Document:

Exhibit 10.1

 

REGISTRATION
RIGHTS AGREEMENT

 

THIS REGISTRATION RIGHTS AGREEMENT (this
“Agreement”) is made and entered into as of February 25, 2004 by and among
Cherokee International Corporation, a Delaware corporation (the “Company”),
OCM/GFI and GSC (each as defined herein), and the other persons listed on
Schedule I attached hereto (collectively, the “Securityholders”).

 

The Securityholders are the beneficial owners of certain Registrable
Securities (as defined below) issued by the Company.  The Company and the Securityholders deem it to be in their
respective best interests to set forth the rights and certain obligations of
the Securityholders or other Holders in connection with public offerings and
sales of the Registrable Securities.

 

NOW, THEREFORE, in consideration of the premises and mutual covenants
and obligations hereinafter set forth, the Company and the Securityholders,
intending to be legally bound hereby, agree as follows.

 

Section 1.                                          Definitions.  As used in
this Agreement, the following terms shall have the following meanings:

 

“Affiliate” of any Person shall mean any other Person who either
directly or indirectly through one or more intermediaries is in control of, is
controlled by, or is under common control with, such Person.  For purposes of this definition, “control”
when used with respect to any Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise.

 

“Business Day” shall mean any Monday, Tuesday, Wednesday, Thursday or
Friday that is not a day on which banking institutions in The City of New York
are authorized or required by law, regulation or executive order to close.

 

“Capital Stock” shall mean all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock.

 

“Common Stock” shall mean the common stock, par value $0.001 per share,
of the Company.

 

“Company Registration” has the meaning set forth in Section 4(a)
hereof.

 

“Demanding Holders” shall mean each Holder holding 10% or more of the
outstanding Common Stock at the time of determination.  As of the date hereof, OCM/GFI and GSC shall
constitute Demanding Holders.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended (or any similar successor federal statute), and the rules and
regulations thereunder, as the same are in effect from time to time.

 

“GSC” shall mean, collectively, GSC Recovery II, L.P., GSC Recovery
IIA, L.P., GSC Partners CDO Funds, Limited and GSC Partners CDO Fund II,
Limited, which shall

 

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constitute a single Holder for purposes of determining percentage
ownership of Common Stock hereunder.

 

“Holder” shall mean each Securityholder, any Affiliate of a
Securityholder that holds Registrable Securities and any Person that acquires
from a Securityholder Registrable Securities constituting 10% or more of the
then-outstanding shares of Common Stock. 
For purposes of this Agreement, the Company may deem the registered
holder of a Registrable Security as the Holder thereof.

 

“IPO” shall have the meaning set forth in Section 2(a).

 

“OCM/GFI” shall mean, collectively, OCM Principal Opportunities Fund,
L.P., OCM/GFI Power Opportunities Fund, L.P. and GFI Two LLC, which shall
constitute a single Holder for purposes of determining percentage ownership of
Common Stock hereunder.

 

“Other Restricted Stockholders” shall mean holders of shares of Common
Stock to which the Company has granted piggyback registration rights under the
Stockholders Agreement among the Company and its Securityholders party thereto,
dated November 27, 2002, as amended.

 

“Person” shall mean an individual, partnership, corporation, limited
liability company, joint venture, trust or unincorporated organization,
governmental or regulatory body or subdivision thereof or any other entity.

 

“Prospectus” shall mean the prospectus included in any Registration
Statement, as amended or supplemented by a prospectus supplement, with respect
to the terms of the offering of any portion of the Registrable Securities
covered by such Registration Statement, and by all other amendments and
supplements to the prospectus, including post-effective amendments and all
material incorporated by reference or deemed to be incorporated by reference in
such prospectus.

 

“Registrable Securities” shall mean the shares of Common Stock held by
the Securityholders as of the date hereof, as well as shares of Common Stock
underlying the other securities of the Company held by the Securityholders as
of the date hereof, and any other securities issued or issuable as a result of
or in connection with any stock dividend, stock split or reverse stock split,
reclassification, merger, consolidation or similar transaction in respect of
such shares of Common Stock; provided, however, that any shares
of Common Stock shall cease to be Registrable Securities upon the earliest of
the following:  (i) a Registration
Statement registering such shares of Common Stock under the Securities Act has
been declared or becomes effective and such shares of Common Stock have been
sold or otherwise transferred by the Holder or owner thereof pursuant to such
effective Registration Statement; (ii) such shares of Common Stock are
sold or otherwise transferred to the public pursuant to Rule 144; or (iii) all
such shares of Common Stock held by the Holder may be sold in a single
transaction without registration in compliance with Rule 144(k) under the
Securities Act.

 

“Registration Expenses” shall have the meaning set forth in
Section 7 hereof.

 

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“Registration Statement” shall mean any registration statement which
covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus included therein, all amendments and
supplements to such Registration Statement, including post-effective
amendments, all exhibits and all material incorporated or deemed to be
incorporated by reference in such Registration Statement.

 

“Requesting Securityholder Registration” has the meaning set forth in
Section 4(a) hereof.

 

“Rule 144” shall mean Rule 144 promulgated under the Securities Act, as
amended from time to time, or any similar successor rule thereto that may be
promulgated by the SEC.

 

“Rule 415” shall mean Rule 415 promulgated under the Securities Act, as
amended from time to time, or any similar successor rule thereto that may be
promulgated by the SEC.

 

“SEC” shall mean the Securities and Exchange Commission, or any other
federal agency at the time administering the Securities Act or the Exchange
Act.

 

“Securities Act” shall mean the Securities Act of 1933, as amended (or
any similar successor federal statute), and the rules and regulations
thereunder, as the same are in effect from time to time.

 

“Shelf Demanding Holder” shall mean any Holder that was a Demanding
Holder as of the date hereof that owns at least 5% of the outstanding shares of
Common Stock on the date a request is made by such Person pursuant to
Section 3 hereof.  As of the date
hereof, OCM/GFI and GSC shall constitute Shelf Demanding Holders.

 

“Shelf Registration” has the meaning set forth in Section 3(c)
hereof.

 

“Underwritten Offering” shall mean a registered offering in which
shares of Common Stock are sold to an underwriter for reoffering to the public.

 

Section 2.                                          Form
S-1 Registration.

 

(a)                                  Demand.  At any time commencing on the earlier of (i)
180 days following the first Underwritten Offering by the Company resulting in
gross proceeds to the Company of at least $75 million (the “IPO”) and (ii) the
first anniversary of the date of this Agreement, upon the written request of a
Demanding Holder that the Company effect an Underwritten Offering of
Registrable Securities on a long-form Registration Statement (Form S-1 or any
similar successor form) under the Securities Act and specifying the aggregate
number of Registrable Securities to be registered and the intended method of
disposition thereof, the Company shall, subject to Section 6(b) hereof,
use its reasonable best efforts to effect the registration under the Securities
Act of the Registrable Securities which the Company has been so requested to
register as soon as practicable; provided, however, that the
Company shall not be obligated to effect a registration pursuant to this
Section 2 unless the Registrable Securities requested to be included
therein have an anticipated aggregate price to the public of at least $50
million.  In addition, the Company

 

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shall not be obligated to effect, or to take any action to effect, any
such registration pursuant to this Section 2(a):  (w) after the Company has effected one (1) such registration; (x)
within 180 days following the last date on which a Registration Statement filed
in respect of a registration hereunder, if any, was effective; (y) during the
period commencing with the date thirty (30) days prior to the Company’s good
faith estimate of the date of filing of, and ending on a date ninety (90) days
after the effective date of, a Company Registration, provided that the Company
is actively employing in good faith all reasonable efforts to cause such
registration statement to become effective; provided, that if the Company
abandons such Company Registration, the Company shall promptly so notify any
Demanding Holder that was unable to effect a registration under this
Section 2 as a result of this clause (y); or (z) if the Demanding Holder
proposes to dispose of Registrable Securities that may be immediately registered
on Form S-3 pursuant to a request made under Section 3 hereof; and provided,
further, that no more than two (2) registrations under this
Section 2(a) and Section 3 may become effective during any 12 month
period.

 

Upon receipt of any request for registration pursuant to this
Section 2 from a Demanding Holder, the Company shall promptly give written
notice of such request to the other Holders. 
The Company shall include in the requested registration all Registrable Securities
requested to be included by such Holders who shall make such request by written
notice (specifying the aggregate number of Registrable Securities to be
included) to the Company delivered within ten (10) days after their receipt of
the Company’s notice.  If the Company
shall receive a request for inclusion in the registration of the Registrable
Securities of Holders other than the Demanding Holder initiating the
registration, it shall promptly so inform the Demanding Holder that made the
initial request for registration.

 

Holders of a majority of the Registrable Securities to be included in
such registration pursuant to this Section 2 may, at any time prior to the
effective date of the Registration Statement relating to such registration,
revoke such request by providing a written notice to the Company revoking such
request and, if applicable, request withdrawal of any Registration Statement
filed with the SEC and the Company shall use its reasonable best efforts to so
withdraw such Registration Statement.  A
registration requested pursuant to this Section 2(a) shall not be deemed
to have been effected unless a Registration Statement with respect thereto has
become effective and the Registrable Securities registered thereunder for sale
are sold thereunder or are not so sold solely by reason of an act or omission
by any Demanding Holder whose Registrable Securities are included therein; provided,
however, that if such registration does not become effective after the
Company has filed it solely by reason of a Demanding Holder’s revocation of its
registration request or refusal to proceed (other than a refusal to proceed
based upon the advice of counsel relating to a matter with respect to the
Company), then such registration shall be deemed to have been effected unless
the requesting Demanding Holder shall have elected to pay all Registration
Expenses and any out-of-pocket expenses of any party required to be borne by
the Company pursuant hereto.

 

(b)                                 Effectiveness
of Registration Statement.  Subject
to Section 6(b), the Company agrees to use its reasonable best efforts to
(x) cause the Registration Statement relating to any demand registration
pursuant to this Section 2 to become effective as promptly as practicable
following a request for registration under Section 2(a), and (y) thereafter
keep such Registration Statement effective continuously for the period
specified in the next succeeding paragraph.

 

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Except as provided in the last paragraph of Section 2(a) above, a
demand registration requested pursuant to this Section 2 will not be
deemed to have been effected (w) unless the Registration Statement relating
thereto has become effective under the Securities Act and remained continuously
effective (except as otherwise permitted under this Agreement) for a period
ending on the earlier of (i) the date which is ninety (90) days after the
effective date of such Registration Statement (subject to extension as provided
in Sections 5(b) and 6(b)) and (ii) the date on which all Registrable
Securities covered by such Registration Statement have been sold and the
distribution contemplated thereby has been completed; provided, however,
that with respect to a demand registration that is a Shelf Registration, the
Registration Statement related thereto shall remain continuously effective for
the period provided in Section 3(c) below, (x) if, after it has become
effective, such registration is interfered with for any reason by any stop
order, injunction or other order or requirement of the SEC or any other governmental
authority, or as a result of the initiation of any proceeding for such a stop
order by the SEC through no fault of the Demanding Holder, and the result of
such interference is to prevent the Demanding Holder from disposing of such
Registrable Securities proposed to be sold in accordance with the intended
methods of disposition, or (y) if the conditions to closing specified in the
purchase agreement or underwriting agreement entered into in connection with
any Underwritten Offering shall not be satisfied or waived with the consent of
the Demanding Holder, other than as a result of any breach by the Demanding
Holder or any underwriter of its obligations thereunder or hereunder.

 

(c)                                  Inclusion
of Other Securities; Cutback.  The
Company, and any other holder of the Company’s securities who has existing
registration rights or is granted subsequent registration rights in accordance
with Section 10 hereof, may include its securities in any demand
registration effected pursuant to this Section 2 on a basis no less favorable to the Demanding Holders than
that of any other holder of the Common Stock of the Company; provided, however,
that if the managing or lead underwriter or underwriters of a proposed
Underwritten Offering contemplated thereby advise the Demanding Holders in
writing that the total number of securities to be included in such proposed
public offering exceeds the number that can be sold in such offering within a
price range acceptable to the selling Holders holding a majority of the
Registrable Securities included in the demand registration, then the amount or
kind of securities offered for the account of the following groups of holders
shall be reduced pro rata among members of such group in accordance with such
managing underwriter’s recommendation in the following order of priority (with
the securities to be reduced first listed first): (i) securities other than (A)
Registrable Securities and (B) securities held by the Other Restricted
Stockholders; (ii) securities offered by the Company; (iii) securities held by
the Other Restricted Stockholders; and (iv) Registrable Securities; and provided,
further, that no Registrable Securities shall be reduced until all
securities other than Registrable Securities are entirely excluded from the
underwriting.

 

Section 3.                                          Form
S-3 and Shelf Registration.

 

(a)                                  After
the Company has qualified for the use of Form S-3 under the Securities Act (or
any successor or substantially similar form) for sales of Registrable
Securities by selling stockholders, in addition to the rights contained in
Section 2, the Demanding Holders shall have the right to request an
unlimited number of registrations on Form S-3 (such requests shall be in
writing and shall state the number of shares of Registrable Securities to be
disposed of and the intended methods of disposition of such shares by such
Demanding Holders, including whether

 

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such offering is requested to be an Underwritten Offering), and upon
such request, the Company shall, subject to Section 6(b) hereof, use its
reasonable best efforts to effect the registration under the Securities Act of
the Registrable Securities which the Company has been so requested to register
by such Demanding Holders; provided, however, that the Company shall
not be obligated to effect a registration pursuant to this
Section 3(a):  (x) unless the
Registrable Securities requested to be included therein have an anticipated
aggregate price to the public of at least $20 million, (y) in the circumstances
described in clause (y) of Section 2(a), or (z) within 180 days following
the last date on which a Registration Statement filed in respect of a
registration hereunder, if any, was effective. 
Any registration under this Section 3(a) shall be underwritten at
the request of Holders holding a majority of the Registrable Securities to be
included therein.

 

(b)                                 If
a request complying with the requirements of Section 3(a) hereof is
delivered to the Company, the provisions set forth in the second and third
paragraphs of Section 2(a) and the provisions of Sections 2(b) and (c)
shall apply to such registration; provided, that if such request is for
an offering other than an Underwritten Offering, the portions of Sections 2(a)
through (c) applying to an Underwritten Offering shall not apply.

 

(c)                                  The
Shelf Demanding Holders shall have the right to request two (2) “shelf”
registrations that constitute offerings of Registrable Securities under the
Securities Act in a manner that permits sales on a continuous or delayed basis
pursuant to Rule 415 under the Securities Act (or any successor provision) (the
“Shelf Registration”).  Each request for
and initial filing of a Shelf Registration shall be made in compliance with
Section 3(a); provided, that clause (x) of such section shall
be inapplicable to such request.  The
Company shall, subject to Section 6(b), use its reasonable best efforts to
cause the Registration Statement relating to the Shelf Registration to become
effective as promptly as practicable and maintain the effectiveness of such
Registration Statement for a period ending on the earliest of (i) two years
following the date on which such Registration Statement first becomes
effective, and (ii) the date on which all Registrable Securities covered by
such Registration Statement have been sold and the distribution contemplated
thereby has been completed or have become freely tradeable pursuant to Rule 144
without regard to volume.  Any
“takedown” under the Shelf Registration shall be underwritten at the request of
Holders holding a majority of the Registrable Securities to be included
therein.  Any such “takedown” that is
intended to be an Underwritten Offering shall be made pursuant to
Section 3(a) such that the provisions relating to effecting a Registration
Statement thereunder apply to effecting the takedown under the Shelf
Registration.  Any sales made on a
delayed or continuous basis under the Shelf Registration that do not constitute
an Underwritten Offering shall not be required to comply with
Section 3(a).

 

Section 4.                                          Piggyback
Registration.

 

(a)                                  If
the Company at any time proposes to file a registration statement with respect
to any of its equity securities, whether for its own account (other than a
registration statement on Form S-4 or
S-8 (or any successor or substantially similar form), or in connection with (A)
an employee stock option, stock purchase or compensation plan or securities
issued or issuable pursuant to any such plan, or (B) a dividend reinvestment
plan) (any of the foregoing, a “Company Registration”), or for the account of
any holder of securities of the Company pursuant to demand registration rights
granted by the Company (a “Requesting Securityholder” and, such

 

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registration, a “Requesting Securityholder Registration”), then the
Company shall in each case give written notice of such proposed filing to all
Holders of Registrable Securities at least twenty (20) days before the
anticipated filing date of any such registration statement by the Company.  Such notice shall offer to all Holders the
opportunity to have any or all of the Registrable Securities held by such
Holders included in such registration statement and shall include the number of
shares proposed to be registered, the proposed filing date, the intended method
of distribution of such shares and the proposed managing underwriter, if
any.  Each Holder of Registrable
Securities desiring to have its Registrable Securities registered under this
Section 4 shall so advise the Company in writing within ten (10) days
after the date of receipt of such notice (which request shall set forth the
amount of Registrable Securities for which registration is requested), and the
Company shall include in such Registration Statement all such Registrable
Securities so requested to be included therein.  If the Registration Statement relates to an Underwritten
Offering, such Registrable Securities shall be included in the underwriting on
the same terms and conditions as the securities otherwise being sold through the
underwriters, as provided herein.  Any
Holder shall have the right to withdraw a request to include its Registrable
Securities in any public offering pursuant to this Section 4 by giving
written notice to the Company of its election to withdraw such request at least
ten (10) Business Days prior to the proposed effective date of such
Registration Statement.  Notwithstanding
the foregoing, if the managing or lead underwriter or underwriters of any such
proposed Underwritten Offering advise the Company in writing that the total
number of securities which the Holders of Registrable Securities, the Company
and any other persons or entities intended to be included in such proposed
Underwritten Offering exceeds the number that can be sold in such offering
within a price range acceptable to the Company (in the case of a Company
Registration) or to the Requesting Securityholders holding a majority of the
securities included in a Requesting Securityholder Registration (in the case of
a Requesting Securityholder Registration), then the amount or kind of
securities offered for the account of the following groups of holders shall be
reduced pro rata among members of such group in accordance with such managing
underwriter’s recommendation in the following order of priority: (i) if a
registration under this Section 4 is a Company Registration, then the
order of priority shall be (with the securities to be reduced first listed
first) (A) securities other than (1) Registrable Securities or
(2) securities held by the Other Restricted Stockholders, (B) the
Registrable Securities and securities held by the Other Restricted Stockholders
and (C) securities offered by the Company; (ii) if a registration under this
Section 4 is a Requesting Securityholder Registration (and the Requesting
Securityholder is not a Demanding Holder or a Shelf Demanding Holder), then the
order of priority shall be (with the securities to be reduced first listed
first) (A) securities offered by the Company, (B) securities other than
(1) Registrable Securities or (2) securities held by the Other
Restricted Stockholders (other than securities of the Requesting
Securityholder), (C) securities held by the Other Restricted Stockholders
and (D) subject to the provisions of Section 10 hereof, the Registrable
Securities and securities of the Requesting Securityholder on a pro rata basis;
and (iii) if a registration under this Section 4 is a Requesting
Securityholder Registration made pursuant to Section 2 or 3 hereof, then
the order of priority shall be as set forth in Section 2(c).  The Company may withdraw or postpone a
registration statement referred to in this Section 4 at any time before it
becomes effective or withdraw, postpone or terminate the offering after it
becomes effective, without obligation to any Holder of Registrable Securities,
unless such registration statement was filed pursuant to Section 2 or 3
hereof.  Notwithstanding anything in
this Section 4 to the contrary, the Holders shall be granted priority over
any holders of shares of Common

 

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Stock (other than the Other Restricted Stockholders) in connection with
exercising rights under this Section 4.

 

(b)                                 Notwithstanding
anything herein to the contrary, the Holders shall be entitled to exercise the
registration rights provided in Section 4(a) with respect to any
registration statement relating to the IPO, and such Holders and the Company
hereby waive any requirement for delivery of notice by any party as provided in
Section 4(a).  In such event, all rights
and obligations set forth in this Agreement shall apply to such registration.

 

Section 5.                                          Registration
Procedures.

 

(a)                                  General.  In connection with the Company’s
registration obligations pursuant to Sections 2, 3 and 4 hereof, at its
expense, except as provided in Section 8, the Company will, as
expeditiously as possible:

 

(i)                                     prepare and file
with the SEC a Registration Statement with respect to such Registrable
Securities as described in Sections 2, 3 and 4 on a form permitted by
Section 2, 3 or 4 and available for the sale of the Registrable Securities
by the Holders thereof in accordance with the intended method or methods of
distribution thereof or such amendments and post-effective amendments to an
existing Registration Statement as may be necessary to keep such Registration
Statement effective for the time periods set forth in Sections 2(b) or 3(c) (if
applicable); provided that no Registration Statement shall be required
to remain in effect after all Registrable Securities covered by such Registration
Statement have been sold and distributed
as contemplated by such Registration Statement;

 

(ii)                                  take such reasonable
action as may be necessary so that:  (i)
any Registration Statement and any amendment thereto and any Prospectus forming
part thereof and any amendment or supplement thereto (and each report or other
document incorporated therein by reference) complies in all material respects
with the Securities Act and the Exchange Act and the respective rules and
regulations thereunder, (ii) any Registration Statement and any amendment
thereto does not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and (iii) any
Prospectus forming part of any Registration Statement, and any amendment or
supplement to such Prospectus, does not, as of such date, include an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading;

 

(iii)                               notify the selling
Holders of Registrable Securities and the managing underwriters, if any,
promptly and, if requested, by the Holders, confirm such notice in writing (1)
when a new Registration Statement, Prospectus or any Prospectus supplement or
post-effective amendment has been filed,

 

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and, with respect to any new Registration Statement or post-effective
amendment, when it has become effective, (2) of any request by the SEC for
amendments or supplements to any Registration Statement or Prospectus or for
additional information, (3) of the issuance by the SEC of any comments with
respect to any filing and of the Company’s responses thereto, (4) of any stop
order suspending the effectiveness of any Registration Statement or the
initiation of any proceedings for that purpose, (5) of any suspension of the
qualification of the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose and (6) of the
happening of any event which makes any statement of a material fact made in any
Registration Statement, Prospectus or any document incorporated therein by
reference untrue or which requires the making of any changes in any
Registration Statement, Prospectus or any document incorporated therein by
reference in order to make the statements therein (in the case of any
Prospectus, in the light of the circumstances under which they were made) not
misleading (which notice shall be accompanied by an instruction to suspend the
use of the Prospectus relating to such Registrable Securities until the
requisite changes have been made);

 

(iv)                              furnish to each selling Holder
of Registrable Securities prior to the filing thereof with the SEC, a copy of
any Registration Statement, and each amendment thereof and each amendment or
supplement, if any, to the Prospectus included therein and afford such Holder,
the managing underwriter and their respective counsel a reasonable opportunity
within a reasonable period to review and comment on copies of all such
documents (including a reasonable opportunity to review copies of any documents
to be incorporated by reference therein and all exhibits thereto) proposed to
be filed;

 

(v)                                 furnish to each
selling Holder of Registrable Securities, without charge, as many conformed
copies as may reasonably be requested, of the then effective Registration
Statement and any post-effective amendments thereto, including financial
statements and schedules, all documents incorporated therein by reference and
all exhibits (including those incorporated by reference);

 

(vi)                              deliver to each selling
Holder of Registrable Securities, without charge, as many copies of the then
effective Prospectus (including each prospectus subject to completion) and any
amendments or supplements thereto as such Persons may reasonably request in
order to permit the offering and sale of the shares of such Registrable Securities
to be offered and sold, but only while the Company shall be required under the
provisions hereof to cause the Registration Statement to remain effective, and
the Company consents (except during a suspension period permitted by this
Agreement) to the use of the Prospectus or any amendment or supplement thereto
by the selling Holder in connection with the offering and sale of the

 

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Registrable Securities covered by the Prospectus or any amendment or
supplement thereto in accordance with the terms hereof;

 

(vii)                           use its reasonable best
efforts to prevent the issuance, and if issued to obtain the withdrawal, of any
order suspending the effectiveness of the Registration Statement relating to
such Registrable Securities;

 

(viii)                        prior to any offering of
Registrable Securities pursuant to any Registration Statement, use reasonable
best efforts to register or qualify or cooperate with the selling Holders of
Registrable Securities and their respective counsel in connection with the
registration or qualification of such Registrable Securities for offer and sale
under the securities or blue sky laws of such jurisdictions as any selling
Holder of Registrable Securities or underwriter reasonably requests in writing
and to keep such registration or qualification (or exemption therefrom)
effective during the period such Registration Statement is required to be kept
effective and to do all other acts or things reasonably necessary or advisable
to enable the disposition in such distributions of the securities covered by
the applicable Registration Statement; provided,  however, that
the Company will not be required to (1) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify, but for this
paragraph (v), (2) subject itself to general taxation in any such jurisdiction
or (3) file a general consent to service of process in any such jurisdiction;

 

(ix)                                cooperate with the
selling Holders of Registrable Securities to facilitate the timely preparation
of, and furnish the selling Holders or the managing underwriters, at the
Company’s expense, certificates representing Registrable Securities to be sold
and not bearing any restrictive legends; and enable such Registrable Securities
to be in such denominations and registered in such names as the selling Holders
or managing underwriters, if any, may reasonably request at least two Business
Days prior to any sale of Registrable Securities to any underwriters and
instruct the transfer agent and registrar of the Registrable Securities to
release any stop transfer orders with respect to the Registrable Securities;

 

(x)                                   cause all
Registrable Securities covered by the Registration Statement to be listed on
each securities exchange (or quotation system operated by a national securities
association) on which identical securities issued by the Company are then
listed on or prior to the effective date of any Registration Statement filed
hereunder and enter into customary agreements including, if necessary, a listing
application and indemnification agreement in customary form;

 

(xi)                                provide the Holders,
the transfer agent and registrar a CUSIP number for the Registrable Securities
no later than the effective date of such Registration Statement;

 

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(xii)                             use its reasonable best
efforts to comply with all applicable rules and regulations of the SEC relating
to such registration and the distribution of the securities being offered and
make generally available to its securities holders, as soon as reasonably
practicable, earnings statements satisfying the provisions of
Section 11(a) of the Securities Act;

 

(xiii)                          cooperate and assist in any
filings required to be made with the National Association of Securities
Dealers, Inc.;

 

(xiv)                         if requested, include or
incorporate in a Prospectus supplement or post-effective amendment to a
Registration Statement, such information as the managing underwriters
administering an Underwritten Offering of the Registrable Securities registered
thereunder reasonably request to be included therein and to which the Company
does not reasonably object and make all required filings of such Prospectus
supplement or post-effective amendment as soon as reasonably practicable after
they are notified of the matters to be included or incorporated in such
Prospectus supplement or post-effective amendment;

 

(xv)                            upon the occurrence of any
event contemplated by clauses (4) (5) or (6) of Section 5(a)(iii) above,
as soon as reasonably practicable prepare a post-effective amendment to any
Registration Statement or an amendment or supplement to the related Prospectus
or file any other required document so that, as thereafter delivered to
purchasers of the Registrable Securities included therein, the Prospectus will
not include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;

 

(xvi)                         subject to the proviso in
paragraph (xv) above, cause the Registrable Securities covered by the
Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the seller
or sellers thereof to consummate the disposition of such Registrable Securities
(other than as may be required by the governmental agencies or authorities of
any foreign jurisdiction and other than as may be required by a law applicable
to a selling Holder by reason of its own activities or business other than the
sale of Registrable Securities);

 

(xvii)                      if such offering is an
Underwritten Offering, enter into an underwriting agreement with an investment
banking firm selected in accordance with Section 5(c) of this Agreement
containing representations, warranties, indemnities and agreements then
customarily included by an issuer in underwriting agreements with respect to
secondary underwritten distributions and take all such other actions as are
reasonably requested by the managing underwriters for such underwritten
offering in order to facilitate the registration or the disposition of such
Registrable Securities;

 

11

 

(xviii)                   if such offering is an Underwritten
Offering, (a) make reasonably available for inspection by each selling Holder
of Registrable Securities and any managing or lead underwriter in such
Underwritten Offering, and any attorney, accountant or other agent retained by
such selling Holder or any such underwriter, all relevant financial and other
records, pertinent corporate documents and properties of the Company and its
subsidiaries as shall be reasonably necessary to enable them to conduct a
“reasonable” investigation for purposes of Section 11(a) of the Securities
Act; (b) cause the Company’s officers, directors and employees to make
reasonably available for inspection all relevant information reasonably
requested by the selling Holder or any such underwriter, attorney, accountant
or agent in connection with any such Registration Statement, in each case, as
is customary for similar due diligence examinations; provided that any information that is designated by the
Company as confidential at the time of delivery of such information shall be
kept confidential by the selling Holder, such underwriter, or any such,
attorney, accountant or agent, unless such disclosure is required by law, or
such information becomes available to the public generally or through a third
party without an accompanying obligation of confidentiality; and (c) deliver
such documents and certificates as may be reasonably requested by the selling
Holder and the managing underwriters, if any, including customary opinions of
counsel and “cold comfort” letters as may be reasonably required pursuant to
the underwriting agreement relating thereto.

 

(xix)                           in connection with an
Underwritten Offering requested pursuant to Section 2 or 3, the Company
will participate, to the extent reasonably requested by the managing
underwriter for the offering or the Demanding Holder or Shelf Demanding Holder
participating therein, in customary efforts to sell the securities under the
Underwritten Offering, including, without limitation, participating in “road
shows” or other investor meetings, and the Company shall secure the reasonable
participation of its senior management for such purposes; and

 

(xx)                              use its reasonable best
efforts to take all other reasonable steps necessary to effect the
registration, offering and sale of the Registrable Securities covered by the
Registration Statement contemplated hereby.

 

The Company may require each seller of Registrable Securities, prior to
inclusion of its Registrable Securities in a Registration Statement as to which
any registration is being effected, to furnish to the Company such information
regarding such seller and the distribution of such Registrable Securities as
the Company may from time to time reasonably request and as shall be required
in connection with any registration referred to herein.   No Holder may include Registrable
Securities in any Registration Statement pursuant to this Agreement unless and
until such Holder has furnished to the Company such information.  Each Holder further agrees to furnish as
soon as reasonably practicable to the Company all information required to be
disclosed in order to make information previously furnished to the Company by
such Holder not materially misleading.

 

12

 

(b)                                 Each
Holder of Registrable Securities agrees that, upon receipt of any written
notice from the Company of the happening of any event of the kind described in
clause (4), (5) or (6) of Section 5(a)(iii) or in Section 6(b), such
Holder will forthwith discontinue disposition of Registrable Securities
pursuant to the then current Prospectus until (1) such Holder is advised in
writing by the Company that a new Registration Statement covering the offer of
Registrable Securities has become effective under the Securities Act or (2)
such Holder receives copies of a supplemented or amended Prospectus contemplated
by this Section 5(b), or until such Holder is advised in writing by the
Company that the use of the Prospectus may be resumed.  If the Company shall have given any such
notice during a period when a demand registration is in effect, the Company
shall extend the period described in Section 2(b) or 3(c) (as applicable)
by the number of days during which any such disposition of Registrable
Securities is discontinued pursuant to this paragraph, if so directed by the
Company, on the happening of such event, the Holder will deliver to the Company
(at the Company’s expense) all copies, other than permanent file copies then in
such Holder’s possession, of the Prospectus covering such Registrable
Securities current at the time of receipt of such notice.

 

(c)                                  Selection
of Underwriters.  With respect to
any Underwritten Offering, the Company shall be entitled to select the managing
underwriter; provided, that if the Underwritten Offering is undertaken
pursuant to Section 2 or 3 hereof, such managing underwriter shall be
selected by the Holders of a majority of the Registrable Securities included in
such registration, subject to approval of the Company, which approval shall not
be unreasonably withheld.

 

Section 6.                                          Other
Agreements.

 

(a)                                  “Market
Stand-Off” Election.  In the case of
any Underwritten Offering, upon the request of the managing underwriter, each
Holder agrees not to effect any public sale or distribution of Registrable
Securities, except as part of such Underwritten Offering pursuant to the terms
hereof, during the period beginning fifteen (15) days prior to the closing date
of such Underwritten Offering and during the period ending ninety (90) days
after such closing date (or such longer period, not to exceed 180 days, as may
be reasonably requested by the Company or by the managing underwriter or
underwriters).

 

(b)                                 Material
Development Condition.  With respect
to any Registration Statement filed or to be filed pursuant to Section 2
or 3, if the Company determines that, in its good faith judgment, that (i) filing
a Registration Statement or maintaining effectiveness of a current Registration
Statement would have a material adverse effect on the Company or its
stockholders in relation to any material financing, acquisition or other
corporate transaction, and the Company has determined that disclosure of any
such transaction is not in the best interests of the Company and its
stockholders, or (ii) the filing or maintaining effectiveness of a current
Registration Statement would require disclosure of material information that
the Company has a valid business purpose of retaining as confidential, upon the
giving of a written notice (a “Delay Notice”) to such effect, signed by the
Chairman Chief Executive Officer or Chief Financial Officer of the Company, to
any Holder of Registrable Securities included or to be included in such
Registration Statement, the Company shall be entitled to postpone filing or
suspend the use by the Holders of the Registration Statement for a reasonable
period of time, provided that the Company may not postpone the filing or
suspend any such sales for a period of more than sixty (60) consecutive days; provided,
that the Company shall not be entitled to exercise any such right

 

13

 

more than two times in any calendar year or less than 30 days from the
prior suspension period; and provided  further, that such exercise
shall not prevent the Holders from being entitled to at least 240 days of
effective registration per calendar year.

 

(c)                                  Limitation
on Demand, Shelf  and Piggyback Registration Rights.  Anything to the contrary contained in this
Agreement notwithstanding, when upon the written opinion of counsel for the
Company (which may be in-house counsel) delivered to a Holder requesting
registration hereunder that the Registrable Securities held by such Holder are
not Registrable Securities as defined in clause (iii) of the definition thereof
and the Company has agreed to remove all restrictive securities law legends
with respect to such Registrable Securities, such Holder shall have no rights
pursuant to Sections 2, 3 or 4 hereof, to request a registration in connection
with such proposed sale; provided, however, if counsel for such
Holder of Registrable Securities reasonably disagrees in a written opinion
delivered to the Company with such written opinion of counsel for the Company,
the foregoing limitation on registration rights shall be of no force or effect.

 

Section 7.                                          Registration
Expenses.

 

All expenses incident to the Company’s performance of or compliance
with this Agreement, including without limitation all registration and filing
fees, listing fees, fees and expenses of compliance with securities or blue sky
laws (including reasonable fees and disbursements of counsel in connection with
blue sky qualifications or registrations (or the obtaining of exemptions
therefrom) of the Registrable Securities), fees of the National Association of
Securities Dealers, Inc. transfer and registration fees of transfer agents and
registrars, printing expenses (including expenses of printing Prospectuses),
messenger and delivery expenses, internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), fees and disbursements of its counsel and its
independent certified public accountants (including expenses of any special
audit or accounting review), securities acts liability insurance (if the
Company elects to obtain such insurance), fees and expenses of any special
experts retained by the Company in connection with any registration hereunder,
reasonable fees and expenses, not to exceed $20,000 per registration hereunder,
of one counsel for the Holders (and any necessary local counsel), fees and
expenses of other Persons retained by the Company, fees and expenses of one law
firm chosen by the holders of a majority of Registrable Securities included in
a registration pursuant hereto and all out-of-pocket fees and expenses incurred
by any Holder in connection with the IPO (all such expenses being referred to
as “Registration Expenses”), shall be borne by the Company; provided,
that Registration Expenses shall not include out-of-pocket expenses incurred by
the Holders (except out-of-pocket expenses set forth in this Section 7)
and underwriting discounts,
commissions or fees attributable to the sale of the Registrable Securities,
which shall be paid by the Holders pro rata on the basis of the number of
shares of Common Stock registered on their behalf.

 

Section 8.                                          Indemnification.

 

(a)                                  Indemnification
by the Company.  The Company,
without limitation as to time agrees to indemnify and hold harmless, to the fullest extent
permitted by law, but without duplication, each Holder of Registrable
Securities included in a Registration Statement, its

 

14

 

officers, directors, employees, partners, principals, equityholders,
managed or advised accounts, advisors and agents, and each Person who controls
such Holder within the meaning of Section 15 of the Securities Act, and,
unless indemnification of such Persons is otherwise provided for in the
applicable underwriting agreement, each underwriter, its partners, members,
directors and officers and each person, if any, who controls such Underwriter
within the meaning of Section 15 of the Securities Act  (individually, an “Indemnified Person”),
from and against all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation and reasonable legal fees and
expenses and including expenses incurred and amounts paid in settlement of any
litigation, commenced or threatened) arising out of or based upon any untrue
statement (or alleged untrue statement) of a material fact in, or any omission
(or alleged omission) of a material fact required to be stated in, such
Registration Statement or Prospectus or necessary to make the statements
therein (in the case of a Prospectus in light of the circumstances under which
they were made) not misleading, as such expenses are incurred, except insofar
as the same are caused by or contained in any information furnished in writing
to the Company by any Indemnified Person or any underwriter expressly for use
therein.

 

(b)                                 Indemnification
by Holders of Registrable Securities. 
In connection with any Registration Statement in which a Holder of
Registrable Securities is participating, each such Holder will furnish to the
Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such Registration Statement or
Prospectus and agrees to indemnify and hold harmless, to the fullest extent
permitted by law, severally but not jointly with any other Holder, but without
duplication, and without limitation as to time, the Company, its officers,
directors, shareholders, employees, advisors and agents, and each Person who
controls the Company (within the meaning of the Securities Act) against any
losses, claims, damages, liabilities and expenses (including reasonable costs
of investigation and reasonable legal fees and expenses and including expenses
incurred in settlement of any litigation, commenced or threatened) arising out
of or based upon any untrue statement (or alleged untrue statement) of material
fact in, or any omission (or alleged omission) of a material fact required to
be stated in, the Registration Statement or Prospectus or necessary to make the
statements therein (in the case of a Prospectus in light of the circumstances
under which they were made) not misleading, as such expenses are incurred, to the
extent, but only to the extent, that such untrue statement or omission is
contained in any information or affidavit so furnished in writing by such
Holder to the Company specifically for inclusion therein.  In no event shall any participating Holder
be liable for any amount in excess of the proceeds (net of payment of all
expenses (excluding underwriting discounts and commissions paid or payable by
such Holder)) received by such Holder upon the sale of the Registrable
Securities offered and sold by such Holder pursuant to such Registration
Statement.

 

(c)                                  Conduct
of Indemnification Proceedings.  Any
Person entitled to indemnification hereunder will (i) give prompt notice to the
indemnifying party of any claim with respect to which it seeks indemnification
and (ii) permit such indemnifying party to assume the defense of such claim
with counsel of such indemnifying party’s choice; provided,  however,
that any Person entitled to indemnification hereunder shall have the right to
employ separate counsel and to participate in the defense of such claim, but
the fees and expenses of such counsel shall be at the expense of such
indemnified Person unless (A) the indemnifying party shall have agreed in
writing to pay them, (B) the indemnifying party shall have failed to assume the
defense of such 

 

15

 

claim and employ counsel reasonably satisfactory to the indemnified
party in a timely manner or (C) the named parties to an action, claim or
proceeding (including any impleaded parties) include any indemnified party and
the indemnifying party or any of its Affiliates and in the reasonable judgment
of any such Person, based upon advice of its counsel, (1) a conflict of
interest may exist between such person and the indemnifying party with respect
to such claims (in which case, if the Person notifies the indemnifying party in
writing that such Person elects to employ separate counsel at the expense of
the indemnifying party, the indemnifying party shall not have the right to assume
the defense of such claim on behalf of such person) or (2) there may be one or
more legal defenses available to it which are different from or in addition to
those available to the indemnifying party; provided, that such counsel
only be hired to the extent necessary for such defense or defenses; and provided,
further, that the indemnifying party shall be responsible to pay the
fees and expenses of only one law firm plus one local counsel in each necessary
jurisdiction pursuant to these clauses (A), (B) and (C).  The indemnifying party will not be subject
to any liability for any settlement made without its written consent (which
consent shall not be unreasonably withheld). 
No indemnified party will be required to consent to entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim or
litigation.  An indemnifying party who
is not entitled to, or elects not to, assume the defense of the claim will not
be obligated to pay the fees and expenses of more than one counsel (plus one
local counsel if required in a specific instance) for all parties indemnified
by such indemnifying party with respect to such claim.  The failure by an indemnified party to give
notice as provided herein shall not relieve the indemnifying party of its
obligations under this Section 9, except to the extent the failure to give
such notice is materially prejudicial to the indemnifying party’s ability to
defend such action.

 

(d)                                 Contribution.  If for any reason the indemnification
provided for in Section 8(a) or Section 8(b) is unavailable to an
indemnified party or insufficient to hold it harmless as contemplated by Section 8(a)
and Section 8(b), then the indemnifying party shall contribute to the
amount paid or payable by the indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and the indemnified party, as well as
any other relevant equitable considerations. 
The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement or the omission or
alleged omission relates to information supplied by the indemnifying party or
parties on the one hand or the indemnified party on the other and the parties,
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. 
No Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution
from any Person who was not guilty of such fraudulent misrepresentations.  The amount paid or payable by a party as a
result of any losses shall be deemed to include any legal or other fees or
expenses incurred by such part in connection with any proceeding, to the extent
such party would have been indemnified for such expenses if the indemnification
provided for in Section 8(a) or Section 8(b) were available to such
party.  In no event shall any
participating Holder be liable for any amount in excess of the proceeds (net of
payment of all expenses (excluding underwriting discounts and commissions paid
or payable by such Holder)) received by such Holder upon the sale of the
Registrable Securities offered and sold by such Holder pursuant to such
Registration Statement.

 

16

 

(e)                                  Remedies
Cumulative.  The indemnity,
contribution and expense reimbursement obligations under this Section 8
shall be in addition to any liability each indemnifying person may otherwise
have and shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any indemnified party.

 

Section 9.                                          Participation
in Underwritten Registrations.

 

No Person may participate in any Underwritten Offering hereunder unless
such Person (i) agrees to sell such Person’s Registrable Securities on the
basis provided in any underwriting arrangements related thereto and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.  Nothing in
this Section 9 shall be construed to create any additional rights
regarding the registration of Registrable Securities in any Person otherwise
than as set forth herein.

 

Section 10.                                   Subsequent
Registration Rights.

 

The Company shall not modify or amend any existing agreement providing
for registration rights in a manner that would adversely affect the rights of
the Holders granted hereunder.  In
addition, the Company shall not grant any Person any registration rights with
respect to shares of Common Stock other than registration rights that expressly
permit the Holders to participate in the registration pro rata with the Person
being granted registration rights based on the number of shares requested to be
included (and on a basis no less favorable to the Holders than that of the
Person being granted registration rights). 
Notwithstanding anything herein to the contrary, the Company may grant
registration rights with respect to shares of Common Stock issued in connection
with an acquisition of stock or assets of another company so long as the
registration rights would not be in conflict with or inconsistent with the
rights of the Holders hereunder in any material respect.

 

Section 11.                                   Rule
144 Reporting.

 

With a view to making available the benefits of certain rules and
regulations of the SEC that may permit the sale of the Registrable Securities
to the public without registration, the Company agrees to use its reasonable
best efforts to:

 

(a)                                  make
and keep public information regarding the Company available as those terms are
understood and defined in and interpreted under Rule 144 under the Securities
Act, at all times from and after ninety (90) days following the effective date
of an IPO registration statement;

 

(b)                                 file
with the Commission in a timely manner all reports and other documents required
of the Company under the Securities Act and the Exchange Act at any time after
it has become and remains subject to such reporting requirements; and

 

(c)                                  so
long as a Holder owns any Restricted Securities, furnish to the Holder
forthwith upon written request a written statement by the Company as to its
compliance with the reporting requirements of Rule 144 (at any time from and
after ninety (90) days following the

 

17

 

effective date of an IPO registration statement), and of the Securities
Act and the Exchange Act (at any time after it has become and remains subject
to such reporting requirements), a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents so filed as a
Holder may reasonably request in availing itself to any rule or regulation of
the SEC allowing a Holder to sell any such securities without registration.

 

Section 12.                                   Amendments
and Waivers.

 

The provisions of this Agreement, including the provisions of this
Section 12, may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given unless (a)
with respect to a particular offering hereunder, the Company has obtained the
written consent of Holders of a majority of the Registrable Securities included
in such offering as are then outstanding as determined by the Company or (b) in
any other event, the Company has obtained the written consent of Holders of a
majority of the Registrable Securities then outstanding as determined by the
Company and so long as the effect thereof will be that the consenting Holders
will not be treated more favorably than all other Holders.  Whenever the consent or approval of Holders
of a specified number of Registrable Securities is required hereunder,
Registrable Securities held by the Company shall not be counted in determining
whether such consent or approval was given by the Holders of such required
number.

 

Section 13.                                   Notices.

 

All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, registered first-class
mail, telecopier, or air-courier guaranteeing overnight delivery:

 

(a)                                  If
to a Holder of Registrable Securities, initially at the address set forth below
such Holder’s signature page hereto, with a copy to Stroock & Stroock &
Lavan LLP, 180 Maiden Lane, New York, New York 10038, Attention:  Patty Perez, Esq., Facsimile: (212) 806-6006
and thereafter at such other address as may be designated from time to time by
notice given in accordance with the provisions of this Section 13.

 

(b)                                 If
to the Company, initially at 500 West Dutton Road, Aston, Pennsylvania 19014,
Attention:  Chief Executive Officer and
President; telecopier no. (610) 619-3081, with a copy to Skadden, Arps, Slate,
Meagher & Flom LLP, 300 South Grand Avenue, Suite 3400, Los Angeles,
California 90071, Attention:  Jeffrey H.
Cohen, Esq., Facsimile: (213) 687-5600, and thereafter at such other address as
may be designated from time to time by notice given in accordance with the
provisions of this Section 13.

 

(c)                                  All
such notices and other communications shall be deemed to have been delivered
and received (i) in the case of personal delivery, telecopier or telegram, on
the date of such delivery, (ii) in the case of overnight air courier, on the
Business Day after the date when sent and (iii) in the case of mailing, on the
third Business Day following such mailing.

 

18

 

Section 14.                                   Successors
and Assigns.

 

This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto, including without
limitation and without the need for an express assignment to subsequent Holders
of the Registrable Securities who acquire their shares in transactions not
involving a registration under the Securities Act or a sale of shares in the
public markets; provided, that the transferee or assignee of such rights
assumes in writing the obligations of such transferor under this Agreement and
shall be added to Schedule I attached hereto as a result and provided,
further, that no successor or assign shall be deemed a Holder or
entitled to the rights of a Holder unless such successor or assign (a) is
an Affiliate of a Securityholder or (b) acquires from a Securityholder
Registrable Securities constituting 10% or more of the then-outstanding shares
of Common Stock.

 

Section 15.                                   Counterparts.

 

This Agreement may be executed in any number of counterparts and by the
parties hereto in separate counterparts, each of which when so executed shall
be deemed to be an original and all of which taken together shall constitute
one and the same agreement.

 

Section 16.                                   Headings.

 

The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.

 

Section 17.                                   Governing
Law.

 

THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF NEW YORK, INCLUDING, WITHOUT LIMITATION,
SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND NEW YORK
CIVIL PRACTICE LAWS AND RULES 327(b).

 

Section 18.                                   Jurisdiction;
Forum.

 

Each party hereto consents and submits to the jurisdiction of any state
court sitting in the County of New York or federal court sitting in the
Southern District of the State of New York in connection with any dispute
arising out of or relating to this Agreement. 
Each party hereto waives any objection to the laying of venue in such courts
and any claim that any such action has been brought in an inconvenient
forum.  To the extent permitted by law,
any judgment in respect of a dispute arising out of or relating to this
Agreement may be enforced in any other jurisdiction within or outside the
United States by suit on the judgment, a certified copy of such judgment being
conclusive evidence of the fact and amount of such judgment.  Each party hereto agrees that personal
service of process may be effected by any of the means specified in Section 13,
addressed to such party.  The foregoing
shall not limit the rights of any party to serve process in any other manner
permitted by law.

 

Section 19.                                   Severability.

 

In the event that any one or more of the provisions contained herein,
or the application thereof in any circumstance, is held invalid, illegal or
unenforceable, the validity,

 

19

 

legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be affected
or impaired thereby.

 

Section 20.                                   Termination
Of Registration Rights.

 

All rights granted under this Agreement shall terminate with respect to
any Holder at such time as such Holder ceases to own Registrable Securities.

 

Section 21.                                   Remedies.

 

In the event of a breach by any party of any of its obligations under
this Agreement, the other parties, in addition to being entitled to exercise
all rights provided herein or granted by law, including recovery of damages,
will be entitled to specific performance of their rights under this
Agreement.  The Company and the
Securityholders agree that monetary damages would not be adequate compensation
for any loss incurred by reason of a breach by the Company or the
Securityholders, as the case may be, of any of the provisions of this Agreement
and hereby further agree that, in the event of any action for specific
performance in respect of such breach, the Company or the Securityholders, as
the case may be, shall waive the defense that a remedy at law would be
adequate.  No failure or delay on the
part of the Company or the Securityholders in exercising any right, power or
remedy hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.

 

Section 22.                                   Entire
Agreement.

 

This Agreement
is intended by the parties as a final expression of their agreement and is
intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein.  This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.

 

[Remainder of
Page Intentionally Left Blank]

 

20

 

IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.

 

	
   

  	
  CHEROKEE INTERNATIONAL CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Van Holland, Jr.

  	
   

  
	
   

  	
   

  	
  Name: Van Holland, Jr.

  
	
   

  	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OCM PRINCIPAL OPPORTUNITIES FUND, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Oaktree Capital Management, LLC,

  
	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Christopher S. Brothers

  	
   

  
	
   

  	
   

  	
  Name: Christopher S. Brothers

  
	
   

  	
   

  	
  Title: Managing Director

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Lisa Arakaki

  	
   

  
	
   

  	
   

  	
  Name: Lisa Arakaki

  
	
   

  	
   

  	
  Title: Vice President, Legal

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OCM/GFI POWER OPPORTUNITIES FUND, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  GFI Energy Ventures, LLC,

  
	
   

  	
   

  	
  its Co-General Partner,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ian Schapiro

  	
   

  
	
   

  	
   

  	
  Name: Ian Schapiro

  
	
   

  	
   

  	
  Title: Principal

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GFI Two LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:  

  	
  /s/ Ian Schapiro

  	
   

  
	
   

  	
   

  	
  Name: Ian Schapiro

  
	
   

  	
   

  	
  Title: Principal

  
					

 

i

 

	
   

  	
  GSC RECOVERY II, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  GSC Recovery II GP, L.P., its general partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  GSC RII, LLC, its general partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:  GSCP (NY) Holdings, L.P.,
  its sole

  member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  GSCP (NJ), Inc., its general

  partner

  
	
   

  	
   

  
	
   

  	
  By:  

  	
  /s/ Robert Hamwee

  	
   

  
	
   

  	
   

  	
  Name: Robert Hamwee

  
	
   

  	
   

  	
  Title: Managing Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GSC RECOVERY IIA, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  GSC Recovery IIA GP, L.P., its general partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  GSC RIIA, LLC, its general partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:   GSCP (NY) Holdings,
  L.P., its sole

  member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  GSCP (NJ), Inc., its general

  partner

  
	
   

  	
   

  
	
   

  	
  By:  

  	
  /s/ Robert Hamwee

  	
   

  
	
   

  	
   

  	
  Name: Robert Hamwee

  
	
   

  	
   

  	
  Title: Managing Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GSC PARTNERS CDO FUND, LIMITED

  
	
   

  	
   

  
	
   

  	
  By:

  	
  GSCP (NJ), L.P.

  
	
   

  	
   

  	
  as attorney-in-fact

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  GSCP (NJ), Inc.

  
	
   

  	
   

  	
  its general partner

  	
   

  
	
   

  	
   

  
	
   

  	
  By:  

  	
  /s/ Seth Katzenstein

  	
   

  
	
   

  	
   

  	
  Name: Seth Katzenstein

  
	
   

  	
   

  	
  Title: Vice President

  
														

 

ii

 

	
   

  	
  GSC PARTNERS CDO FUND II, LIMITED

  
	
   

  	
   

  
	
   

  	
  By:

  	
  GSCP (NJ), L.P.

  
	
   

  	
   

  	
  as attorney-in-fact

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  GSCP (NJ), Inc.

  
	
   

  	
   

  	
  its general partner

  	
   

  
	
   

  	
   

  
	
   

  	
  By:  

  	
  /s/ Seth Katzenstein

  	
   

  
	
   

  	
   

  	
  Name: Seth Katzenstein

  
	
   

  	
   

  	
  Title: Vice President

  
						

 

iii

 

SCHEDULE I

 

OCM Principal Opportunities Fund, L.P.

OCM/GFI Power Opportunities Fund, L.P.

GFI Two LLC

GSC Recovery II, L.P.

GSC Recovery IIA, L.P.

GSC Partners CDO Fund, Limited

GSC Partners CDO Fund II, Limited

 

IExhibit 4.3

 

CIPHERGEN BIOSYSTEMS, INC.

 

2000 STOCK PLAN

 

                1.             Purposes of the Plan.  The purposes of this 2000 Stock Plan are:

 

                                                                                                •  to attract and retain the best available personnel for positions of
substantial responsibility,

 

                                                                                                •  to provide additional incentive to Employees, Directors and Consultants,
and

 

                                                                                                •  to promote the success of the Company’s business.

 

                The Plan permits the grant of Incentive Stock
Options, Nonstatutory Stock Options, Stock Purchase Rights, Stock Appreciation
Rights, Performance Units and Performance Shares.

 

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

 

                                                                (a)           “Administrator”
means the Board or any of its Committees as will be administering the Plan, in
accordance with Section 4 of the Plan.

 

                                                                (b)           “Applicable
Laws” means the requirements relating to the administration of
equity-based awards under U.S. state corporate laws, U.S. federal and
state securities laws, the Code, any stock exchange or quotation system on
which the Common Stock is listed or quoted and the applicable laws of any
foreign country or jurisdiction where Awards are, or will be, granted under the
Plan.

 

                                                                (c)           “Award”
means, individually or collectively, a grant under the Plan of Options, SARs,
Restricted Stock, Performance Units or Performance Shares.

 

                                                                (d)           “Award
Agreement” means the written or electronic agreement setting forth
the terms and provisions applicable to each Award granted under the Plan,
including an Option Agreement.

 

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

 

                                                                (f)            “Cash
Position” means as to any Performance Period, the Company’ s level
of cash and cash equivalents, including, without limitation, amounts classified
for financial reporting purposes as short-term investments and restricted
investments.

 

                                                                (g)           “Code”
means the Internal Revenue Code of 1986, as amended. Any reference to a section
of the Code herein will be a reference to any successor or amended section of
the Code.

 

                                                                (h)           “Committee”
means a committee of Directors or of other individuals satisfying Applicable
Laws appointed by the Board in accordance with Section 4 hereof.

 

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

 

                                                                (j)            “Company”
means Ciphergen Biosystems, Inc., a Delaware corporation.

 

                                                                (k)           “Consultant”
means any natural person, including an advisor, engaged by the Company or a
Parent or Subsidiary to render services to such entity.

 

                                                                (l)            “Determination
Date” means the latest possible date that will not jeopardize the
qualification of an Award granted under the Plan as “performance-based
compensation” under Section 162(m) of the Code.

 

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

 

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

 

 

1

 

                                                                (o)           “Earnings
Per Share” means as to any Performance Period, the Company’s or a
business unit’s Net Income, divided by a weighted average number of Shares
outstanding and dilutive equivalent Shares deemed outstanding, determined in accordance
with U.S. GAAP; provided, however, that if Net Income as to any such
Performance Period is a negative amount, then Earnings Per Share means the
Company’s or business unit’s Net Income, divided by a weighted average number
of Shares outstanding, determined in accordance with U.S. GAAP.

 

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

 

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

 

                                                                (r)            “Excluded
Items” includes, without limitation, (i) incentive
compensation, (ii) in-process research and development expenses,
(iii) acquisition costs, (iv) compensation expense from equity
compensation, (v) operating expenses from acquired businesses,
(vi) amortization of acquired intangible assets, and (vii) such other
unusual or one-time items as may be identified by the Administrator.

 

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

 

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

 

                                                                                                                (ii)           If the Common Stock is regularly
quoted by a recognized securities dealer but selling prices are not reported,
the Fair Market Value of a Share of Common Stock will be the mean between the
high bid and low asked prices for the Common Stock on the day of determination,
as reported in The Wall Street Journal
or such other source as the Administrator deems reliable; or

 

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

 

                                                                (t)            “Fiscal
Year” means the fiscal year of the Company.

 

                                                                (u)           “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.

 

                                                                (v)           “Net
Income” means as to any Performance Period, the Company’s or a
business unit’s income after taxes determined in accordance with U.S. GAAP,
adjusted for any Excluded Items approved for exclusion by the Administrator.

 

                                                                (w)          “Nonstatutory
Stock Option” means an Option that by its terms does not qualify, or
is not intended to qualify, as an Incentive Stock Option.

 

                                                                (x)            “Notice
of Grant” means a written or electronic notice evidencing certain
terms and conditions of an individual Option grant. The Notice of Grant is part
of the Option Agreement.

 

                                                                (y)           “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.

 

 

2

 

                                                                (z)            “Operating
Income” means as to any Performance Period, the Company’s or a
business unit’s income from operations determined in accordance with U.S. GAAP,
adjusted for any Excluded Items approved for exclusion by the Administrator.

 

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

 

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

 

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

 

                                                                (dd)         “Optionee”
means the holder of an outstanding Option granted under the Plan.

 

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

 

                                                                (ff)           “Participant”
means the holder of an outstanding Award, including any Optionee.

 

                                                                (gg)         “Performance
Goals” means the goal(s) (or combined goal(s)) determined by the
Administrator (in its discretion) to be applicable to a Participant with
respect to an Award granted under the Plan. As determined by the Administrator,
the Performance Goals applicable to an Award may provide for a targeted level
or levels of achievement using one or more of the following measures:
(a) Cash Position, (b) Earnings Per Share, (c) Net Income,
(d) Operating Cash Flow, (e) Operating Income, (f) Return on
Assets, (g) Return on Equity, (h) Return on Sales, (i) Revenue
and (j) Total Shareholder Return. The Performance Goals may differ from
Participant to Participant and from Award to Award. Prior to the Determination
Date, the Administrator will determine whether any significant element(s) will
be included in or excluded from the calculation of any Performance Goal with
respect to any Participant.

 

                                                                (hh)         “Performance
Period” means any Fiscal Year of the Company or such other period as
determined by the Administrator in its sole discretion.

 

                                                                (ii)           “Performance
Share” means the right to receive Shares or cash pursuant to
Section 9.

 

                                                                (jj)           “Performance
Unit” means the right to receive Shares or cash pursuant to
Section 9.

 

                                                                (kk)         “Period
of Restriction” means the period during which the transfer of Shares
of Restricted Stock are subject to restrictions and therefore, the Shares are
subject to a substantial risk of forfeiture. Such restrictions may be based on
the passage of time, the achievement of Performance Goals, or the occurrence of
other events as determined by the Administrator.

 

                                                                (ll)           “Plan”
means this 2000 Stock Plan, as amended and restated.

 

                                                                (mm)       “Restricted
Stock” means Shares issued pursuant to an Award of Restricted Stock
under Section 7 of the Plan, or issued pursuant to the early exercise of
an Option.

 

                                                                (nn)         “Return
on Assets” means as to any Performance Period, the percentage equal
to the Company’s or a business unit’s Operating Income divided by average net
Company or business unit, as applicable, assets, determined in accordance with
U.S. GAAP.

 

                                                                (oo)         “Return
on Equity” means as to any Performance Period, the percentage equal
to the Company’s Net Income divided by average stockholder’s equity, determined
in accordance with U.S. GAAP.

 

                                                                (pp)         “Return
on Sales” means as to any Performance Period, the percentage equal
to the Company’s or a business unit’s Operating Income divided by the Company’s
or the business unit’s, as applicable, Revenue.

 

 

3

 

                                                                (qq)         “Revenue”
means as to any Performance Period, the Company’s or business unit’s net sales,
determined in accordance with U.S. GAAP.

 

                                                                (rr)           “Rule 16b-3”
means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3,
as in effect when discretion is being exercised with respect to the Plan.

 

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

 

                                                                (tt)           “Service
Provider” means an Employee, Director or Consultant.

 

                                                                (uu)         “Share”
means a share of the Common Stock, as adjusted in accordance with
Section 12 of the Plan.

 

                                                                (vv)         “Stock
Appreciation Right” or “SAR”
means an Award, granted alone or in connection with an Option, that pursuant to
Section 8 is designated as a SAR.

 

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

 

                                                                (xx)          “Total
Shareholder Return” means as to any Performance Period, the total
return (change in share price plus reinvestment of any dividends) of a Share.

 

                                                                (yy)         “U.S.
GAAP” means generally accepted accounting principles in the United
States.

 

                3.             Stock Subject to the Plan.

 

                        a.             Stock
Subject to the Plan.  Subject
to the provisions of Section 12 of the Plan, the maximum aggregate number
of Shares that may be optioned and sold under the Plan is 2,500,000 Shares,
plus an annual increase to be added on the first day of the Company’s fiscal
year, beginning fiscal year 2001, equal to the lesser of (i) 5,000,000
Shares, (ii) 5% of the outstanding Shares of Common Stock on the last day
of the immediately preceding fiscal year or (iii) an amount determined by
the Board. The Shares may be authorized, but unissued, or reacquired Common
Stock. Shares will not be deemed to have been issued pursuant to the Plan with
respect to any portion of an Award that is settled in cash. Upon payment in
Shares pursuant to the exercise of an SAR, the number of Shares available for
issuance under the Plan will be reduced only by the number of Shares actually
issued in such payment. If the exercise price of an Award is paid by tender to
the Company, or attestation to the ownership, of Shares owned by the
Participant, the number of Shares available for issuance under the Plan will be
reduced by the gross number of Shares for which the Award is exercised.

 

                                b.             Lapsed
Awards.  If an Award expires
or becomes unexercisable without having been exercised in full, the unpurchased
Shares which were subject thereto will become available for future grant or
sale under the Plan (unless the Plan has terminated); provided, however, that Shares that have
actually been issued under the Plan, whether upon exercise of an Award, will
not be returned to the Plan and will not become available for future
distribution under the Plan, except that if unvested Shares are forfeited or
repurchased by the Company, such Shares will become available for future grant
under the Plan.

 

                                                                                                c.             Share Reserve.  The Company, during the term of this Plan, will at all times
reserve and keep available such number of Shares as will be sufficient to
satisfy the requirements of the Plan.

 

                4.             Administration of the Plan.

 

                                                                a.             Procedure.

 

                                                                                                                (i)            Multiple Administrative Bodies.  Different Committees with respect to
different groups of Service Providers may administer the Plan.

 

4

 

                                                                                                                (ii)           Section 162(m). 
To the extent that the Administrator determines it to be
desirable to qualify Awards granted hereunder as “performance-based
compensation” within the meaning of Section 162(m) of the Code, the Plan
will be administered by a Committee of two or more “outside directors” within
the meaning of Section 162(m) of the Code.

 

                                                                                                                (iii)          Rule 16b-3. 
To the extent desirable to qualify transactions hereunder as
exempt under Rule 16b-3, the transactions contemplated hereunder will be
structured to satisfy the requirements for exemption under Rule 16b-3.

 

                                                                                                                (iv)          Other Administration.  Other than as provided above, the Plan will
be administered by (A) the Board or (B) a Committee, which committee
will be constituted to satisfy Applicable Laws.

 

                                                                b.             Powers
of the Administrator. 
Subject to the provisions of the Plan, and in the case of a Committee,
subject to the specific duties delegated by the Board to such Committee, the
Administrator will have the authority, in its discretion:

 

                                                                                                                (i)            to determine the Fair Market Value;

 

                                                                                                                (ii)           to select the Service Providers to
whom Awards may be granted hereunder;

 

                                                                                                                (iii)          to determine the number of Shares to
be covered by each Award granted hereunder;

 

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

 

                                                                                                                (v)           to determine the terms and
conditions, not inconsistent with the terms of the Plan, of any Award granted
hereunder. Such terms and conditions include, but are not limited to, the
exercise price, the time or times when Awards may be exercised (which may be
based on performance criteria), any vesting acceleration or waiver of
forfeiture restrictions, and any restriction or limitation regarding any Award
or the Shares relating thereto, based in each case on such factors as the Administrator
will determine;

 

                                                                                                                (vi)          to construe and interpret the terms of
the Plan and Awards granted pursuant to the Plan;

 

                                                                                                                (vii)         to prescribe, amend and rescind rules
and regulations relating to the Plan, including rules and regulations relating
to sub-plans established for the purpose of satisfying applicable foreign laws;

 

                                                                                                                (viii)        to modify or amend each Award (subject
to Section 17(c) of the Plan), including the discretionary authority to
extend the post-termination exercisability period of Awards longer than is
otherwise provided for in the Plan;

 

                                                                                                                (ix)           to allow Participants to satisfy
withholding tax obligations in such manner as prescribed in Section 13;

 

                                                                                                                (x)            to authorize any person to execute
on behalf of the Company any instrument required to effect the grant of an
Award previously granted by the Administrator;

 

                                                                                                                (xi)           to allow a Participant to defer the
receipt of the payment of cash or the delivery of Shares that would otherwise
be due to such Participant under an Award; and

 

                                                                                                                (xii)          to make all other determinations
deemed necessary or advisable for administering the Plan.

 

                                                                i)              Effect
of Administrator’s Decision. 
The Administrator’s decisions, determinations and interpretations will
be final and binding on all Participants and any other holders of Awards.

 

5

 

 

                5)             Eligibility.  Nonstatutory Stock Options, Restricted Stock, Stock Appreciation
Rights, Performance Units and Performance Shares may be granted to Service
Providers. Incentive Stock Options may be granted only to Employees.

 

                6)             Stock Options.

 

                                                                (a)           Limitations.

 

                                                                                                                i)              Each Option will be designated in
the Option Agreement as either an Incentive Stock Option or a Nonstatutory
Stock Option. However, notwithstanding such designation, to the extent that the
aggregate Fair Market Value of the Shares with respect to which Incentive Stock
Options are exercisable for the first time by the Participant during any
calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds
$100,000, such Options will be treated as Nonstatutory Stock Options. For
purposes of this Section 6(a), Incentive Stock Options will be taken into
account in the order in which they were granted. The Fair Market Value of the
Shares will be determined as of the time the Option with respect to such Shares
is granted.

 

                                                                                ii)             The following limitations will
apply to grants of Options:

 

                                                                                                                                                                A.            No Service Provider will be granted,
in any Fiscal Year, Options to purchase more than 750,000 Shares.

 

                                                                                                                                                                B.            In connection with his or her
initial service, a Service Provider may be granted Options to purchase up to an
additional 2,000,000 Shares, which will not count against the limit set forth
in Section 6(a)(2)(ii)(A) above.

 

                                                                                                                                                                C.            The foregoing limitations will be
adjusted proportionately in connection with any change in the Company’s
capitalization as described in Section 12.

 

                                                                                                                                                                D.            If an Option is cancelled in the
same Fiscal Year in which it was granted (other than in connection with a
transaction described in Section 12), the cancelled Option will be counted
against the limits set forth in subsections (A) and (B) above. For
this purpose, if the exercise price of an Option is reduced, the transaction
will be treated as a cancellation of the Option and the grant of a new Option.

 

                                                                b)            Term
of Option.  The Administrator
will determine the term of each Option in its sole discretion. In the case of
an Incentive Stock Option, the term will be ten (10) years from the date
of grant or such shorter term as may be provided in the Option Agreement.
Moreover, in the case of an Incentive Stock Option granted to an Participant
who, at the time the Incentive Stock Option is granted, owns stock representing
more than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Incentive
Stock Option will be five (5) years from the date of grant or such shorter
term as may be provided in the Option Agreement.

 

                                                                c)             Option
Exercise Price and Consideration.

 

                                                                                                                (i)            Exercise Price.  The per share exercise price for the Shares to be issued pursuant
to exercise of an Option will be determined by the Administrator, subject to
the following:

 

                                                                                                A.            In the case of an Incentive Stock
Option

 

                                                                                                                                                                                                                a)             granted to an Employee who, at the
time the Incentive Stock Option is granted, owns stock representing more than
ten percent (10%) of the voting power of all classes of stock of the Company or
any Parent or Subsidiary, the per Share exercise price will be no less than
110% of the Fair Market Value per Share on the date of grant.

 

6

 

 

                                                                                                                                                                                                                b)            granted to any Employee other than
an Employee described in paragraph a) immediately above, the per Share
exercise price will be no less than 100% of the Fair Market Value per Share on
the date of grant.

 

                                                                                                                                                                                                                c)             Notwithstanding the foregoing,
Incentive Stock Options may be granted with a per Share exercise price of less
than 100% of the Fair Market Value per Share on the date of grant pursuant to a
transaction described in, and in a manner consistent with, Section 424(a)
of the Code.

 

                                                                                                                                                                A.            In the case of a Nonstatutory Stock
Option, the per Share exercise price will be determined by the Administrator.
In the case of a Nonstatutory Stock Option intended to qualify as “performance-based
compensation” within the meaning of Section 162(m) of the Code, the per
Share exercise price will be no less than 100% of the Fair Market Value per
Share on the date of grant.

 

                                                                                                                (ii)           Waiting Period and Exercise Dates.  At the time an Option is granted,
the Administrator will fix the period within which the Option may be exercised
and will determine any conditions that must be satisfied before the Option may
be exercised.

 

                                                                                                                (iii)          Form of Consideration.  The Administrator will determine the
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator will
determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of:

 

                                                                A.            cash;

 

                                                                B.            check;

 

                                                                C.            promissory note to the extent
permitted by Applicable Laws;

 

                                                                                                                                                                D.            other Shares, provided Shares
acquired directly or indirectly from the Company, (1) have been owned by
the Participant and not subject to substantial risk of forfeiture for more than
six months on the date of surrender, and (2) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which said Option will be exercised;

 

                                                                                                                                                                E.             consideration received by the
Company under a cashless exercise program implemented by the Company in
connection with the Plan;

 

                                                                                                                                                                F.             a reduction in the amount of any
Company liability to the Participant, including any liability attributable to
the Participant’s participation in any Company-sponsored deferred
compensation program or arrangement;

 

                                                                G.            any combination of the foregoing
methods of payment; or

 

                                                                                                                                                                H.            such other consideration and method
of payment for the issuance of Shares to the extent permitted by Applicable
Laws.

 

                                                                d)            Exercise
of Option.

 

                                                                                                                i.              Procedure for Exercise;  Rights as a Stockholder.Any Option granted
hereunder will be exercisable according to the terms of the Plan and at such
times and under such conditions as determined by the Administrator and set
forth in the Option Agreement. Unless the Administrator provides otherwise,
vesting of Options granted hereunder will be suspended during any unpaid leave
of absence. An Option may not be exercised for a fraction of a Share.

 

                                                                                                                                                An Option will be deemed exercised when the Company receives:
(i) written or electronic notice of exercise (in accordance with the
Option Agreement) from the person entitled to 

 

 

7

 

                                                                                                exercise the Option, and (ii) full payment for the Shares with
respect to which the Option is exercised (together with an applicable
withholding taxes). Full payment may consist of any consideration and method of
payment authorized by the Administrator and permitted by the Option Agreement
and the Plan. Shares issued upon exercise of an Option will be issued in the
name of the Participant or, if requested by the Participant, in the name of the
Participant and his or her spouse. Until the Shares are issued (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a stockholder will exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company will issue (or cause to
be issued) such Shares promptly after the Option is exercised. No adjustment
will be made for a dividend or other right for which the record date is prior
to the date the Shares are issued, except as provided in Section 12 of the
Plan.

 

                                                                                                                                                Exercising an Option in any manner will decrease the number of Shares
thereafter available, both for purposes of the Plan and for sale under the
Option, by the number of Shares as to which the Option is exercised.

 

                                                                                                                ii.             Termination of Relationship as a Service Provider.  If an Participant ceases to be a Service
Provider, other than upon the Participant’s death or Disability, the
Participant may exercise his or her Option within such period of time as is
specified in the Option Agreement to the extent that the Option is vested on
the date of termination (but in no event later than the expiration of the term
of such Option as set forth in the Option Agreement). In the absence of a
specified time in the Option Agreement, the Option will remain exercisable for
three (3) months following the Participant’s termination. If, on the date
of termination, the Participant is not vested as to his or her entire Option,
the Shares covered by the unvested portion of the Option will revert to the
Plan. If, after termination, the Participant does not exercise his or her
Option within the time specified by the Administrator, the Option will
terminate, and the Shares covered by such Option will revert to the Plan.

 

                                                                                                                iii.            Disability of Participant.  If an Participant ceases to be a Service Provider as a
result of the Participant’s Disability, the Participant may exercise his or her
Option within such period of time as is specified in the Option Agreement to
the extent the Option is vested on the date of termination (but in no event
later than the expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option will remain exercisable for twelve (12) months following the
Participant’s termination. If, on the date of termination, the Participant is
not vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option will revert to the Plan. If, after termination, the
Participant does not exercise his or her Option within the time specified
herein, the Option will terminate, and the Shares covered by such Option will
revert to the Plan.

 

                                                                                                                iv.            Death of Participant.  If an Participant dies while a Service
Provider, the Option may be exercised following Participant’s death within such
period of time as is specified in the Option Agreement to the extent that the
Option is vested on the date of death (but in no event may the option be
exercised later than the expiration of the term of such Option as set forth in
the Option Agreement) by the Participant’s designated beneficiary, provided
such beneficiary has been designated prior to Participant’s death in a form
acceptable by the Administrator. If no such beneficiary has been designated by
the Participant, then such Option may be exercised by the personal
representative of the Participant’s estate or by the person(s) to whom the
Option is transferred pursuant to the Participant’s will or in accordance with
the laws of descent and distribution. In the absence of a specified time in the
Option Agreement, the Option will remain exercisable for twelve
(12) months following Participant’s death. If, at the time of death, the
Participant is not vested as to his or her entire Option, the Shares 

 

 

8

 

 

                                                                                                covered by the unvested portion of the Option will immediately revert to
the Plan. If the Option is not so exercised within the time specified herein,
the Option will terminate, and the Shares covered by such Option will revert to
the Plan.

 

                (7)           Restricted Stock.

 

                                                                a)             Grant
of Restricted Stock.  Subject
to the terms and provisions of the Plan, the Administrator, at any time and
from time to time, may grant Shares of Restricted Stock to Service Providers in
such amounts as the Administrator, in its sole discretion, will determine.

 

                                                                b)            Restricted
Stock Agreement.  Each Award
of Restricted Stock will be evidenced by an Award Agreement that will specify
the Period of Restriction, the number of Shares granted, and such other terms
and conditions as the Administrator, in its sole discretion, will determine.
Notwithstanding the foregoing, during any Fiscal Year no Participant will
receive more than an aggregate of 250,000 Shares of Restricted Stock; provided,
however, that in connection with a Participant’s initial service as an
Employee, an Employee may be granted an aggregate of up to an additional
500,000 Shares of Restricted Stock. Unless the Administrator determines
otherwise, Shares of Restricted Stock will be held by the Company as escrow
agent until the restrictions on such Shares have lapsed.

 

                                                                c)             Transferability.  Except as provided in this Section 7,
Shares of Restricted Stock may not be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated until the end of the applicable Period of
Restriction.

 

                                                                d)            Other
Restrictions.  The
Administrator, in its sole discretion, may impose such other restrictions on
Shares of Restricted Stock as it may deem advisable or appropriate.

 

                                                                e)             Removal
of Restrictions.  Except as
otherwise provided in this Section 7, Shares of Restricted Stock covered
by each Restricted Stock grant made under the Plan will be released from escrow
as soon as practicable after the last day of the Period of Restriction. The
Administrator, in its discretion, may accelerate the time at which any
restrictions will lapse or be removed.

 

                                                                f)             Voting
Rights.  During the Period of
Restriction, Service Providers holding Shares of Restricted Stock granted
hereunder may exercise full voting rights with respect to those Shares, unless
the Administrator determines otherwise.

 

                                                                g)            Dividends
and Other Distributions. 
During the Period of Restriction, Service Providers holding Shares of
Restricted Stock will be entitled to receive all dividends and other
distributions paid with respect to such Shares unless otherwise provided in the
Award Agreement. If any such dividends or distributions are paid in Shares, the
Shares will be subject to the same restrictions on transferability and
forfeitability as the Shares of Restricted Stock with respect to which they
were paid.

 

                                                                h)            Return
of Restricted Stock to Company. 
On the date set forth in the Award Agreement, the Restricted Stock for
which restrictions have not lapsed will revert to the Company and again will
become available for grant under the Plan.

 

                                                                i)              Section 162(m)
Performance Restrictions. 
For purposes of qualifying a Restricted Stock as “performance-based
compensation” under Section 162(m) of the Code, the Administrator, in its
discretion, may set restrictions based upon the achievement of Performance
Goals, which will be set by the Administrator on or before the Determination
Date. In this connection, the Administrator will follow any procedures
determined by it from time to time to be necessary or appropriate to ensure
qualification of the Restricted Stock under Section 162(m) of the Code
(e.g., in determining the Performance Goals).

 

 

9

 

                8)             Stock Appreciation Rights.

 

                                                                a)             Grant
of SARs.  Subject to the
terms and conditions of the Plan, a SAR may be granted to Service Providers at
any time and from time to time as will be determined by the Administrator, in
its sole discretion.

 

                                                                b)            Number
of Shares.  The Administrator
will have complete discretion to determine the number of SARs granted to any
Participant, provided that during any Fiscal Year, no Participant will be
granted SARs covering more than 750,000 Shares. Notwithstanding the foregoing
limitation, in connection with a Participant’s initial service as an Employee,
an Employee may be granted SARs covering up to an additional 2,000,000 Shares.

 

                                                                c)             Exercise
Price and Other Terms.  The
Administrator, subject to the provisions of the Plan, will have complete
discretion to determine the terms and conditions of SARs granted under the
Plan.

 

                                                                d)            SAR
Agreement.  Each SAR grant
will be evidenced by an Award Agreement that will specify the exercise price,
the term of the SAR, the conditions of exercise, and such other terms and
conditions as the Administrator, in its sole discretion, will determine.

 

                                                                e)             Expiration
of SARs.  An SAR granted
under the Plan will expire upon the date determined by the Administrator, in
its sole discretion, and set forth in the Award Agreement. Notwithstanding the
foregoing, the rules of Section 6(d) also will apply to SARs.

 

                                                                f)             Payment
of SAR Amount.  Upon exercise
of an SAR, a Participant will be entitled to receive payment from the Company,
less any applicable withholding taxes, in an amount determined by multiplying:

 

                                                                                                                i)              The difference between the Fair
Market Value of a Share on the date of exercise and the exercise price; times

 

                                                                                                                ii)             The number of Shares with respect
to which the SAR is exercised.

 

                                                                At the discretion
of the Administrator, the payment upon SAR exercise may be in cash, in Shares
of equivalent value, or in some combination thereof.

 

                (9)           Performance Units and Performance Shares.

 

                                                                a)             Grant
of Performance Units/Shares. 
Performance Units and Performance Shares may be granted to Service
Providers at any time and from time to time, as will be determined by the
Administrator, in its sole discretion. The Administrator will have complete
discretion in determining the number of Performance Units and Performance
Shares granted to each Participant provided that during any Fiscal Year,
(a) no Participant will receive Performance Units having an initial value
greater than $2,000,000, and (b) no Participant will receive more than
250,000 Performance Shares. Notwithstanding the foregoing limitation, in
connection with a Participant’s initial service as an Employee, an Employee may
be granted up to an additional 500,000 Performance Shares.

 

                                                                b)            Value
of Performance Units/Shares. 
Each Performance Unit will have an initial value that is established by
the Administrator on or before the date of grant. Each Performance Share will
have an initial value equal to the Fair Market Value of a Share on the date of
grant.

 

                                                                c)             Performance
Objectives and Other Terms. 
The Administrator will set performance objectives or other vesting
provisions (including, without limitation, continued status as a Service
Provider) in its discretion which, depending on the extent to which they are
met, will determine the number or value of Performance Units/Shares that will
be paid out to the Service Provider. The time period during which the
performance objectives or other vesting provisions must be met 

 

 

10

 

                                                will be called the “Performance Period.” Each Award of Performance
Units/Shares will be evidenced by an Award Agreement that will specify the
Performance Period, and such other terms and conditions as the Administrator,
in its sole discretion, will determine.

 

                                                                                                                i)              General Performance Objectives.  The Administrator may set performance
objectives based upon the achievement of Company-wide, divisional, or
individual goals, or any other basis determined by the Administrator in its
discretion.

 

                                                                                                                ii)             Section 162(m) Performance Objectives.  For purposes of qualifying grants of
Performance Units/Shares as “performance-based compensation” under
Section 162(m) of the Code, the Administrator, in its discretion, may
determine that the performance objectives applicable to Performance
Units/Shares will be based on the achievement of Performance Goals. The
Administrator will set the Performance Goals on or before the Determination
Date. In granting Performance Units/Shares which are intended to qualify under
Section 162(m) of the Code, the Administrator will follow any procedures
determined by it from time to time to be necessary or appropriate to ensure
qualification of the Performance Units/Shares under Section 162(m) of the
Code (e.g., in determining the Performance Goals).

 

                                                                d)            Earning
of Performance Units/Shares. 
After the applicable Performance Period has ended, the holder of
Performance Units/Shares will be entitled to receive a payout of the number of
Performance Units/Shares earned by the Participant over the Performance Period,
to be determined as a function of the extent to which the corresponding
performance objectives or other vesting provisions have been achieved. After
the grant of a Performance Unit/Share, the Administrator, in its sole
discretion, may reduce or waive any performance objectives or other vesting
provisions for such Performance Unit/Share.

 

                                                                e)             Form
and Timing of Payment of Performance Units/Shares.  Payment of earned Performance Units/Shares
will be made as soon as practicable after the expiration of the applicable
Performance Period. The Administrator, in its sole discretion, may pay earned
Performance Units/Shares in the form of cash, in Shares (which have an
aggregate Fair Market Value equal to the value of the earned Performance
Units/Shares at the close of the applicable Performance Period) or in a
combination thereof, taking into consideration any applicable withholding taxes
which may be due as a result of the Award.

 

                                                                f)             Cancellation
of Performance Units/Shares. 
On the date set forth in the Award Agreement, all unearned or unvested
Performance Units/Shares will be forfeited to the Company, and again will be
available for grant under the Plan.

 

                (10)         Leaves of Absence.  Unless the Administrator provides otherwise,
vesting of Awards granted hereunder will be suspended during any unpaid leave
of absence. A Service Provider will not cease to be an Employee in the case of
(i) any leave of absence approved by the Company or (ii) transfers
between locations of the Company or between the Company, its Parent, or any
Subsidiary. For purposes of Incentive Stock Options, no such leave may exceed
ninety (90) days, unless reemployment upon expiration of such leave is
guaranteed by statute or contract. If reemployment upon expiration of a leave
of absence approved by the Company is not so guaranteed, then three
(3) months following the 91st day of such leave any Incentive Stock Option
held by the Participant will cease to be treated as an Incentive Stock Option
and will be treated for tax purposes as a Nonstatutory Stock Option.

 

                (11)         Transferability of Awards.  Unless determined otherwise by the Administrator,
an Award may not be sold, pledged, assigned, hypothecated, transferred, or
disposed of in any manner other than by will or by the laws of descent or
distribution and may be exercised, during the lifetime of the Participant, only
by the Participant. If the Administrator makes an Award transferable, such
Award will contain such additional terms and conditions as the Administrator
deems appropriate.

 

 

11

 

                (12)         Adjustments Upon Changes in Capitalization,
Dissolution, Merger or Asset Sale.

 

                                                                a)             Changes
in Capitalization.  Subject
to any required action by the shareholders of the Company, the number and class
of Shares that may be delivered under the Plan and/or the number, class, and
price of Shares covered by each outstanding Award, and the numerical Share
limits set forth in Sections 3, 6, 7, 8 and 9 will be proportionately adjusted
for any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split, reverse stock split, stock dividend, combination
or reclassification of the Common Stock, or any other increase or decrease in
the number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided,
however, that conversion of any convertible securities of the
Company will not be deemed to have been “effected without receipt of
consideration.” Such adjustment will be made by the Board, whose determination
in that respect will be final, binding and conclusive. Except as expressly provided
herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, will affect, and no
adjustment by reason thereof will be made with respect to, the number or price
of shares of Common Stock subject to an Award.

 

                                                                b)            Dissolution
or Liquidation.  In the event
of the proposed dissolution or liquidation of the Company, the Administrator
will notify each Participant as soon as practicable prior to the effective date
of such proposed transaction. The Administrator in its discretion may provide
for a Participant to have the right to exercise his or her Option until ten
(10) days prior to such transaction as to all of the Optioned Stock
covered thereby, including Shares as to which the Option would not otherwise be
exercisable. In addition, the Administrator may provide that any Company
repurchase option applicable to any Shares purchased upon exercise of an Option
will lapse as to all such Shares, provided the proposed dissolution or
liquidation takes place at the time and in the manner contemplated. To the
extent it has not been previously exercised, an Option will terminate
immediately prior to the consummation of such proposed action.

 

                                                                c)             Merger
or Asset Sale.  In the event
of a merger of the Company with or into another corporation, or the sale of
substantially all of the assets of the Company, each outstanding Award will be
assumed or an equivalent option or right substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. In the
event that the successor corporation refuses to assume or substitute for the
Award, the Participant will fully vest in and have the right to exercise all of
his or her outstanding Options and Stock Appreciation Rights, including Shares
as to which such Awards would not otherwise be vested or exercisable, all
restrictions on Restricted Stock will lapse, and, with respect to Performance
Shares and Performance Units, all performance goals or other vesting criteria
will be deemed achieved at target levels and all other terms and conditions
met. In addition, if an Option or Stock Appreciation Right becomes fully vested
and exercisable in lieu of assumption or substitution in the event of a merger
or sale of assets, the Administrator will notify the Participant in writing or
electronically that the Option or Stock Appreciation Right will be fully vested
and exercisable for a period of fifteen (15) days from the date of such
notice, and the Option or Stock Appreciation Right will terminate upon the
expiration of such period.

 

                For the purposes of this subsection (c), an Award
will be considered assumed if, following the merger or sale of assets, the
Award confers the right to purchase or receive, for each Share subject to the
Award immediately prior to the merger or sale of assets, the consideration
(whether stock, cash, or other securities or property) or, in the case of a
Stock Appreciation Right upon the exercise of which the Administrator
determines to pay cash or a Performance Share or Performance Unit which the
Administrator can determine to pay in cash, the fair market value of the
consideration received in the merger or sale of assets by holders of Common
Stock for each Share held on the effective date of the transaction (and if
holders were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding Shares); provided,
however, that if such consideration 

 

 

12

 

received in the merger or
sale of assets is not solely common stock of the successor corporation or its
Parent, the Administrator may, with the consent of the successor corporation,
provide for the consideration to be received upon the exercise of an Option or
Stock Appreciation Right or upon the payout of a Performance Share or
Performance Unit, for each Share subject to such Award (or in the case of
Performance Units, the number of implied shares determined by dividing the
value of the Performance Units by the per share consideration received by
holders of Common Stock in the merger or sale of assets), to be solely common
stock of the successor corporation or its Parent equal in fair market value to
the per share consideration received by holders of Common Stock in the merger or
sale of assets.

 

                Notwithstanding anything in this subsection
(c) to the contrary, an Award that vests, is earned or paid-out upon the
satisfaction of one or more performance goals will not be considered assumed if
the Company or its successor modifies any of such performance goals without the
Participant’s consent; provided, however, a modification to such performance
goals only to reflect the successor corporation’s post-transaction corporate
structure will not be deemed to invalidate an otherwise valid Award assumption.

 

                (13)         Tax Withholding

 

                                                                a)             Withholding
Requirements.  Prior to the
delivery of any Shares or cash pursuant to an Award (or exercise thereof), the
Company will have the power and the right to deduct or withhold, or require a
Participant to remit to the Company, an amount sufficient to satisfy federal,
state, local, foreign or other taxes (including the Participant’s FICA
obligation) required to be withheld with respect to such Award (or exercise
thereof).

 

                                                                b)            Withholding
Arrangements.  The
Administrator, in its sole discretion and pursuant to such procedures as it may
specify from time to time, may permit a Participant to satisfy such tax
withholding obligation, in whole or in part by (a) paying cash,
(b) electing to have the Company withhold otherwise deliverable cash or
Shares having a Fair Market Value equal to the amount required to be withheld,
or (c) delivering to the Company already-owned Shares having a Fair
Market Value equal to the amount required to be withheld. The amount of the
withholding requirement will be deemed to include any amount which the
Administrator agrees may be withheld at the time the election is made, not to
exceed the amount determined by using the maximum federal, state or local
marginal income tax rates applicable to the Participant with respect to the
Award on the date that the amount of tax to be withheld is to be determined.
The Fair Market Value of the Shares to be withheld or delivered will be
determined as of the date that the taxes are required to be withheld.

 

                (14)         No Effect on Employment or Service.  Neither the Plan nor any Award will confer
upon a Participant any right with respect to continuing the Participant’s
relationship as a Service Provider with the Company, nor will they interfere in
any way with the Participant’s right or the Company’s right to terminate such
relationship at any time, with or without cause, to the extent permitted by
Applicable Laws.

 

                (15)         Term of Plan.  Subject to Section 20 of the Plan, the Plan, as amended and
restated on April 28, 2004, will become effective upon its adoption by the
Board. It will continue in effect for a term of ten (10) years from the
original date of adoption.

 

                (16)         Date of Grant.  The date of grant of an Option will be, for all purposes, the
date on which the Administrator makes the determination granting such Option,
or such other later date as is determined by the Administrator. Notice of the
determination will be provided to each Participant within a reasonable time
after the date of such grant.

 

 

13

 

                (17)         Amendment and Termination of the Plan.

 

                                                                a)             Amendment
and Termination.  The Board
may at any time amend, alter, suspend or terminate the Plan.

 

                                                                b)            Stockholder
Approval.  The Company will
obtain stockholder approval of any Plan amendment to the extent necessary and
desirable to comply with Applicable Laws.

 

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

 

                (18)         Conditions Upon Issuance of Shares.

 

                                                                a)             Legal
Compliance.  Shares will not
be issued pursuant to the exercise of an Option unless the exercise of such
Option and the issuance and delivery of such Shares will comply with Applicable
Laws and will be further subject to the approval of counsel for the Company
with respect to such compliance.

 

                                                                b)            Investment
Representations.  As a
condition to the exercise of an Option, the Company may require the person
exercising such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without
any present intention to sell or distribute such Shares if, in the opinion of
counsel for the Company, such a representation is required.

 

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

 

                (20)         Stockholder Approval.  The Plan will be subject to approval by the
stockholders of the Company within twelve (12) months after the date the
Plan is adopted. Such stockholder approval will be obtained in the manner and
to the degree required under Applicable Laws.

 

 

14

 

APPENDIX A

 

Rules for French Option Grants

 

                The following rules will apply in the case of Option
grants to French residents.

 

                (1)           Definitions.  As used herein, the following definitions will apply:

 

                                                                a)             “Applicable
Laws” means the legal requirements relating to the administration of
stock option plans under French corporate, securities, and tax laws.

 

                                                                b)            “Disability”
means total and permanent disability, as defined under Applicable Laws.

 

                                                                c)             “Employee”
means any person, including officers and Directors, employed by the Company or
any Parent or Subsidiary of the Company, (i) who does not own more than
10% of the voting power of all classes of stock of the Company, or any Parent
or Subsidiary of the Company, and (ii) who is a resident of the Republic
of France for tax purposes or who performs his or her duties in France and is
subject to French income tax on his or her remuneration.

 

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

 

                                                                                                                i)              If the Common Stock is listed on
any established stock exchange or a national market system, including without
limitation the Nasdaq National Market of the Nasdaq Stock Market, its Fair
Market Value will be the average quotation price for the last 20 days
preceding the date of determination for such stock (or the average closing bid
for such 20 day period, if no sales were reported) as quoted on such
exchange or system and reported in The Wall
Street Journal or such other source as the Administrator deems
reliable;

 

                                                                                                                ii)             If the Common Stock is quoted on
the Nasdaq Stock market (but not on the Nasdaq National Market thereof) or
regularly quoted by a recognized securities dealer but selling prices are not
reported, its Fair Market Value will be the mean between the high bid and low
asked prices for the Common Stock for the last 20 days preceding the date
of determination; or

 

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

 

                (2)           Eligibility.  Options granted pursuant to this Appendix A may be granted
only to Employees; provided, however, that the Président
Directeur Général, the Directeur
Général and other directors who are also Employees of a Subsidiary
may be granted Options hereunder.

 

                (3)           Stock Subject to the Plan.  The total number of Options outstanding
which may be exercised for newly issued Shares of Common Stock may at no time
exceed that number equal to one-third of the Company’s voting stock, whether
preferred stock of the Company or Common Stock. If any Optioned Stock is to
consist of reacquired Shares, such Optioned Stock must be purchased by the
Company prior to the date of the grant of the corresponding new Option and must
be reserved and set aside for such purposes. In addition, the new Option must
be granted within one (1) year of the acquisition of the Shares
underlying such new Option.

 

                (4)           Term of Plan.  Options may be granted under this Appendix A from the date
of the adoption of the Plan by the Board. It will continue in effect until the
earlier of (i) the termination of the Plan or (ii) the date five
(5) years from the date of its adoption or the maximum length of time permitted
for favorable tax and social security treatment under Applicable Laws, unless
terminated earlier under Section 17 of the Plan.

 

                (5)           Option Price.  The Option price for the Shares to be issued pursuant to exercise
of an Option will be determined by the Administrator upon the date of grant of
the Option and stated in the 

 

 

15

 

Option Agreement, but in
no event will be lower than one hundred percent (100%) of the Fair Market Value
on the date the Option is granted. If any Optioned Stock is to consist of
reacquired Shares, the Option price will be no lower than 80% of the average
purchase price paid by the Company for the repurchase of such Optioned Stock.
The Option price cannot be modified while the Option is outstanding, except as
required by Applicable Laws.

 

                (6)           Exercise of Option; Restriction on Sale.

 

                                                                a)             Options granted hereunder may be
not be exercised within one (1) year of the date the Option is granted
(the “Initial Exercise Date”) whether or not the Option has vested prior to
such time; provided, however, that the Initial Exercise Date will be
automatically adjusted to conform with any changes under Applicable Laws so
that the length of time from the date of grant to the Initial Exercise Date
when added to the length of time in which shares may not be disposed of after
the Initial Exercise Date as provided in Section 6(b) below, will allow
for favorable tax and social security treatment under Applicable Laws.
Thereafter, Options may be exercised to the extent they have vested. Options
granted hereunder will vest as determined by the Administrator.

 

                                                                An Option will be
deemed exercised when the Company receives: (i) written or electronic
notice of exercise (in accordance with the Option Agreement) from the person
entitled to exercise the Option, and (ii) full payment for the Shares with
respect to which the Option is exercised together with any applicable
withholding taxes. Full payment may consist of any consideration and method of
payment authorized by the Administrator and permitted by the Option Agreement
and the Plan. Shares issued upon exercise of an Option will be issued in the
name of the Participant or, if required by the Participant, in the name of the
Participant and his or her spouse. Until the Shares are issued (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a stockholder will exist with respect to the Shares,
notwithstanding the exercise of the Option. The Company will issue (or cause to
be issued) such Shares promptly after the Option is exercised. No adjustment
will be made for a dividend or other right for which the record date is prior
to the date the shares are issued, except as provided in Section 12 of the
Plan.

 

                                                                b)            The Shares subject to this Option
may not be transferred, assigned or hypothecated in any manner otherwise than
by will or by the laws of descent or distribution before the date three
(3) years from the Initial Exercise Date, except for any events provided
for in Article 91 ter of Annex II to the French tax code; provided,
however, that the duration of this restriction on sale will be automatically
adjusted to conform with any changes to the holding period required for
favorable tax and social security treatment under Applicable Laws as determined
by the Administrator and to the extent permitted under Applicable Laws.

 

                                                                c)             Termination
of Employment Relationship. 
In the event that a Participant’s status as an Employee terminates
(other than upon the Participant’s death or Disability), the Participant may
exercise his or her Option, within such period of time as specified in the
Option Agreement to the extent that the Participant was entitled to exercise it
at the date of termination (but in no event later than the expiration of the
term of such Option as set forth in the Option Agreement). In the absence of a
specified time in the Option Agreement, the Option will remain exercisable for
three (3) months following the Participant’s termination. If, after
termination, the Participant does not exercise the vested portion of his or her
Option within the time specified by the Administrator, the Option will
terminate, and the Shares covered by such Option will revert to the Plan.

 

                                                                d)            Disability
of Participant.  In the event
that a Participant’s status as an Employee terminates as a result of the
Participant’s Disability, the Participant may exercise his or her Option within
such period of time as specified in the Option Agreement to the extent that the
Participant was entitled to exercise it at the date of such termination (but in
no event later than the expiration of the term of such Option as set forth in
the Option Agreement). In the absence of a time 

 

 

16

 

                                                specified in the Option Agreement, the Option will remain exercisable
for twelve (12) months following the Participant’s termination. If, at the
date of termination, the Participant has not vested as to his or her entire
Option, the Shares covered by the unexercisable portion of the Option will
revert to the Plan. If, after termination, the Participant does not exercise
the vested portion of his or her Option within the time specified herein, the
Option will terminate, and the Shares covered by such Option will revert to the
Plan.

 

                                                                e)             Death
of Participant.  In the event
of the death of a Participant while an Employee, the Option may be exercised at
any time within six (6) months following the date of death by the
Participant’s estate or by a person who acquired the right to exercise the
Option by bequest or inheritance, but only to the extent that the Option had
vested at the date of death (but in no event later than the expiration of the
term of such Option as set forth in the Option Agreement). If, at the time of
death, the Participant had not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option will revert to the Plan.
If, after death, the Participant’s estate or a person who acquired the right to
exercise the Option by bequest or inheritance does not exercise the vested
portion of Option within the time specified herein, the Option will terminate,
and the Shares covered by such Option will immediately revert to the Plan.

 

                (7)           Changes in Capitalization.  If any adjustment provided for in
Section 12(a) of the Plan to the exercise price and the number of shares
of Common Stock covered by outstanding Options would violate Applicable Laws in
such a way to jeopardize the favorable tax and social security treatment of
this Plan together with this Appendix A and the Options granted
thereunder, then no such adjustment will be made prior to the exercise of any
such outstanding Option.

 

                (8)           Information Statements to Participants.  The Company or its French Parent or
Subsidiary, as required under Applicable Laws, will provide to each
Participant, with copies to the appropriate governmental entities, such
statements of information as required by the Applicable Laws.

 

                (9)           Effect of Amendment or Termination.  No amendment, alteration, suspension or
termination of the Plan will impair the rights of any Participant, unless
mutually agreed otherwise between the Participant and the Administrator, which
agreement must be in writing and signed by the Participant and the Company. Any
favorable amendments or alteration are automatically deemed to be approved by
Participant. Termination of the Plan will not affect the Administrator’s
ability to exercise the powers granted to it hereunder with respect to Options
granted under the Plan prior to the date of such termination.

 

                (10)         Information to Shareholders.  The French Parent or Subsidiary of the
Company, as required under Applicable Laws, will provide its shareholders with
an annual report with respect to Options granted and/or exercised by its
Employees in the financial year.

 

 

17

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