Document:

ex10_1.htm

    
      

    

    Exhibit
10.1

     

    Procera
Networks, Inc.

     

    2007
Equity Incentive Plan

     

    Approved
by the Board:  October 17, 2007

    Approved
by the Stockholders: January 30, 2008

    Termination
Date: October 17,2017

     

    
      	
              1.

            	
              General.

            

    

     

    (a)        Successor and Continuation of Prior
Plans.  The Plan is intended as the successor to and
continuation of the Procera Networks, Inc. 2003 Stock Option Plan and 2004 Stock
Option Plan, as amended (the “Prior
Plans”).  Following the Effective Date, no additional stock
awards shall be granted under the Prior Plans.  Any shares remaining
available for future awards under the Prior Plans as of the Effective Date (the
“Prior Plan
Available Reserve”) shall become available for issuance pursuant to
Awards granted hereunder.  From and after the Effective Date, any
shares subject to outstanding stock awards granted under the Prior Plans that
expire or terminate for any reason prior to exercise or settlement (the “Returning
Shares”) shall become available for issuance pursuant to Awards granted
hereunder.  From and after the Effective Date, all outstanding stock
awards granted under the Prior Plans shall remain subject to the terms of the
Prior Plans with respect to which they were originally granted and shares
issuable under such awards shall be issued from such Prior Plans. All Awards
granted subsequent to the effective date of this Plan shall be subject to the
terms of this Plan.

     

    (b)        Eligible Award
Recipients.  The persons eligible to receive Awards are
Employees, Directors and Consultants.

     

    (c)        Available
Awards.  The Plan provides for the grant of the following
Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii)
Restricted Stock Awards, (iv) Restricted Stock Unit Awards, (v) Stock
Appreciation Rights, (vi) Performance Stock Awards, (vii) Performance Cash
Awards and (viii) Other Stock Awards.

     

    (d)        Purpose.  The
Company, by means of the Plan, seeks to secure and retain the services of the
group of persons eligible to receive Awards as set forth in Section 1(b), to
provide incentives for such persons to exert maximum efforts for the success of
the Company and any Affiliate, and to provide a means by which such eligible
recipients may be given an opportunity to benefit from increases in value of the
Common Stock through the granting of Stock Awards.

     

    
      	
              2.

            	
              Administration.

            

    

     

    (a)        Administration by
Board.  The Board shall administer the Plan unless and until
the Board delegates administration of the Plan to a Committee or Committees, as
provided in Section 2(c).

     

    (b)        Powers of
Board.  The Board shall have the power, subject to, and within
the limitations of, the express provisions of the Plan:

     

    (i)          To
determine from time to time (A) which of the persons eligible under the Plan
shall be granted Awards; (B) when and how each Award shall be granted; (C) what
type or combination of types of Awards shall be granted; (D) the provisions of
each Award granted (which need not be identical), including the time or times
when a person shall be permitted to receive cash or Common Stock pursuant to an
Award; and (E) the number of shares of Common Stock with respect to which a
Stock Award shall be granted to each such person.

     

    (ii)         To
construe and interpret the Plan and Awards granted under it, and to establish,
amend and revoke rules and regulations for its administration.  The
Board, in the exercise of this power, may correct any defect, omission or
inconsistency in the Plan or in any Stock Award Agreement or in the written
terms of a Performance Cash Award, in a manner and to the extent it shall deem
necessary or expedient to make the Plan or Award fully effective.

     

    (iii)       To
settle all controversies regarding the Plan and Awards granted under
it.

     

    (iv)        To
accelerate the time at which a Stock Award may first be exercised or the time
during which an Award or any part thereof will vest in accordance with the Plan,
notwithstanding the provisions in the Award stating the time at which it may
first be exercised or the time during which it will vest.

     

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    (v)          To
effect, at any time and from time to time, with the consent of any adversely
affected Participant, (1) the reduction of the exercise price of any outstanding
Option or the strike price of any outstanding Stock Appreciation Right; (2) the
cancellation of any outstanding Option or Stock Appreciation Right and the grant
in substitution therefor of (a) a new Option or Stock Appreciation Right under
the Plan or another equity plan of the Company covering the same or different
number of shares of Common Stock, (b) a Restricted Stock Award, (c) a Restricted
Stock Unit Award, (d) an Other Stock Award, (e) cash, and/or (f) other valuable
consideration as determined by the Board in its sole discretion; or (3) any
other action that is treated as a repricing under generally accepted accounting
principles.

     

    (vi)        To
suspend or terminate the Plan at any time.  Suspension or termination
of the Plan shall not impair rights and obligations under any Award granted
while the Plan is in effect except with the written consent of the affected
Participant.

     

    (vii)       To
amend the Plan in any respect the Board deems necessary or advisable, including,
without limitation, relating to Incentive Stock Options and certain nonqualified
deferred compensation under Section 409A of the Code and/or to bring the Plan or
Awards granted under the Plan into compliance therewith, subject to the
limitations, if any, of applicable law. However, except as provided in Section
9(a) relating to Capitalization Adjustments, stockholder approval shall be
required for any amendment of the Plan that either (i) materially increases the
number of shares of Common Stock available for issuance under the Plan, (ii)
materially expands the class of individuals eligible to receive Awards under the
Plan, (iii) materially increases the benefits accruing to Participants under the
Plan or materially reduces the price at which shares of Common Stock may be
issued or purchased under the Plan, (iv) materially extends the term of the
Plan, or (v) expands the types of Awards available for issuance under the Plan,
but in each of (i) through (v) only to the extent required by applicable law or
listing requirements. Except as provided above, rights under any Award granted
before amendment of the Plan shall not be impaired by any amendment of the Plan
unless (i) the Company requests the consent of the affected Participant, and
(ii) such Participant consents in writing.

     

    (viii)      To
submit any amendment to the Plan for stockholder approval, including, but not
limited to, material amendments to the Plan intended to satisfy the requirements
of (i) Section 162(m) of the Code and the regulations thereunder regarding the
exclusion of performance-based compensation from the limit on corporate
deductibility of compensation paid to Covered Employees, (ii) Section 422 of the
Code regarding Incentive Stock Options, or (iii) Rule 16b-3.

     

    (ix)        To
approve forms of Award Agreements for use under the Plan and to amend the terms
of any one or more Awards, including, but not limited to, amendments to provide
terms more favorable than previously provided in the Award Agreement, subject to
any specified limits in the Plan that are not subject to Board discretion; provided however, that, the
rights under any Award shall not be impaired by any such amendment unless (i)
the Company requests the consent of the affected Participant, and (ii) such
Participant consents in writing.  Notwithstanding the foregoing,
subject to the limitations of applicable law, if any, and without the affected
Participant’s consent, the Board may amend the terms of any one or more Awards,
or correct any clerical errors, if necessary to maintain the qualified status of
the Stock Award as an Incentive Stock Option or to bring the Award into
compliance with Section 409A of the Code and the related guidance
thereunder.

     

    (x)         Generally,
to exercise such powers and to perform such acts as the Board deems necessary or
expedient to promote the best interests of the Company and that are not in
conflict with the provisions of the Plan or Awards.

     

    (xi)        To
adopt such procedures and sub-plans as are necessary or appropriate to permit
participation in the Plan by Employees, Directors or Consultants who are foreign
nationals or employed outside the United States.

     

    
      	
               
      

            	
              (c)

            	
              Delegation
      to Committee.

            

    

     

    (i)          General.  The Board
may delegate some or all of the administration of the Plan to a Committee or
Committees.  If administration is delegated to a Committee, the
Committee shall have, in connection with the administration of the Plan, the
powers theretofore possessed by the Board that have been delegated to the
Committee, including the power to delegate to a subcommittee of the Committee
any of the administrative powers the Committee is authorized to exercise (and
references in the Plan to the Board shall thereafter be to the Committee or
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.  The Board may retain the authority to concurrently administer
the Plan with the Committee and may, at any time, revest in the Board some or
all of the powers previously delegated.

     

    (ii)         Section 162(m) and Rule 16b-3
Compliance.  In the sole discretion of the Board, the Committee
may consist solely of two or more Outside Directors, in accordance with Section
162(m) of the Code, and/or solely of two or more Non-Employee Directors, in
accordance with Rule 16b-3.  In addition, the Board or the Committee,
in its sole discretion, may (A) delegate to a Committee who need not be Outside
Directors the authority to grant Awards to eligible persons who are either (I)
not then Covered Employees and are not expected to be Covered Employees at the
time of recognition of income resulting from such Award, or (II) not persons
with respect to whom the Company wishes to comply with Section 162(m) of the
Code, and/or (B) delegate to a Committee who need not be Non-Employee Directors
the authority to grant Awards to eligible persons who are not then subject to
Section 16 of the Exchange Act.

     

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    (d)        Delegation to
Officers.  The Board may delegate to one or more Officers the
authority to do one or both of the following (i) designate Officers and
Employees of the Company or any of its Subsidiaries to be recipients of Options
(and, to the extent permitted by applicable law, other Awards) and the terms
thereof, and (ii) determine the number of shares of Common Stock to be subject
to such Stock Awards granted to such Officers and Employees; provided, however, that the
Board resolutions regarding such delegation shall specify the total number of
shares of Common Stock that may be subject to the Stock Awards granted by such
Officers and that such Officer may not grant a Stock Award to himself or
herself.  Notwithstanding anything to the contrary in this Section
2(d), the Board may not delegate to an Officer authority to determine the Fair
Market Value of the Common Stock pursuant to Section 13(x)(ii)
below.

     

    (e)        Effect of Board’s Decision.
All determinations, interpretations and constructions made by the Board in good
faith shall not be subject to review by any person and shall be final, binding
and conclusive on all persons.

     

    
      	
              3.

            	
              Shares
      Subject to the Plan.

            

    

     

    (a)        Share Reserve. Subject to the
provisions of Section 9(a) relating to Capitalization Adjustments, the aggregate
number of shares of common stock of the Company that may be issued pursuant to
Stock Awards under the Plan shall not exceed 5,000,000 shares of Common Stock,
plus an additional number of shares in an amount not to exceed 7,378,480,
comprised of: (i) that number of shares subject to the Prior Plan Available
Reserve plus (ii) the Returning Shares (as such shares become available from
time to time).  Shares may be issued in connection with a merger or
acquisition as permitted by NASD Rule 4350(i)(1)(A)(iii) or, if applicable, NYSE
Listed Company Manual Section 303A.08, or AMEX Company Guide Section 711 and
such issuance shall not reduce the number of shares available for issuance under
the Plan.

     

    (b)        Reversion of Shares to the Share
Reserve.  If any (i) Stock Award shall for any reason expire or
otherwise terminate, in whole or in part, without having been exercised in full,
(ii) shares of Common Stock issued to a Participant pursuant to a Stock Award
are forfeited back to or repurchased by the Company because of the failure to
meet a contingency or condition required for the vesting of such shares, (iii) a
Stock Award is settled in cash, (iv) if any shares of Common Stock are cancelled
in accordance with the cancellation and regrant provisions of Section 3(b)(v),
then the shares of Common Stock not issued under such Stock Award, or forfeited
to or repurchased by the Company, shall revert to and again become available for
issuance under the Plan.  If any shares subject to a Stock Award are
not delivered to a Participant because such shares are withheld for the payment
of taxes or the Stock Award is exercised through a reduction of shares subject
to the Stock Award (i.e., “net exercised”) or an appreciation distribution in
respect of a Stock Appreciation right is paid in shares of Common Stock, the
number of shares subject to the Stock Award that are not delivered to the
Participant shall remain available for subsequent issuance under the
Plan.  If the exercise price of any Stock Award is satisfied by
tendering shares of Common Stock held by the Participant (either by actual
delivery or attestation), then the number of shares so tendered shall remain
available for issuance under the Plan.

     

    (c)        Incentive Stock Option
Limit.  Notwithstanding anything to the contrary in this
Section 3(c), subject to the provisions of Section 9(a) relating to
Capitalization Adjustments the aggregate maximum number of shares of Common
Stock that may be issued pursuant to the exercise of Incentive Stock Options
shall be 12,378,480 shares of Common Stock immediately following the Effective
Date of the Plan.

     

    (d)        Source of
Shares.  The stock issuable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock, including shares repurchased
by the Company on the open market.

     

    
      	
              4.

            	
              Eligibility.

            

    

     

    (a)        Eligibility for Specific Stock
Awards.  Incentive Stock Options may be granted only to
employees of the Company or a “parent corporation” or “subsidiary corporation”
thereof (as such terms are defined in Sections 424(e) and 424(f) of the
Code).  Stock Awards other than Incentive Stock Options may be granted
to Employees, Directors and Consultants.

     

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    (b)          
 Ten Percent
Stockholders.  A Ten Percent Stockholder shall not be granted
an Incentive Stock Option unless the exercise price of such Option is at least
one hundred ten percent (110%) of the Fair Market Value of the Common Stock on
the date of grant and the Option is not exercisable after the expiration of five
(5) years from the date of grant.

     

    (c)          
 Section 162(m)
Limitation.  Subject to the provisions of Section 9(a) relating
to Capitalization Adjustments, at such time as the Company may be subject to the
applicable provisions of Section 162(m) of the Code, no Employee shall be
eligible to be granted during any calendar year Stock Awards whose value is
determined by reference to an increase over an exercise or strike price of at
least one hundred percent (100%) of the Fair Market Value of the Common Stock on
the date the Stock Award is granted covering more than 1,500,000 shares of
Common Stock. 

     

    (d)        Consultants.  A
Consultant shall be eligible for the grant of a Stock Award only if, at the time
of grant, (i) a Form S-8 Registration Statement under the Securities Act or a
successor or similar form under the Securities Act (“Form S-8”)
is available to register either the offer or the sale of the Company’s
securities to such Consultant because of the nature of the services that the
Consultant is providing to the Company, because the Consultant is a natural
person, or because of any other rule governing the use of Form S-8, (ii) such
grant complies with the requirements of Rule 701 of the Securities Act, or (iii)
the Company determines that such grant will otherwise comply with the securities
laws of all relevant jurisdictions.

     

    
      	
              5.

            	
              Option
      Provisions.

            

    

     

    Each
Option shall be in such form and shall contain such terms and conditions as the
Board shall deem appropriate.  All Options shall be separately
designated Incentive Stock Options or Nonstatutory Stock Options at the time of
grant, and, if certificates are issued, a separate certificate or certificates
shall be issued for shares of Common Stock purchased on exercise of each type of
Option.  If an Option is not specifically designated as an Incentive
Stock Option, then the Option shall be a Nonstatutory Stock
Option.  The provisions of separate Options need not be identical;
provided, however, that
each Option Agreement shall conform to (through incorporation of provisions
hereof by reference in the Option Agreement or otherwise) the substance of each
of the following provisions:

     

    (a)        Term.  Subject to
the provisions of Section 4(b) regarding Ten Percent Stockholders, no Option
shall be exercisable after the expiration of ten (10) years from the date of its
grant or such shorter period specified in the Option Agreement.

     

    (b)        Exercise
Price.  Subject to the provisions of Section 4(b) regarding Ten
Percent Stockholders, and notwithstanding anything in the Option Agreement to
the contrary, the exercise price of each Option shall be not less than one
hundred percent (100%) of the Fair Market Value of the Common Stock subject to
the Option on the date the Option is granted.  Notwithstanding the
foregoing, an Option may be granted with an exercise price lower than one
hundred percent (100%) of the Fair Market Value of the Common Stock subject to
the Option if such Option is granted pursuant to an assumption or substitution
for another option in a manner consistent with the provisions of Sections 409A
and 424(a) of the Code (whether or not such options are Incentive Stock
Options).

     

    (c)        Consideration.  The
purchase price of Common Stock acquired pursuant to the exercise of an Option
shall be paid, to the extent permitted by applicable law and as determined by
the Board in its sole discretion, by any combination of the methods of payment
set forth below. The Board shall have the authority to grant Options that do not
permit all of the following methods of payment (or otherwise restrict the
ability to use certain methods) and to grant Options that require the consent of
the Company to utilize a particular method of payment.  The methods of
payment permitted by this Section 5(c) are:

     

    (i)          by
cash, check, bank draft or money order payable to the Company;

     

    (ii)         pursuant
to a program developed under Regulation T as promulgated by the Federal Reserve
Board that, prior to the issuance of the stock subject to the Option, results in
either the receipt of cash (or check) by the Company or the receipt of
irrevocable instructions to pay the aggregate exercise price to the Company from
the sales proceeds;

     

    (iii)       by
delivery to the Company (either by actual delivery or attestation) of shares of
Common Stock;

     

    (iv)        by
a “net exercise” arrangement pursuant to which the Company will reduce the
number of shares of Common Stock issuable upon exercise by the largest whole
number of shares with a Fair Market Value that does not exceed the aggregate
exercise price; provided,
however, that the Company shall accept a cash or other permitted payment
from the Participant to the extent of any remaining balance of the aggregate
exercise price not satisfied by such reduction in the number of whole shares to
be issued; provided,
further, that shares of Common Stock will no longer be outstanding under
an Option and will not be exercisable thereafter to the extent that (A) shares
are used to pay the exercise price pursuant to the “net exercise,” (B) shares
are delivered to the Participant as a result of such exercise, and (C) shares
are withheld to satisfy tax withholding obligations;  or

     

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    (v)          in
any other form of legal consideration that may be acceptable to the Board in its
sole discretion and permissible under applicable law.

     

    (d)        Transferability of
Options.  The Board may, in its sole discretion, impose such
limitations on the transferability of Options as the Board shall
determine.  If the Board determines that an Option will be
transferable, the Option will contain such additional terms and conditions as
the Board deems appropriate.  In the absence of such a determination
by the Board to the contrary, the following restrictions on the transferability
of Options shall apply:

     

    (i)          Restrictions on
Transfer.  An Option shall not be transferable except by will
or by the laws of descent and distribution and shall be exercisable during the
lifetime of the Optionholder only by the Optionholder; provided, however, that the
Board may, in its sole discretion, permit transfer of the Option in a manner
that is consistent with applicable tax and securities laws upon the
Optionholder’s request.

     

    (ii)        Domestic Relations
Orders.  Notwithstanding the foregoing, an Option may be
transferred pursuant to a domestic relations order, provided, however, that if an
Option is an Incentive Stock Option, such Option may be deemed to be a
Nonstatutory Stock Option as a result of such transfer.

     

    (iii)       Beneficiary Designation.
Notwithstanding the foregoing, the Optionholder may, by delivering written
notice to the Company, in a form provided by or otherwise satisfactory to the
Company and any broker designated by the Company to effect Option exercises,
designate a third party who, in the event of the death of the Optionholder,
shall thereafter be entitled to exercise the Option.  In the absence
of such a designation, the executor or administrator of the Optionholder’s
estate shall be entitled to exercise the Option.

     

    (e)        Vesting of Options
Generally.  The total number of shares of Common Stock subject
to an Option may vest and therefore become exercisable in periodic installments
that may or may not be equal.  The Option may be subject to such other
terms and conditions on the time or times when it may or may not be exercised
(which may be based on the satisfaction of Performance Goals or other criteria)
as the Board may deem appropriate.  The vesting provisions of
individual Options may vary.  The provisions of this Section 5(e) are
subject to any Option provisions governing the minimum number of shares of
Common Stock as to which an Option may be exercised.

     

    (f)        Termination of Continuous
Service.  Except as otherwise provided in the applicable Option
Agreement or other agreement between the Optionholder and the Company, in the
event that an Optionholder’s Continuous Service terminates (other than for Cause
or upon the Optionholder’s death or Disability), the Optionholder may exercise
his or her Option (to the extent that the Optionholder was entitled to exercise
such Option as of the date of termination of Continuous Service) but only within
such period of time ending on the date three (3) months following the
termination of the Optionholder’s Continuous Service, or (ii) the expiration of
the term of the Option as set forth in the Option Agreement.  If,
after termination of Continuous Service, the Optionholder does not exercise his
or her Option within the time specified herein or in the Option Agreement (as
applicable), the Option shall terminate.

     

    (g)        Extension of Termination
Date.  An Optionholder’s Option Agreement may provide that if
the exercise of the Option following the termination of the Optionholder’s
Continuous Service (other than for Cause or upon the Optionholder’s death or
Disability) would be prohibited at any time solely because the issuance of
shares of Common Stock would violate the registration requirements under the
Securities Act, then the Option shall terminate on the earlier of (i) the
expiration of a period of three (3) months after the termination of the
Optionholder’s Continuous Service during which the exercise of the Option would
not be in violation of such registration requirements and would not subject the
Optionholder to short-swing liability under Section 16(b) of the Exchange Act,
or (ii) the expiration of the term of the Option as set forth in the Option
Agreement.

     

    (h)        Disability of
Optionholder.  In the event that an Optionholder’s Continuous
Service terminates as a result of the Optionholder’s Disability, the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise such Option as of the date of termination of Continuous
Service), but only within such period of time ending on the earlier of (i) the
date twelve (12) months following such termination of Continuous Service (or
such longer or shorter period specified in the Option Agreement), or (ii) the
expiration of the term of the Option as set forth in the Option
Agreement.  If, after termination of Continuous Service, the
Optionholder does not exercise his or her Option within the time specified
herein or in the Option Agreement (as applicable), the Option shall
terminate.

     

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    (i)         Death of
Optionholder.  In the event that (i) an Optionholder’s
Continuous Service terminates as a result of the Optionholder’s death, or (ii)
the Optionholder dies within the period (if any) specified in the Option
Agreement after the termination of the Optionholder’s Continuous Service for a
reason other than death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise such Option as of the date of death) by
the Optionholder’s estate, by a person who acquired the right to exercise the
Option by bequest or inheritance or by a person designated to exercise the
option upon the Optionholder’s death, but only within the period ending on the
earlier of (i) the date eighteen (18) months following the date of death (or
such longer or shorter period specified in the Option Agreement); or (ii) the
expiration of the term of such Option as set forth in the Option
Agreement.  If, after the Optionholder’s death, the Option is not
exercised within the time specified herein or in the Option Agreement (as
applicable), the Option shall terminate.

     

    (j)         Termination for
Cause.  Except as otherwise explicitly provided in an
Optionholder’s Option Agreement, in the event that an Optionholder’s Continuous
Service is terminated for Cause, the Option shall terminate immediately and
cease to remain outstanding.

     

    (k)       Non-Exempt
Employees.  No Option granted to an Employee that is a
non-exempt employee for purposes of the Fair Labor Standards Act shall be first
exercisable for any shares of Common Stock until at least six months following
the date of grant of the Option.  The foregoing provision is intended
to operate so that any income derived by a non-exempt employee in connection
with the exercise or vesting of an Option will be exempt from his or her regular
rate of pay.

     

    
      	
              6.

            	
              Provisions
      of Stock Awards other than Options.

            

    

     

    (a)        Restricted Stock
Awards.  Each Restricted Stock Award Agreement shall be in such
form and shall contain such terms and conditions as the Board shall deem
appropriate.  To the extent consistent with the Company’s Bylaws, at
the Board’s election, shares of Common Stock may be (x) held in book entry form
subject to the Company’s instructions until any restrictions relating to the
Restricted Stock Award lapse; or (y) evidenced by a certificate, which
certificate shall be held in such form and manner as determined by the
Board.  The terms and conditions of Restricted Stock Award Agreements
may change from time to time, and the terms and conditions of separate
Restricted Stock Award Agreements need not be identical, provided, however, that each
Restricted Stock Award Agreement shall conform to (through incorporation of the
provisions hereof by reference in the agreement or otherwise) the substance of
each of the following provisions:

     

    (i)          Consideration.  A
Restricted Stock Award may be awarded in consideration for (A) cash, check, bank
draft or money order payable to the Company; (B) past or future services
actually or to be rendered to the Company or an Affiliate; or (C) any other form
of legal consideration that may be acceptable to the Board in its sole
discretion and permissible under applicable law.

     

    (ii)        
Vesting.  Shares of
Common Stock awarded under a Restricted Stock Award Agreement may be subject to
forfeiture to the Company in accordance with a vesting schedule to be determined
by the Board.

     

    (iii)       Termination of Participant’s
Continuous Service.  In the event a Participant’s Continuous
Service terminates, the Company may receive via a forfeiture condition or a
repurchase right, any or all of the shares of Common Stock held by the
Participant which have not vested as of the date of termination of Continuous
Service under the terms of the Restricted Stock Award Agreement.

     

    (iv)        Transferability.  Rights
to acquire shares of Common Stock under the Restricted Stock Award Agreement
shall be transferable by the Participant only upon such terms and conditions as
are set forth in the Restricted Stock Award Agreement, as the Board shall
determine in its sole discretion, so long as Common Stock awarded under the
Restricted Stock Award Agreement remains subject to the terms of the Restricted
Stock Award Agreement.

     

    (b)        Restricted Stock Unit
Awards.  Each Restricted Stock Unit Award Agreement shall be in
such form and shall contain such terms and conditions as the Board shall deem
appropriate.  The terms and conditions of Restricted Stock Unit Award
Agreements may change from time to time, and the terms and conditions of
separate Restricted Stock Unit Award Agreements need not be identical, provided, however, that each
Restricted Stock Unit Award Agreement shall conform to (through incorporation of
the provisions hereof by reference in the agreement or otherwise) the substance
of each of the following provisions:

     

    (i)           Consideration.  At
the time of grant of a Restricted Stock Unit Award, the Board will determine the
consideration, if any, to be paid by the Participant upon delivery of each share
of Common Stock subject to the Restricted Stock Unit Award. The consideration to
be paid (if any) by the Participant for each share of Common Stock subject to a
Restricted Stock Unit Award may be paid in any form of legal consideration that
may be acceptable to the Board in its sole discretion and permissible under
applicable law.

     

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    (ii)         Vesting.  At the
time of the grant of a Restricted Stock Unit Award, the Board may impose such
restrictions or conditions to the vesting of the Restricted Stock Unit Award as
it, in its sole discretion, deems appropriate.

     

    (iii)       Payment.  A
Restricted Stock Unit Award may be settled by the delivery of shares of Common
Stock, their cash equivalent, any combination thereof or in any other form of
consideration, as determined by the Board and contained in the Restricted Stock
Unit Award Agreement.

     

    (iv)        Additional
Restrictions.  At the time of the grant of a Restricted Stock
Unit Award, the Board, as it deems appropriate, may impose such restrictions or
conditions that delay the delivery of the shares of Common Stock (or their cash
equivalent) subject to a Restricted Stock Unit Award to a time after the vesting
of such Restricted Stock Unit Award.

     

    (v)          Dividend
Equivalents.  Dividend equivalents may be credited in respect
of shares of Common Stock covered by a Restricted Stock Unit Award, as
determined by the Board and contained in the Restricted Stock Unit Award
Agreement.  At the sole discretion of the Board, such dividend
equivalents may be converted into additional shares of Common Stock covered by
the Restricted Stock Unit Award in such manner as determined by the
Board.  Any additional shares covered by the Restricted Stock Unit
Award credited by reason of such dividend equivalents will be subject to all the
terms and conditions of the underlying Restricted Stock Unit Award Agreement to
which they relate.

     

    (vi)         Termination of Participant’s
Continuous Service.  Except as otherwise provided in the
applicable Restricted Stock Unit Award Agreement, such portion of the Restricted
Stock Unit Award that has not vested will be forfeited upon the Participant’s
termination of Continuous Service.

     

    (vii)       Compliance with Section 409A of the
Code.  Notwithstanding anything to the contrary set forth
herein, any Restricted Stock Unit Award granted under the Plan that is not
exempt from the requirements of Section 409A of the Code shall contain such
provisions so that such Restricted Stock Unit Award will comply with the
requirements of Section 409A of the Code.  Such restrictions, if any,
shall be determined by the Board and contained in the Restricted Stock Unit
Award Agreement evidencing such Restricted Stock Unit Award.  For
example, such restrictions may include, without limitation, a requirement that
any Common Stock that is to be issued in a year following the year in which the
Restricted Stock Unit Award vests must be issued in accordance with a fixed
pre-determined schedule.

     

    (c)        Stock Appreciation
Rights.  Each Stock Appreciation Right Agreement shall be in
such form and shall contain such terms and conditions as the Board shall deem
appropriate.  Stock Appreciation Rights may be granted as stand-alone
Stock Awards or in tandem with other Stock Awards.  The terms and
conditions of Stock Appreciation Right Agreements may change from time to time,
and the terms and conditions of separate Stock Appreciation Right Agreements
need not be identical; provided, however, that each
Stock Appreciation Right Agreement shall conform to (through incorporation of
the provisions hereof by reference in the agreement or otherwise) the substance
of each of the following provisions:

     

    (i)          Term.  No Stock
Appreciation Right shall be exercisable after the expiration of ten (10) years
from the date of its grant or such shorter period specified in the Stock
Appreciation Right Agreement.

     

    (ii)         Strike Price. Each Stock Appreciation
Right will be denominated in shares of Common Stock
equivalents.  Notwithstanding anything in the applicable Stock Award
Agreement to the contrary, the strike price of each Stock Appreciation Right
shall not be less than one hundred percent (100%) of the Fair Market Value of
the Common Stock equivalents subject to the Stock Appreciation Right on the date
of grant.

     

    (iii)        Calculation of
Appreciation.  The appreciation distribution payable on the
exercise of a Stock Appreciation Right will be not greater than an amount equal
to the excess of (A) the aggregate Fair Market Value (on the date of the
exercise of the Stock Appreciation Right) of a number of shares of Common Stock
equal to the number of share of Common Stock equivalents in which the
Participant is vested under such Stock Appreciation Right, and with respect to
which the Participant is exercising the Stock Appreciation Right on such date,
over (B) the aggregate strike price of the Common Stock equivalents being
exercised.

     

    (iv)        
Vesting.  At
the time of the grant of a Stock Appreciation Right, the Board may impose such
restrictions or conditions to the vesting of such Stock Appreciation Right as
it, in its sole discretion, deems appropriate.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (v)          Exercise.  To
exercise any outstanding Stock Appreciation Right, the Participant must provide
written notice of exercise to the Company in compliance with the provisions of
the Stock Appreciation Right Agreement evidencing such Stock Appreciation
Right.

     

    (vi)        Payment.  The
appreciation distribution in respect of a Stock Appreciation Right may be paid
in Common Stock, in cash, in any combination of the two or in any other form of
consideration, as determined by the Board and set forth in the Stock
Appreciation Right Agreement evidencing such Stock Appreciation
Right.

     

    (vii)       Termination of Continuous
Service.  In the event that a Participant’s Continuous Service
terminates (other than for Cause), the Participant may exercise his or her Stock
Appreciation Right (to the extent that the Participant was entitled to exercise
such Stock Appreciation Right as of the date of termination of Continuous
Service) but only within such period of time ending on the earlier of (A) the
date three (3) months following the termination of the Participant’s Continuous
Service (or such longer or shorter period specified in the Stock Appreciation
Right Agreement), or (B) the expiration of the term of the Stock Appreciation
Right as set forth in the Stock Appreciation Right Agreement.  If,
after termination of Continuous Service, the Participant does not exercise his
or her Stock Appreciation Right within the time specified herein or in the Stock
Appreciation Right Agreement (as applicable), the Stock Appreciation Right shall
terminate.

     

    (viii)      Termination for
Cause.  Except as explicitly provided otherwise in an
Participant’s Stock Appreciation Right Agreement, in the event that a
Participant’s Continuous Service is terminated for Cause, the Stock Appreciation
Right shall terminate upon the termination date of such Participant’s Continuous
Service, and the Participant shall be prohibited from exercising his or her
Stock Appreciation Right from and after the time of such termination of
Continuous Service.

     

    (ix)        Extension of Termination
Date.  If the exercise of the Stock Appreciation Right
following the termination of the Participant’s Continuous Service would either
(A) be prohibited at any time solely because the issuance of shares of Common
Stock would violate the registration requirements under the Securities Act, or
(B) subject the Participant to short-swing liability under Section 16(b) of the
Exchange Act, then the Stock Appreciation Right shall terminate on the earlier
of (x) the expiration of a period of ninety (90) days after the termination of
the Participant’s Continuous Service during which the exercise of the Stock
Appreciation Right would not be in violation of such registration requirements
and would not subject the Participant to short-swing liability under Section
16(b) of the Exchange Act, or (y) the expiration of the term of the Stock
Appreciation Right as set forth in the Stock Appreciation Right
Agreement.

     

    
      	
               
      

            	
              (d)

            	
              Performance
      Awards.

            

    

     

    (i)          Performance Stock
Awards.  A Performance Stock Award is either a Restricted Stock
Award or Restricted Stock Unit Award that may be granted or may vest based upon
the attainment during a Performance Period of certain Performance
Goals.  A Performance Stock Award may, but need not, require the
completion of a specified period of Continuous Service. The length of any
Performance Period, the Performance Goals to be achieved during the Performance
Period, and the measure of whether and to what degree such Performance Goals
have been attained shall be conclusively determined by the Committee in its sole
discretion.  The maximum Performance Stock Award that may be granted
in a calendar year to any Participant pursuant to this Section 6(d)(i) shall not
exceed the value of 750,000 shares of Common Stock (as determined at the time of
grant).  In addition, to the extent permitted by applicable law and
the applicable Award Agreement, the Board may determine that cash may be used in
payment of Performance Stock Awards.

     

    (ii)        Performance Cash
Awards.  A Performance Cash Award is a cash award granted
pursuant to this Section 6(d)(ii) that is paid upon the attainment during a
Performance Period of certain Performance Goals.  A Performance Cash
Award may also require the completion of a specified period of Continuous
Service.  The length of any Performance Period, the Performance Goals
to be achieved during the Performance Period, and the measure of whether and to
what degree such Performance Goals have been attained shall be conclusively
determined by the Committee in its sole discretion.  The maximum
Performance Cash Award that may be granted to a Participant in a calendar year
and made subject to the future attainment of one or more Performance Goals shall
not exceed $1,000,000.  The Board may provide for or, subject to such
terms and conditions as the Board may specify, may permit a Participant to elect
for, the payment of any Performance Cash Award to be deferred to a specified
date or event.  The Committee may specify the form of payment of
Performance Cash Awards, which may be cash or other property, or may provide for
a Participant to have the option for his or her Performance Cash Award, or such
portion thereof as the Board may specify, to be paid in whole or in part in cash
or other property.  In addition, to the extent permitted by applicable
law and the applicable Award Agreement, the Board may determine that Common
Stock authorized under this Plan may be used in payment of Performance Cash
Awards, including additional shares in excess of the Performance Cash Award as
an inducement to hold shares of Common Stock.

     

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    (e)        Other Stock
Awards.  Other forms of Stock Awards valued in whole or in part
by reference to, or otherwise based on, Common Stock (“Other Stock
Awards”) may be granted either alone or in addition to Stock Awards
provided for under Section 5 and the preceding provisions of this Section
6.  Such Other Stock Awards will be subject to a written Award
Agreement between the Company and a holder of an Other Stock Award evidencing
the terms and conditions of an Other Stock Award, and each Other Stock Award
shall be subject to the terms and conditions of the Plan. Subject to the
provisions of the Plan, the Board shall have sole and complete authority to
determine the persons to whom and the time or times at which such Other Stock
Awards will be granted, the number of shares of Common Stock (or the cash
equivalent thereof) to be granted pursuant to such Other Stock Awards and all
other terms and conditions of such Other Stock Awards.

     

    
      	
              7.

            	
              Covenants
      of the Company.

            

    

     

    (a)         Availability of
Shares.  During the terms of the Awards, the Company shall keep
available at all times the number of shares of Common Stock required to satisfy
such Awards.

     

    (b)         Securities Law
Compliance.  The Company shall seek to obtain from each
regulatory commission or agency having jurisdiction over the Plan such authority
as may be required to grant Stock Awards and to issue and sell shares of Common
Stock upon exercise of the Stock Awards; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
the Plan, any Award or any Common Stock issued or issuable pursuant to any such
Award.  If, after reasonable efforts, the Company is unable to obtain
from any such regulatory commission or agency the authority that counsel for the
Company deems necessary for the lawful issuance and sale of Common Stock under
the Plan, the Company shall be relieved from any liability for failure to issue
and sell Common Stock upon exercise of such Awards or make payments of cash or
other property in settlement of Awards unless and until such authority is
obtained.  A Participant shall not be eligible for the grant of a
Stock Award or the subsequent issuance of Common Stock pursuant to the Stock
Award if such grant or issuance would be in violation of any applicable
securities laws.

     

    (c)        No Obligation to
Notify.  The Company shall have no duty or obligation to any
holder of an Award to advise such holder as to the time or manner of exercising
or settling such Award.  Furthermore, the Company shall have no duty
or obligation to warn or otherwise advise such holder of a pending termination
or expiration of an Award or a possible period in which the Award may not be
exercised or settled.  The Company has no duty or obligation to
minimize the tax consequences of an Award to the holder of such
Award.

     

    
      	
              8.

            	
              Miscellaneous.

            

    

     

    (a)        Use of
Proceeds.  Proceeds from the sale of shares of Common Stock
pursuant to Stock Awards shall constitute general funds of the
Company.

     

    (b)        Corporate Action Constituting Grant
of Awards.  Corporate action constituting a grant by the
Company of an Award to any Participant shall be deemed completed as of the date
of such corporate action, unless otherwise determined by the Board, regardless
of when the instrument, certificate, or letter evidencing the Award is
communicated to, or actually received or accepted by, the
Participant.  If the Board determines that the terms of an Award do
not reflect the appropriate exercise, strike or purchase price on the
appropriate date of grant in accordance with the requirements of the Plan, the
terms of the Award shall be automatically corrected to reflect the appropriate
price or other terms provided for under the Plan, as determined by the Board,
without the need for consent of the Participant; provided, however, that no
such correction shall result in a direct or indirect reduction in the exercise
price or strike price of the Award.

     

    (c)        Stockholder
Rights.  No Participant shall be deemed to be the holder of, or
to have any of the rights of a holder with respect to, any shares of Common
Stock subject to an Award unless and until (i) such Participant has satisfied
all requirements for exercise or settlement of the Award pursuant to its terms,
and (ii) the issuance of the Common Stock pursuant to such exercise or
settlement has been entered into the books and records of the
Company.

     

    (d)        No Employment or Other Service
Rights.  Nothing in the Plan, any Award Agreement or other
instrument executed thereunder or in connection with any Award granted pursuant
to the Plan shall confer upon any Participant any right to continue to serve the
Company or an Affiliate in the capacity in effect at the time the Award was
granted or shall affect the right of the Company or an Affiliate to terminate
(i) the employment of an Employee with or without notice and with or without
cause, (ii) the service of a Consultant pursuant to the terms of such
Consultant’s agreement with the Company or an Affiliate, or (iii) the service of
a Director pursuant to the Bylaws of the Company or an Affiliate, and any
applicable provisions of the corporate law of the state in which the Company or
the Affiliate is incorporated, as the case may be.

     

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    (e)        Incentive Stock Option $100,000
Limitation.  To the extent that the aggregate Fair Market Value
(determined at the time of grant) of Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by any Optionholder
during any calendar year (under all plans of the Company and any Affiliates)
exceeds one hundred thousand dollars ($100,000), the Options or portions thereof
that exceed such limit (according to the order in which they were granted) shall
be treated as Nonstatutory Stock Options, notwithstanding any contrary provision
of the applicable Option Agreement(s) or any Board or Committee resolutions
related thereto.

     

    (f)        Investment
Assurances.  The Company may require a Participant, as a
condition of exercising or acquiring Common Stock under any 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 Stock Award; and (ii) to give written assurances
satisfactory to the Company stating that the Participant is acquiring Common
Stock subject to the Award for the Participant’s own account and not with any
present intention of selling or otherwise distributing the Common
Stock.  The foregoing requirements, and any assurances given pursuant
to such requirements, shall be inoperative if (x) the issuance of the shares
upon the exercise or acquisition of Common Stock under the Award has been
registered under a then currently effective registration statement under the
Securities Act, or (y) 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 Common Stock.

     

    (g)        Withholding
Obligations.  Unless prohibited by the terms of an Award
Agreement, the Company may, in its sole discretion, satisfy any federal, state
or local tax withholding obligation relating to an Award by any of the following
means (in addition to the Company’s right to withhold from any compensation paid
to the Participant by the Company) or by a combination of such means: (i)
causing the Participant to tender a cash payment; (ii)  withholding
shares of Common Stock from the shares of Common Stock issued or otherwise
issuable to the Participant in connection with the Award; provided, however, that no
shares of Common Stock are withheld with a value exceeding the minimum amount of
tax required to be withheld by law (or such lower amount as may be necessary to
avoid classification of the Stock Award as a liability for financial accounting
purposes); (iii) withholding cash from an Award settled in cash; (iv)
withholding payment from any amounts otherwise payable to the Participant; or
(v) by such other method as may be set forth in the Award
Agreement.

     

    (h)        Electronic
Delivery.  Any reference herein to a “written” agreement or
document shall include any agreement or document delivered electronically or
posted on the Company’s intranet.

     

    (i)        Deferrals.  To the
extent permitted by applicable law, the Board, in its sole discretion, may
determine that the delivery of Common Stock or the payment of cash, upon the
exercise, vesting or settlement of all or a portion of any Award may be deferred
and may establish programs and procedures for deferral elections to be made by
Participants.  Deferrals by Participants will be made in accordance
with Section 409A of the Code. Consistent with Section 409A of the Code, the
Board may provide for distributions while a Participant is still an
employee.  The Board is authorized to make deferrals of Awards and
determine when, and in what annual percentages, Participants may receive
payments, including lump sum payments, following the Participant’s termination
of employment or retirement, and implement such other terms and conditions
consistent with the provisions of the Plan and in accordance with applicable
law.

     

    (j)         Compliance with Section
409A.  To the extent that the Board determines that any Award
granted under the Plan is, or may reasonably be, subject to Section 409A of the
Code (together, with any state law of similar effect, “Section
409A”), the Award Agreement evidencing such Award shall incorporate the
terms and conditions necessary to avoid the consequences described in Section
409A(a)(1).  To the extent applicable and permitted by law, the Plan
and Award Agreements shall be interpreted in accordance with Section 409A and
Department of Treasury regulations and other interpretive guidance issued
thereunder, including without limitation any such regulations or other guidance
that may be issued or amended after the Effective Date.

     

    (i)           Notwithstanding
any provision of the Plan to the contrary, in the event that following the
Effective Date the Board determines that any Award is, or may reasonably be,
subject to Section 409A and related Department of Treasury guidance (including
such Department of Treasury guidance as may be issued after the Effective Date),
the Board may adopt such amendments to the Plan and the applicable Award
Agreement or adopt other policies and procedures (including amendments, policies
and procedures with retroactive effect), or take any other actions, that the
Board determines are necessary or appropriate to (1) exempt the Award from
Section 409A and/or preserve the intended tax treatment of the benefits provided
with respect to the Award, or (2) comply with the requirements of Section 409A
and related Department of Treasury guidance.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (ii)         In addition, and except as otherwise
set forth in the applicable Award Agreement, if the Company determines that any
Award granted under this Plan constitutes, or may reasonably constitute,
“deferred compensation” under Section 409A and the Participant is a “specified
employee” of the Company at the relevant date, as such term is defined in
Section 409A(a)(2)(B)(i) (a “Specified
Employee”), then, solely
to the extent necessary to avoid the incurrence of the adverse personal tax
consequences under Section 409A, the time at which cash payments shall be paid,
or shares of Common Stock issued, to such Participant shall be automatically
delayed as follows:  on the earlier to occur of (1) the date that is
six months and one day after the date of termination of the Participant’s
Continuous Service or (2) the date of the Participant’s death (such earlier
date, the “Delayed
Initial Payment Date”),
the Company shall (A) pay to the Participant a lump sum amount equal to the sum
of the cash payments, and issue to the Participant that number of shares of
Common Stock, that the Participant would otherwise have received through the
Delayed Initial Payment Date if such issuance or payment had not been delayed
pursuant to this Section 8(j), in each case, without liability to the
Participant for interest during such period of delay, and (B) commence paying or
issuing the balance of the amounts due under the Award in accordance with the
applicable schedules set forth in the Award Agreement.

     

    (k)        Notwithstanding
anything to the contrary contained herein, neither the Company nor any of its
Affiliates shall not be responsible for, or required to reimburse or otherwise
make any participant whole for, any tax or penalty imposed on, or losses
incurred by, any Participant that arises in connection with the potential or
actual application of Section 409A to any Award granted hereunder.

     

    
      	
              9.

            	
              Adjustments
      upon Changes in Common Stock; Other Corporate
  Events.

            

    

     

    (a)        Capitalization
Adjustments.  In the event of a Capitalization Adjustment, in
order to prevent diminution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, the Board shall appropriately and
proportionately adjust: (i) the class(es) and maximum number of securities
subject to the Plan pursuant to Section 3(a); (ii) the class(es) and maximum
number of securities that may be issued pursuant to the exercise of Incentive
Stock Options pursuant to Section 3(c); (iii) the class(es) and maximum number
of securities that may be awarded to any person pursuant to Section 4(c) and
6(d)(i); and (iv) the class(es) and number of securities and price per share of
stock subject to outstanding Awards.  The Board shall make such
adjustments, and its determination shall be final, binding and
conclusive.

     

    (b)        Dissolution or
Liquidation.  Except as otherwise provided in a Stock Award
Agreement, in the event of a dissolution or liquidation of the Company, all
outstanding Stock Awards (other than Stock Awards consisting of vested and
outstanding shares of Common Stock not subject to a forfeiture condition or the
Company’s right of repurchase) shall terminate immediately prior to the
completion of such dissolution or liquidation, and the shares of Common Stock
subject to the Company’s repurchase rights may be repurchased by the Company
notwithstanding the fact that the holder of such Stock Award is providing
Continuous Service, provided,
however, that the Board may, in its sole discretion, cause some or all
Stock Awards to become fully vested, exercisable and/or no longer subject to
repurchase or forfeiture (to the extent such Stock Awards have not previously
expired or terminated) before the dissolution or liquidation is completed but
contingent on its completion.  All other Awards that are not Stock
Awards shall be treated in accordance with the applicable Award
Agreements.

     

    (c)        Corporate Transaction.
  The following provisions shall apply to Awards in the event
of a Corporate Transaction unless otherwise provided in the Award Agreement or
any other applicable written agreement between the Company or any Affiliate and
the holder of the Award, or unless otherwise expressly provided by the Board at
the time of grant of an Award.  Except as otherwise stated in the
Award Agreement, in the event of a Corporate Transaction, then, notwithstanding
any other provision of the Plan, the Board shall take one or more of the
following actions with respect to Awards, contingent upon the closing or
completion of the Corporate Transaction:

     

    (i)          arrange
for the surviving corporation or acquiring corporation (or the surviving or
acquiring corporation’s parent company) to assume or continue the Award or to
substitute a similar award for the Award (including, but not limited to, an
award to acquire the same consideration paid to the stockholders of the Company
pursuant to the Corporate Transaction);

     

    (ii)         arrange
for the assignment of any reacquisition or repurchase rights held by the Company
in respect of Common Stock issued pursuant to the Award to the surviving
corporation or acquiring corporation (or the surviving or acquiring
corporation’s parent company);

     

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    (iii)           accelerate
the vesting of the Award (and, if applicable, the time at which the Award may be
exercised or settled) to a date prior to the effective time of such Corporate
Transaction as the Board shall determine (or, if the Board shall not determine
such a date, to the date that is five (5) days prior to the effective date of
the Corporate Transaction), with such Award terminating if not exercised (if
applicable) at or prior to the effective time of the Corporate
Transaction;

     

    (iv)           arrange
for the lapse of any reacquisition or repurchase rights held by the Company with
respect to the Award;

     

    (v)           cancel
or arrange for the cancellation of the Award, to the extent not vested or not
exercised or settled prior to the effective time of the Corporate Transaction,
in exchange for such cash consideration, if any, as the Board, in its sole
discretion, may consider appropriate; and

     

    (vi)           the
payment, in such form as may be determined by the Board equal to the excess, if
any, of (A) the value of the property the holder of the Award would have
received upon the exercise or settlement of the Award, over (B) any exercise or
purchase price payable by such holder in connection with such exercise or
settlement.

     

    The Board
need not take the same action with respect to all Awards or with respect to all
Participants.

     

    (d)        Change in
Control.  An Award may be subject to additional acceleration of
vesting and exercisability upon or after a Change in Control as may be provided
in the Award Agreement for such Award or as may be provided in any applicable
written agreement between the Company or any Affiliate and the
Participant.  An Award may vest as to all or any portion of the cash
or shares subject to the Award (i) immediately upon the occurrence of a Change
in Control, whether or not such Award is assumed, continued, or substituted by a
surviving or acquiring entity in the Change in Control, or (ii) in the event a
Participant’s Continuous Service is terminated, actually or constructively,
within a designated period following the occurrence of a Change in
Control.  In the absence of such provisions, no such acceleration
shall occur.

     

    
      	
              10.

            	
              Termination
      or Suspension of the Plan.

            

    

     

    (a)        Plan Term.  The
Board may suspend or terminate the Plan at any time.  Unless
terminated sooner, the Plan shall terminate on the day before the tenth (10th)
anniversary of the earlier of (i) the date the Plan is adopted by the Board, or
(ii) the date the Plan is approved by the stockholders of the
Company.  No Awards may be granted under the Plan while the Plan is
suspended or after it is terminated.

     

    (b)        No Impairment of
Rights.  Suspension or termination of the Plan shall not impair
rights and obligations under any Award granted while the Plan is in effect
except with the written consent of the affected Participant.

     

    
      	
              11.

            	
              Effective
      Date of Plan.

            

    

     

    The Plan
shall become effective on the date it is first approved by the Board, but no
Stock Award shall be exercised (or, in the case of a Restricted Stock Award,
Restricted Stock Unit Award, Performance Stock Award, or Other Stock Award shall
be granted and no Performance Cash Award shall be settled) unless and until the
Plan has been approved by the Stockholders of the Company, which approval shall
be within twelve (12) months before or after the date the Plan is adopted by the
Board.

     

    
      	
              12.

            	
              Choice
      of Law.

            

    

     

    The law
of the State of California shall govern all questions concerning the
construction, validity and interpretation of this Plan, without regard to that
state’s conflict of laws rules.

     

    
      	
              13.

            	
              Definitions.

            

    

     

    As used
in the Plan, the following definitions shall apply to the capitalized terms
indicated below:

     

    (a)        “Affiliate”
means, at the time of determination, any “parent” or “subsidiary” of the Company
as such terms are defined in Rule 405 of the Securities Act.  The
Board shall have the authority to determine the time or times at which “parent”
or “subsidiary” status is determined within the foregoing
definition.

     

    (b)        “Annual
Meeting” means the annual meeting of the stockholders of the
Company.

     

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    (c)        “Award”
means a Stock Award or a Performance Cash Award.

     

    (d)        “Award
Agreement” means a Stock Award Agreement or the written terms of a
Performance Cash Award. Each Award Agreement shall be subject to the terms and
conditions of the Plan.

     

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

     

    (f)        
“Capitalization
Adjustment” means any change that is made in, or other events that occur
with respect to, the Common Stock subject to the Plan or subject to any Stock
Award after the Effective Date without the receipt of consideration by the
Company (through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or other transaction not involving the receipt of
consideration by the Company). Notwithstanding the foregoing, the conversion of
any convertible securities of the Company shall not be treated as a transaction
“without the receipt of consideration” by the Company.

     

    (g)         “Cause” means
with respect to a Participant, the occurrence of any of the following
events:  (i) such Participant’s commission of any felony or any crime
involving fraud, dishonesty or moral turpitude under the laws of the United
States or any state thereof; (ii) such Participant’s attempted commission of, or
participation in, a fraud or act of dishonesty against the Company; (iii) such
Participant’s intentional, material violation of any contract or agreement
between the Participant and the Company or of any statutory duty owed to the
Company; (iv)  such Participant’s unauthorized use or disclosure of
the Company’s confidential information or trade secrets; or (v) such
Participant’s gross misconduct. The determination that a termination of the
Participant’s Continuous Service is either for Cause or without Cause shall be
made by the Company in its sole discretion.  Any determination by the
Company that the Continuous Service of a Participant was terminated with or
without Cause for the purposes of outstanding Awards held by such Participant
shall have no effect upon any determination of the rights or obligations of the
Company or such Participant for any other purpose.

     

    Notwithstanding
the foregoing or any other provision of this Plan, the definition of Cause (or
any analogous term) in an individual written agreement between the Company or
any Affiliate and the Participant shall supersede the foregoing definition with
respect to Awards subject to such agreement; provided, however, that if no
definition of Cause or any analogous term is set forth in such an individual
written agreement, the foregoing definition shall apply.

     

    

     

    (h)        “Change in
Control” means the occurrence, in a single transaction or in a series of
related transactions, of any one or more of the following events:

     

    (i)           any
Exchange Act Person becomes the Owner, directly or indirectly, of securities of
the Company representing more than fifty percent (50%) of the combined voting
power of the Company’s then outstanding securities other than by virtue of a
merger, consolidation or similar transaction.  Notwithstanding the
foregoing, a Change in Control shall not be deemed to occur (A) on account of
the acquisition of securities of the Company by an investor, any affiliate
thereof or any other Exchange Act Person from the Company in a transaction or
series of related transactions the primary purpose of which is to obtain
financing for the Company through the issuance of equity securities or (B)
solely because the level of Ownership held by any Exchange Act Person (the
“Subject
Person”) exceeds the designated percentage threshold of the outstanding
voting securities as a result of a repurchase or other acquisition of voting
securities by the Company reducing the number of shares outstanding, provided
that if a Change in Control would occur (but for the operation of this sentence)
as a result of the acquisition of voting securities by the Company, and after
such share acquisition, the Subject Person becomes the Owner of any additional
voting securities that, assuming the repurchase or other acquisition had not
occurred, increases the percentage of the then outstanding voting securities
Owned by the Subject Person over the designated percentage threshold, then a
Change in Control shall be deemed to occur;

     

    (ii)         there
is consummated a merger, consolidation or similar transaction involving
(directly or indirectly) the Company and, immediately after the consummation of
such merger, consolidation or similar transaction, the stockholders of the
Company immediately prior thereto do not Own, directly or indirectly, either (A)
outstanding voting securities representing more than fifty percent (50%) of the
combined outstanding voting power of the surviving Entity in such merger,
consolidation or similar transaction or (B) more than fifty percent (50%) of the
combined outstanding voting power of the parent of the surviving Entity in such
merger, consolidation or similar transaction, in each case in substantially the
same proportions as their Ownership of the outstanding voting securities of the
Company immediately prior to such transaction; or

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (iii)        there
is consummated a sale, lease, exclusive license or other disposition of all or
substantially all of the consolidated assets of the Company and its
Subsidiaries, other than a sale, lease, license or other disposition of all or
substantially all of the consolidated assets of the Company and its Subsidiaries
to an Entity, more than fifty percent (50%) of the combined voting power of the
voting securities of which are Owned by stockholders of the Company in
substantially the same proportions as their Ownership of the outstanding voting
securities of the Company immediately prior to such sale, lease, license or
other disposition.

     

    For
avoidance of doubt, the term Change in Control shall not include a sale of
assets, merger or other transaction effected exclusively for the purpose of
changing the domicile of the Company.

     

    Notwithstanding
the foregoing or any other provision of the Plan, the definition of Change in
Control (or any analogous term) in an individual written agreement between the
Company or any Affiliate and the Participant shall supersede the foregoing
definition with respect to Awards subject to such agreement; provided, however, that if no
definition of Change in Control or any analogous term is set forth in such an
individual written agreement, the foregoing definition shall apply.

     

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

     

    (j)         “Committee”
means a committee of one (1) or more Directors to whom authority has been
delegated by the Board in accordance with Section 2(c).

     

    (k)        “Common
Stock” means the common stock of the Company.

     

    (l)         “Company”
means Procera Networks, Inc., a Nevada corporation.

     

    (m)       “Consultant”
means any person, including an advisor, who is (i) engaged by the Company or an
Affiliate to render consulting or advisory services and is compensated for such
services, or (ii) serving as a member of the board of directors of an Affiliate
and is compensated for such services.  However, service solely as a
Director, or payment of a fee for such service, shall not cause a Director to be
considered a “Consultant” for purposes of the Plan.

     

    (n)        “Continuous
Service” means that the Participant’s service with the Company or an
Affiliate, whether as an Employee, Director or Consultant, is not interrupted or
terminated.  A change in the capacity in which the Participant renders
service to the Company or an Affiliate as an Employee, Consultant or Director or
a change in the entity for which the Participant renders such service, provided
that there is no interruption or termination of the Participant’s service with
the Company or an Affiliate, shall not, by itself, terminate a Participant’s
Continuous Service; provided,
however, if the Entity for which a Participant is rendering services
ceases to qualify as an “Affiliate,” as determined by the Board in its sole
discretion, such Participant’s Continuous Service shall be considered to have
terminated on the date such Entity ceases to qualify as an
Affiliate.  To the extent a Participant, upon a change in capacity of
service, ceases to provide service at a rate of more than 20% of his or her rate
of service (immediately prior to the change in capacity), such Participant may
be deemed to have suffered a termination of Continuous Service. To the extent
permitted by law, the Board or the chief executive officer of the Company, in
that party’s sole discretion, may determine whether Continuous Service shall be
considered interrupted in the case of: (i) any leave of absence approved by the
Board of the chief executive officer of the Company, including sick leave,
military leave or any other personal leave; or (ii) transfers between the
Company, an Affiliate, or their successors.  Notwithstanding the
foregoing, and except as otherwise required by applicable law or as otherwise
determined by the Company, a leave of absence shall be treated as Continuous
Service for purposes of vesting in a Stock Award only to such extent as may be
provided in the Company’s leave of absence policy, in the written terms of any
leave of absence agreement or policy applicable to the Participant, or as
otherwise required by law.

     

    (o)         “Corporate
Transaction” means the occurrence, in a single transaction or in a series
of related transactions, of any one or more of the following
events:

     

    (i)          the
consummation of a sale or other disposition of
all or substantially all, as determined by the Board in its sole discretion, of
the consolidated assets of the Company and its Subsidiaries;

     

    (ii)         the
consummation of a sale or other disposition of at least ninety percent (90%) of
the outstanding securities of the Company;

     

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    (iii)       the
consummation of a merger, consolidation or similar transaction following which
the Company is not the surviving corporation; or

     

    (iv)        the
consummation of a merger, consolidation or similar transaction following which
the Company is the surviving corporation but the shares of Common Stock
outstanding immediately preceding the merger, consolidation or similar
transaction are converted or exchanged by virtue of the merger, consolidation or
similar transaction into other property, whether in the form of securities, cash
or otherwise.

     

    (p)        “Covered
Employee” shall have the meaning provided in Section 162(m)(3) of the
Code and the regulations promulgated thereunder.

     

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

     

    (r)        “Disability”
means, with respect to a Participant,  the inability of such
Participant to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months, as provided in Section 22(e)(3) and 409A(a)(2)(c)(i) of the
Code.

     

    (s)        “Effective
Date” means the effective date of the Plan as set forth in Section
11.

     

    (t)        
“Employee”
means any person employed by the Company or an Affiliate.  However,
service solely as a Director, or payment of a fee for such services, shall not
cause a Director to be considered an “Employee” for purposes of the
Plan.

     

    (u)        “Entity”
means a corporation, partnership, limited liability company or other
entity.

     

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

     

    (w)        “Exchange Act
Person” means
any natural person, Entity or “group” (within the meaning of Section 13(d) or
14(d) of the Exchange Act), except that “Exchange Act Person” shall not include
(i) the Company or any Subsidiary of the Company, (ii) any employee benefit plan
of the Company or any Subsidiary of the Company or any trustee or other
fiduciary holding securities under an employee benefit plan of the Company or
any Subsidiary of the Company, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, (iv) an Entity Owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their Ownership of stock of the Company; or (v) any natural
person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the
Exchange Act) that, as of the Effective Date, is the Owner, directly or
indirectly, of securities of the Company representing more than fifty percent
(50%) of the combined voting power of the Company’s then outstanding
securities.

     

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

     

    (i)           If
the Common Stock is listed on any established stock exchange or traded on any
established market, the Fair Market Value of a share of Common Stock shall be
the closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such exchange or market (or the exchange or market with
the greatest volume of trading in the Common Stock) on the date of
determination, as reported in The Wall Street Journal or
such other source as the Board deems reliable. Unless otherwise provided by the
Board, if there is no closing sales price (or closing bid if no sales were
reported) for the Common Stock on the date of determination, then the Fair
Market Value shall be the mean between the bid and asked prices for the Common
Stock on the last preceding date for which such quotation exists.

     

    (ii)         In
the absence of such markets for the Common Stock or if the Board otherwise
determines that value derived pursuant to the foregoing methods does not
accurately reflect the value of the Common Stock, the Fair Market Value shall be
determined by the Board in good faith and in a manner that complies with Section
409A of the Code.

     

    (y)        “Incentive Stock
Option” means an Option which qualifies as an “incentive stock option”
within the meaning of Section 422 of the Code and the regulations promulgated
thereunder.

     

    (z)        “Non-Employee
Director” means a Director who
either (i) is not a current employee or officer of the Company or an Affiliate,
does not receive compensation, either directly or indirectly, from the Company
or an Affiliate for services rendered as a consultant or in any capacity other
than as a Director (except for an amount as to which disclosure would not be
required under Item 404(a) of Regulation S-K promulgated pursuant to the
Securities Act (“Regulation
S-K”)), does not possess an interest in any other transaction for which
disclosure would be required under Item 404(a) of Regulation S-K, and is not
engaged in a business relationship for which disclosure would be required
pursuant to Item 404(b) of Regulation S-K; or (ii) is otherwise considered a
“non-employee director” for purposes of Rule 16b-3.

     

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    (aa)      “Nonstatutory
Stock Option” means an Option that does not qualify as an Incentive Stock
Option.

     

    (bb)      “Officer”
means any person designated by the Company as an officer; provided, however,
that at any time that any class of the equity securities of the Company is
registered pursuant to Section 12 of the Exchange Act, “Officer” shall mean a
person who is an officer of the Company within the meaning of Section 16 of the
Exchange Act and the rules and regulations promulgated thereunder.

     

    (cc)       “Option”
means an Incentive Stock Option or a Nonstatutory Stock Option to purchase
shares of Common Stock granted pursuant to the Plan.

     

    (dd)      “Option
Agreement” means a written agreement between the Company and an
Optionholder evidencing the terms and conditions of an Option
grant.  Each Option Agreement shall be subject to the terms and
conditions of the Plan.

     

    (ee)       “Optionholder”
means a person to whom an Option is granted pursuant to the Plan or, if
applicable, such other person who holds an outstanding Option.

     

    (ff)        “Other Stock
Award” means an award based in whole or in part by reference to the
Common Stock which is granted pursuant to the terms and conditions of Section
6(d).

     

    (gg)      “Outside
Director” means a Director who either (i) is not a current employee of
the Company or an “affiliated corporation” (within the meaning of Treasury
Regulations promulgated under Section 162(m) of the Code), is not a former
employee of the Company or an “affiliated corporation” who receives compensation
for prior services (other than benefits under a tax-qualified retirement plan)
during the taxable year, has not been an officer of the Company or an
“affiliated corporation,” and does not receive remuneration from the Company or
an “affiliated corporation,” either directly or indirectly, in any capacity
other than as a Director, or (ii) is otherwise considered an “outside director”
for purposes of Section 162(m) of the Code.

     

    (hh)      “Own,”
“Owned,”
“Owner,”
“Ownership” A person or Entity shall
be deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired
“Ownership” of securities if such person or Entity, directly or indirectly,
through any contract, arrangement, understanding, relationship or otherwise, has
or shares voting power, which includes the power to vote or to direct the
voting, with respect to such securities.

     

    (ii)        “Participant”
means a person to whom an Award is granted pursuant to the Plan or, if
applicable, such other person who holds an outstanding Award.

     

    (jj)        “Performance
Criteria” means the one or more criteria that the Board shall select for
purposes of establishing the Performance Goals for a Performance
Period.  The Performance Criteria that shall be used to establish such
Performance Goals may be based on any one of, or combination of, on a U.S.
generally accepted accounting standards or non-generally accepted accounting
standards basis, the following: (i) earnings per share; (ii) earnings before
interest, taxes and depreciation; (iii) earnings before interest, taxes,
depreciation and amortization (EBITDA); (iv) total stockholder return; (v)
return on equity; (vi) return on assets, investment, or capital employed; (vii)
operating margin; (viii) gross margin; (ix) operating income; (x) net income
(before or after taxes); (xi) net operating income; (xii) net operating income
after tax; (xiii) pre- and after-tax income; (xiv) pre-tax profit; (xv)
operating cash flow; (xvi) sales or revenue targets; (xvii) orders and revenue;
(xviii) increases in revenue or product revenue; (xix) expenses and cost
reduction goals; (xx) improvement in or attainment of expense levels; (xxi)
improvement in or attainment of working capital levels; (xxii) economic value
added (or an equivalent metric); (xxiii) market share; (xxiv) cash flow; (xxv)
cash flow per share; (xxvi) share price performance; (xxvii) debt reduction;
(xxviii) implementation or completion of projects or processes; (xxix) customer
satisfaction; (xxx) stockholders’ equity; (xxxi) quality measures; and (xxxii)
to the extent that a Stock Award is not intended to comply with Section 162(m)
of the Code, other measures of performance selected by the
Board.  Partial achievement of the specified criteria may result in
the payment or vesting corresponding to the degree of achievement as specified
in the Award Agreement.  The Board shall, in its sole discretion,
define the manner of calculating the Performance Criteria it selects to use for
such Performance Period.

     

    (kk)     “Performance
Goals” means, for a Performance Period, the one or more goals established
by the Board for the Performance Period based upon the satisfaction of the
Performance Criteria.  Performance Goals may be based on a
Company-wide basis, with respect to one or more business units, divisions,
Affiliates, or business segments, and in either absolute terms or relative to
the performance of one or more comparable companies or the performance of one or
more relevant indices.  At the time of the grant of any Award, the
Board is authorized to determine whether, when calculating the attainment of
Performance Goals for a Performance Period: (i) to exclude restructuring and/or
other nonrecurring charges; (ii) to exclude exchange rate effects, as
applicable, for non-U.S. dollar denominated net sales and operating earnings;
(iii) to exclude the effects of changes to generally accepted accounting
standards required by the Financial Accounting Standards Board; (iv) to exclude
the effects of any statutory adjustments to corporate tax rates; and (v) to
exclude the effects of any “extraordinary items” as determined under generally
accepted accounting principles.  In addition, the Board retains the
discretion to reduce or eliminate the compensation or economic benefit due upon
attainment of Performance Goals.

     

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    (ll)        “Performance
Period” means one or more periods of time, which may be of varying and
overlapping duration, as the Committee may select, over which the attainment of
one or more Performance Goals will be measured for the purpose of determining a
Participant’s right to and the payment of a Performance Stock Award or a
Performance Cash Award.

     

    (mm)    “Performance Stock
Award” means a Restricted Stock Award or Restricted Stock Unit Award
which is granted pursuant to the terms and conditions of Section
6(d)(i).

     

    (nn)      “Plan”
means this Procera Networks, Inc. 2007 Equity Incentive Plan.

     

    (oo)       “Prior
Plans” means the Company’s 2003 Stock Option Plan and 2004 Stock Option
Plan, as in effect immediately prior to the Effective Date.

     

    (pp)      “Restricted Stock
Award” means an award of shares of Common Stock which is granted pursuant
to the terms and conditions of Section 6(a).

     

    (qq)      “Restricted Stock
Award Agreement” means a written agreement between the Company and a
holder of a Restricted Stock Award evidencing the terms and conditions of a
Restricted Stock Award grant.  Each Restricted Stock Award Agreement
shall be subject to the terms and conditions of the Plan.

     

    (rr)      “Restricted Stock
Unit Award” means
a right to receive shares of Common Stock which is granted pursuant to the terms
and conditions of Section 6(b).

     

    (ss)      “Restricted Stock
Unit Award Agreement” means a written agreement between the Company and a
holder of a Restricted Stock Unit Award evidencing the terms and conditions of a
Restricted Stock Unit Award grant.  Each Restricted Stock Unit Award
Agreement shall be subject to the terms and conditions of the Plan.

     

    (tt)       “Rule
16b-3” means Rule 16b-3 promulgated under the Exchange Act or any
successor to Rule 16b-3, as in effect from time to time.

     

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

     

    (vv)       “Stock
Appreciation Right” means a right to receive the appreciation on Common
Stock that is granted pursuant to the terms and conditions of Section
6(c).

     

    (ww)     “Stock
Appreciation Right Agreement” means a written agreement between the
Company and a holder of a Stock Appreciation Right evidencing the terms and
conditions of a Stock Appreciation Right grant.  Each Stock
Appreciation Right Agreement shall be subject to the terms and conditions of the
Plan.

     

    (xx)       “Stock
Award” means any right to receive Common Stock granted under the Plan,
including an Option, a Restricted Stock Award, a Restricted Stock Unit Award, a
Stock Appreciation Right, a Performance Stock Award, or Other Stock
Award.

     

    (yy)      “Stock Award
Agreement” means a written agreement between the Company and a
Participant evidencing the terms and conditions of a Stock Award
grant.  Each Stock Award Agreement shall be subject to the terms and
conditions of the Plan.

     

    (zz)      “Subsidiary”
means, with respect to the Company, (i) any corporation of which more than fifty
percent (50%) of the outstanding capital stock having ordinary voting power to
elect a majority of the board of directors of such corporation (irrespective of
whether, at the time, stock of any other class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency) is at the time, directly or indirectly, Owned by the Company, and
(ii) any partnership, limited liability company or other entity in which the
Company has a direct or indirect interest (whether in the form of voting or
participation in profits or capital contribution) of more than fifty percent
(50%) .

     

    (aaa)     “Ten Percent
Stockholder” means a person who Owns (or is deemed to Own pursuant to
Section 424(d) of the Code) stock possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or any
Affiliate.ex10_2.htm

    
      

    

    Exhibit
10.2

     

    Procera
Networks, Inc.

     

    EXECUTIVE
EMPLOYMENT AGREEMENT

    for

    JAMES
F. BREAR

     

    This
Executive Employment Agreement (“Agreement”) by and between
James F. Brear (“Executive”) and Procera
Networks, Inc. (the “Company”) (collectively, the
“Parties”) is entered
into on February 11, 2008 (the “Effective Date”).

     

    Whereas,
the Company desires to employ Executive to provide personal services to the
Company, and wishes to provide Executive with certain compensation and benefits
in return for his services;

     

    Whereas,
Executive wishes to be employed by the Company and to provide personal services
to the Company in return for certain compensation and benefits;

     

    Now,
Therefore, in consideration of the mutual promises and covenants
contained herein, it is hereby agreed by and between the parties hereto as
follows:

     

    
      	
               
      

            	
              1.

            	
              Employment
      by the Company.

            

    

     

    1.1          Position.  Subject
to terms and conditions set forth herein, the Company agrees to employ Executive
in the position of Chief Executive Officer and President of the Company, and to
appoint Executive as a member of the Company’s Board of Directors (the “Board”),
and Executive hereby accepts such employment and appointment.  During
the term of Executive’s employment with the Company, Executive will devote
Executive’s best efforts and substantially all of Executive’s business time and
attention to the business of the Company, except for vacation periods as set
forth herein and reasonable periods of illness or other incapacities permitted
by the Company’s general employment policies.  Executive’s first date
of employment is February 6, 2008 (the “Commencement
Date”).

     

    1.2          Duties and
Location.  Executive shall serve in an executive capacity and
shall perform such duties as are customarily associated with Executive’s then
current title, consistent with the bylaws of the Company and as required by the
Board.  Executive shall report to the Board.  Executive’s
primary office location shall be a location mutually acceptable to both the
Executive and the Company.  The Company reserves the right to
reasonably require Executive to perform Executive’s duties at places other than
Executive’s primary office location from time to time as agreed to by Executive,
and to require reasonable business travel.

     

    1.3          Policies and
Procedures.  The employment relationship between the parties
shall be governed by the general employment policies and practices of the
Company, except that when the terms of this Agreement differ from or are in
conflict with the Company’s general employment policies or practices, this
Agreement shall control.

     

    
      
        
           

        

        
          1

          
            

          

        

        
           

        

      

    

     

    
      	
               
      

            	
              2.

            	
              Compensation.

            

    

     

    2.1          Salary.  For
services to be rendered hereunder, Executive shall receive an annual salary at
the rate of $240,000.00 (the “Base Salary”), subject to
payroll withholding and deductions and payable in accordance with the Company’s
regular payroll schedule.  Executive’s Base Salary shall be reviewed
annually and may be increased as approved by the Board in its sole
discretion.

     

    2.2          Initial Performance
Bonus.  Executive shall earn a bonus of fifty percent (50%) of
his Base Salary (the “Initial
Bonus”) after his first six months of employment, provided Executive
remains an active employee through such time.  Except as otherwise
provided in Section 5, Executive will not earn any Initial Bonus if
Executive’s employment terminates for any reason before the Initial Bonus is
earned by him.  The Initial Bonus, if earned, shall be paid within one
month after the end of the six month anniversary of the Commencement
Date.

     

    2.3          Annual
Bonus.  Executive will be eligible to earn an annual
discretionary bonus with a target amount equal to eighty percent (80%) of his
Base Salary; provided that for calendar year 2008, this potential bonus shall be
prorated over the time between the end of the first six (6) months of employment
(as contemplated in Section 2.2 above) and the end of calendar year
2008.  The annual bonus shall be based on a set of objectives mutually
agreed to by Executive and the Board (or an executive or compensation committee
thereof) within the first thirty days of each calendar year; provided however
that with respect to calendar 2008, such objectives may be set within the first
90 days of employment. The amount of the annual bonus actually earned shall be
determined by the Board based upon a good faith, objective determination of
Executive’s achievement of the previously agreed to objectives (the “Annual
Bonus”).  Since the Annual Bonus is intended both to reward
past Company and Executive performance and to provide an incentive for Executive
to remain with the Company, Executive must remain an active employee through the
date that any such Annual Bonus is paid to him in order to earn any such
bonus.  Except as otherwise provided in Section 5, Executive will
not earn any Annual Bonus (including a prorated bonus) if Executive’s employment
terminates for any reason before the Annual Bonus is paid to him.  Any
earned Annual Bonus shall be paid not later than March 15th of the
year following the calendar as to which performance was measured.

     

    2.4          Equity
Compensation.  Executive shall be granted an option to purchase
2,250,000 shares of the Company’s Common Stock (the “Option”), having an exercise
price equal to the closing price of the Common Stock as quoted on the American
Stock Exchange on date of grant.  The Option will be subject to the
terms and conditions of the Company’s 2007 Equity Incentive Plan (the “Plan”).  Except as
otherwise provided herein, the Option will vest and become exercisable over four
(4) years, with twenty-five percent (25%) of the shares covered by the Option
vesting and becoming exercisable on the one year anniversary of the Commencement
Date, and the remaining shares covered by the Option vesting and becoming
exercisable in thirty-six (36) equal monthly installments thereafter, as long as
the Executive remains in continuous service with the Company (as defined in the
Plan).  The Option shall be governed by the terms and conditions set
forth in the Plan, and in the applicable stock option agreement and grant
document.

     

    
      
        
           

        

        
          2

          
            

          

        

        
           

        

      

    

     

    2.5          Standard Company
Benefits.  Executive shall be entitled to participate in all
employee benefit programs for which Executive is eligible under the terms and
conditions of the benefit plans which may be in effect from time to time and
provided by the Company to its employees generally.

     

    
      	
               
      

            	
              3.

            	
              Confidential
      Information Obligations.

            

    

     

    3.1          Confidential Information
Agreement.  As a condition of employment, Executive agrees to
execute and abide by the Employee Confidential  Information and
Inventions Assignment Agreement attached hereto as Exhibit A.

     

    3.2          Third Party Agreements and
Information.  Executive represents and warrants that
Executive’s employment by the Company will not conflict with any prior
employment or consulting agreement or other agreement with any third party, and
that Executive will perform Executive’s duties to the Company without violating
any such agreement.  Executive represents and warrants that Executive
does not possess confidential information arising out of prior employment,
consulting, or other third party relationships, which would be used in
connection with Executive’s employment by the Company, except as expressly
authorized by that third party.  During Executive’s employment by the
Company, Executive will use in the performance of Executive’s duties only
information which is generally known and used by persons with training and
experience comparable to Executive’s own, common knowledge in the industry,
otherwise legally in the public domain, or obtained or developed by the Company
or by Executive in the course of Executive’s work for the Company.

     

    
      	
               
      

            	
              4.

            	
              Outside
      Activities During Employment.

            

    

     

    4.1          Non-Company
Business.  Except with the prior written consent of the Board,
Executive will not during the term of Executive’s employment with the Company
undertake or engage in any other employment, occupation or business enterprise,
other than ones in which Executive is a passive investor.  Executive
may engage in civic and not-for-profit activities so long as such activities do
not materially interfere with the performance of Executive’s duties
hereunder.

     

    4.2          No Adverse
Interests. Executive agrees not to acquire, assume or participate
in, directly or indirectly, any position, investment or interest known by him to
be adverse or antagonistic to the Company, its business or prospects, financial
or otherwise, except as a passive investor in mutual or exchange traded
funds.

     

    
      	
               
      

            	
              5.

            	
              Termination
      Of Employment.

            

    

     

    5.1          At-Will
Relationship.  Executive’s employment relationship is
at-will.  Either Executive or the Company may terminate the employment
relationship at any time, with or without Cause or advance notice.

     

    
      
        
           

        

        
          3

          
            

          

        

        
           

        

      

    

     

    5.2          Termination without Cause;
Resignation for Good Reason.  If, at any time, the Company
terminates Executive’s employment without Cause (as defined herein), or
Executive resigns with Good Reason (as defined herein), and Executive executes
and delivers the Separation Date Release of all claims set forth as Exhibit B
hereto within the timeframe set forth therein and allows such release to become
effective, then the Company will provide Executive with the following severance
benefits:

     

    (a)        
 Cash
Severance.  The Company shall pay Executive severance in the
form of continuation of Executive’s Base Salary in effect on Executive’s last
day of employment (the “Separation Date”) for a period
of six (6) months after Executive’s termination.  This severance shall
be paid in substantially equal installments on the Company’s regular payroll
schedule (subject to standard deductions and withholdings) over the six (6)
month period following the Separation Date: provided, however, that no payments
will be made prior to the effective date of the release of claims.  On
the first payroll date following the effective date of the release, the Company
will pay Executive the payments that Executive would have received on or prior
to such date in a lump sum under the original schedule but for the delay in
effectiveness of the release, with the balance of the cash severance being paid
as originally scheduled.

     

    (b)        
 Bonus.  The Company
shall pay Executive the full amount of his Initial Bonus, if it has not
previously been paid.  The Company shall also pay Executive the full
amount of any Annual Bonus awarded for the completed calendar year preceding the
employment termination, if it has not already been paid.  Finally, the
Company shall pay Executive a payment equal to the product of (i) his
Annual Bonus for the calendar year in which his employment terminates, with the
amount of the Annual Bonus determined in good faith based on year to date
performance and expected  Company performance in the balance of the
year, and (ii)  a fraction, the numerator of which is the number of days of
his employment in such calendar year prior to the Separation Date and the
denominator of which is 365.  All amounts payable under this
Subsection (b) shall be paid in a lump sum on the first regularly scheduled
payroll pay date following the effective date of his release.

     

    (c)         
Continued Health Insurance
Coverage.  To the extent provided by the federal continuation
of coverage law or, if applicable, state laws of similar effect (collectively,
“COBRA”), and by the
Company’s then-current group health insurance policies, Executive may be
eligible to continue Executive’s then-current group health insurance benefits
after the termination of his employment.  If Executive timely elects
such COBRA coverage for himself and/or his eligible dependents, and provided
Executive continues to pay the portion of the premiums then-paid by active
employees for similar coverage, then the Company shall pay the remaining portion
of the COBRA premiums for the first six (6) months of such coverage, or until
such earlier date on which Executive and/or his eligible dependents cease to be
eligible for COBRA coverage.  Executive shall notify the Company
immediately if he and/or his eligible dependents become covered by a medical,
dental or vision insurance plan of a subsequent employer or otherwise cease to
be eligible for COBRA coverage.

     

    
      
        
           

        

        
          4

          
            

          

        

        
           

        

      

    

     

    (d)         
Accelerated
Vesting.  In the event the Company terminates Executive’s
employment without Cause, or Executive resigns with Good Reason, in either case
within twelve (12) months after a Change in Control (as defined below), then the
Company will accelerate the vesting of any outstanding equity awards then-held
by Executive such that one hundred percent (100%) of the then-unvested shares
subject to each such award shall become fully vested and exercisable as of
Executive’s Separation Date.

     

    5.3          Termination for Cause; Resignation
Without Good Reason.  If the Company terminates Executive’s
employment with the Company for Cause, or Executive resigns without Good Reason,
then Executive will not be entitled to any further compensation from the Company
(other than accrued salary, and accrued and unused vacation, through Executive’s
last day of employment), including severance pay, pay in lieu of notice or any
other such compensation.

     

    5.4          Termination Due to Death or
Disability.

     

    (a)         
Death.  This
Agreement and Executive’s employment shall terminate immediately upon
Executive’s death and Executive’s estate shall not be entitled to any further
compensation from the Company (other than accrued salary, and accrued and unused
vacation, through Executive’s last day of employment), including severance pay,
pay in lieu of notice or any other such compensation.

     

    (b)         
Disability.  If
Executive is incapacitated by accident, sickness or otherwise such that
Executive is incapable of performing the services set forth in Section 1.1
herein for at least sixty (60) consecutive days or at least ninety (90)
days within a period of one hundred and  eighty (180) consecutive
days, and such incapacity is certified by a qualified medical doctor, then this
Agreement and Executive’s employment shall terminate.  In such an
event, Executive and/or Executive’s legal representatives shall not be entitled
to any further compensation from the Company (other than accrued salary, and
accrued and unused vacation, through Executive’s last day of employment),
including severance pay, pay in lieu of notice or any other such
compensation.

     

    5.5           Section 409A
Compliance.  The parties intend that the severance benefits
provided under Section 5.2 above (the “Severance”) satisfy, to the
greatest extent possible, the exemptions from the application of Section 409A of
the Internal Revenue Code (together with any state laws of similar effect,
“Section 409A”) provided under Treasury Regulations 1.409A-1(b)(4),
1.409A-1(b)(5) and 1.409A-1(b)(9).  Notwithstanding the foregoing, if
the Company (or, if applicable, the successor entity thereto) determines that
the Severance constitutes “deferred compensation” under Section 409A, and if
Executive is a “specified employee” of the Company or any successor entity
thereto, as such term is defined in Section 409A(a)(2)(B)(i) (a “Specified Employee”), then,
solely to the extent necessary to avoid the incurrence of the adverse personal
tax consequences under Section 409A, the timing of the Severance shall be
delayed as follows:  on the earlier to occur of (i) the date that is
six months and one day after the date of separation of service or (ii) the date
of Executive’s death (such earlier date, the “Delayed Initial Payment
Date”), the Company (or the successor entity thereto, as applicable)
shall (A) pay to Executive a lump sum amount equal to the sum of the Severance
that Executive would otherwise have received through the Delayed Initial Payment
Date if the commencement of the payment of the Severance had not been delayed
pursuant to this paragraph and (B) commence paying the balance of the Severance
in accordance with the payment schedule set forth above.   It is
intended that each payment made pursuant to Section 5.2 is a separate payment
(as defined in Treasury Regulations Section 1.409A-2(b)(2)) from any other
payments made pursuant to this Agreement for purposes of the “short term
deferral rule” under Treasury Regulations Section 1.409A-1(b)(4).

     

    
      
        
           

        

        
          5

          
            

          

        

        
           

        

      

    

     

    5.6          Limitation on
Payments.  In the event that the payments or other benefits
provided for in this Agreement or otherwise payable to Executive (i) constitute
“parachute payments” within the meaning of Section 280G of the Code, and (ii)
would be subject to the excise tax imposed by Section 4999 of the Code (the
“Excise Tax”), then
Executive’s benefits under this Agreement shall be either (a) delivered in full,
or (b) delivered to such lesser extent which would result in no portion of such
benefits being subject to the Excise Tax, whichever of the foregoing amounts,
taking into account the applicable federal, state and local income taxes and the
Excise Tax, results in the receipt by Executive on an after-tax basis, of the
greatest amount of benefits, notwithstanding that all or some portion of such
benefits may be taxable under Section 4999 of the Code.  If a
reduction in payments or benefits constituting “parachute payments” is necessary
pursuant to the foregoing provision, reduction shall occur in the following
order: reduction of cash payments; cancellation of accelerated vesting of stock
awards; reduction of employee benefits.  If acceleration of vesting of
stock award compensation is to be reduced, such acceleration of vesting shall be
cancelled in the reverse order of the date of grant of the Executive’s stock
awards.

     

    Unless
the Company and Executive otherwise agree in writing, any determination required
under this Section 5.6 shall be made in writing by the Company’s independent
public accountants (the “Accountants”), whose
determination shall be conclusive and binding upon Executive and the Company for
all purposes and may be relied upon by the Company.  For purposes of
making the calculations required by this Section 5.6, the Accountants may make
reasonable assumptions and approximations concerning applicable taxes and may
rely on reasonable, good faith interpretations concerning the application of
Section 280G and 4999 of the Code.  The Company and Executive shall
further to the Accountants such information and documents as the Accountants may
reasonably request in order to make a determination under this Section
5.6.  The Company shall bear all costs the Accountants may reasonably
incur in connection with any calculations contemplated by this Section
5.6.

     

    
      	
               
      

            	
              5.7

            	
              Definitions.

            

    

     

    (a)          
For purposes of this Agreement, “Cause” shall mean any one or
more of the following:

     

    (i)         Executive’s
indictment or conviction of, or plea of guilty or no contest to, any felony or
any crime involving dishonesty;

     

    
      
        
           

        

        
          6

          
            

          

        

        
           

        

      

    

     

    (ii)        Executive’s
participation in any fraud or other act of willful misconduct against the
Company (including any material breach of Company policy that causes or
reasonably could cause harm to the Company);

     

    (iii)       Executive’s
refusal to comply with any lawful directive of the Company or the
Board;

     

    (iv)        Executive’s
material breach of Executive’s fiduciary, statutory, contractual, or common law
duties to the Company (including any material breach of this Agreement or the
Confidential Information and Inventions Agreement); or

     

    (v)         Conduct
by Executive which in the good faith and reasonable determination of the Board
demonstrates gross unfitness to serve.

     

    Provided, however, that in the
event that any of the foregoing events is reasonably capable of being cured, the
Company shall, within twenty (20) days after the discovery of such event,
provide written notice to the Executive describing the nature of such event and
Executive shall thereafter have ten (10) business days to cure such
event.

     

    (b)         For
purposes of this Agreement, Executive shall have “Good Reason” for Executive’s
resignation if: (w) any of the events listed below occurs without Executive’s
consent; (x) Executive notifies the Company in writing,
within  ninety  (90) days after the occurrence of such event
that Executive intends to terminate his employment for Good Reason and specifies
the basis therefore; (y) the Company does not cure such condition within
thirty  (30) days following its receipt of such notice or states
unequivocally in writing that it does not intend to attempt to cure such
condition, and (z) the Executive’s resignation from employment is effective
within  ten (10) days following the end of the period within which the
Company was entitled to remedy the condition constituting Good Reason but failed
to do so:

     

    (i)         the
assignment to Executive of any duties or responsibilities which result in the
material diminution of Executive’s authority, duties or responsibility; provided
however, that the acquisition of the Company and subsequent conversion of the
Company to a division or unit of the acquiring corporation will not by itself
result in a material diminution of Executive’s authority, duties or
responsibility.

     

    (ii)        a
material reduction by the Company in Executive’s annual base salary, except to
the extent the base salaries of all other executive officers of the Company are
accordingly reduced;

     

    (iii)      
a relocation of Executive’s place of work, or the Company’s principal executive
offices if Executive’s principal office is at such offices, to a location that
increases Executive’s daily one-way commute by more than thirty-five (35) miles;
or

     

    (iv)        any
material breach by the Company of any material provision of this Agreement,
including but not limited to Section 7.7.

     

    
      
        
           

        

        
          7

          
            

          

        

        
           

        

      

    

     

    (c)         
For purposes of this Agreement, “Change in Control” shall be
deemed to have occurred if, in a single transaction or series of related
transactions: (i) any person (as such term is used in Section 13(d) and 14(d) of
the Securities Exchange Act of 1934 (“Exchange Act”)), or persons acting as a
group, other than a trustee or fiduciary holding securities under an employment
benefit program, is or becomes a “beneficial owner” (as defined in Rule 13-3
under the Exchange Act), directly or indirectly of securities of the Company
representing 51% or more of the combined voting power of the Company, (ii) there
is a merger, consolidation or other business combination transaction of the
Company with or into another corporation, entity or person, other than a
transaction in which the holders of at least a majority of the shares of voting
capital stock of the Company outstanding immediately prior to such transaction
continue to hold (either by such shares remaining outstanding or by their being
converted into shares of voting capital stock of the surviving entity) a
majority of the total voting power represented by the shares of voting capital
stock of the Company (or the surviving entity) outstanding immediately after
such transaction, or (iii) all or substantially all of the Company’s assets are
sold.

     

    
      	
               
      

            	
              6.

            	
              Arbitration.

            

    

     

    To ensure
the timely and economical resolution of disputes that may arise in connection
with Executive’s employment with the Company, Executive and the Company agree
that any and all disputes, claims, or causes of action arising from or relating
to the enforcement, breach, performance, negotiation, execution, or
interpretation of this Agreement, Executive’s employment, or the termination of
Executive’s employment, shall be resolved to the fullest extent permitted by law
by final, binding and confidential arbitration, by a single arbitrator, in San
Jose, California, conducted by JAMS under the then applicable JAMS rules. By agreeing to this arbitration
procedure, both Executive and the Company waive the right to resolve any such
dispute through a trial by jury or judge or administrative
proceeding.  The arbitrator shall:  (a) have the
authority to compel adequate discovery for the resolution of the dispute and to
award such relief as would otherwise be permitted by law; and (b) issue a
written arbitration decision, to include the arbitrator’s essential findings and
conclusions and a statement of the award.  The arbitrator shall be
authorized to award any or all remedies that Executive or the Company would be
entitled to seek in a court of law.  The Company shall pay all JAMS’
arbitration fees in excess of the amount of court fees that would be required if
the dispute were decided in a court of law.  Nothing in this Agreement
is intended to prevent either Executive or the Company from obtaining injunctive
relief in court to prevent irreparable harm pending the conclusion of any such
arbitration.

     

    
      	
               
      

            	
              7.

            	
              General
      Provisions.

            

    

     

    7.1          Notices.  Any
notices provided hereunder must be in writing and shall be deemed effective upon
the earlier of personal delivery (including personal delivery by fax) or the
next day after sending by overnight carrier, to the Company at its primary
office location and to Executive at his address as listed on the Company
payroll.

     

    
      
        
           

        

        
          8

          
            

          

        

        
           

        

      

    

     

    7.2          Severability.  Whenever
possible, each provision of this Agreement will be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or any other jurisdiction,
but this Agreement will be reformed, construed and enforced in such jurisdiction
to the extent possible in keeping with the intent of the parties.

     

    7.3          Waiver.  Any waiver
of any breach of any provisions of this Agreement must be in writing to be
effective, and it shall not thereby be deemed to have waived any preceding or
succeeding breach of the same or any other provision of this
Agreement.

     

    7.4          Complete
Agreement.  This Agreement, including Exhibit A, constitutes
the entire agreement between Executive and the Company and it is the complete,
final, and exclusive embodiment of their agreement with regard to this subject
matter.  It is entered into without reliance on any promise or
representation other than those expressly contained herein, and it cannot be
modified or amended except in a writing signed by the Executive and a duly
authorized officer of the Company.

     

    7.5          Counterparts.  This
Agreement may be executed in separate counterparts, any one of which need not
contain signatures of more than one party, but all of which taken together will
constitute one and the same Agreement.

     

    7.6          Headings.  The
headings of the sections hereof are inserted for convenience only and shall not
be deemed to constitute a part hereof nor to affect the meaning
thereof.

     

    7.7          Successors and
Assigns.  This Agreement is intended to bind and inure to the
benefit of and be enforceable by Executive and the Company, and their respective
successors, assigns, heirs, executors and administrators, except that Executive
may not assign any of his duties hereunder and he may not assign any of his
rights hereunder without the written consent of the Company, which shall not be
withheld unreasonably.  The Company shall obtain the assumption of
this Agreement by any successor or assign of the Company.

     

    7.8          Choice of Law.  All
questions concerning the construction, validity and interpretation of this
Agreement will be governed by the law of the State of California.

     

    
      
        
           

        

        
          9

          
            

          

        

        
           

        

      

    

     

     

    In Witness
Whereof, the parties have executed this Agreement.

     

    
      	 	
              Procera
      Networks, Inc.

            
	 	 
      
	 	 
      
	 	
              By:

            	
              /s/ Thomas H. Williams

            
	 	 
      	
              Thomas H. Williams

            
	 	 
      	
              iCEO
      and CFO

            
	 	 	 
	 	 
      	February
      11, 2008
	 	
              Date:

            

    

    

     

    
      	
              Understood
      and Agreed:

            	 
	 
      	 
      	 
	
              Executive

            	 
	 
      	 
      	 
	 
      	 
      	 
	
              By:

            	
              /s /James F. Brear

            	 
	 
      	
              James F. Brear

            	 
	 
      	 
      	 
	
              Date:

            	
              February 11, 2008

            	 

    

    

    

    
      	
              Agreed-to
      Commencement Date:

            	
              February 6, 2008

            	
              JB:

            	 
      	
              TW:

            	 
      

    

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    Exhibit
B

     

    

    Separation
Date Release

    

    (To
be signed on or within 21 days after the employment termination
date.)

     

    In
exchange for the severance benefits to be provided to me by Procera Networks,
Inc. (the “Company”) pursuant to the terms of my Executive Employment Agreement
(the “Agreement”), I hereby provide the following General Release of Claims (the
“Release”).  I understand that, on the last date of my employment with
the Company, the Company will pay me any accrued salary to which I am entitled
by law, regardless of whether I sign this Release, but I am not entitled to any
severance benefits unless I sign and return this Release to the Company and I
allow it to become effective.

     

    I hereby
generally and completely release the Company and its directors, officers,
employees, shareholders, partners, agents, attorneys, predecessors, successors,
parent and subsidiary entities, insurers, affiliates, and assigns (collectively
the “Released Parties”) of and from any and all claims, liabilities and
obligations, both known and unknown, arising out of or in any way related to
events, acts, conduct, or omissions occurring at any time prior to or at the
time that I sign this Release.

     

    This
general release includes, but is not limited to: (1) all claims arising out of
or in any way related to my employment with the Company or the termination of
that employment; (2) all claims related to my compensation or benefits from the
Company, including salary, bonuses, commissions, vacation pay, expense
reimbursements, severance pay, fringe benefits, stock, stock options, or any
other ownership or equity interests in the Company; (3) all claims for
breach of contract, wrongful termination, and breach of the implied covenant of
good faith and fair dealing (including claims based on or arising under the
Agreement); (4) all tort claims, including claims for fraud, defamation,
emotional distress, and discharge in violation of public policy; and (5) all
federal, state, and local statutory claims, including claims for discrimination,
harassment, retaliation, attorneys’ fees, or other claims arising under the
federal Civil Rights Act of 1964 (as amended), the federal Americans with
Disabilities Act of 1990, the federal Age Discrimination in Employment Act (as
amended) (“ADEA”), the federal Family and Medical Leave Act, the California
Labor Code (as amended), the California Family Rights Act, and the California
Fair Employment and Housing Act (as amended).

     

    I
understand that notwithstanding the foregoing, the following are not included in
the Released Claims (the “Excluded Claims”): (i) any rights or claims for
indemnification I may have pursuant to any written indemnification agreement to
which I am a party, the charter, bylaws, or operating agreements of any of the
Released Parties, or under applicable law; or (ii) any rights which are not
waivable as a matter of law.  In addition, I understand that nothing
in this release prevents me from filing, cooperating with, or participating in
any proceeding before the Equal Employment Opportunity Commission, the
Department of Labor, or the California Department of Fair Employment and
Housing, except that I acknowledge and agree that I shall not recover any
monetary benefits in connection with any such claim, charge or proceeding with
regard to any claim released herein.  I hereby represent and warrant
that, other than the Excluded Claims, I am not aware of any claims I have or
might have against any of the Released Parties that are not included in the
Released Claims.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    I
acknowledge that I am knowingly and voluntarily waiving and releasing any rights
I may have under the ADEA, and that the consideration given for the waiver and
release in the preceding paragraph is in addition to anything of value to which
I am already entitled.  I further acknowledge that I have been advised
by this writing that:  (1) my waiver and release do not apply to any
rights or claims that may arise after the date I sign this Release; (2) I should
consult with an attorney prior to signing this Release (although I may choose
voluntarily not to do so); (3) I have twenty-one (21) days to consider this
Release (although I may choose voluntarily to sign it earlier); (4) I have seven
(7) days following the date I sign this Release to revoke it by providing
written notice of revocation to the Company’s Board of Directors; and
(5) this Release will not be effective until the date upon which the
revocation period has expired, which will be the eighth calendar day after the
date I sign it provided that I do not revoke it (the “Effective
Date”).

     

    I
UNDERSTAND THAT THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN
CLAIMS.  I acknowledge that I have read and understand Section 1542 of
the California Civil Code which reads as follows:  “A general release does not extend to
claims which the creditor does not know or suspect to exist in his or her favor
at the time of executing the release, which if known by him or her must have
materially affected his or her settlement with the debtor.” I hereby
expressly waive and relinquish all rights and benefits under that section and
any law or legal principle of similar effect in any jurisdiction with respect to
my release of claims herein, including but not limited to the release of unknown
and unsuspected claims.

     

    I hereby
represent that I have been paid all compensation owed and for all hours worked,
I have received all the leave and leave benefits and protections for which I am
eligible, pursuant to the Family and Medical Leave Act, the California Family
Rights Act, or otherwise, and I have not suffered any on-the-job injury for
which I have not already filed a workers’ compensation claim.

     

    I further
agree: (1) not to disparage the Company, its parent, or its or their officers,
directors, employees, shareholders, affiliates and agents, in any manner likely
to be harmful to its or their business,  business reputation, or
personal reputation (although I may respond accurately and fully to any
question, inquiry or request for information as required by legal process); (2)
not to voluntarily (except in response to legal compulsion) assist any third
party in bringing or pursuing any proposed or pending litigation, arbitration,
administrative claim or other formal proceeding against the Company, its parent
or subsidiary entities, affiliates, officers, directors, employees or agents;
and (3) to reasonably cooperate with the Company, by voluntarily (without legal
compulsion) providing accurate and complete information, in connection with the
Company’s actual or contemplated defense, prosecution, or investigation of any
claims or demands by or against third parties, or other matters, arising from
events, acts, or failures to act that occurred during the period of my
employment by the Company.

     

    
      	
              By:

            	 
      	 
      
	 
      	
              James F. Brear

            	
              Date

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