Filed by Bowne Pure Compliance



 




Exhibit 10.1




NEUTRON ENTERPRISES, INC.

2007 STOCK INCENTIVE PLAN




1. Purpose.



The purpose of this 2007 Stock Incentive Plan (the “Plan”) of Neutron Enterprises, Inc., a
Nevada corporation (the “Company”), is to promote and closely align the interests of employees of
the Company and its shareholders by providing employees with stock-based compensation and other
performance-based compensation. The Plan is intended to strengthen the Company’s ability to reward
employee performance that enhances long-term shareholder value, increase employee stock ownership
through performance-based compensation plans, and strengthen the Company’s ability to attract and
retain outstanding employees.



Except where the context otherwise requires or as specifically provided herein, the term
“Company” shall include any of the Company’s present or future parent or subsidiary corporations as
defined in Section 424 of the Internal Revenue Code of 1986, as amended, and any regulations
promulgated thereunder (the “Code”), and any other business venture or affiliate in which the
Company has a controlling interest.



2. Administration.



(a) Administration by Board. The Plan will be administered by the board of directors
of the Company (the “Board”). The Board will have full and final authority to operate, manage and
administer the Plan on behalf of the Company. To the extent required for transactions under the
Plan to qualify for the exemptions available under Rule 16b-3 promulgated under the Securities and
Exchange Act of 1934, as amended (the “Exchange Act”), all actions relating to Awards (as defined
in Section 4) to persons subject to Section 16 of the Exchange Act may be taken by the Board or a
Committee composed of two or more members, each of whom is a “non-employee director” within the
meaning of Rule 16b-3 under the Exchange Act. To the extent required for compensation realized
from Awards under the Plan to be deductible by the Company pursuant to Section 162(m) of the Code
(“Section 162(m)”), such Awards may be granted by the Board or a Committee composed of two or more
members, each of whom is an “outside director” within the meaning of Section 162(m).



(b) Authority of Board. Except as provided in the Plan, the Board shall be authorized
and empowered to take all actions necessary or desirable, in its sole discretion, in connection
with the administration of the Plan, including, without limitation, the following:



(1) to prescribe, amend and rescind rules and regulations relating to the Plan and any Awards
and to define terms not otherwise defined herein;



(2) to determine which persons are Participants, to which of such Participants, if any, Awards
shall be granted hereunder, and the timing of any such Awards;



(3) to grant Awards to Participants and determine the terms and conditions thereof, including
the number of shares of Common Stock subject to Awards and the circumstances under which Awards
become exercisable or vested or are forfeited or expire;


 


 









 





(4) to establish, verify the extent of satisfaction of, adjust, reduce or waive any
performance goals or other conditions applicable to the grant, issuance, exercisability, vesting
and/or ability to retain any Award;



(5) to prescribe and amend the terms and conditions of the agreements or other documents
evidencing Awards made under this Plan, which terms and conditions may differ among individual
Awards and participants;



(6) to interpret and construe this Plan, any rules and regulations under this Plan, and the
terms and conditions of any Award granted hereunder, and to make exceptions to any such provisions
in good faith and for the benefit of the Company; and



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



All decisions and interpretations by the Board shall be made in the Board’s sole discretion
and shall be final, binding and conclusive on all persons having or claiming any interest in the
Plan or in any Award. No member or former member of the Board acting pursuant to the authority
delegated by the Board shall be liable for any action or determination made in good faith with
respect to the Plan.



(c) Appointment of Committees. To the extent permitted by applicable law, the Board
may delegate any or all of its powers under the Plan to one or more committees or subcommittees of
the Board (a “Committee”). Action of a Committee may be taken by the vote of a majority of its
members or by the written consent of a majority of its members. All decisions by a Committee shall
be made in the Committee’s sole discretion and shall be final, binding and conclusive on all
persons having or claiming any interest in the Plan or in any Award. A Committee may allocate
among its members and delegate to any director of the Company who is not a member of the Committee
any of its administrative responsibilities. All references in the Plan to the “Board” shall mean
the Board or one or more Committees to the extent the Board has delegated any of its powers or
authority under the Plan to such Committee.



3. Individuals Eligible for Awards.



Awards under the Plan may be made to the following individuals: (i) employees, officers or
directors of the Company, (ii) consultants or advisors to the Company, and (iii) individuals who
have entered into an agreement with the Company under which they will be employed by the Company in
the future. Each individual who is eligible to participate in the Plan or has been granted an
Award under the Plan shall be deemed a “Participant.”



4. Awards Available Under the Plan.



Awards may be made under the Plan in the form of: (i) options, (ii) stock appreciation rights,
(iii) restricted stock, (iv) restricted stock units, (v) unrestricted stock, and (vi) other
equity-based or equity-related awards that the Board determines to be consistent with the purpose
of the Plan and the interests of the Company (each award together with the written agreement
containing the terms and conditions of the award, an “Award”).


 


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5. Stock Available for Awards.



(a) Number of Shares. Awards may be made under the Plan for up to 6,000,000 shares of
common stock, $.001 par value per share, of the Company (the “Common Stock”). If: (i) any Award
expires or is terminated, surrendered or canceled without having been fully exercised or is
forfeited in whole or in part (including as the result of shares of Common Stock subject to such
Award being repurchased by the Company at the original issuance price pursuant to a contractual
repurchase right), (ii) any Award results in any Common Stock not being issued (including, without
limitation, when an Award is settled for cash), (iii) shares of Common Stock are surrendered or
withheld from any Award to satisfy a Participant’s income tax or other withholding obligation, or
(iv) shares of Common Stock owned by a Participant are tendered to pay the exercise price of any
Award granted under the Plan, then in each such case the shares of Common Stock covered by such
forfeited, terminated or canceled Award or that are equal to the number of shares surrendered,
withheld or tendered shall again become available for transfer pursuant to Awards granted or to be
granted under the Plan, subject, however, in the case of Incentive Stock Options (as hereinafter
defined), to any limitations under the Code. Shares issued under the Plan may consist in whole or
in part of authorized but unissued shares or treasury shares.



(b) Substitute Awards. The Board may grant Awards in tandem with or in substitution
for any other Award granted under this Plan or any award granted under any other plan of the
Company. The Board may grant Awards under the Plan in substitution for stock and stock-based
awards held by employees of another corporation who concurrently become employees of the Company as
the result of a merger or consolidation of the employing corporation with the Company or the
acquisition by the Company of property or stock of the employing corporation. The Board may direct
that the substitute Awards be granted on such terms and conditions as the Board considers
appropriate in the circumstances.



6. Stock Options.



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



(b) Incentive Stock Options. An Option that the Board intends to be an “incentive
stock option” as defined in Section 422 of the Code (an “Incentive Stock Option”) shall only be
granted to employees of the Company, any of the Company’s present or future parent or subsidiary
corporations as defined in Sections 424(e) or (f) of the Code and any other entities the employees
of which are eligible to receive Incentive Stock Options under the Code, and shall be subject to
and shall be construed consistently with the requirements of Section 422 of the Code. To the
extent required for “incentive stock option” treatment under Section 422 of the Code, the aggregate
fair market value as determined by, or in a manner approved by, the Board in good faith (“Fair
Market Value”), determined as of the time of grant, of the shares of Common Stock



 


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with respect to which Incentive Stock Options granted under the Plan and any other plan of the
Company become exercisable for the first time by a Participant during any calendar year shall not
exceed $100,000. The Company shall have no liability to a Participant, or any other party, if an
Option, or any part thereof, that is intended to be an Incentive Stock Option is not an Incentive
Stock Option.



(c) Exercise Price. The Board shall establish the exercise price of an Option at the
time each Option is granted and specify it in the applicable Award; provided, however, that the
exercise price shall not be less than 100% of the fair market value of the Common Stock, as
determined by the Board, at the time the Option is granted; and provided further, that if the
Option granted is an Incentive Stock Option, the exercise price shall be not less than 100% of the
fair market value of the Common Stock, as determined by the Board, at the time the Incentive Stock
Option is granted. If an employee owns or is deemed to own, by reason of the attribution rules
applicable under Section 424(d) of the Code, more than ten percent (10%) of the combined voting
power of all classes of stock of the Company and an Incentive Stock Option is granted to such
employee, the exercise price shall be not less than 110% of the fair market value of the Common
Stock, as determined by the Board, at the time the Option is granted.



(d) Duration. Each Option shall be exercisable at such times and subject to such
terms and conditions as the Board may specify in the applicable Award; provided, however, that no
Option will be granted for a term in excess of 10 years. If an employee owns or is deemed to own,
by reason of the attribution rules applicable under Section 424(d) of the Code, more than ten
percent (10%) of the combined voting power of all classes of stock of the Company and an Incentive
Stock Option is granted to such employee, the term of such option shall be no more than five (5)
years from the date of grant.



(e) Exercisability; Rights of Stockholder. Options shall become vested and
exercisable at such time or times, whether or not in installments, as shall be determined by the
Board. In the alternative, the Board may specify that an Option shall become vested and
exercisable upon the achievement of such performance goals, objectives and other conditions as it
may establish at the time of grant. A Participant shall have the rights of a stockholder only as
to shares of Common Stock acquired upon the exercise of a Option and not as to shares of Common
Stock underlying unexercised Options.



(f) Restrictions. The Board shall determine, with respect to each Option to be
granted, the nature and extent of the restrictions, if any, to be imposed on the shares of Common
Stock that may be purchased thereunder. Without limiting the generality of the foregoing, the
Board may impose conditions restricting absolutely or conditionally the transferability of shares
of Common Stock acquired through the exercise of Options for such periods, and subject to such
conditions, including continued employment of the Participant by the Company, as the Board may
determine.



(g) Method of Exercise. Options may be exercised in whole or in part by delivering
written notice of exercise to the Company specifying the number of shares to be purchased and
signed by the proper person, or by any other form of notice, including electronic notice, approved
by the Board, together with payment in full of the aggregate exercise price for the number of
shares for which the Option is exercised.


 


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(h) Methods of Payment. Common Stock purchased upon the exercise of an Option granted
under the Plan may be paid for as follows:



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



(2) if the shares of Common Stock underlying the Option are registered under the Securities
Act, except as the Board may, in its sole discretion, otherwise provide in an Award, by: (i)
delivery of an irrevocable and unconditional undertaking by a creditworthy broker to deliver
promptly to the Company sufficient funds to pay the exercise price and any required tax
withholding, or (ii) delivery by the Participant to the Company of a copy of irrevocable and
unconditional instructions to a creditworthy broker to deliver promptly to the Company the exercise
price and any required tax withholding;



(3) by delivery of such shares of Common Stock owned by the Participant valued at their Fair
Market Value, provided (i) such method of payment is then permitted under applicable law, (ii) such
shares of Common Stock were owned by the Participant at least six months prior to such delivery,
and (iii) such shares of Common Stock are not subject to any repurchase, forfeiture, unfulfilled
vesting or other similar requirements or restrictions (any such shares satisfying all of the
requirements set forth in subsections (i), (ii) and (iii), “Mature Shares”);



(4) by reducing the number of shares of Common Stock otherwise issuable under the Option to
the Participant upon the exercise of the Option by a number of shares of Common Stock having a Fair
Market Value equal to such aggregated exercise price; provided, however, that such method of
payment is then permitted under applicable law;



(5) to the extent permitted by applicable law and by the Board, in its sole discretion, by:
(i) delivery of a promissory note of the Participant to the Company on terms determined by the
Board, or (ii) payment of such other lawful consideration as the Board may determine; or




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



The delivery of certificates representing the shares of Common Stock to be purchased pursuant
to the exercise of an Option will be contingent upon receipt from the Participant (or a purchaser
acting in his stead in accordance with the provisions of the Option) by the Company of the full
purchase price for the shares and the fulfillment of any other requirements contained in the Option
or imposed by applicable law.



7. Stock Appreciation Rights.



(a) General. The Board may grant Awards entitling the holder on exercise thereof to
acquire: (i) a number of shares of Common Stock, (ii) an equivalent amount of cash, or (iii) a
combination of Common Stock and cash, as determined by the Board in its sole discretion, determined
in whole or in part by reference to the appreciation, from and after the date of grant, in the Fair
Market Value of a share of Common Stock (each, a “SAR”), with such rights and subject to such
restrictions and conditions as the Board may determine at the time of grant.


 


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(b) Exercise Price. The Board shall establish the exercise price at the time each SAR
is granted and specify it in the applicable Award; provided, however, that the exercise price shall
be not less than 100% of the fair market value of the Common Stock, as determined by the Board, at
the time the SAR is granted.



(c) Calculation of Appreciation. Upon exercise, the Participant shall receive a
number of shares of Common Stock, an amount of cash, or a combination of Common Stock and cash,
having an aggregate Fair Market Value equal to the product of: (i) the sum of: (x) the Fair Market
Value of a share of Common Stock on the date of the Participant’s request, less (y) the exercise
price per share of Common Stock specified in such SAR, multiplied by (ii) the number of shares of
Common Stock for which such SAR shall be exercised.



(d) Exercisability; Rights of Stockholder. SARs shall become vested and exercisable
at such time or times, whether or not in installments, as shall be determined by the Board. In the
alternative, the Board may specify that a SAR shall become vested and exercisable upon the
achievement of such performance goals, objectives and other conditions as it may establish at the
time of grant. A Participant shall have the rights of a stockholder only as to shares of Common
Stock acquired upon the exercise of a SAR and not as to shares of Common Stock underlying
unexercised SARs.



(e) Restrictions. The Board shall determine, with respect to each SAR to be granted,
the nature and extent of the restrictions, if any, to be imposed on any shares of Common Stock that
may be purchased thereunder. Without limiting the generality of the foregoing, the Board may
impose conditions restricting absolutely or conditionally the transferability of shares of Common
Stock acquired through the exercise of SARs for such periods, and subject to such conditions,
including continued employment of the Participant by the Company, as the Board may determine.



(f) Method of Exercise. SARs may be exercised in whole or in part by delivering
written notice of exercise to the Company specifying the number of shares to be purchased and
signed by the proper person, or by any other form of notice, including electronic notice, approved
by the Board.



8. Restricted Stock.



(a) General. The Board may grant Awards entitling recipients to acquire, for such
purchase price, if any, as may be determined by the Board, shares of Common Stock (“Restricted
Stock”) with such rights and subject to such restrictions and conditions as the Board may determine
at the time of grant.



(b) Acceptance of Award. A Participant who is granted Restricted Stock shall have no
rights with respect to such Award unless the Participant shall have accepted the Award within 60
days (or such shorter date as the Board may specify) following the date of the Award by making
payment to the Company of the specified purchase price, if any, of the shares covered by the Award
and by executing and delivering to the Company a written instrument that sets forth the terms and
conditions applicable to the Restricted Stock in such form as the Board shall determine.


 


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(c) Vesting of Restricted Stock. Shares of Restricted Stock shall become vested and
exercisable at such time or times, whether or not in installments, as shall be determined by the
Board. In the alternative, the Board may specify that the shares of Restricted Stock shall become
vested and exercisable upon the achievement of such performance goals, objectives and other
conditions as it may establish at the time of grant. Subsequent to such date or dates and/or the
attainment of such pre-established performance goals, objectives and other conditions, the shares
on which all restrictions have lapsed shall no longer be Restricted Stock and shall be deemed
“vested.”



(d) Rights as a Stockholder. Upon complying with the provisions of this Section 8, a
Participant shall have all the rights of a stockholder with respect to the Restricted Stock,
including voting and dividend rights, subject to non-transferability restrictions and Company
repurchase or forfeiture rights described in the Plan and subject to such other conditions
contained in the Award. Unless the Board shall otherwise determine, certificates evidencing shares
of Restricted Stock shall remain in the possession of the Company until such shares are vested as
provided in Section 8(c) below.



(e) Restrictions. In the event of termination of employment by the Company for any
reason, including death, Disability, Retirement and for Cause, the Company shall have the right, at
the discretion of the Board, to repurchase shares of Restricted Stock that have not then vested at
their purchase price, or to require forfeiture of such shares to the Company if acquired at no
cost, from the Participant or the Participant’s legal representative or legatee. Unless otherwise
specified in the Award, the Company must exercise such right of repurchase or forfeiture within 90
days following such termination of employment.



(f) Waiver, Deferral and Reinvestment of Dividends. The written instrument evidencing
the Award may require or permit the immediate payment, waiver, deferral or investment of dividends
paid on the Restricted Stock.



9. Restricted Units.



(a) General. The Board may grant Awards entitling recipients to acquire in the
future: (i) shares of Common Stock, (ii) an equivalent amount of cash, or (iii) a combination of
shares of Common Stock and cash, as determined by the Board in its sole discretion, with such
rights and subject to such restrictions and conditions as the Board may determine at the time of
grant, (each, a “Restricted Unit”; together with Restricted Stock, a “Restricted Award”).



(b) Vesting of Restricted Units. Restricted Units shall become vested and exercisable
at such time or times, whether or not in installments, as shall be determined by the Board. In the
alternative, the Board may specify that a Restricted Unit shall become vested and exercisable upon
the achievement of such performance goals, objectives and other conditions as it may establish at
the time of grant.



(c) No Rights as Stockholder. A Participant holding Restricted Units shall not have
the rights of a stockholder with respect to the shares of Common Stock, if any, issuable under such
Restricted Units, unless and until such shares are issued to the Participant pursuant to the
provisions of the Restricted Units and this Plan.


 


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10. Unrestricted Stock.



The Board may grant Awards entitling recipients to acquire, for such purchase price, if any,
as may be determined by the Board, shares of Common Stock free of any vesting restrictions or
conditions under the Plan (“Unrestricted Stock”) at a purchase price determined by the Board if
such shares of Common Stock are registered under the Securities Act. Shares of Unrestricted Stock
may be granted or sold in respect of past services or other valid consideration.



11. Other Stock-Based Awards.



The Board may grant other types of equity-based or equity-related Awards in such amounts and
subject to such terms and conditions as the Board may determine. Such Awards may entail the
transfer of actual shares of Common Stock to Participants or payment in cash or otherwise of
amounts based on the value of shares of Common Stock, and may include, without limitation, Awards
designed to comply with or take advantage of the applicable local laws of jurisdictions other than
the United States.



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



(a) Changes in Capitalization. In the event of any stock split, reverse stock split,
stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off or
other similar change in capitalization or event, or any distribution to holders of shares of Common
Stock other than an ordinary cash dividend: (i) the number and class of securities available under
this Plan, (ii) the number and class of securities and exercise price per share subject to each
Option then outstanding, (iii) the repurchase price per share of Common Stock subject to each
Restricted Award then outstanding, and (iv) the terms of each other stock-based Award then
outstanding, shall be adjusted appropriately by the Company, or substituted Awards may be made, if
applicable, to the extent the Board shall determine, in good faith, that such an adjustment or
substitution is necessary or appropriate. Any adjustment under this Section 12(a) shall become
effective at the close of business on the date the subdivision or combination becomes effective, or
as of the record date of such dividend, or in the event that no record date is fixed, upon the
making of such dividend. If this Section 12(a) applies and Section 12(c) also applies to any
event, Section 12(c) shall be applicable to such event, and this Section 12(a) shall not be
applicable.



(b) Liquidation or Dissolution. In the event the shareholders of the Company approve
a plan of complete liquidation or dissolution of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company’s assets, the Board shall
provide that: (i) except to the extent specifically provided to the contrary in any Award, all then
unexercised Options and SARs outstanding will: (A) become exercisable in full as of a specified
time at least 10 business days prior to the effective date of such liquidation, dissolution, sale
or disposition, and (B) terminate effective upon such liquidation, dissolution, sale or
disposition, except to the extent exercised before such effective date, and (ii) except to the
extent specifically provided to any Restricted Award, all restrictions and conditions on all
Restricted Awards then outstanding shall automatically be deemed terminated or satisfied.



(c) Reorganization and Change in Control Events.


 


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(1) Definitions.




(a) A “Reorganization Event” shall mean:




(i) any merger or consolidation of the Company with or into another entity as a result
of which all of the outstanding shares of Common Stock are converted into or exchanged for
the right to receive cash, securities or other property; or




(ii) any exchange of all of the outstanding shares of Common Stock for cash, securities
or other property pursuant to a share exchange transaction.




(b) A “Change in Control Event” shall mean:




(i) the acquisition by an individual, entity or group within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act (each, a “Person”) of beneficial ownership of any
capital stock of the Company if, after such acquisition, such Person beneficially owns
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) 30% or more of either
(x) the then-outstanding shares of common stock of the Company (the “Outstanding Common
Stock”) or (y) the combined voting power of the then-outstanding securities of the Company
entitled to vote generally in the election of directors (the “Outstanding Voting
Securities”); provided, however, that for purposes of this subsection (i), the following
acquisitions shall not constitute a Change in Control Event: (A) any acquisition directly
from the Company (excluding an acquisition pursuant to the exercise, conversion or exchange
of any security exercisable for, convertible into or exchangeable for common stock or voting
securities of the Company, unless the Person exercising, converting or exchanging such
security acquired such security directly from the Company or an underwriter or agent of the
Company), (B) any acquisition by any employee benefit plan or related trust sponsored or
maintained by the Company or any corporation controlled by the Company, or (C) any
acquisition by any corporation pursuant to a Business Combination (as defined in Section
12(c)(1)(b)(iii) below) that complies with clauses (x) and (y) of subsection (iii) of this
definition;




(ii) an event that results in the Continuing Directors (as defined below) not
constituting a majority of the Board (or, if applicable, the board of directors of a
successor corporation to the Company). “Continuing Director” means, at any date, a member
of the Board: (x) who was a member of the Board on the date of the initial adoption of this
Plan by the Board, or (y) who was nominated or elected subsequent to such date by at least a
majority of the directors who were Continuing Directors at the time of such nomination or
election or whose election to the Board was recommended or endorsed by at least a majority
of the directors who were Continuing Directors at the time of such nomination or election;
provided, however, that there shall be excluded from this clause (y) any individual whose
initial assumption of office occurred as a result of an actual or threatened election
contest with respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents, by or on behalf of a person other than the Board; or


 


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(iii) the consummation of a merger, consolidation, reorganization, recapitalization or
share exchange involving the Company or a sale or other disposition of all or substantially
all of the assets of the Company (a “Business Combination”), unless, immediately following
such Business Combination, each of the following two conditions is satisfied: (x) all or
substantially all of the individuals and entities who were the beneficial owners of the
Outstanding Common Stock and Outstanding Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more than 50% of the
then-outstanding shares of common stock and the combined voting power of the
then-outstanding securities entitled to vote generally in the election of directors,
respectively, of the resulting or acquiring corporation in such Business Combination, which
shall include, without limitation, a corporation that as a result of such transaction owns
the Company or all or substantially all of the Company’s assets either directly or through
one or more subsidiaries (such resulting or acquiring corporation is referred to herein as
the “Acquiring Corporation”) in substantially the same proportions as their ownership of the
Outstanding Common Stock and Outstanding Voting Securities, respectively, immediately prior
to such Business Combination, and (y) no Person (excluding the Acquiring Corporation or any
employee benefit plan or related trust maintained or sponsored by the Company or by the
Acquiring Corporation) beneficially owns, directly or indirectly, 30% or more of the
then-outstanding shares of common stock of the Acquiring Corporation, or of the combined
voting power of the then-outstanding securities of such corporation entitled to vote
generally in the election of directors (except to the extent that such ownership existed
prior to the Business Combination).


 


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(2) Effect on Options and SARs.



(a) Reorganization Event. Upon the occurrence of a Reorganization Event (regardless
of whether such event also constitutes a Change in Control Event), or the execution by the Company
of any agreement with respect to a Reorganization Event (regardless of whether such event will
result in a Change in Control Event), the Board shall provide that all outstanding Options and SARs
shall be assumed, or equivalent options shall be substituted, by the acquiring or succeeding
corporation (or an affiliate thereof); provided, however, that if such Reorganization Event also
constitutes a Change in Control Event, except to the extent specifically provided to the contrary
in the instrument evidencing any Option or SAR or any other agreement between a Participant and the
Company, such assumed or substituted options shall be immediately exercisable in full upon the
occurrence of such Reorganization Event. For purposes hereof, an Option or SAR shall be considered
to be assumed if, following consummation of the Reorganization Event, the Option or SAR confers the
right to purchase, for each share of Common Stock subject to the Option or SAR immediately prior to
the consummation of the Reorganization Event, the consideration (whether cash, securities or other
property) received as a result of the Reorganization Event by holders of Common Stock for each
share of Common Stock held immediately prior to the consummation of the Reorganization Event (and
if holders were offered a choice of consideration, the type of consideration chosen by the holders
of a majority of the outstanding shares of Common Stock); provided, however, that if the
consideration received as a result of the Reorganization Event is not solely common stock of the
acquiring or succeeding corporation (or an affiliate thereof), the Company may, with the consent of
the acquiring or succeeding corporation (or an affiliate thereof), provide for the consideration to
be received upon the exercise of Options and SARs to consist solely of common stock of the
acquiring or succeeding corporation (or an affiliate thereof) equivalent in fair market value to
the per share consideration received by holders of outstanding shares of Common Stock as a result
of the Reorganization Event.



Notwithstanding the foregoing, if the acquiring or succeeding corporation (or an affiliate
thereof) does not agree to assume, or substitute for, such Options and SARs, then the Board shall,
upon written notice to the Participants, provide that all then unexercised Options and SARs will
become exercisable in full as of a specified time prior to the Reorganization Event and will
terminate immediately prior to the consummation of such Reorganization Event, except to the extent
exercised by the Participants before the consummation of such Reorganization Event; provided,
however, that in the event of a Reorganization Event under the terms of which holders of Common
Stock will receive upon consummation thereof a cash payment for each share of Common Stock
surrendered pursuant to such Reorganization Event (the “Acquisition Price”), then the Board may
instead provide that all outstanding Options and SARs shall terminate upon consummation of such
Reorganization Event and that each Participant shall receive, in exchange therefor, a cash payment
equal to the amount (if any) by which: (A) the Acquisition Price multiplied by the number of shares
of Common Stock subject to such outstanding Options and SARs (whether or not then exercisable),
exceeds (B) the aggregate exercise price of such Options.



(b) Change in Control Event that is not a Reorganization Event. Upon the occurrence
of a Change in Control Event that does not also constitute a Reorganization
Event, except to the extent specifically provided to the contrary in any Option or SAR Award,
all Options and SARs then outstanding shall automatically become immediately exercisable in full.


 


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(3) Effect on Restricted Awards and Awards of Unrestricted Stock.



(a) Reorganization Event that is not a Change in Control Event. Upon the occurrence of
a Reorganization Event that is not a Change in Control Event, the repurchase and other rights of
the Company under each outstanding Restricted Award shall inure to the benefit of the Company’s
successor and shall apply to the cash, securities or other property that the Common Stock was
converted into or exchanged for pursuant to such Reorganization Event in the same manner and to the
same extent as they applied to the Common Stock subject to such Restricted Award.



(b) Change in Control Event. Upon the occurrence of a Change in Control Event
(regardless of whether such event also constitutes a Reorganization Event), except to the extent
specifically provided to the contrary in the Restricted Award, all restrictions and conditions on
all Restricted Awards then outstanding shall automatically be deemed terminated or satisfied.



(d) Notice of Adjustment. When any adjustment is required to be made in under this
Section 12, the Company shall promptly notify the Participant of such event and of the number of
shares of Common Stock or other securities or property thereafter owned or that may be acquired
under an Award.



(e) No Impairment. The Company and the Participant will not, by any voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Company or the Participant, respectively, but will at all times in good
faith assist in the carrying out of all the provisions of this Section 12 and in the taking of all
such action as may be necessary or appropriate in order to protect the rights or the Company and
the Participant against impairment



13. Termination of Awards.



(a) Termination by Death. If any Participant’s employment by, or other relationship
with, the Company terminates by reason of death: (i) any Options or SARs then owned by such
Participant may thereafter be exercised, to the extent exercisable at the date of death by the
legal representative or legatee of the Participant, until the earlier of the date that is one year
(or such longer period as the Board shall specify at any time) after the date of death or until the
date of expiration of the stated term of the Options or SARs, if earlier, and (ii) any restrictions
and conditions on any Restricted Awards then owned by the Participant shall automatically be deemed
terminated or satisfied on the date of death, and the legal representative or legatee of the
Participant shall have the right to acquire any shares of Common Stock underlying the Restricted
Awards until the earlier of the date that is one year (or such longer period as the Board shall
specify at any time) after the date of death or until the expiration of the stated term of the
Restricted Award.



(b) Termination by Reason of Disability or Retirement.


 


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(1) If a Participant’s employment by, or other relationship with, the Company terminates by
reason of disability as set forth in Section 22(e)(3) of the Code (“Disability”): (i) any Options
or SARs then owned by such Participant may thereafter be exercised, to the extent they were
exercisable at the time of such termination of employment, until the earlier of the date that is
one year (or such longer period as the Board shall specify at any time) after the date of such
termination of employment or the date of expiration of the stated term of the Options or SARs, and
(ii) any restrictions and conditions on any Restricted Awards then owned by the Participant shall
automatically be deemed terminated or satisfied on the date of such termination of employment, and
the legal representative or guardian of the Participant shall have the right to acquire any shares
of Common Stock underlying the Restricted Awards until the earlier of the date that is one year (or
such longer period as the Board shall specify at any time) after the date of such termination of
employment or the date of expiration of the stated term of the Restricted Award.



(2) If a Participant retires in good standing from active employment or service with the
Company in accordance with the retirement policies of the Company then in effect (“Retirement”),
(i) any Options and SARs then held by the Participant may thereafter be exercised, to the extent
they were exercisable at the time of such termination, until the earlier of the date that is three
months (or such longer period as the Board shall specify at any time) after the date of such
Retirement or until the date of expiration of the stated term of the Options or SARs, and (ii) any
restrictions and conditions on any Restricted Awards then owned by the Participant shall
automatically be deemed terminated or satisfied on the date of such Retirement and the Participant
shall have the right to acquire any shares of Common Stock underlying the Restricted Awards until
the earlier of the date that is three months (or such longer period as the Board shall specify at
any time) after the date of such Retirement or the date of expiration of the stated term of the
Restricted Award.



(3) The Board shall have sole authority and discretion to determine whether a Participant’s
employment or services has been terminated by reason of Disability or Retirement.



(c) Termination for Cause. If a Participant’s employment by, or other relationship
with, the Company terminates for “Cause,” any Options, SARs and Restricted Awards held by such
Participant shall immediately terminate and be of no further force and effect; provided, however,
that the Board may, in its sole discretion, provide that any such Options and SARs may be exercised
until the earlier of the date that is three months after the date of such termination (or such
longer period as the Board shall specify at any time) of employment or the date of expiration of
the stated term of the Options or SARs.



“Cause” shall have the meaning ascribed to such term in any written employment, consulting,
advisory or other agreement between the applicable Participant and the Company; provided, however,
that if no such agreement exists or, if such agreement exists but no such term is provided or
defined therein, “Cause” shall mean a determination by the Company (including the Board) that the
Participant’s employment or other relationship with the Company should be terminated as a result
of: (i) a material breach by the Participant of any agreement to which the Participant and the
Company are parties, (ii) any act, other than Retirement, or omission to act by the Participant
that may have a material and adverse effect on the business of the Company or on the Participant’s
ability to perform services for the Company, including, without limitation, the
proven or admitted commission of any crime (other than an ordinary traffic violation), or (iii) any
material misconduct or material neglect of duties by the Participant in connection with the
business or affairs of the Company.


 


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(d) Other Termination. Except as provided under the Plan or under the terms of any
Award, if a Participant’s employment by, or other relationship with, the Company terminates for any
reason other than death, Disability, Retirement or for Cause: (i) any Options and SARs held by such
Participant may thereafter be exercised, to the extent they are exercisable on the date of
termination of employment, until the earlier of the date that is 90 days (or such longer period as
the Board shall specify at any time) after the date of such termination of employment or the date
of expiration of the stated term of the Options and SARs, and (ii) any restrictions and conditions
on any Restricted Awards then owned by the Participant shall automatically be deemed terminated or
satisfied on the date of such Retirement and the Participant shall have the right to acquire any
shares of Common Stock underlying the Restricted Awards until the earlier of the date that is 90
days (or such longer period as the Board shall specify at any time) after the date of such
termination of employment or the date of expiration of the stated term of the Restricted Award.



(e) Transfer and Leave of Absence. For purposes of the Plan, the following events
shall not be deemed a termination of employment: (i) a transfer of employment between any of the
Company, a parent, a subsidiary or any other affiliate of the Company, and (ii) an approved leave
of absence for military service or sickness, or for any other purpose approved by the Board, if the
employee’s right to re-employment is guaranteed by a statute, by contract or under the policy
pursuant to which the leave of absence was granted, or if the Board otherwise so provides in
writing.



14. Withholding.



(a) Payment by Participant. Each Participant shall pay to the Company, or make
arrangements satisfactory to the Board regarding payment of, any federal, state, local, provincial
and/or payroll taxes of any kind required by law to be withheld with respect to such income. The
Company may, to the extent permitted by law, deduct any such taxes from any payment of any kind
otherwise due to a Participant whether or not pursuant to the Plan.



(b) Payment in Shares. A Participant may elect, with the consent of the Board, to
have such tax withholding obligation satisfied, in whole or in part, by (i) authorizing the Company
to withhold from shares of Common Stock to be issued pursuant to an Award a number of shares of
Common Stock having an aggregate Fair Market Value that would satisfy the minimum withholding
amount due with respect to such Award, or (ii) delivering to the Company a number of Mature Shares
with an aggregate Fair Market Value that would satisfy the minimum withholding amount due. The
Company may require that any fractional share amount be settled in cash. For the purposes of this
Section 14(b), Fair Market Value shall be determined as of the date on which the amount of tax to
be withheld is determined.



(c) Notice of Disqualifying Disposition. If any Participant shall make any
disposition of shares of Common Stock delivered pursuant to the exercise of an Incentive Stock
Option under the circumstances described in Section 421(b) of the Code (relating to certain
disqualifying dispositions), such Participant shall notify the Company of such disposition
within 10 days thereof.


 


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15. Status of Participant. With respect to the portion of any Award that has not been
exercised and any payments in cash, shares of Common Stock or other consideration not received by a
Participant, a Participant shall have no rights greater than those of a general unsecured creditor
of the Company unless the Board shall otherwise expressly determine in connection with an Award.
The Board may, in its sole discretion, authorize the creation of trusts or other arrangements to
meet the Company’s obligations to deliver shares of Common Stock or make payments with respect to
Awards hereunder, provided that the existence of such trusts or other arrangements is consistent
with the provision of the preceding sentence.



16. General Provisions Applicable to Awards.



(a) Transferability of Awards. Except as the Board may otherwise determine or provide
in an Award or as otherwise provided in the Plan, no Award or any right or obligation thereunder
may be sold, exchanged, transferred, assigned, pledged, hypothecated or otherwise encumbered or
disposed of, whether voluntarily or involuntarily, by the person to whom they are granted, except
by will or the laws of descent and distribution. Awards shall be exercisable only during the life
of the Participant to whom an Award was granted and only by the Participant or the Participant’s
legal representative. References to a Participant, to the extent relevant in the context, shall
include references to authorized transferees. Notwithstanding the immediately proceeding three (3)
sentences, the Board may permit a Participant to transfer any Award to any person or entity that
the Board so determines under such terms and conditions that it deems appropriate in its sole
discretion. Any assignment in violation of the provisions of this Section 16(a) shall be void.
All of the terms and conditions of this Plan and any Awards shall be binding upon any such
permitted successors and assigns of the Participant.



(b) Agreements Evidencing Awards. Each Award granted under the Plan shall be
evidenced by a written document that shall contain such provisions and conditions as the Board
deems appropriate. By accepting an Award pursuant to the Plan, a Participant thereby agrees that
the Award shall be subject to all of the terms and provisions of the Plan and the applicable Award.



(c) Non-Uniform Determinations. Except as otherwise provided by the Plan, each Award
may be made alone or in addition to or in relation to any other Award. The terms of each Award
need not be identical, and the Board need not treat Participants uniformly, regardless of whether
such persons are similarly situated. Without limiting the generality of the foregoing, the Board
shall be entitled, among other things, to make non-uniform and selective determinations when
issuing Awards, and to grant non-uniform and selective Awards as to: (i) the persons to receive
Awards, (ii) the terms and provisions of Awards, and (iii) whether a Participant’s employment has
been terminated for purposes of the Plan.



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


 


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(e) Delivery of Shares. The Company will not be obligated to deliver any shares of
Common Stock pursuant to the Plan or to remove restrictions from shares previously delivered under
the Plan until: (i) all conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company’s counsel, all other legal matters in connection with
the issuance and delivery of such shares have been satisfied, including any applicable securities
laws and any applicable stock exchange or stock market rules and regulations, and (iii) the
Participant has executed and delivered to the Company such representations or agreements as the
Company may consider appropriate to satisfy the requirements of any applicable laws, rules or
regulations. The Board may, at any time, provide that, at the time any shares of Common Stock
would otherwise be delivered pursuant to an Award, the Participant shall instead receive an
instrument evidencing the right to future delivery of shares of Common Stock at such time or times,
and on such conditions, as the Board shall specify. The Board may at any time accelerate the time
at which delivery of all or any part of the shares of Common Stock shall take place.



(f) Stock Certificates. Any stock certificates issued in respect of a Restricted
Stock Award shall be registered in the name of the Participant and, unless otherwise determined by
the Board, deposited by the Participant, together with a stock power endorsed in blank, with the
Company or the Company’s designee. At the expiration of the applicable restriction periods, the
Company or such designee shall deliver the certificates no longer subject to such restrictions to
the Participant or if the Participant has died, to the Participant’s legal representative or
legatee. Delivery of stock certificates to Participants under this Plan shall be deemed effected
for all purposes when the Company or a stock transfer agent of the Company shall have delivered
such certificates in the United States mail, addressed to the Participant, at the Participant’s
last known address on file with the Company.



17. Miscellaneous




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



(b) Nature of Payments. Any and all grants of Awards and deliveries of shares of
Common Stock, cash, securities or other property under the Plan shall be in consideration of
services performed or to be performed for the Company by the Participant. Awards under the Plan
may, in the discretion of the Board, be made in substitution in whole or in part for cash or other
compensation otherwise payable to a Participant. All such grants and deliveries shall constitute a
special discretionary incentive payment to the Participant and shall not be required to be taken
into account in computing the amount of salary or compensation of the Participant for the purpose
of determining any contributions to or any benefits under any pension, retirement, profit-sharing,
bonus, life insurance, severance or other benefit plan of the Company or under any agreement with
the Participant, unless the Company specifically provides otherwise.


 


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(c) No Rights As Stockholder. Subject to the provisions of the applicable Award, no
Participant or Designated Beneficiary shall have any rights as a stockholder with respect to any
shares of Common Stock to be distributed with respect to an Award until delivery of the shares to
the Participant or the Participant’s legal representative or legatee. In the event the Company
effects a split of the shares of Common Stock by means of a stock dividend and the exercise price
of and the number of shares subject to an Option are adjusted as of the date of the distribution of
the dividend (rather than as of the record date for such dividend), a Participant who exercises an
Option between the record date and the distribution date for such stock dividend shall be entitled
to receive, on the distribution date, the stock dividend with respect to the shares of Common Stock
acquired upon such Option exercise, notwithstanding the fact that such shares were not outstanding
as of the close of business on the record date for such stock dividend.



(d) Effective Date of Plan. The Plan shall become effective on the date on which it
is adopted by the Board; provided, however, that: (i) no Award granted to a Participant shall
become effective until any shareholder approval of the Company to issue the underlying securities
necessary under applicable legal, regulatory or listing requirements shall be obtained, and (ii) no
Award granted to a Participant that is intended to comply with Section 162(m) shall become
exercisable, vested or realizable, as applicable to such Award, unless and until the Plan has been
approved by the Company’s stockholders to the extent stockholder approval is required by Section
162(m) in the manner required under Section 162(m).



(e) Entire Agreement. This Plan and any Award contain the entire agreement between
the parties with respect to the subject matter hereof and supercede all prior agreements and
understandings, both written and oral, between the parties with respect to the subject matter
hereof, and no party shall be liable or bound to any other party in any manner by any warranties,
representations, guarantees or covenants except as specifically set forth in the Plan and any
Award. Nothing in this Agreement, express or implied, is intended to confer upon any party other
than the parties hereto or their respective successors and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as expressly provided in
this Agreement.



(f) Amendment of Plan or Award. The Board may at any time amend or discontinue the
Plan and amend or cancel any outstanding Award, including in any manner that adversely affects the
rights, duties or obligations of any Participant, and including but not limited to, substituting
therefor another Award of the same or a different type, changing the date of exercise or
realization, converting an Incentive Stock Option to a Nonstatutory Stock Option, and converting an
Option into a SAR, for the purpose of satisfying changes in law or for any other lawful purpose.
Unless otherwise determined by the Board, stockholder approval of any suspension, discontinuance,
revision or amendment shall be obtained only to the extent necessary to comply with any applicable
law, rule or regulation. To the extent required by Section 162(m), no Award granted to a
Participant that is intended to comply with Section 162(m) after the date of such amendment shall
become exercisable, realizable or vested, as applicable to such Award, unless and until such
amendment shall have been approved by the Company’s stockholders if required by Section 162(m)
(including the vote required under Section 162(m)). No Award shall be made that is conditioned
upon stockholder approval of any amendment to the Plan.


 


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(g) Severability. If any provision of the Plan or any Award or the application
thereof to any person or circumstance is held to be invalid or unenforceable to any extent, the
remainder of the Plan or any Award shall remain in full force and effect and shall be reformed to
render the Agreement valid and enforceable while reflecting to the greatest extent permissible the
intent of the parties.



(h) Successors and Assigns. The terms and conditions of the Plan and any Award shall
be binding upon and inure to the benefit of the Company and its successors and assigns.



(i) Termination of Plan. The Plan shall terminate upon the tenth anniversary of its
effective date. The Board may terminate the Plan at any time prior to such date. No Award may be
granted under the Plan after the Plan has been terminated. No Award granted while this Plan is in
effect shall be altered or impaired by termination of the Plan, except upon the consent of the
holder of such Award. The power of the Board to construe and interpret this Plan and the Awards
granted prior to the termination of the Plan shall continue after such termination.



(j) Other Compensatory Arrangements. Neither the adoption of the Plan by the Board
nor the submission of the Plan to the shareholders of the Company for approval shall be construed
as creating any limitations on the power of the Board to adopt such other incentive arrangements as
it may deem desirable, and such arrangements may be either generally applicable or applicable only
in specific cases.



(k) Consents and Legal Requirements. If the Board shall at any time determine that
any Consent (as defined below) is necessary or desirable as a condition of, or in connection with,
the granting of any Award, the delivery of shares of Common Stock, or the delivery of any cash,
securities or other property under the Plan, or the taking of any other action thereunder (each
such action being hereinafter referred to as a “Plan Action”), then such Plan Action shall not be
taken, in whole or in part, unless and until such Consent shall have been effected or obtained to
the full satisfaction of the Board. The Board may require each person acquiring shares of Common
Stock pursuant to an Award to represent to and agree with the Company in writing that such person
is acquiring the shares for investment purposes only and without a view to distribution thereof.
The Board may also direct that any certificate evidencing shares delivered pursuant to the Plan
shall bear a legend setting forth such restrictions on transferability as the Board may determine
to be necessary or desirable, and may advise the transfer agent to place a stop order against any
legended shares.



“Consent” as use herein with respect to any Plan Action includes (i) any and all listings,
registrations or qualifications in respect thereof upon any securities exchange or under any
federal, state or local law, or law, rule or regulation of a jurisdiction outside the United
States, (ii) any and all written agreements and representations by the Participant with respect to
the disposition of shares, or with respect to any other matter, which the Committee may deem
necessary or desirable to comply with the terms of any such listing, registration or qualification,
or to obtain an exemption from the requirement that any such listing, registration or qualification
be made, (iii) any and all other consents, clearances and approvals in respect of a plan action by
any governmental or other regulatory body or any stock exchange or self-regulatory agency, and (iv)
any and all consents or authorizations required to comply with, or required to be obtained
under, applicable local law or otherwise required by the Board. Nothing herein shall require the
Company to list, register or qualify the shares of Common Stock on any securities exchange.


 


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(l) Section 83(b) Election. No election under Section 83(b) of the Code (relating to
the inclusion of gross income in the year of transfer the amounts specified in such Code section)
or under a similar provision of the law of a jurisdiction outside the United States may be made
unless expressly permitted by the terms of the Award or by action of the Board in writing prior to
the making of such election. If a Participant, in connection with the acquisition of shares of
Common Stock under the Plan or otherwise, is expressly permitted under the terms of the Award or by
such Board action to make any such election and the Participant makes the election, the Participant
shall notify the Board of such election within 10 days of filing notice of the election with the
Internal Revenue Service or other governmental authority, in addition to any filing or notification
required pursuant to the regulations issued under Section 83(b) of the Code or other applicable
provision.



(m) Absence of Third-Party Beneficiary Rights. Unless expressly provided in the Plan
or any Award, no provision of the Plan or any Award is intended, nor will be interpreted, to
provide or create any third-party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, officer, director, shareholder, employee, partner of any party hereto or any
other person or entity, and, except as so provided, all provisions hereof and thereof will be
solely between the parties to the Plan and any Award.



(n) Provisions for Foreign Participants. The Board may modify the terms and
conditions of Awards granted to Participants who are foreign nationals or employed outside the
United States, establish sub-plans under the Plan, or adopt such modifications or procedures as the
Board may determine to be necessary or advisable, to recognize differences in laws, rules,
regulations or customs of such foreign jurisdictions with respect to tax, securities, currency,
employee benefit, accounting or other matters.



(o) Liability of the Company. The Company and any affiliate that is in existence or
hereafter comes into existence shall not be liable to a Participant or other persons as to: (i) the
non-issuance or sale of shares of Common Stock as to which the Company has been unable to obtain
approval from any regulatory body having jurisdiction deemed by the Company’s counsel to be
necessary to the lawful issuance and sale of any shares of Common Stock hereunder, and (ii) any tax
consequence expected, but not realized, by any Participant or other person due to the receipt,
exercise or settlement of any Option, SAR or other Award granted hereunder.



(p) Governing Law. This Plan and any Award shall be governed by and construed in
accordance with the laws of the State of Nevada, without regard to the laws that might otherwise
govern under applicable principles of conflicts of laws thereof.




 


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