Document:

Exhibit 10.2 

Annex B 

CIT GROUP INC.
EXECUTIVE INCENTIVE PLAN                        
(Effective as of January 1, 2007) 

1. Purposes 

        The
purposes of the Plan are (i) to enable the Company to attract, retain, motivate and
reward Participants by providing them with the opportunity to earn incentive compensation
under the Plan related to the Company’s performance and (ii) to qualify any such
compensation paid to Participants as performance-based compensation within the meaning of
Section 162(m). 

2. Definitions 

        For
purposes of the Plan, the following terms shall be defined as follows: 

        “Award” means
the cash and non-cash amounts actually awarded to a Participant by the Committee for a
Performance Period in accordance with Section 4 based upon the Value of the Pool Amount
for the Performance Period, the Participant’s percentage interest in the Pool Amount
and any reductions to the Participant’s Maximum Amount for that Performance Period
made by the Committee in accordance with Section 4(b).  

        “Board” means
the Board of Directors of the Company.  

        “Code” means
the Internal Revenue Code of 1986, as amended, and the applicable rulings and regulations
thereunder.  

        “Committee” means
the Compensation Committee of the Board, any successor committee thereto or any other
committee appointed by the Board to administer the Plan. The Committee shall consist of
at least two (2) individuals, each of whom shall be qualified as an “outside director” (or
shall satisfy any successor standard thereto) for purposes of Section 162(m), and shall
serve at the pleasure of the Board; provided, however, that an inadvertent failure of any
member of the Committee to be so qualified shall not invalidate any action or
determination made by the Committee.  

        “Common
Stock” means the Common Stock, par value $.01 per share, of the Company.  

        “Company” means
CIT Group Inc., a Delaware corporation, or any successor to all or substantially all of
the Company’s business that adopts the Plan.  

        “Deferred
Compensation Plan” means the CIT Group Inc. Deferred Compensation Plan, as from time
to time amended, or any other plan or arrangement adopted by the Company that permits the
voluntary deferral of Awards.  

        “Disability” means
a physical or mental impairment sufficient to make a Participant eligible for benefits
under the Company’s Long-Term Disability Plan; provided, however, that, if payment
or settlement of an Award subject to Section 409A of the Code is to be accelerated solely
as a result of a Participant’s Disability, Disability shall have the meaning set
forth in Section 409A of the Code.  

        “Eligible
Executive” means each executive officer of the Company and each other key employee
designated from time to time by the Committee as eligible to participate in the Plan.  

        “Employment
Agreement” means any written employment agreement between a Participant and the
Company or one of its Subsidiaries that is in effect at the time of a Participant’s
termination of employment with the Company and its Subsidiaries.  

        “Equity-Based
Award” means any portion of an Award that is paid in, or settled or exercisable for,
shares of Common Stock or that is denominated in units that are valued with reference to,
or settled in shares of, Common Stock, including, without limitation, stock, restricted
stock, stock units, stock appreciation rights or options.  

        “Equity
Plan” means any plan adopted by the Company and approved by its shareholders
pursuant to the terms of which Equity-Based Awards may be granted to Participants.  

        “Fair
Market Value” means, for purposes of Equity-Based Awards, the closing sale price of
a share of Common Stock on the date of determination as reported on the composite tape
for securities listed on the principal securities exchange on which the Common Stock is
listed or such other comparable method for determining fair market value approved by the
Committee.  

        “Maximum
Amount” means the Value of the percentage of the Pool Amount allocated to a
Participant in accordance with Section 4(a). The maximum Value of an Award granted to an
individual  

 
	 	
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Participant for a Performance Period
may not exceed ten million dollars ($10,000,000). 

        “Net
Income,” for any Performance Period, means the Company’s consolidated net
income for the Performance Period, before extraordinary items and the cumulative effect
of tax law changes and/or accounting changes, determined in accordance with generally
accepted accounting principles consistently applied, and as reported by management of the
Company to the Board following the end of the Performance Period as will be reflected in
the audited financial statements for the Performance Period, or other books and records
of the Company if the Performance Period does not correspond to the calendar year.  

        “Participant” means,
for a Performance Period, each Eligible Executive who is designated by the Committee as a
participant in the Plan in accordance with Section 4(a) for that Performance Period.  

        “Performance
Period” means the fiscal year of the Company.  

        “Plan” means
this CIT Group Inc. Executive Incentive Plan, as amended or restated from time to time.  

        “Pool
Amount” means the Value for a particular Performance Period of two percent (2%) of
Net Income for the Performance Period.  

        “Retirement” shall
mean either (i) a Participant’s election to retire upon attaining his or her Normal
Retirement Age; or (ii) a Participant’s election to retire upon (A) completing at
least a 10-year Period of Benefit Service and (B) having either (1) attained age 55 or
(2) incurred an Eligible Termination and, at the time of such Eligible Termination,
having attained age 54. For purposes of this definition, the terms “Normal
Retirement Age,” “Period of Benefit Service” and “Eligible Termination” shall
have the meanings as defined in the Retirement Plan.  

        “Retirement
Plan” means the CIT Group Inc. Retirement Plan, as amended or restated from time to
time.  

        “Section
162(m)” means Section 162(m) of the Code.  

        “Severance
Plan” means the CIT Executive Severance Plan, as in effect from time to time or any
successor plan thereto.  

        “Subsidiary” means
(i) a corporation or other entity with respect to which the Company, directly or
indirectly, has the power, whether through the ownership of voting securities, by
contract or otherwise, to elect at least a majority of the members of such corporation’s
board of directors or analogous governing body or (ii) any other corporation or other
entity in which the Company, directly or indirectly, has an equity or similar interest
and which the Committee designates as a Subsidiary for purposes of the Plan.  

        “Value” means
(i) with respect to the Pool Amount or the Maximum Amount, the dollar value thereof as of
the last day of the Performance Period, and (ii) with respect to (A) any portion of an
Award paid in cash, the dollar value thereof at the time of payment, (B) any portion of
an Award paid in shares of Common Stock or denominated in stock units corresponding to
shares of Common Stock, the Fair Market Value of a share of Common Stock on the date of
grant multiplied by the number of such shares or units, as applicable, (C) any portion of
an Award paid in options exercisable for shares of Common Stock, the value of such option
as of the date of grant determined in accordance with Statement of Financial Accounting
Standards 123R and utilized by the Company for financial accounting purposes, and (D)
with respect to the portion of the Award paid in any other property not described in
clause (ii)(B) or (C) hereof, the market value of such property at the time of grant as
reasonably determined by the Committee.  

3. Administration 

        (a)
Power and Authority of the Committee. The Plan shall be administered by the Committee
which shall have full power and authority, subject to the express provisions hereof:  

	  	        (i)
to select Participants from the Eligible Executives; 

	  	        (ii)
to determine the amount of any Award; 

	  	        (iii)
to prescribe, amend and rescind rules and procedures relating       to the Plan; 

	  	        (iv)
subject to the provisions of the Plan, applicable laws, rules       and regulations and
such additional limitations and restrictions as the       Committee may impose, to
delegate to one or more officers of the Company       some or all of its authority under
the Plan; 

	  	        (v)
to employ such legal counsel, independent auditors and       consultants as it deems
desirable for the administration of the Plan and       to rely upon any opinion or
computation received therefrom; and 

 
	 	
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	  	        (vi)
to make all other determinations and take all other actions as       may be necessary,
appropriate or advisable for the administration of the       Plan. 

        (b)
Plan Construction and Interpretation. The Committee shall have full power and authority,
subject to the express provisions hereof, to construe and interpret the Plan.  

        (c)
Determinations of Committee Final and Binding. All determinations by the Committee in
carrying out and administering the Plan and in construing and interpreting the Plan shall
be made in the Committee’s sole discretion and shall be final, binding and
conclusive for all purposes and upon all persons interested herein.  

        (d)
Liability of Committee. No member of the Committee (or its delegates) shall be liable for
any action or determination made in good faith, and the members of the Committee (and its
delegates) shall be entitled to indemnification and reimbursement in the manner provided
in the Company’s Certificate of Incorporation as it may be amended from time to
time. In the performance of its responsibilities with respect to the Plan, the Committee
shall be entitled to rely upon information and advice furnished by the Company’s
officers, the Company's accountants, the Company's counsel and any other party the
Committee deems necessary, and no member of the Committee shall be liable for any action
taken or not taken in reliance upon any such advice.  

4. Awards 

        (a)
Performance Targets. No later than 90 days after the beginning of a Performance Period
(or such earlier or later date as may be permitted or required by Section 162(m)), the
Committee shall designate from among the Eligible Executives the Participants for that
Performance Period and shall allocate to each Participant so designated a percentage of
the Pool Amount for that Performance Period; provided, however, that the total of all
such percentages shall not exceed one hundred percent (100%), and the maximum percentage
for any single Participant shall not exceed thirty percent (30%).  

        (b)
Grant of Award. Following the completion of each Performance Period, the Committee shall
certify in writing the Net Income for the Performance Period and the Maximum Amount
payable to each Participant. At such time, the Committee shall also determine and specify
the portion of the Maximum Amount that shall be awarded to the Participant as an Award
for that Performance Period. The Value of an Award to a Participant for a Performance
Period may not exceed the Value of the Participant’s Maximum Amount. The aggregate
Value of all Awards under the Plan for any Performance Period shall not exceed the Value
of the Pool Amount for the Performance Period. In determining the amount of the Award to
be granted to a Participant for a given Performance Period, the Committee shall take into
account any factors that the Committee may deem relevant to the assessment of individual
or corporate performance for the Performance Period.  

        (c)
Payment of Awards. Awards that are not deferred in accordance with Section 4(d) below
shall be paid to the Participant on a date after the end of the Performance Period that
is no later than 21/2 months following the end of such Performance Period. Awards may be
paid in cash, Equity-Based Awards or any other form of consideration or any combination
thereof determined by the Committee. Awards may be granted subject to such vesting,
forfeiture, transfer or such other restrictions (or any combination thereof) as the
Committee shall specify. The component of any Award that is an Equity-Based Award shall
be granted under the terms and conditions of an Equity Plan. If the Committee determines
that a component of an Award shall consist of an Equity-Based Award, then solely for
purposes of determining the number of shares of Common Stock subject to an Award, the
Committee may value such shares at a discount to Fair Market Value in its discretion,
including to reflect any applicable transfer or forfeiture restrictions or other
conditions and limitations; provided, however, that the Value of all components of the
Award cannot exceed the Value of the Maximum Amount; and provided, further, that no
portion of an Equity-Based Award that is an option or stock appreciation right shall have
an exercise price per share that is less than the Fair Market Value of a share of Common
Stock on the date of grant.  

        (d)
Deferral. Subject to applicable laws, including, without limitation, Section 409A of the
Code, the Committee may (i) require the mandatory deferral of some or all of an Award on
terms specified by the Committee in connection with such mandatory deferral or (ii)
permit a Participant to elect to defer a portion of an Award in accordance with the
provisions of the Deferred Compensation Plan.  

        (e)
Adjustments. Certain adjustments shall apply to Net Income to take into account any one
or more of the following with respect to the relevant Performance Period:  

 
	 	
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	  	        (i)
the gain, loss, income or expense reported publicly by the       Company with respect to
the Performance Period that is extraordinary or       unusual in nature or infrequent in
occurrence as defined by the United       States Generally Accepted Accounting
Principles, excluding gains or losses       on the early extinguishment of debt; 

	  	        (ii)
the gains or losses resulting from, and the direct expenses       incurred in connection
with, the disposition of a business, in whole or in       part, or the sale of non-core
assets; 

	  	        (iii)
the gain or loss from all or certain claims, litigation and/or       regulatory
proceedings and all or certain insurance recoveries relating to       claims or
litigation; 

	  	        (iv)
the impact of impairment of intangible assets; 

	  	        (v)
the impact of restructuring or business recharacterization       activities, including,
but not limited to, terminations of office leases,       or reductions in force, that are
reported publicly by the Company; and 

	  	        (vi)
the impact of changes in United States Generally Accepted       Accounting Principles and
statutory tax rates not contemplated in the       Performance Period. 

5. Termination of
Employment 

        (a)
Death; Disability; Retirement. If a Participant’s employment with the Company and
its Subsidiaries terminates prior to payment of an Award in accordance with Section 4(c)
by reason of the Participant’s death, Disability or Retirement, the Participant will
remain eligible, subject to Section 4 hereof, to receive an Award with respect to such
Performance Period. Such award shall be determined and payable in accordance with Section
4 above, except that the amount, if any, of the Award shall be prorated to take into
account the number of days that the Participant was employed by the Company and its
Subsidiaries during the Performance Period.  

        (b)
Other Terminations. If a Participant’s employment with the Company or a Subsidiary
terminates prior to the payment of an Award for a Performance Period for a reason not
described in Section 5(a), the Participant’s participation in the Plan for such
Performance Period shall terminate forthwith and the Participant shall not be entitled to
an Award for such Performance Period.  

        (c)
Employment Agreements; Severance Plan. The terms of this Section 5 may be modified by the
terms of (i) the Severance Plan, if the Participant is a participant therein, or (ii) any
Employment Agreement applicable to a Participant, and in the event of any conflict
between the terms of this Section 5 and the terms of the Severance Plan or an Employment
Agreement, as applicable, the terms of the Severance Plan or the Employment Agreement, as
applicable, shall control.  

6. Effective Date 

        The
Plan shall be effective for Performance Periods beginning on or after January 1, 2007,
subject to the approval of the Plan prior to that date by the stockholders of the
Company, and no Awards may be made under the Plan if stockholder approval is not obtained. 

7. Amendment and
Termination 

        Subject
to applicable laws, rules and regulations, the Board or the Committee may at any time
amend, suspend, discontinue or terminate the Plan; provided, however, that no such action
shall be effective without approval by the stockholders of the Company to the extent
necessary to continue to qualify the amounts payable hereunder as performance-based
compensation under Section 162(m). 

8. Miscellaneous 

        (a)
Tax Withholding. The Company or a Subsidiary, as appropriate, may require any individual
entitled to receive a payment of an Award to remit to the Company, prior to payment, an
amount sufficient to satisfy any applicable tax withholding requirements. In the case of
an Award payable in Shares, the Company or a Subsidiary, as appropriate, may permit or
require a Participant to satisfy, in whole or in part, such obligation to remit taxes by
directing the Company to withhold shares that would otherwise be received by such
individual or to repurchase shares that were issued to the Participant to satisfy the
minimum statutory withholding rates for any applicable tax withholding purposes, in
accordance with all applicable laws and pursuant to such rules as the Committee may
establish from time to time. The Company or a Subsidiary, as appropriate, shall also have
the right to deduct from all cash payments made to a Participant (whether or not such
payment is made in connection with an Award) any applicable taxes required to be withheld
with respect to such payments.  

 
	 	
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        (b)
No Rights to Awards or Employment. This Plan is not a contract between the Company and an
Eligible Executive or Participant. No Eligible Executive shall have any claim or right to
receive Awards under the Plan. Nothing in the Plan shall confer upon any employee of the
Company any right to continued employment with the Company or interfere in any way with
the right of the Company to terminate the employment of any of its employees at any time,
with or without cause, including, without limitation, any individual who is then a
Participant in the Plan.  

        (c)
Other Compensation. Nothing in this Plan shall preclude or limit the ability of the
Company to pay any compensation to a Participant under the Company’s other
compensation and benefit plans, programs and arrangements, including, without limitation,
any Equity Plan or bonus plan, program or arrangement.  

        (d)
No Limitation on Corporate Actions. Nothing contained in the Plan shall be construed to
prevent the Company or any Subsidiary from taking any corporate action, whether or not
such action would have an adverse effect on any Awards made under the Plan. No
Participant, beneficiary or other person shall have any claim against the Company or any
Subsidiary as a result of any such action.  

        (e)
Unfunded Plan. The Plan is intended to constitute an unfunded plan for incentive
compensation. Prior to the payment of any Award, nothing contained herein shall give any
Participant any rights that are greater than those of a general creditor of the Company.
In its sole discretion, the Committee may authorize the creation of trusts or other
arrangements to meet the obligations created under the Plan to deliver payment in cash or
other amounts with respect to Awards hereunder.  

        (f)
Non-Transferability. Except as expressly provided herein, no Participant or beneficiary
shall have the power or right to sell, transfer, assign, pledge or otherwise encumber or
dispose of the Participant’s interest under the Plan.  

        (g)
Designation of Beneficiary. A Participant may designate a beneficiary or beneficiaries to
receive any payments which may be made following the Participant’s death in
accordance with the Company’s policies as in effect from time to time.  

        (h)
Severability. If any provision of this Plan is held unenforceable, the remainder of the
Plan shall continue in full force and effect without regard to such unenforceable
provision and shall be applied as though the unenforceable provision were not contained
in the Plan. In addition, if any provision of this Plan would cause Awards not to
constitute “qualified performance-based compensation” under Section 162(m) of
the Code, that provision shall be severed from, and shall be deemed not to be a part of,
the Plan, but the other provisions hereof shall remain in full force and effect. Any
specific action by the Committee that would be violative of Section 162(m) of the Code
and the regulations thereunder shall be void.  

        (i)
Expenses. The costs and expenses of administering the Plan shall be borne by the Company.  

        (j)
Arbitration. Any dispute, controversy or claim arising out of or relating to the Plan
that cannot be resolved by the Participant on the one hand, and the Company on the other,
shall be submitted to arbitration in the State of New Jersey under the National Rules for
the Resolution of Employment Disputes of the American Arbitration Association; provided,
however, that any such submission by the Participant must be made within one (1) year of
the date of the events giving rise to such dispute, controversy or claim. The
determination of the arbitrator shall be conclusive and binding on the Company and the
Participant, and judgment may be entered on the arbitrator’s award in any court
having jurisdiction. The expenses of such arbitration shall be borne by the Company;
provided, however, that each party shall bear its own legal expenses unless the
Participant is the prevailing party, in which case the Company shall promptly pay or
reimburse the Participant for the reasonable legal fees and expenses incurred by the
Participant in connection with such contest or dispute (excluding any fees payable
pursuant to a contingency fee arrangement).  

        (k)
Governing Law. The Plan and all actions taken thereunder shall be governed by and
construed in accordance with and governed by the laws of the State of New York.  

 
	 	
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Exhibit 10.2

SM&A

SECOND AMENDED AND RESTATED

EQUITY INCENTIVE PLAN

	1.	 	Purposes.

     (a) The purpose of the Plan is to provide a means by which selected employees, Directors and
Consultants of SM&A (the “Company”) and its Affiliates may be given an opportunity to benefit from
increases in value of the stock of the Company through the granting of Awards (as defined below).

     (b) The Company, by means of the Plan, seeks to retain the services of persons who are now
Employees, Directors or Consultants of the Company or its Affiliates to secure and retain the
services of new Employees, Directors and Consultants, and to provide incentives for such persons to
exert maximum efforts for the success of the Company and its Affiliates.

     (c) The Company intends that the Options issued as Awards under the Plan shall, in the
discretion of the Board or the Committee, be either Incentive Stock Options and Nonstatutory Stock
Options (in each case as defined below). All Options shall be separately designated Incentive
Stock Options or Nonstatutory Stock Options at the time of grant, and in such form as issued
pursuant to Section 6, and a certificate or certificates will be issued for shares
purchased on exercise of such Options.

	2.	 	Definitions.

     (a) “Accelerate” or “Accelerated” means (i) when used with respect to an
Option, that as of the time of reference the Option will become exercisable with respect to some or
all of the shares of Common Stock for which it was not then otherwise exercisable by its terms and
(ii) when used with respect to Restricted Stock, that the Risk of Forfeiture otherwise applicable
to such Restricted Stock shall expire with respect to some or all of such shares of Restricted
Stock then still otherwise subject to such Risk of Forfeiture.

     (b) “Affiliate” means any parent corporation or subsidiary corporation, whether now or
hereafter existing, as those terms are defined in Sections 424(e) and (f) respectively, of the
Code.

     (c) “Award” means any grant or sale pursuant to the Plan of Options or Restricted
Stock.

     (d) “Award Agreement” means a written agreement between the Company and the recipient
of an Award evidencing the terms and conditions of the Award. Each Award Agreement shall be
subject to the terms and conditions of the Plan.

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

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

     (g) “Committee” means a Committee appointed by the Board in accordance with
Section 3(c) of the Plan.

     (h) “Company” means SM&A, a California corporation.

     (i) “Consultant” means any person, including an advisor, engaged by the Company or an
Affiliate to render consulting or advisory services and who is compensated for such services,
provided that the term “Consultant” shall not include Directors who are paid only a director’s fee
by the Company or who are not compensated by the Company for their services as Directors.

     (j) “Continuous Status as an Employee, Director or Consultant” means the employment or
relationship as an Employee, Director or Consultant is not interrupted or terminated. Continuous
Status as an Employee, Director or Consultant shall be considered interrupted in the case of any
leave of absence, including sick leave, military leave or any other personal leave;
provided, however, that for purposes of Incentive Stock Options, any such leave
exceeding three (3) months shall be considered an interruption in the Continuous Status as an
Employee, Director or Consultant, as applicable, unless reemployment upon the expiration of such
leave is guaranteed by contract, Company policies or statute.

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

     (l) “Employee” means any person, including Officers and Directors, employed by the
Company or any Affiliate of the Company. Neither service as a Director nor payment of a director’s
fee by the Company shall be sufficient to constitute “employment” by the Company.

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

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

          (i) If the Common Stock is admitted to trading or listed on a national securities exchange,
the last reported sale price on that day regular way, or if no such reported sale takes place on
that day, the average of the last reported bid and ask prices on that day regular way, in either
case on the principal national securities exchange on which the Common Stock is admitted to trading
or listed.

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          (ii) If not listed or admitted to trading on any national securities exchange, the last sale
price regular way on that day reported on the Nasdaq National Market (“Nasdaq National Market”) of
the Nasdaq Stock Market (“NSM”) or, if no such reported sale takes place on that day, the average
of the closing bid and ask prices regular way on that day.

          (iii) If not traded or listed on a national securities exchange or included in the Nasdaq
National Market, the last reported sale price on that day regular way, or if no such reported sale
takes place on that day, the average of the closing bid and ask prices regular way on that day
reported by the NSM, or any comparable system on that day.

          (iv) If the Common Stock is not included in (i), (ii) or (iii) above, the last reported sale
price on that day regular way, or if no such reported sale takes place on that day, the closing bid
and ask prices regular way on that day as furnished by any member of the National Association of
Securities Dealers, Inc. (“NASD”) selected from time to time by the Company for that purpose.

If the national securities exchange, Nasdaq National Market, NSM, or NASD, as applicable, are
closed on such date, the “Fair Market Value” shall be determined as of the last preceding day on
which the Common Stock was traded or for which bid and ask prices are available. In the case of an
Incentive Stock Option, “Fair Market Value” shall be determined without reference to any
restriction other than one that, by its terms, will never lapse.

     (o) “Incentive Stock Option” means an Option intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

     (p) “Nonstatutory Stock Option” means an Option not intended to qualify as an
Incentive Stock Option.

     (q) “Officer” means 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.

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

     (s) “Optionee” means a Participant to whom an Option has been granted.

     (t) “Participant” means any Employee, Director or Consultant who is granted an Award
under the Plan

     (u) “Plan” means this Second Amended and Restated 1997 Stock Option Plan.

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     (v) “Restricted Stock” means a grant or sale of Common Stock to a Participant subject
to a Risk of Forfeiture.

     (w) “Restriction Period” means the period of time, established by the Committee in
connection with an Award of Restricted Stock, during which the shares of Restricted Stock are
subject to a Risk of Forfeiture described in the applicable Award Agreement.

     (x) “Risk of Forfeiture” means a limitation on the right of the Participant to retain
Restricted Stock, including a right of the Company to reacquire shares of Restricted Stock at less
than their then Fair Market Value, arising because of the occurrence or non-occurrence of specified
events or conditions.

     (y) “Rule 16b-3” means Rule 16b-3 under the Exchange Act or any successor to Rule
16b-3.

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

	3.	 	Administration.

     (a) The Plan shall be administered by the Board unless and until the Board delegates
administration to a Committee.

     (b) 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 which of the persons eligible under the Plan shall be
granted Awards, when and how Awards shall be granted and the provisions of each Award granted
(which need not be identical);

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

          (iii) To amend the Plan as provided in Section 12; and

          (iv) Generally, to exercise such powers and to perform such acts as the Board deems necessary
or advisable to promote the best interests of the Company.

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     (c) The Board may delegate administration of the Plan to a committee composed of not fewer
than two (2) members of the Board (the “Committee”), provided, however,
that the Board may administer the Plan for any grants to Participants who are not subject to Code
Section 162(m). The Board may remove members from, or add members to, the Committee at any time.
The Board may also abolish the Committee at any time and revest in the Board the administration of
the Plan. To the extent possible and advisable, the Committee shall be composed of individuals
that satisfy Rule 16b-3 and Section 162(m) of the Code. 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 (and references in this Plan to the Board shall thereafter be to
the Committee), subject, however, to such resolutions, not inconsistent with the provisions of the
Plan, as may be adopted from time to time by the Board.

	4.	 	Shares Subject to the Plan.

     (a) Subject to the provisions of Section 11 relating to adjustments upon changes in
stock, the number of shares of Common Stock that may be issued pursuant to Awards shall not exceed
in the aggregate Five Million (5,000,000) shares of the Company’s Common Stock (or such lesser
number of shares as is permitted under Section 260.140.45 of Title 10 of the California Code of
Regulations, if applicable, or other comparable or applicable state law, if any). The maximum
number of shares of the Company’s Common Stock that may be issued to a single Participant pursuant
to Awards under the Plan is Five Hundred Thousand (500,000).

     (b) If any Option shall for any reason expire or otherwise terminate, in whole or in part,
without having been exercised in full, or if any other Award is forfeited by the recipient, the
shares of Common Stock not purchased by the Optionee or which are forfeited by the recipient shall
revert to and again become available for issuance under the Plan.

     (c) If an Optionee surrenders any shares of stock issued pursuant to Options as payment of the
purchase price of other shares of stock acquired pursuant to Options, the shares so surrendered
shall revert to and again become available for issuance under the Plan.

     (d) If the Company reacquires any shares of stock issued pursuant to Options or withholds any
shares of stock issued pursuant to Options to pay withholding taxes in connection with the exercise
of Options, the shares so acquired or withheld shall revert to and again become available for
issuance under the Plan.

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	5.	 	Eligibility; Transferability.

     (a) Eligibility. The Committee may grant from time to time and at any time prior to
the termination of the Plan one or more Awards, either alone or in combination with any other
Awards, to any Employee, Director or Consultant. However, Incentive Stock Options may be granted
only to Employees. In addition, no person shall be eligible for the grant of an Incentive Stock
Option if, at the time of grant, such person 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 of any of its Affiliates (“Ten Percent Owner”) unless the
exercise price of such Incentive Stock Option is at least one hundred ten percent (110%) of the
Fair Market Value of such stock at the date of grant and the term of such Incentive Stock Option is
no more than five (5) years.

     (b) Transferability. An Award shall not be transferable except by will or by the laws
of descent and distribution, and a Participant’s rights in an Award shall be exercisable during the
lifetime of the person to whom the Award is granted only by such Participant.

	6.	 	Specific Terms of Awards.

     (a) Options.

          Each Option shall be in such form and shall contain such terms and conditions as the Board
shall deem appropriate. The provisions of separate Options need not be identical, but each Option
shall include (through incorporation of provisions hereof by reference in the Option or otherwise)
the substance of each of the following provisions:

          (i) Term. No Option shall be exercisable after the expiration of ten (10) years from
the date it was granted. The date of grant of an Option will be the date on which the Board or the
Committee makes the determination to grant such Option, unless a later date is otherwise specified
by the Board or the Committee

          (ii) Price.

               (a) No Option shall have an exercise price that is less than eighty-five percent (85%) of the
Fair Market Value of the stock subject to the Option on the date the Option is granted.

               (b) The exercise price of each Incentive Stock Option shall be not less than one hundred
percent (100%) of the Fair Market Value of the stock subject to the Incentive Stock Option on the
date the Incentive Stock Option is granted and one hundred ten percent (110%) in the case of a Ten
Percent Owner.

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               (c) The exercise price of each Option granted to the Chief Executive Officer of the Company or
any employee whose total compensation for the fiscal year in which such Option is granted is
required to be reported to shareholders under the Exchange Act by reason of such employee being
among the four (4) highest compensated officers (other than the Chief Executive Officer) of the
Company for such fiscal year shall be not less than one hundred percent (100%) of the Fair Market
Value of the Stock subject to the Option on the date the Option is granted, if it is intended that
the Option be exempt from the million dollar compensation deduction limitation of Code Section
162(m).

          (iii) Consideration. The purchase price of Common Stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and regulations, either (i) in
cash at the time the Option is exercised, (ii) at the discretion of the Board or the Committee,
either at the time of the grant or exercise of the Option, by delivering to the Company other
shares of Common Stock of the Company (provided that the shares have been held for the period
required (if any) to avoid a charge to the Company’s reported earnings), (iii) at the time of the
exercise of the Option, by delivering to the Company all or any part of an Option granted under
this Plan for a cashless exercise (provided that such cashless exchange will not result in a charge
to the Company’s reported earnings), or (iv) by tendering any other form of legal consideration
that may be acceptable to the Board. For the purposes of this paragraph, a “cashless exercise”
shall be effected by one of the following methods:

               (a) through a “same day sale” commitment from the Optionee and a broker-dealer that is a
member of the National Association of Securities Dealers (an “NASD Dealer”) whereby the Optionee
irrevocably elects to exercise the Option and to sell a portion of the shares so purchased
sufficient to pay the total exercise price for all shares so purchased, and whereby the NASD Dealer
irrevocably commits upon receipt of such shares to forward such total exercise price directly to
the Company; or

               (b) through a “margin” commitment from the Optionee and an NASD Dealer whereby the Participant
irrevocably elects to exercise the Option and to pledge the shares so purchased to the NASD Dealer
in a margin account as security for a loan from the NASD Dealer in the amount of the total exercise
price for all shares so purchased, and whereby the NASD Dealer irrevocably commits upon receipt of
such shares to forward such total exercise price directly to the Company.

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          (iv) Vesting. The total number of shares of Common Stock subject to an Option may,
but need not, be allotted in periodic installments (which may, but need not, be equal). However,
any Optionee who is not an Officer or Director of, or a Consultant to, the Company shall have the
right to exercise such Option at the rate of at least twenty percent (20%) per year over the five
years from the date the Option is granted, subject to reasonable conditions such as continued
employment. The Option Agreement may provide that from time to time during each of such
installment periods, the Option may become exercisable (“vest”) with respect to some or all of the
shares allotted to that period, and may be exercised with respect to some or all of the shares
allotted to such period and/or any prior period as to which the Option became vested but was not
fully exercised. The Option may be subject to such other terms and conditions on the time or times
when it may be exercised (which may be based on performance or other criteria) as the Board may
deem appropriate. Notwithstanding any vesting provided for in the Option Agreement, no Option may
be exercised for (i) less than One Hundred (100) shares of Common Stock of the Company or, if less,
the remaining number of shares available under the Option, or, if less, or (ii) fractional shares
of Common Stock of the Company.

          (v) Termination of Employment or Relationship as a Director or Consultant. In the
event an Optionee’s Continuous Status as an Employee, Director or Consultant terminates (other than
upon the Optionee’s death or disability), the Optionee may exercise his or her Option (to the
extent that the Optionee was entitled to exercise it at the date of termination) but only within
such period of time ending on the earlier of (i) the date ninety (90) days after the termination of
the Optionee’s Continuous Status as an Employee, Director or Consultant (or such longer period
specified in the Option Agreement), or (ii) the expiration of the term of the Option as set forth
in the Option Agreement. If, at the date of termination, the Optionee is not entitled to exercise
his or her entire Option, the shares covered by the unexercisable (unvested) portion of the Option
shall revert to and again become available for issuance under the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified in the Option Agreement, the
Option shall terminate, and the shares covered by such Option shall revert to and again become
available for issuance under the Plan.

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          (vi) Disability of Optionee. In the event an Optionee’s Continuous Status as an
Employee, Director or Consultant terminates as a result of the Optionee’s disability, the Optionee
may exercise his or her Option (to the extent that the Optionee was entitled to exercise it at the
date of termination), but only within such period of time ending on the earlier of (i) the date six
(6) months following such termination (or such longer period specified in the Option Agreement), or
(ii) the expiration of the term of the Option as set forth in the Option Agreement. If, at the
date of termination, the Optionee is not entitled to exercise his or her entire Option, the shares
covered by the unexercisable (unvested) portion of the Option shall revert to and again become
available for issuance under the Plan. If, after termination, the Optionee does not exercise the
vested portion of his or her Option within the time specified herein, the Option shall terminate,
and the shares covered by the vested portion of such Option shall revert to and again become
available for issuance under the Plan.

          (vii) Death of Optionee. In the event of the death of an Optionee during, or within a
period specified in the Option after the termination of the Optionee’s Continuous Status as an
Employee, Director or Consultant, the Option may be exercised (to the extent the Optionee was
entitled to exercise the Option at the date of death) by the Optionee’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 Optionee’s death pursuant to Section 5(d), but only within the
period ending on the earlier of (i) the date twelve (12) months following the date of death (or
such longer period specified in the Option Agreement), or (ii) the expiration of the term of such
Option as set forth in the Option Agreement. If, at the time of death, the Optionee was not
entitled to exercise his or her entire Option, the shares covered by the unexercisable (unvested)
portion of the Option shall revert to and again become available for issuance under the Plan. If,
after death, the vested portion of the Option is not exercised within the time specified herein,
the Option shall terminate, and the shares covered by the vested portion of such Option shall
revert to and again become available for issuance under the Plan.

     (b) Restricted Stock.

          (i) Purchase Price. Shares of Restricted Stock shall be issued under the Plan for
such consideration, in cash, other property or services, or any combination thereof, as is
determined by the Committee.

          (ii) Issuance of Certificates. Each Participant receiving a Restricted Stock Award,
subject to subsection (iii) below, shall be issued a stock certificate in respect of such shares of
Restricted Stock. Such certificate shall be registered in the name of such Participant, and, if
applicable, shall bear an appropriate legend referring to the terms, conditions, and restrictions
applicable to such Award substantially in the following form:

THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS OF THE COMPANY’S
SECONDED AMENDED AND RESTATED 1997 STOCK OPTION PLAN AND AN AWARD
AGREEMENT ENTERED INTO BY THE REGISTERED OWNER AND THE COMPANY. COPIES OF
SUCH PLAN AND AGREEMENT ARE ON FILE IN THE OFFICES OF THE COMPANY.

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          (iii) Escrow of Shares. The Committee may require that the stock certificates
evidencing shares of Restricted Stock be held in custody by a designated escrow agent (which may
but need not be the Company) until the restrictions thereon shall have lapsed, and that the
Participant deliver a stock power, endorsed in blank, relating to the shares of Common Stock
covered by such Award.

          (iv) Restrictions and Restriction Period. During the Restriction Period applicable to
shares of Restricted Stock, such shares shall be subject to limitations on transferability and a
Risk of Forfeiture arising on the basis of such conditions related to the performance of services,
Company performance or otherwise as the Committee may determine and provide for in the applicable
Award Agreement. Any such Risk of Forfeiture may be waived or terminated, or the Restriction
Period shortened, at any time by the Committee on such basis as it deems appropriate.

          (v) Rights Pending Lapse of Risk of Forfeiture or Forfeiture of Award. Except as
otherwise provided in the Plan or the applicable Award Agreement, at all times prior to lapse of
any Risk of Forfeiture applicable to, or forfeiture of, an Award of Restricted Stock, the
Participant shall have all of the rights of a shareholder of the Company, including the right to
vote, and the right to receive any dividends with respect to, the shares of Restricted Stock. The
Committee, as determined at the time of Award, may permit or require the payment of cash dividends
to be deferred and, if the Committee so determines, reinvested in additional Restricted Stock to
the extent shares are available under Section 4 of the Plan.

          (vi) Lapse of Restrictions. If and when the Restriction Period expires without a
prior forfeiture of the Restricted Stock, the certificates for such shares shall be delivered to
the Participant promptly if not theretofore so delivered.

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	7.	 	Cancellation and Re-grant of Options.
	 
	 	 	[Intentionally Omitted]
	 
	8.	 	Covenants of the Company.

     The Company shall seek to obtain from each regulatory commission or agency having jurisdiction
over the Plan such authority as may be required to issue and sell shares of Common Stock in
connection with the grant or exercise of Awards. However, this undertaking shall not require the
Company to register under the Securities Act either the Plan, any Awards, or any Common Stock
issued or issuable pursuant to any Awards. If the Company is unable to obtain from any such
regulatory commission or agency the authority which 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 subject to any Award unless and until such
authority is obtained.

	9.	 	Use of Proceeds.

     Proceeds from the sale of Common Stock upon the exercise of the Options or in connection with
any Restricted Stock Award shall constitute the general funds of the Company.

	10.	 	Miscellaneous.

     (a) Neither a Participant nor any person to whom an Award is transferred under Section
5(d) 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 such Award unless and until such person has satisfied all
requirements for exercise of the Award pursuant to its terms.

     (b) Nothing in the Plan or any Award granted pursuant thereto shall confer upon any Employee,
Director, Consultant or other holder of an Award any right to continue in the employ of the Company
or any Affiliate (or to continue acting as a Director or Consultant) or shall affect the right of
the Company or any Affiliate to terminate the employment or relationship as a Director or
Consultant of any Employee, Director, Consultant or other holder of Options with or without cause.

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     (c) To the extent that the aggregate Fair Market Value (determined at the time of grant) of
stock with respect to which Incentive Stock Options are granted are exercisable for the first time
by an Optionee during any calendar year under all plans of the Company and its Affiliates exceeds
One Hundred Thousand Dollars ($100,000), the Options or portions thereof which exceed such limit
(according to the order in which they were granted) shall be treated as Nonstatutory Stock Options.

     (d) To the extent provided by the terms of an Award Agreement, the person to whom an Award is
granted may, at the discretion of the Board, satisfy any mandatory federal, state or local tax
withholding obligation relating to the exercise or acquisition of Common Stock under an Award by
any of the following means or by a combination of such means: (i) tendering cash payment; (ii)
authorizing the Company to withhold shares from the shares of Common Stock otherwise issuable to
the Participant as a result of the exercise or acquisition of Common Stock under the Award provided
that such arrangement will not result in a charge to the Company’s reported earnings; or (iii)
delivering to the Company owned and unencumbered shares of the Common Stock of the Company that
have been held for the period required (if any) to avoid a charge to the Company’s reported
earnings. The exercise of an Award shall be conditioned upon the receipt by the Company of
satisfactory evidence of the Participant’s satisfaction of any withholding obligations.

	11.	 	Adjustments Upon Changes in Stock.

     (a) Subject to any required action by shareholders, upon the occurrence of any change,
increase or decrease in the number and type of issued shares of Common Stock of the Company without
receipt of consideration by the Company that results from a stock split, a reverse stock split, a
stock dividend, a merger, consolidation, reorganization or reincorporation, a recapitalization, a
combination or reclassification of shares, change in corporate structure or other like capital
adjustment, an appropriate and proportionate adjustment shall be made in (i) the maximum number and
kinds of shares provided in Section 4(a), (ii) the number and kinds of shares or other securities
subject to any then outstanding Awards, (iii) the exercise price for each share or unit of other
securities subject to any then outstanding Options (without change in the aggregate purchase price
of such Options), and (iv) the repurchase price of each share of Restricted Stock then subject to a
Risk of Forfeiture in the form of a Company repurchase right.

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     (b) In the event of: (i) a dissolution, liquidation or sale of substantially all of the
assets of the Company; (ii) a merger or consolidation in which the Company is not the surviving
corporation; or (iii) a reverse merger in which the Company is the surviving corporation but the
shares of the Company’s Common Stock outstanding immediately preceding the merger are converted by
virtue of the merger into other property, whether in the form of securities, cash or otherwise,
then to the extent permitted by applicable law: (A) any surviving corporation shall assume any
Awards outstanding under the Plan or shall substitute similar Awards for those outstanding under
the Plan, or (B) such Awards shall continue in full force and effect. In the event any surviving
corporation refuses to assume or continue such Awards, or to substitute similar awards for those
outstanding under the Plan, then, with respect to Awards held by persons then performing services
as Employees, Directors or Consultants, such Awards shall be Accelerated in full as of the third
(3rd) business day prior to such event. Any Option so Accelerated shall terminate upon
the happening of such event if not exercised prior to such event.

	12.	 	Amendment of the Plan.

     (a) The Board at any time, and from time to time, may amend the Plan, provided that the
implementation of such amendment complies with all applicable laws.

     (b) Without the approval of the majority of the shareholders of the Company, the Board may not
amend the provisions of this Plan regarding:

          (i) The class of individuals entitled to receive Incentive Stock Options; or

          (ii) The maximum number of shares of Common Stock that may be issued under the Plan, except as
provided in Section 11 of this Plan.

     (c) Rights and obligations under any Award granted before amendment of the Plan shall not be
altered or impaired by any amendment of the Plan unless (i) the Company requests the consent of the
person to whom the Award was granted, and (ii) such person consents in writing.

	13.	 	Termination or Suspension of the Plan.

     (a) The Board may suspend or terminate the Plan at any time. Unless sooner terminated, the
Plan shall terminate on October 1, 2007. No Awards may be granted under the Plan while the Plan is
suspended or after it is terminated.

     (b) Rights and obligations under any Award granted while the Plan is in effect shall not be
altered or impaired by suspension or termination of the Plan, except with the consent to the person
to whom the Award was granted.

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	14.	 	Financial Information.

     The Company will provide to each Participant financial statements of the Company at least
annually in accordance with Section 260.140.46 of Title 10 of the California Code of Regulations.

	15.	 	Notice of Disqualifying Disposition of Incentive Stock Options.

     An Optionee must notify the Company if the Optionee disposes of stock acquired pursuant to the
exercise of an Incentive Stock Option issued under the Plan prior to the expiration of the holding
periods required to qualify for long-term capital gains treatment on the disposition.

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