative reasonably satisfactory
to the Company who is knowledgeable and experienced in financial and business matters and that he
or she is capable of evaluating, alone or together with the purchaser representative, the merits
and risks of exercising the Option or purchasing Restricted Stock; and (ii) to give written
assurances satisfactory to the Company stating that the participant is acquiring the stock subject
to the Option or Restricted Stock award for the participant’s own account and not with any present
intention of selling or otherwise distributing the stock. The foregoing requirements, and any
assurances given pursuant to such requirements, shall be inoperative if (A) the issuance of the
shares upon the exercise or acquisition of stock under the applicable Option or Restricted Stock
award has been registered under a then currently effective registration statement under the
Securities Act or (B) as to any particular requirement, a determination is made by counsel for the
Company that such requirement need not be met in the circumstances under the then applicable
securities laws. The Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or appropriate in order to
comply with applicable securities laws, including, but not limited to, legends restricting the
transfer of the stock.



     22. Governing Law. The validity and enforceability of this Plan shall be governed by
and construed in accordance with the laws of the State of New York without regard to otherwise
governing principles of conflicts of law.



     23. Stockholders Agreement. As a condition precedent to the award of any Option or
Restricted Stock award under the Plan, or the exercise or delivery of certificates for Shares
issued pursuant thereto, the Administrator may require any Holder (or the Holder’s successor, as
applicable) to enter into or become a party to a Stockholders Agreement, Subscription Agreement or
a Voting Trust Agreement in such form(s) as the Administrator may determine from time to time (the
“Stockholders Agreement”).




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