Document:

Unassociated Document

     

    Exhibit
4.1

     

    ALTIGEN
COMMUNICATIONS, INC.

     

    2009
EQUITY INCENTIVE PLAN

     

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

     

    
      	
               
      

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

            

    

     

    
      	
               
      

            	
              to
      provide incentives to individuals who perform services to the Company,
      and

            

    

     

    
      	
               
      

            	
              to
      promote the success of the Company's
business.

            

    

     

    The Plan
permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Stock
Appreciation Rights, Restricted Stock, Restricted Stock Units, 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)           "Affiliate" means any
corporation or any other entity (including, but not limited to, partnerships and
joint ventures) controlling, controlled by, or under common control with the
Company.

     

    (c)           "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.

     

    (d)           "Award" means, individually or
collectively, a grant under the Plan of Options, Stock Appreciation Rights,
Restricted Stock, Restricted Stock Units, Performance Units or Performance
Shares.

     

    (e)           "Award Agreement" means the
written or electronic agreement setting forth the terms and provisions
applicable to each Award granted under the Plan.  The Award Agreement
is subject to the terms and conditions of the Plan.

     

    (f)           "Board" means the Board of
Directors of the Company.

     

    (g)           "Change in Control" means the
occurrence of any of the following events:

     

    (i)        Change in Ownership of the
Company.  A change in the ownership of the Company which occurs
on the date that any one person, or more than one person acting as a group
("Person"), acquires ownership of the stock of the Company that, together with
the stock held by such Person, constitutes more than fifty percent (50%) of the
total voting power of the stock of the Company; provided, however, that for
purposes of this subsection (i), the acquisition of additional stock by any one
Person, who is considered to own more than fifty percent (50%) of the total
voting power of the stock of the Company will not be considered a Change in
Control; or

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (ii)       Change in Effective Control of the
Company.  If the Company has a class of securities registered
pursuant to Section 12 of the Exchange Act, a change in the effective
control of the Company which occurs on the date that a majority of members of
the Board is replaced during any twelve (12) month period by Directors whose
appointment or election is not endorsed by a majority of the members of the
Board prior to the date of the appointment or election.  For purposes
of this subsection (ii), if any Person is considered to be in effective control
of the Company, the acquisition of additional control of the Company by the same
Person will not be considered a Change in Control; or

     

    (iii)      Change in Ownership of a Substantial
Portion of the Company's Assets.  A change in the ownership of
a substantial portion of the Company's assets which occurs on the date that any
Person acquires (or has acquired during the twelve (12) month period ending on
the date of the most recent acquisition by such person or persons) assets from
the Company that have a total gross fair market value equal to or more than
fifty percent (50%) of the total gross fair market value of all of the assets of
the Company immediately prior to such acquisition or acquisitions; provided,
however, that for purposes of this subsection (iii), the following will not
constitute a change in the ownership of a substantial portion of the Company's
assets: (A) a transfer to an entity that is controlled by the Company's
stockholders immediately after the transfer, or (B) a transfer of assets by
the Company to: (1) a stockholder of the Company (immediately before the asset
transfer) in exchange for or with respect to the Company's stock, (2) an entity,
fifty percent (50%) or more of the total value or voting power of which is
owned, directly or indirectly, by the Company, (3) a Person, that owns, directly
or indirectly, fifty percent (50%) or more of the total value or voting power of
all the outstanding stock of the Company, or (4) an entity, at least fifty
percent (50%) of the total value or voting power of which is owned, directly or
indirectly, by a Person described in this subsection (iii)(B)(3). For purposes
of this subsection (iii), gross fair market value means the value of the assets
of the Company, or the value of the assets being disposed of, determined without
regard to any liabilities associated with such assets.

     

    For
purposes of this Section 2(g), persons will be considered to be acting as a
group if they are owners of a corporation that enters into a merger,
consolidation, purchase or acquisition of stock, or similar business transaction
with the Company.

     

    Notwithstanding
the foregoing, a transaction shall not be deemed a Change in Control unless the
transaction qualifies as a change in control event within the meaning of
Section 409A of the Code, as it has been and may be amended from time to
time, and any proposed or final Treasury Regulations and Internal Revenue
Service guidance that has been promulgated or may be promulgated thereunder from
time to time.

     

    Further
and for the avoidance of doubt, a transaction shall not constitute a Change in
Control if: (i) its sole purpose is to change the state of the Company's
incorporation, or (ii) its sole purpose is to create a holding company that
shall be owned in substantially the same proportions by the persons who held the
Company's securities immediately before such transaction.

     

    (h)           "Code" means the Internal
Revenue Code of 1986, as amended.  Reference to a specific section of
the Code or Treasury Regulation thereunder will include such section or
regulation, any valid regulation or other official applicable guidance
promulgated under such section, and any comparable provision of any future
legislation or regulation amending, supplementing or superseding such section or
regulation.

     

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

     

    (j)           "Common Stock" means the
common stock of the Company.

     

    (k)           "Company" means AltiGen
Communications, Inc., a Delaware corporation, or any successor
thereto.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (l)           "Consultant" means any person,
including an advisor, engaged by the Company or its Affiliates to render
services to such entity other than as an Employee.

     

    (m)           "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.

     

    (n)           "Director" means a member of
the Board.

     

    (o)           "Disability" means total and
permanent disability as defined in Section 22(e)(3) of the Code, provided
that in the case of Awards other than Incentive Stock Options, the Administrator
in its discretion may determine whether a permanent and total disability exists
in accordance with uniform and non-discriminatory standards adopted by the
Administrator from time to time.

     

    (p)           "Employee" means any person,
including Officers and Directors, employed by the Company or its
Affiliates.  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)           "Exchange Program" means a
program under which (i) outstanding Awards are surrendered or cancelled in
exchange for Awards of the same type (which may have higher or lower exercise
prices and different terms), Awards of a different type, and/or cash,
(ii) Participants would have the opportunity to transfer for value any
outstanding Awards to a financial institution or other person or entity selected
by the Administrator, and/or (iii) the exercise price of an outstanding
Award is reduced or increased. The Administrator will determine the terms and
conditions of any Exchange Program in its sole discretion.

     

    (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 Global Market, the Nasdaq
Global Select Market or the Nasdaq Capital Market, its Fair Market Value shall
be the closing sales price for such stock (or, if no closing sales price was
reported on that date, as applicable, on the last trading date such closing
sales price is 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, its Fair Market Value shall be the mean between
the high bid and low asked prices for the Common Stock on the day of
determination (or, if no bids and asks were reported on that date, as
applicable, on the last trading date such bids and asks are reported);
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)           "Family Member" means any
child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former
spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law (including adoptive
relationships) of the Employee, any person sharing the Employee's household
(other than a tenant or employee), a trust in which these persons (or the
Employee) have more than 50% of the beneficial interest, a foundation in which
these persons (or the Employee) control the management of assets, and any other
entity in which these persons (or the Employee) own more than 50% of the voting
interests.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (u)           "Fiscal Year" means the fiscal
year of the Company.

     

    (v)           "Incentive Stock Option" means
an Option that by its terms qualifies and is otherwise intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and
the regulations promulgated thereunder.

     

    (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)           "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.

     

    (y)           "Option" means a stock option
granted pursuant to the Plan.

     

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

     

    (aa)           "Participant" means the holder
of an outstanding Award.

     

    (bb)           "Performance Goals" will have
the meaning set forth in Section 11 of the Plan.

     

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

     

    (dd)           "Performance Share" means an
Award denominated in Shares which may be earned in whole or in part upon
attainment of performance goals or other vesting criteria as the Administrator
may determine pursuant to Section 10.

     

    (ee)           "Performance Unit" means an
Award which may be earned in whole or in part upon attainment of performance
goals or other vesting criteria as the Administrator may determine and which may
be settled for cash, Shares or other securities or a combination of the
foregoing pursuant to Section 10.

     

    (ff)           "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 target levels of performance, or the occurrence of other
events as determined by the Administrator.

     

    (gg)           "Plan" means this 2009 Equity
Incentive Plan.

     

    (hh)           "Restricted Stock" means
Shares issued pursuant to a Restricted Stock award under Section 8 of the
Plan, or issued pursuant to the early exercise of an Option.

     

    (ii)           
"Restricted Stock Unit"
means a bookkeeping entry representing an amount equal to the Fair Market Value
of one Share, granted pursuant to Section 9.  Each Restricted
Stock Unit represents an unfunded and unsecured obligation of the
Company.

     

    (jj)           "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.

     

    (kk)           "Section 16(b)" means
Section 16(b) of the Exchange Act.

     

    (ll)           "Service Provider" means an
Employee, Director or Consultant.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (mm)         "Share" means a share of the
Common Stock, as adjusted in accordance with Section 15 of the
Plan.

     

    (nn)           "Stock Appreciation Right"
means an Award, granted alone or in connection with an Option, that pursuant to
Section 7 is designated as a Stock Appreciation Right.

     

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

     

    3.           Stock Subject to the
Plan.

     

    (a)           Subject
to the provisions of Section 15 of the Plan, the maximum aggregate number
of Shares that may be subject to Awards and sold under the Plan is equal to the
sum of (i) 200,000 Shares, (ii) any Shares which have been reserved
but not issued pursuant to any awards granted under the Company's 1999 Stock
Plan (the "1999 Plan") as of the date of stockholder approval of this Plan (up
to a maximum of 4,800,000 Shares pursuant to this subsection (ii)), and
(iii) any Shares subject to stock options or similar awards granted under
1999 Plan that expire or otherwise terminate without having been exercised in
full and Shares issued pursuant to awards granted under the 1999 Plan that are
forfeited to or repurchased by the Company (up to a maximum of 3,500,000 Shares
pursuant to this subsection (iii)). The Shares may be authorized, but unissued,
or reacquired Common Stock.

     

    (b)           Lapsing Award.  If
an Award expires or becomes unexercisable without having been exercised in full,
is surrendered pursuant to an Exchange Program, or, with respect to Restricted
Stock, Restricted Stock Units, Performance Units or Performance Shares, is
forfeited to or repurchased by the Company due to failure to vest, the
unpurchased Shares (or for Awards other than Options or Stock Appreciation
Rights the forfeited or repurchased Shares) which were subject thereto will
become available for future grant or sale under the Plan (unless the Plan has
terminated). With respect to Stock Appreciation Rights, only Shares actually
issued (i.e., the net Shares issued) pursuant to a Stock Appreciation Right will
cease to be available under the Plan; all remaining Shares under Stock
Appreciation Rights will remain available for future grant or sale under the
Plan (unless the Plan has terminated).  Shares that have actually been
issued under the Plan under any Award will not be returned to the Plan and will
not become available for future distribution under the Plan; provided, however,
that if Shares issued pursuant to Awards of Restricted Stock, Restricted Stock
Units, Performance Shares or Performance Units are repurchased by the Company or
are forfeited to the Company due to failure to vest, such Shares will become
available for future grant under the Plan.  Shares used to pay the
exercise or purchase price of an Award and/or to satisfy the tax withholding
obligations related to an Award will become available for future grant or sale
under the Plan.  To the extent an Award under the Plan is paid out in
cash rather than Shares, such cash payment will not result in reducing the
number of Shares available for issuance under the
Plan.  Notwithstanding the foregoing and, subject to adjustment as
provided in Section 15, the maximum number of Shares that may be issued
upon the exercise of Incentive Stock Options will equal the aggregate Share
number stated in Section 3(a), plus, to the extent allowable under
Section 422 of the Code and the Treasury Regulations promulgated
thereunder, any Shares that become available for issuance under the Plan under
this Section 3(b).

     

    (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.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (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 (2) 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 Award Agreements 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
determine the terms and conditions of any, and to institute any Exchange
Program;

     

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

     

    (viii)    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 or for qualifying for favorable
tax treatment under applicable foreign laws;

     

    (ix)       to
modify or amend each Award (subject to Section 20(c) of the Plan),
including but not limited to the discretionary authority to extend the
post-termination exercisability period of Awards and to extend the maximum term
of an Option (subject to Section 6(b) regarding Incentive Stock
Options);

     

    (x)        to
allow Participants to satisfy withholding tax obligations in such manner as
prescribed in Section 16;

     

    (xi)       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;

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (xii)      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
pursuant to such procedures as the Administrator may determine; and

     

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

     

    (c)           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.

     

    (d)           No
Liability.  Under no circumstances shall the Company, its
Affiliates, the Administrator, or the Board incur liability for any indirect,
incidental, consequential or special damages (including lost profits) of any
form incurred by any person, whether or not foreseeable and regardless of the
form of the act in which such a claim may be brought, with respect to the Plan
or the Company's, its Affiliates', the Administrator's or the Board's roles in
connection with the Plan.

     

    5.           Eligibility.  Nonstatutory
Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation
Rights, Performance Units, and Performance Shares may be granted to Service
Providers.  Incentive Stock Options may be granted only to employees
of the Company or any Parent or Subsidiary of the Company.

     

    6.           Stock Options.

     

    (a)           Limitations.

     

    (i)        Each
Option will be designated in the Award 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 one hundred thousand U.S. dollars ($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
Administrator will have complete discretion to determine the number of Shares
subject to an Option granted to any Participant, provided that during any Fiscal
Year, no Participant will be granted an Option covering more than 600,000
Shares.  Notwithstanding the limitation in the previous sentence, in
connection with his or her initial service as an Employee, an Employee may be
granted Options covering up to an additional 600,000 Shares.  The
foregoing limitations will be adjusted proportionately in connection with any
change in the Company's capitalization as described in
Section 15.

     

    (b)           Term of
Option.  The term of each Option will be stated in the Award
Agreement; provided, however, that the term will be no more than ten (10) years
from the date of grant thereof.  In the case of an Incentive Stock
Option granted to a 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 Award
Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c)           Option Exercise Price and
Consideration.

     

    (i)         The
per Share exercise price for the Shares to be issued pursuant to the exercise of
an Option will be determined by the Administrator, but will be no less than one
hundred percent (100%) of the Fair Market Value per Share on the date of
grant.  In addition, in the case of an Incentive Stock Option granted
to an employee of the Company or any Parent or Subsidiary of the Company 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 one hundred ten percent (110%) of the Fair Market Value per Share on
the date of grant.  Notwithstanding the foregoing provisions of this
Section 6(c)(i), Options may be granted with a per Share exercise price of
less than one hundred percent (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, Code Section 424(a).

     

    (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(s) of consideration for exercising an Option, including the method of
payment, to the extent permitted by Applicable Laws.  In the case of
an Incentive Stock Option, the Administrator will determine the acceptable form
of consideration at the time of grant.  Such consideration to the
extent permitted by Applicable Laws may include, but is not limited
to:

     

    (1)
cash;

     

    (2)
check;

     

    (3) other
Shares which 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
and provided that accepting such Shares, in the sole discretion of the
Administrator, will not result in any adverse accounting consequences to the
Company;

     

    (4) by
net exercise;

     

    (5)
consideration received by the Company under a cashless exercise program
implemented by the Company in connection with the Plan;

     

    (6) 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;

     

    (7) such
other consideration and method of payment for the issuance of Shares to the
extent permitted by Applicable Laws; or

     

    (8) any
combination of the foregoing methods of payment.

     

    (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 Award
Agreement.  An Option may not be exercised for a fraction of a
Share.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    An Option
will be deemed exercised when the Company receives: (i) notice of exercise
(in such form as the Administrator specifies from time to time) 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 applicable tax
withholdings).  Full payment may consist of any consideration and
method of payment authorized by the Administrator and permitted by the Award
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
Shares subject to an Option, 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 15 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 a Participant ceases to be a Service
Provider, other than upon the Participant's termination as the result of the
Participant's death or Disability, the Participant may exercise his or her
Option within such period of time as is specified in the Award 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 Award
Agreement).  In the absence of a specified time in the Award
Agreement, the Option will remain exercisable for three (3) months following the
Participant's termination.  Unless otherwise provided by the
Administrator, 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 a 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 Award 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 Award
Agreement).  In the absence of a specified time in the Award
Agreement, the Option will remain exercisable for twelve (12) months following
the Participant's termination.  Unless otherwise provided by the
Administrator, 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 a Participant dies while a Service Provider,
the Option may be exercised following the Participant's death within such period
of time as is specified in the Award 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 Award
Agreement), by the Participant's designated beneficiary, provided such
beneficiary has been designated prior to Participant's death in a form
acceptable to 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 Award Agreement, the Option will remain exercisable for twelve (12)
months following Participant's death.  Unless otherwise provided by
the Administrator, if at the time of death Participant is not vested as to his
or her entire Option, the Shares 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.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (v)       Other
Termination.  A Participant's Award Agreement also may provide
that if the exercise of the Option following the termination of Participant's
status as a Service Provider (other than upon the Participant's death or
Disability) would result in liability under Section 16(b), then the Option
will terminate on the earlier of (A) the expiration of the term of the
Option set forth in the Award Agreement, or (B) the tenth (10th) day after
the last date on which such exercise would result in such liability under
Section 16(b). Finally, a Participant's Award Agreement may also provide
that if the exercise of the Option following the termination of the
Participant's status as a Service Provider (other than upon the Participant's
death or Disability) would be prohibited at any time solely because the issuance
of Shares would violate the registration requirements under the Securities Act,
then the Option will terminate on the earlier of (A) the expiration of the
term of the Option, or (B) the expiration of a period of three (3) months
after the termination of the Participant's status as a Service Provider during
which the exercise of the Option would not be in violation of such registration
requirements.

     

    (vi)      Buyout
Provisions.  The Administrator may at any time offer to buy out
for a payment in cash an Option previously granted based on such terms and
conditions as the Administrator will establish and communicate to the
Participant at the time that such offer is made.

     

    7.           Stock Appreciation
Rights.

     

    (a)           Grant of Stock Appreciation
Rights.  Subject to the terms and conditions of the Plan, a
Stock Appreciation Right 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 Stock Appreciation Rights granted to any Participant,
provided that during any Fiscal Year, no Participant will be granted Stock
Appreciation Rights covering more than 300,000
Shares.  Notwithstanding the limitation in the previous sentence, in
connection with his or her initial service as an Employee, an Employee may be
granted Stock Appreciation Rights covering up to an additional 300,000
Shares.  The foregoing limitations will be adjusted proportionately in
connection with any change in the Company's capitalization as described in
Section 15.

     

    (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
Stock Appreciation Rights granted under the Plan, provided, however, that the
exercise price will not be less than one hundred percent (100%) of the Fair
Market Value of a Share on the date of grant.  Notwithstanding the
foregoing provisions of this Section 7(c), Stock Appreciation Rights may be
granted with a per Share exercise price of less than one hundred percent (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 and the Treasury Regulations thereunder.

     

    (d)           Stock Appreciation Right
Agreement.  Each Stock Appreciation Right grant will be
evidenced by an Award Agreement that will specify the exercise price, the term
of the Stock Appreciation Right, the acceptable forms of consideration for
exercise (which may include any form of consideration permitted by
Section 6(c)(iii), the conditions of exercise, and such other terms and
conditions as the Administrator, in its sole discretion, will
determine.

     

    (e)           Expiration of Stock Appreciation
Rights.  A Stock Appreciation Right granted under the Plan will
expire upon the date determined by the Administrator, in its sole discretion,
and set forth in the Award Agreement; provided, however, that the term will be
no more than ten (10) years from the date of grant
thereof.  Notwithstanding the foregoing, the rules of
Section 6(d) relating to exercise also will apply to Stock Appreciation
Rights.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (f)           Payment of Stock Appreciation Right
Amount.  Upon exercise of a Stock Appreciation Right, a
Participant will be entitled to receive payment from the Company in an amount
determined by multiplying:

     

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

     

    (ii)       The
number of Shares with respect to which the Stock Appreciation Right is
exercised.

     

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

     

    8.           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.  Unless the Administrator determines
otherwise, the Company as escrow agent will hold Shares of Restricted Stock
until the restrictions on such Shares have lapsed.  Notwithstanding
the foregoing sentence, for restricted stock intended to qualify as
"performance-based compensation" within the meaning of Section 162(m) of
the Code, during any Fiscal Year no Participant will receive more than an
aggregate of 250,000 Shares of Restricted Stock.  Notwithstanding the
foregoing limitation, in connection with his or her initial service as an
Employee, for restricted stock intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, an Employee
may be granted an aggregate of up to an additional 250,000 Shares of Restricted
Stock.  The foregoing limitations will be adjusted proportionately in
connection with any change in the Company's capitalization as described in
Section 15.

     

    (c)           Transferability.  Except
as provided in this Section 8, 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 8, 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 or at such other time as the
Administrator may determine.  The Administrator, in its sole
discretion, may reduce or waive any restrictions for such Award and 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 the
Administrator provides otherwise.  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 grants of 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.  The Performance Goals will be set
by the Administrator on or before the Determination Date.  In granting
Restricted Stock which is 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 Award under
Section 162(m) of the Code (e.g., in determining the Performance
Goals).

     

    9.           Restricted Stock
Units.

     

    (a)           Grant.  Restricted
Stock Units may be granted at any time and from time to time as determined by
the Administrator.  After the Administrator determines that it will
grant Restricted Stock Units under the Plan, it will advise the Participant in
an Award Agreement of the terms, conditions, and restrictions related to the
grant, including the number of Restricted Stock
Units.  Notwithstanding anything to the contrary in this subsection
(a), for Restricted Stock Units intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, during any
Fiscal Year of the Company, no Participant will receive more than an aggregate
of 250,000 Restricted Stock Units.  Notwithstanding the limitation in
the previous sentence, for Restricted Stock Units intended to qualify as
"performance-based compensation" within the meaning of Section 162(m) of
the Code, in connection with his or her initial service as an Employee, an
Employee may be granted an aggregate of up to an additional 250,000 Restricted
Stock Units.  The foregoing limitations will be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 15.

     

    (b)           Vesting Criteria and Other
Terms.  The Administrator will set vesting criteria in its
discretion, which, depending on the extent to which the criteria are met, will
determine the number of Restricted Stock Units that will be paid out to the
Participant.  The Administrator may set vesting criteria based upon
the achievement of Company-wide, business unit, or individual goals (including,
but not limited to, continued employment), or any other basis determined by the
Administrator in its discretion.

     

    (c)           Earning Restricted Stock
Units.  Upon meeting the applicable vesting criteria, the
Participant will be entitled to receive a payout as determined by the
Administrator.  Notwithstanding the foregoing, at any time after the
grant of Restricted Stock Units, the Administrator, in its sole discretion, may
reduce or waive any vesting criteria that must be met to receive a payout and
may accelerate the time at which any restrictions will lapse or be
removed.

     

    (d)           Form and Timing of
Payment.  Payment of earned Restricted Stock Units will be made
as soon as practicable after the date(s) set forth in the Award Agreement or as
otherwise provided in the applicable Award Agreement or as required by
Applicable Laws.  The Administrator, in its sole discretion, may pay
earned Restricted Stock Units in cash, Shares, or a combination
thereof.  Shares represented by Restricted Stock Units that are fully
paid in cash again will not reduce the number of Shares available for grant
under the Plan.

     

    (e)           Cancellation.  On
the date set forth in the Award Agreement, all unearned Restricted Stock Units
will be forfeited to the Company.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (f)           Section 162(m) Performance
Restrictions.  For purposes of qualifying grants of Restricted
Stock Units 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.  The Performance Goals will be set
by the Administrator on or before the Determination Date.  In granting
Restricted Stock Units 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 Award
under Section 162(m) of the Code (e.g., in determining the Performance
Goals).

     

    10.           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, for Performance Units or Performance Shares
intended to qualify as "performance-based compensation" within the meaning of
Section 162(m) of the Code, (i) no Participant will receive
Performance Units having an initial value greater than $500,000, and
(ii) no Participant will receive more than 250,000 Performance Shares.
Notwithstanding the foregoing limitation, for Performance Shares intended to
qualify as "performance-based compensation" within the meaning of
Section 162(m) of the Code, in connection with his or her initial service,
a Service Provider may be granted up to an additional 250,000 Performance Shares
and additional Performance Units having an initial value up to
$500,000.  The foregoing limitations will be adjusted proportionately
in connection with any change in the Company's capitalization as described in
Section 15.

     

    (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 Providers.  The time period during
which the performance objectives or other vesting provisions must be met 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.  The Administrator may set
performance objectives based upon the achievement of Company-wide, divisional,
or individual goals, applicable federal or state securities laws, or any other
basis determined by the Administrator in its discretion.

     

    (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 and may
accelerate the time at which any restrictions will lapse or be
removed.

     

    (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, or as otherwise provided in the applicable Award
Agreement or as required by Applicable Laws.  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.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (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.

     

    (g)           Section 162(m) Performance
Restrictions.  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 set restrictions based upon
the achievement of Performance Goals.  The Performance Goals will be
set by the Administrator 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 Award under Section 162(m) of the Code (e.g., in
determining the Performance Goals).

     

    11.           Performance-Based Compensation Under
Code Section 162(m).

     

    (a)           General.  If the
Administrator, in its discretion, decides to grant an Award intended to qualify
as "performance-based compensation" under Section 162(m) of the Code, the
provisions of this Section 11 will control over any contrary provision in
the Plan; provided, however, that the Administrator may in its discretion grant
Awards that are not intended to qualify as "performance-based compensation"
under Section 162(m) of the Code to such Participants that are based on
Performance Goals or other specific criteria or goals but that do not satisfy
the requirements of this Section 11.

     

    (b)           Performance
Goals.  The granting and/or vesting of Awards of Restricted
Stock, Restricted Stock Units, Performance Shares and Performance Units and
other incentives under the Plan may be made subject to the attainment of
performance goals relating to one or more business criteria within the meaning
of Section 162(m) of the Code and may provide for a targeted level or
levels of achievement ("Performance Goals") including (1) business acquisitions,
(2) earnings (which may include earnings before interest and taxes, earnings
before taxes and net earnings), (3) earnings per Share, (4) growth in
stockholder value relative to the moving average of the S&P 500 Index or
another index, (5) net income, (6) net sales, (7) new product development, (8)
operating cash flow, (9) profit, (10) revenue, (11) revenue growth, (12) sales
results, (13) sales growth, and (14) stock price. Any criteria used may be
(i) measured in absolute terms, (ii) measured in terms of growth,
(iii) compared to another company or companies, (iv) measured against
the market as a whole and/or according to applicable market indices,
(v) measured against the performance of the Company as a whole or a segment
of the Company and/or (vi) measured on a pre-tax or post-tax basis (if
applicable).  Further, any Performance Goals may be used to measure
the performance of the Company as a whole or a business unit or other segment of
the Company, or one or more product lines or specific markets and may be
measured relative to a peer group or index.  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.  In all other
respects, Performance Goals will be calculated in accordance with the Company's
financial statements, generally accepted accounting principles, or under a
methodology established by the Administrator prior to the issuance of an Award
and which is consistently applied with respect to a Performance Goal in the
relevant Performance Period.  The Administrator will appropriately
adjust any evaluation of performance under a Performance Goal to exclude
(i) any extraordinary non-recurring items as described in Accounting
Principles Board Opinion No. 30 and/or in management's discussion and analysis
of financial conditions and results of operations appearing in the Company's
annual report to stockholders for the applicable year, or (ii) the effect
of any changes in accounting principles affecting the Company's or a business
units' reported results. In addition, the Administrator will adjust any
performance criteria, Performance Goal or other feature of an Award that relates
to or is wholly or partially based on the number of, or the value of, any stock
of the Company, to reflect any stock dividend or split, repurchase,
recapitalization, combination, or exchange of shares or other similar changes in
such stock.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (c)           Procedures.  To the
extent necessary to comply with the performance-based compensation provisions of
Section 162(m) of the Code, with respect to any Award granted subject to
Performance Goals and intended to qualify as "performance-based compensation"
under Section 162(m) of the Code, within the first twenty-five percent
(25%) of the Performance Period, but in no event more than ninety (90) days
following the commencement of any Performance Period (or such other time as may
be required or permitted by Section 162(m) of the Code), the Administrator
will, in writing, (i) designate one or more Participants to whom an Award
will be made, (ii) select the Performance Goals applicable to the
Performance Period, (iii) establish the Performance Goals, and amounts of
such Awards, as applicable, which may be earned for such Performance Period, and
(iv) specify the relationship between Performance Goals and the amounts of
such Awards, as applicable, to be earned by each Participant for such
Performance Period. Following the completion of each Performance Period, the
Administrator will certify in writing whether the applicable Performance Goals
have been achieved for such Performance Period.  In determining the
amounts earned by a Participant, the Administrator will have the right to reduce
or eliminate (but not to increase) the amount payable at a given level of
performance to take into account additional factors that the Administrator may
deem relevant to the assessment of individual or corporate performance for the
Performance Period.  A Participant will be eligible to receive payment
pursuant to an Award intended to qualify as "performance-based compensation"
under Section 162(m) of the Code for a Performance Period only if the
Performance Goals for such period are achieved.

     

    (d)           Additional
Limitations.  Notwithstanding any other provision of the Plan,
any Award which is granted to a Participant and is intended to constitute
qualified performance-based compensation under Section 162(m) of the Code
will be subject to any additional limitations set forth in the Code (including
any amendment to Section 162(m)) or any regulations and ruling issued
thereunder that are requirements for qualification as qualified
performance-based compensation as described in Section 162(m) of the Code,
and the Plan will be deemed amended to the extent necessary to conform to such
requirements.

     

    (e)           Determination of Amounts
Earned.  In determining the amounts earned by a Participant
pursuant to an Award intended to qualify as "performance-based compensation"
under Section 162(m) of the Code, the Committee will have the right to
(a) reduce or eliminate (but not to increase) the amount payable at a given
level of performance to take into account additional factors that the Committee
may deem relevant to the assessment of individual or corporate performance for
the Performance Period, (b) determine what actual Award, if any, will be
paid in the event of a termination of employment as the result of a
Participant's death or disability or upon a Change in Control or in the event of
a termination of employment following a Change in Control prior to the end of
the Performance Period, and (c) determine what actual Award, if any, will
be paid in the event of a termination of employment other than as the result of
a Participant's death or disability prior to a Change of Control and prior to
the end of the Performance Period to the extent an actual Award would have
otherwise been achieved had the Participant remained employed through the end of
the Performance Period. A Participant will be eligible to receive payment
pursuant to an Award intended to qualify as "performance-based compensation"
under Section 162(m) of the Code for a Performance Period only if the
Performance Goals for such period are achieved.

     

    12.           Compliance With Code
Section 409A.  Awards will be designed and operated in
such a manner that they are either exempt from the application of, or comply
with, the requirements of Code Section 409A such that the grant, payment,
settlement or deferral will not be subject to the additional tax or interest
applicable under Code Section 409A, except as otherwise determined in the
sole discretion of the Administrator.  The Plan and each Award
Agreement under the Plan are intended to meet the requirements of Code
Section 409A and will be construed and interpreted in accordance with such
intent, except as otherwise determined in the sole discretion of the
Administrator.  To the extent that an Award or payment, or the
settlement or deferral thereof, is subject to Code Section 409A the Award
will be granted, paid, settled or deferred in a manner that will meet the
requirements of Code Section 409A, such that the grant, payment, settlement
or deferral will not be subject to the additional tax or interest applicable
under Code Section 409A.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    13.           Leaves of Absence/Transfer Between
Locations.  Unless the Administrator provides otherwise and
except as required by Applicable Laws, vesting of Awards granted hereunder will
be suspended during any unpaid leave of absence.  A Participant 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 three (3) months, 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 six (6) months following the
first (1st) 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.

     

    14.           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,
including, without limitation, by instrument to an inter vivos or testamentary
trust in which the Awards are to be passed to beneficiaries upon the death of
the trustor (settlor) or by gift to Family Members, such Award will contain such
additional terms and conditions as the Administrator deems
appropriate.

     

    15.           Adjustments; Dissolution or
Liquidation; Merger or Change in Control.

     

    (a)           Adjustments.  In
the event that any dividend or other distribution (whether in the form of cash,
Shares, other securities, or other property), recapitalization, stock split,
reverse stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, or exchange of Shares or other securities of the
Company, or other change in the corporate structure of the Company affecting the
Shares occurs, the Administrator, in order to prevent diminution or enlargement
of the benefits or potential benefits intended to be made available under the
Plan, will adjust 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, the numerical Share limits set forth in Sections 3, 6, 7, 8, 9 and
10 of the Plan.

     

    (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.  To the extent it has not been previously exercised, an
Award will terminate immediately prior to the consummation of such proposed
action.

     

    (c)           Change in
Control.  In the event of a merger or Change in Control, each
outstanding Award will be treated as the Administrator determines without a
Participant's consent, including, without limitation, that (i) Awards will
be assumed, or substantially equivalent Awards will be substituted, by the
acquiring or succeeding corporation (or an affiliate thereof) with appropriate
adjustments as to the number and kind of shares and prices; (ii) upon
written notice to a Participant, that the Participant's Awards will terminate
upon or immediately prior to the consummation of such merger or Change in
Control; (iii) outstanding Awards will vest and become exercisable,
realizable, or payable, or restrictions applicable to an Award will lapse, in
whole or in part prior to or upon consummation of such merger or Change in
Control, and, to the extent the Administrator determines, terminate upon or
immediately prior to the effectiveness of such merger of Change in Control; (iv)
(A) the termination of an Award in exchange for an amount of cash and/or
property, if any, equal to the amount that would have been attained upon the
exercise of such Award or realization of the Participant's rights as of the date
of the occurrence of the transaction (and, for the avoidance of doubt, if as of
the date of the occurrence of the transaction the Administrator determines in
good faith that no amount would have been attained upon the exercise of such
Award or realization of the Participant's rights, then such Award may be
terminated by the Company without payment), or (B) the replacement of such
Award with other rights or property selected by the Administrator in its sole
discretion; or (v) any combination of the foregoing. In taking any of the
actions permitted under this subsection 15(c), the Administrator will not be
obligated to treat all Awards, all Awards held by a Participant, or all Awards
of the same type, similarly.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    In the
event that the successor corporation does not assume or substitute for the Award
(or portion thereof), the Participant will fully vest in and have the right to
exercise all of his or her outstanding Options and Stock Appreciation Rights
that are not assumed or substituted for, including Shares as to which such
Awards would not otherwise be vested or exercisable, all restrictions on
Restricted Stock, Restricted Stock Units, and Performance Shares/Units not
assumed or substituted for will lapse, and, with respect to Awards with
performance-based vesting not assumed or substituted for, all performance goals
or other vesting criteria will be deemed achieved at one hundred percent (100%)
of target levels and all other terms and conditions met. In addition, if an
Option or Stock Appreciation Right is not assumed or substituted for in the
event of a Change in Control, 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 time determined by the
Administrator in its sole discretion, 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 Change in Control, the Award confers the right to purchase or
receive, for each Share subject to the Award immediately prior to the Change in
Control, 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 Restricted Stock Unit,
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 Change in Control 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 received
in the Change in Control 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 Restricted Stock
Unit, Performance Unit or Performance Share, for each Share subject to such
Award (or in the case of an Award settled in cash, the number of implied shares
determined by dividing the value of the Award by the per share consideration
received by holders of Common Stock in the Change in Control), 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
Change in Control.

     

    Notwithstanding
anything in this Section 15(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-Change in Control corporate structure will not be deemed to
invalidate an otherwise valid Award assumption.

     

    Notwithstanding
anything in this Section 15(c) to the contrary, if a payment under an Award
Agreement is subject to Section 409A of the Code and if the change in
control definition contained in the Award Agreement or other agreement related
to the Award does not comply with the definition of "change in control" for
purposes of a distribution under Section 409A of the Code, then any payment
of an amount that is otherwise accelerated under this Section will be
delayed until the earliest time that such payment would be permissible under
Section 409A of the Code without triggering any penalties applicable under
Section 409A of the Code.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    16.           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
(without limitation) (a) paying cash, (b) electing to have the Company
withhold otherwise deliverable cash or Shares having a Fair Market Value equal
to the statutory amount required to be withheld, (c) delivering to the
Company already-owned Shares having a Fair Market Value equal to the statutory
amount required to be withheld, provided the delivery of such Shares will not
result in any adverse accounting consequences as the Administrator determines in
its sole discretion, (d) selling a sufficient number of Shares otherwise
deliverable to the Participant through such means as the Administrator may
determine in its sole discretion (whether through a broker or otherwise) equal
to the amount required to be withheld, or (e) retaining from salary or
other amounts payable to the Participant cash having a sufficient value to
satisfy 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.

     

    17.           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.

     

    18.           Date of Grant.  The
date of grant of an Award will be, for all purposes, the date on which the
Administrator makes the determination granting such Award, 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.

     

    19.           Term of
Plan.  Subject to Section 23 of the Plan, the Plan will
become effective upon its adoption by the Board.  It will continue in
effect for a term of ten (10) years from the date adopted by the Board, unless
terminated earlier under Section 20 of the Plan.

     

    20.           Amendment and Termination of the
Plan.

     

    (a)           Amendment and
Termination.  The Administrator 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 Awards
granted under the Plan prior to the date of such termination.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    21.           Conditions Upon Issuance of
Shares.

     

    (a)           Legal
Compliance.  Shares will not be issued pursuant to the exercise
of an Award unless the exercise of such Award 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 Award,
the Company may require the person exercising such Award 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.

     

    22.           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.

     

    23.           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 by the Board.  Such stockholder approval will be obtained in
the manner and to the degree required under Applicable Laws.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ALTIGEN
COMMUNICATIONS, INC.

     

    2009
EQUITY INCENTIVE PLAN

     

    STOCK
OPTION AWARD AGREEMENT

     

    Unless
otherwise defined herein, the terms defined in the AltiGen Communications, Inc.
2009 Equity Incentive Plan (the “Plan”) will have the same defined meanings
in this Stock Option Award Agreement (the “Award Agreement”).

     

    NOTICE OF STOCK OPTION
GRANT

    
      Participant’s
Name:

    

     

    Participant’s
Address:

     

    You have
been granted an Option to purchase Common Stock of AltiGen Communications, Inc.
(the “Company”), subject to the terms and conditions of the Plan and this Award
Agreement, as follows:

     

    
      
        
          	
                  Grant
      Number

                	
                  _________________________

                
	 
      	 
      
	
                  Date
      of Grant

                	
                  _________________________

                
	 
      	 
      
	
                  Vesting
      Commencement Date

                	
                  _________________________

                
	 
      	 
      
	
                  Exercise
      Price per Share

                	
                  $
      ________________________

                
	 
      	 
      
	
                  Total
      Number of Shares Granted

                	 
      
	 
      	 
      
	
                  Total
      Exercise Price

                	
                  $
      ________________________

                
	 
      	 
      
	
                  Type
      of Option:

                	
                  ___
      Incentive Stock Option

                
	 
      	 
      
	 
      	
                  ___
      Nonstatutory Stock Option

                
	 
      	 
      
	
                  Term/Expiration
      Date:

                	
                  _________________________

                

        

      

    

     

    Vesting
Schedule:

     

    Subject
to any acceleration provisions contained in the Plan or set forth below, this
Option may be exercised, in whole or in part, in accordance with the following
schedule:

     

    Twenty-five
percent (25%) of the Shares subject to the Option will vest on the one (1) year
anniversary of the Vesting Commencement Date, and 1/48 of the Shares subject to
the Option will vest each month thereafter on the same day of the month as the
Vesting Commencement Date (and if there is no corresponding day, on the last day
of such month), provided that the Participant continues to be a Service Provider
through each such vesting date.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Termination
Period:

     

    This
Option will be exercisable for three (3) months after Participant ceases to be a
Service Provider, unless such termination is due to Participant’s death or
Disability, in which case this Option will be exercisable for twelve (12) months after
Participant ceases to be Service Provider.  Notwithstanding the
foregoing, in no event may this Option be exercised after the Term/Expiration
Date as provided above and may be subject to earlier termination as provided in
Section 15 of the Plan.

     

    By
Participant’s signature and the signature of the Company's representative below,
Participant and the Company agree that this Option is granted under and governed
by the terms and conditions of the Plan and this Award Agreement, including the
Terms and Conditions of Stock Option Grant, attached hereto as Exhibit A, all of
which are made a part of this document.  Participant has reviewed the
Plan and this Award Agreement in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Award Agreement and fully
understands all provisions of the Plan and Award
Agreement.  Participant hereby agrees to accept as binding, conclusive
and final all decisions or interpretations of the Administrator upon any
questions relating to the Plan and Award Agreement.  Participant
further agrees to notify the Company upon any change in the residence address
indicated below.

     

    
      
        
          	
                  PARTICIPANT:

                	 
      	 
      	
                  ALTIGEN COMMUNICATIONS, INC.

                
	 
      	 
      	 
      	 
      
	
                  Signature

                	
                     

                	 
      	 
      	
                  By

                	
                     

                
	 
      	 
      	 
      	 
      	 
      
	
                  Print
      Name

                	
                     

                	 
      	 
      	
                  Title

                	
                     

                
	 
      	 
      	 
      	 
      
	
                  Residence Address

                	
                     

                	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	
                     

                	 
      	 
      	 
      

        

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    EXHIBIT
A

     

    TERMS
AND CONDITIONS OF STOCK OPTION GRANT

          
(1)           Grant of
Option.  The Company hereby grants to the Participant named in the
Notice of Grant attached as Part I of this Award Agreement (the “Participant”)
an option (the “Option”) to purchase the number of Shares, as set forth in the
Notice of Grant, at the exercise price per Share set forth in the Notice of
Grant (the “Exercise Price”), subject to all of the terms and conditions in this
Award Agreement and the Plan, which is incorporated herein by
reference.  Subject to Section 20(c) of the Plan, in the event of a
conflict between the terms and conditions of the Plan and the terms and
conditions of this Award Agreement, the terms and conditions of the Plan will
prevail.

     

    If
designated in the Notice of Grant as an Incentive Stock Option (“ISO”), this
Option is intended to qualify as an ISO under Section 422 of the Internal
Revenue Code of 1986, as amended (the “Code”).  Nevertheless, to the
extent that it exceeds the $100,000 rule of Code Section 422(d), this
Option will be treated as a Nonstatutory Stock Option
(“NSO”).  Further, if for any reason this Option (or portion thereof)
will not qualify as an ISO, then, to the extent of such nonqualification, such
Option (or portion thereof) will be regarded as a NSO granted under the
Plan.  In no event will the Administrator, the Company or any Parent
or Subsidiary or any of their respective employees or directors have any
liability to Participant (or any other person) due to the failure of the Option
to qualify for any reason as an ISO.

     

    (2)           Vesting
Schedule.  Except as provided in Section 3, the Option awarded by this
Award Agreement will vest in accordance with the vesting provisions set forth in
the Notice of Grant.  Shares scheduled to vest on a certain date or
upon the occurrence of a certain condition will not vest in Participant in
accordance with any of the provisions of this Award Agreement, unless
Participant will have been continuously a Service Provider from the Date of
Grant until the date such vesting occurs.

     

    (3)           Administrator
Discretion.  The Administrator, in its discretion, may accelerate the
vesting of the balance, or some lesser portion of the balance, of the unvested
Option at any time, subject to the terms of the Plan.  If so
accelerated, such Option will be considered as having vested as of the date
specified by the Administrator.

     

    (4)           Exercise
of Option.

     

    (a)           Right to
Exercise.  This Option may be exercised only within the term
set out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Award Agreement.

     

    (b)           Method of
Exercise.  This Option is exercisable by delivery of an
exercise notice, in the form attached as Exhibit B (the
“Exercise Notice”) or in a manner and pursuant to such procedures as the
Administrator may determine, which will state the election to exercise the
Option, the number of Shares in respect of which the Option is being exercised
(the “Exercised Shares”), and such other representations and agreements as may
be required by the Company pursuant to the provisions of the
Plan.  The Exercise Notice will be completed by Participant and
delivered to the Company.  The Exercise Notice will be accompanied by
payment of the aggregate Exercise Price as to all Exercised Shares together with
any applicable tax withholding.  This Option will be deemed to be
exercised upon receipt by the Company of such fully executed Exercise Notice
accompanied by such aggregate Exercise Price, together with any applicable tax
withholding.

     

    (5)           Method
of Payment.  Payment of the aggregate Exercise Price will be by any of
the following, or a combination thereof, at the election of
Participant.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (a)           cash;

     

    (b)           check;

     

    (c)           consideration
received by the Company under a cashless exercise program adopted by the Company
in connection with the Plan; or

     

    (d)           surrender
of other Shares which (i) have a Fair Market Value on the date of surrender
equal to the aggregate Exercise Price of the Exercised Shares, and (ii) must be
owned free and clear of any liens, claims, encumbrances or security interests,
provided that accepting such Shares, in the sole discretion of the
Administrator, will not result in any adverse accounting consequences to the
Company.

     

    (6)           Tax
Obligations.

     

    (a)           Withholding
Taxes.  Notwithstanding any contrary provision of this Award
Agreement, no certificate representing the Shares will be issued to Participant,
unless and until satisfactory arrangements (as determined by the Administrator)
will have been made by Participant with respect to the payment of income,
employment, payroll, social insurance and other taxes which the Company
determines must be withheld with respect to such Shares.  If
permissible under local law, the Company will have the right (but not the
obligation), to (i) sell or arrange for the sale of Shares that Participant
acquires to meet any required tax withholding obligations hereunder, and/or (ii)
reduce the number of Shares, otherwise deliverable to Participant necessary to
satisfy the minimum withholding amount.  Further, Participant
authorizes the Company and/or the employing Affiliate (the “Employer”) to
withhold all applicable tax withholding obligations legally payable by
Participant from his or her wages or other cash compensation paid to Participant
by the Company and/or the Employer or from proceeds of the sale of
Shares.  Finally, Participant will pay to the Company or the Employer
any amount of tax withholding obligations that the Company or the Employer may
be required to withhold as a result of Participant’s participation in the Plan
or Participant’s purchase of Shares that cannot be satisfied by the means
previously described.  If Participant fails to make satisfactory
arrangements for the payment of any required tax withholding obligations
hereunder at the time of the Option exercise, Participant acknowledges and
agrees that the Company may refuse to honor the exercise and refuse to deliver
Shares if such withholding amounts are not delivered at the time of
exercise.

     

    (b)           Notice of Disqualifying
Disposition of ISO Shares.  If the Option granted to
Participant herein is an ISO, and if Participant sells or otherwise disposes of
any of the Shares acquired pursuant to the ISO on or before the later of (i) the
date two (2) years after the Grant Date, or (ii) the date one (1) year after the
date of exercise, Participant will immediately notify the Company in writing of
such disposition.  Participant agrees that Participant may be subject
to income tax withholding by the Company on the compensation income recognized
by Participant.

     

    (c)           Code Section
409A.  Under Code Section 409A, an option that vests after
December 31, 2004 (or that vested on or prior to such date but which was
materially modified after October 3, 2004), that was granted with a per Share
exercise price that is determined by the U.S. Internal Revenue Service (the
“IRS”) to be less than the Fair Market Value of a Share on the date of grant (a
“Discount Option”) may be considered “deferred compensation.”  A
Discount Option may result in (i) income recognition by Participant (if they are
a U.S. taxpayer) prior to the exercise of the option, (ii) an additional twenty
percent (20%) federal tax, and (iii) potential penalty and interest
charges.  The Discount Option may also result in additional state
income, penalty and interest charges to the Participant.  Participant
acknowledges that the Company cannot and has not guaranteed that the IRS will
agree that the per Share exercise price of this Option equals or exceeds the
Fair Market Value of a Share on the Date of Grant in a later
examination.  Participant agrees that if the IRS determines that the
Option was granted with a per Share exercise price that was less than the Fair
Market Value of a Share on the date of grant, Participant will be solely
responsible for Participant’s costs related to such a
determination.  The Board reserves the right, to the extent it deems
necessary or advisable in its sole discretion, to unilaterally alter or modify
this Award Agreement to ensure that all Options provided to Participants who are
U.S. taxpayers are made in such a manner that either qualifies for exemption
from or complies with Section 409A of the Code; provided, however, that the
Company makes no representation that the Options will be exempt from or comply
with Section 409A of the Code and makes no undertaking to preclude Section 409A
of the Code from applying to the Options.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (7)           Rights
as Stockholder.  Neither Participant nor any person claiming under or
through Participant will have any of the rights or privileges of a stockholder
of the Company in respect of any Shares deliverable hereunder unless and until
certificates representing such Shares will have been issued, recorded on the
records of the Company or its transfer agents or registrars, and delivered to
Participant.  After such issuance, recordation and delivery,
Participant will have all the rights of a stockholder of the Company with
respect to voting such Shares and receipt of dividends and distributions on such
Shares.

     

    (8)           No
Guarantee of Continued Service.  PARTICIPANT ACKNOWLEDGES AND AGREES
THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED
ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (OR THE
PARENT OR SUBSIDIARY EMPLOYING OR RETAINING PARTICIPANT) AND NOT THROUGH THE ACT
OF BEING HIRED, BEING GRANTED THE OPTION OR ACQUIRING SHARES
HEREUNDER.  PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THIS
AWARD AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING
SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF
CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY
PERIOD, OR AT ALL, AND WILL NOT INTERFERE IN ANY WAY WITH PARTICIPANT’S RIGHT OR
THE RIGHT OF THE COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING
PARTICIPANT) TO TERMINATE PARTICIPANT’S RELATIONSHIP AS A SERVICE PROVIDER AT
ANY TIME, WITH OR WITHOUT CAUSE.

     

    (9)           Address
for Notices.  Any notice to be given to the Company under the terms of
this Award Agreement will be addressed to the Company, in care of its Human
Resources at AltiGen Communications, Inc., 410 East Plumeria Drive, San Jose, CA
95134, or at such other address as the Company may hereafter designate in
writing.

     

    (10)           Non-Transferability
of Option.  This Option may not be transferred in any manner otherwise
than by will or by the laws of descent or distribution and may be exercised
during the lifetime of Participant only by Participant.

     

    (11)           Binding
Agreement.  Subject to the limitation on the transferability of this
grant contained herein, this Award Agreement will be binding upon and inure to
the benefit of the heirs, legatees, legal representatives, successors and
assigns of the parties hereto.

     

    (12)           Additional
Conditions to Issuance of Stock.  No Shares will be issued pursuant to
the exercise of this Option unless such issuance and exercise comply with
Applicable Laws.  If at any time the Company will determine, in its
discretion, that the listing, registration or qualification of the Shares upon
any securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory authority is necessary or desirable as a
condition to the issuance of Shares to Participant (or his or her estate), such
issuance will not occur unless and until such listing, registration,
qualification, consent or approval will have been effected or obtained free of
any conditions not acceptable to the Company.  The Company will make
all reasonable efforts to meet the requirements of any such state or federal law
or securities exchange and to obtain any such consent or approval of any such
governmental authority.  Assuming such compliance, for income tax
purposes the Exercised Shares will be considered transferred to Participant on
the date the Option is exercised with respect to such Exercised
Shares.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (13)           Plan
Governs.  This Award Agreement is subject to all terms and provisions
of the Plan.  In the event of a conflict between one or more
provisions of this Award Agreement and one or more provisions of the Plan, the
provisions of the Plan will govern.  Capitalized terms used and not
defined in this Award Agreement will have the meaning set forth in the
Plan.

     

    (14)           Administrator
Authority.  The Administrator will have the power to interpret the
Plan and this Award Agreement and to adopt such rules for the administration,
interpretation and application of the Plan as are consistent therewith and to
interpret or revoke any such rules (including, but not limited to, the
determination of whether or not any Shares subject to the Option have
vested).  All actions taken and all interpretations and determinations
made by the Administrator in good faith will be final and binding upon
Participant, the Company and all other interested persons.  No member
of the Administrator will be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or this Award
Agreement.

     

    (15)           Electronic
Delivery.  The Company may, in its sole discretion, decide to deliver
any documents related to Options awarded under the Plan, future options that may
be awarded under the Plan, or delivery of Shares pursuant to the Option or
future options by electronic means or request Participant’s consent to
participate in the Plan by electronic means.  Participant hereby
consents to receive such documents by electronic delivery and agrees to
participate in the Plan through any on-line or electronic system established and
maintained by the Company or another third party designated by the
Company.

     

    (16)           Captions.  Captions
provided herein are for convenience only and are not to serve as a basis for
interpretation or construction of this Award Agreement.

     

    (17)           Agreement
Severable.  In the event that any provision in this Award Agreement
will be held invalid or unenforceable, such provision will be severable from,
and such invalidity or unenforceability will not be construed to have any effect
on, the remaining provisions of this Award Agreement.

     

    (18)           Modifications
to the Agreement.  This Award Agreement constitutes the entire
understanding of the parties on the subjects covered.  Participant
expressly warrants that he or she is not accepting this Award Agreement in
reliance on any promises, representations, or inducements other than those
contained herein.  Modifications to this Award Agreement or the Plan
can be made only in an express written contract executed by a duly authorized
officer of the Company.  Notwithstanding anything to the contrary in
the Plan or this Award Agreement, the Company reserves the right to revise this
Award Agreement as it deems necessary or advisable, in its sole discretion and
without the consent of Participant, to comply with Code Section 409A or to
otherwise avoid imposition of any additional tax or income recognition under
Section 409A of the Code in connection to this Option.

     

    (19)           Amendment,
Suspension or Termination of the Plan.  By accepting this Award,
Participant expressly warrants that he or she has received an Option under the
Plan, and has received, read and understood a description of the
Plan.  Participant understands that the Plan is discretionary in
nature and may be amended, suspended or terminated by the Company at any
time.

     

    (20)           Governing
Law.  This Award Agreement will be governed by the laws of the State
of California, without giving effect to the conflict of law principles
thereof.  For purposes of litigating any dispute that arises under
this Option or this Award Agreement, the parties hereby submit to and consent to
the jurisdiction of the State of California, and agree that such
litigation will be conducted in the courts of Alameda County, California, or the
federal courts for the United States for the Northern District of California,
and no other courts, where this Option is made and/or to be
performed.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    EXHIBIT
B

     

    ALTIGEN
COMMUNICATIONS, INC.

     

    2009
EQUITY INCENTIVE PLAN

     

    EXERCISE
NOTICE

     

    AltiGen
Communications, Inc.

    410 East
Plumeria Drive

    San Jose,
CA 95134

    

    Attention:  [_______]

     

    1.      Exercise of
Option.  Effective as of today, ________________, _____, the
undersigned (“Purchaser”) hereby elects to purchase ______________ shares (the
“Shares”) of the Common Stock of AltiGen Communications, Inc. (the “Company”)
under and pursuant to the 2009 Equity Incentive Plan (the “Plan”) and the
Stock Option Award Agreement dated ________ (the “Award
Agreement”).  The purchase price for the Shares will be
$_____________, as required by the Award Agreement.

     

    2.      Delivery of
Payment.  Purchaser herewith delivers to the Company the full
purchase price of the Shares and any required tax withholding to be paid in
connection with the exercise of the Option.

     

    3.      Representations of
Purchaser.  Purchaser acknowledges that Purchaser has received,
read and understood the Plan and the Award Agreement and agrees to abide by and
be bound by their terms and conditions.

     

    4.      Rights as
Stockholder.  Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the Shares, no right to vote or receive dividends or
any other rights as a stockholder will exist with respect to the Shares subject
to the Option, notwithstanding the exercise of the Option.  The Shares
so acquired will be issued to Participant as soon as practicable after exercise
of the Option.  No adjustment will be made for a dividend or other
right for which the record date is prior to the date of issuance, except as
provided in Section 15 of the Plan.

     

    5.      Tax
Consultation.  Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser’s purchase or disposition of
the Shares.  Purchaser represents that Purchaser has consulted with
any tax consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.

     

    6.      Entire Agreement; Governing
Law.  The Plan and Award Agreement are incorporated herein by
reference.  This Exercise Notice, the Plan and the Award Agreement
constitute the entire agreement of the parties with respect to the subject
matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter
hereof, and may not be modified adversely to the Purchaser’s interest except by
means of a writing signed by the Company and Purchaser.  This
agreement is governed by the internal substantive laws, but not the choice of
law rules, of the State of California.  For purposes of litigating any
dispute that arises from the relationship of the parties evidenced by the Option
or the terms of the Award Agreement, the parties hereby submit to and consent to
the jurisdiction of the State of California, and agree that such litigation will
be conducted in the courts of Alameda County, California, or the federal courts
for the United States for the Northern District of California, and no other
courts, where this Option is made and/or to be performed.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      
        
          	
                  Submitted
      by:

                	 
      	
                  Accepted
      by:

                
	 
      	 
      	 
      
	
                  PURCHASER

                	 
      	
                  ALTIGEN COMMUNICATIONS, INC

                
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	
                  Signature

                	
                     

                	 
      	 
      	
                  By

                	
                     

                
	 
      	 
      	 
      	 
      
	
                  Print
      Name

                	
                     

                	 
      	 
      	
                  Title

                	
                     

                
	 
      	 
      	 
      	 
      
	
                  Address

                	
                     

                	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	
                     

                	 
      	 
      	
                  Date
      ReceivedExhibit
4.2

     

    ALTIGEN
COMMUNICATIONS, INC.

     

    2009
EMPLOYEE STOCK PURCHASE PLAN

     

    1.      Purpose.  The
purpose of the Plan is to provide employees of the Company and its Designated
Subsidiaries with an opportunity to purchase Common Stock through accumulated
payroll deductions.  The Company's intention is to have the Plan
qualify as an "employee stock purchase plan" under Section 423 of the
Code.  The provisions of the Plan, accordingly, will be construed so
as to extend and limit Plan participation in a uniform and nondiscriminatory
basis consistent with the requirements of Section 423 of the
Code.

     

    2.      Definitions.

     

    (a)   "Administrator" means the
Board or any Committee designated by the Board to administer the Plan pursuant
to Section 14.

     

    (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 options
are, or will be, granted under the Plan.

     

    (c)    "Board" means the Board of
Directors of the Company.

     

    (d)    "Change in Control" means the
occurrence of any of the following events:

     

    (i)          Change in Ownership of the
Company.  A change in the ownership of the Company which occurs
on the date that any one person, or more than one person acting as a group
("Person"), acquires ownership of the stock of the Company that, together with
the stock held by such Person, constitutes more than 50% of the total voting
power of the stock of the Company; or

     

    (ii)         Change in Effective Control of the
Company.  If the Company has a class of securities registered
pursuant to Section 12 of the Exchange Act, a change in the effective
control of the Company which occurs on the date that a majority of members of
the Board is replaced during any 12 month period by Directors whose appointment
or election is not endorsed by a majority of the members of the Board prior to
the date of the appointment or election.  For purposes of this clause
(ii), if any Person is considered to be in effective control of the Company, the
acquisition of additional control of the Company by the same Person will not be
considered a Change in Control; or

     

    (iii)        Change in Ownership of a Substantial
Portion of the Company's Assets.  A change in the ownership of
a substantial portion of the Company's assets which occurs on the date that any
Person acquires (or has acquired during the 12 month period ending on the date
of the most recent acquisition by such person or persons) assets from the
Company that have a total gross fair market value equal to or more than 50% of
the total gross fair market value of all of the assets of the Company
immediately prior to such acquisition or acquisitions.  For purposes
of this subsection (iii), gross fair market value means the value of the assets
of the Company, or the value of the assets being disposed of, determined without
regard to any liabilities associated with such assets.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    For
purposes of this Section 2(d), persons will be considered to be acting as a
group if they are owners of a corporation that enters into a merger,
consolidation, purchase or acquisition of stock, or similar business transaction
with the Company.

     

    Notwithstanding
the foregoing, a transaction will not be deemed a Change in Control unless the
transaction qualifies as a change in control event within the meaning of Code
Section 409A, as it has been and may be amended from time to time, and any
proposed or final Treasury Regulations and Internal Revenue Service guidance
that has been promulgated or may be promulgated thereunder from time to
time.

     

    Further
and for the avoidance of doubt, a transaction will not constitute a Change in
Control if: (i) its sole purpose is to change the state of the Company's
incorporation, or (ii) its sole purpose is to create a holding company that
will be owned in substantially the same proportions by the persons who held the
Company's securities immediately before such transaction.

     

    (e)     "Code" means the Internal
Revenue Code of 1986, as amended.  Reference to a specific section of
the Code or Treasury Regulation thereunder will include such section or
regulation, any valid regulation or other official applicable guidance
promulgated under such section, and any comparable provision of any future
legislation or regulation amending, supplementing or superseding such section or
regulation.

     

    (f)      "Committee" means a committee
of the Board appointed in accordance with Section 14 hereof.

     

    (g)     "Common Stock" means the
common stock of the Company.

     

    (h)     "Company" means AltiGen
Communications, Inc., a Delaware corporation, or any successor
thereto.

     

    (i)       "Compensation" means an
Eligible Employee's base straight time gross earnings and commissions, but
exclusive of payments for overtime, shift premium, incentive compensation,
incentive payments, bonuses and other compensation.

     

    (j)      "Designated Subsidiary" means
any Subsidiary that has been designated by the Administrator from time to time
in its sole discretion as eligible to participate in the Plan.

     

    (k)     "Director" means a member of
the Board.

     

    (l)      "Eligible Employee" means any
individual who is a common law employee of an Employer and is customarily
employed for at least twenty (20) hours per week and more than five (5) months
in any calendar year by the Employer.  For purposes of the Plan, the
employment relationship will be treated as continuing intact while the
individual is on sick leave or other leave of absence that the Employer
approves.  Where the period of leave exceeds three (3) months and the
individual's right to reemployment is not guaranteed either by statute or by
contract, the employment relationship will be deemed to have terminated three
(3) months and one (1) day following the commencement of such
leave.  The Administrator, in its discretion, from time to time may,
prior to an Offering Date for all options to be granted on such Offering Date,
determine (on a uniform and nondiscriminatory basis) that the definition of
Eligible Employee will or will not include an individual if he or she:
(i) has not completed at least two (2) years of service since his or her
last hire date (or such lesser period of time as may be determined by the
Administrator in its discretion), (ii) customarily works not more than
twenty (20) hours per week (or such lesser period of time as may be determined
by the Administrator in its discretion), (iii) customarily works not more
than five (5) months per calendar year (or such lesser period of time as may be
determined by the Administrator in its discretion), (iv) is an executive,
officer or other manager, or (v) is a highly compensated employee under
Section 414(q) of the Code.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (m)    "Employer" means any one or
all of the Company and its Designated Subsidiaries.

     

    (n)     "Exchange Act" means the
Securities Exchange Act of 1934, as amended, including the rules and regulations
promulgated thereunder.

     

    (o)     "Exercise Date" means the last
Trading Day of each Offering Period.  The first Exercise Date under
the Plan will be November 30, 2009.

     

    (p)     "Fair Market Value" means, as
of any date and unless the Administrator determines otherwise, 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 Global Select Market, the
Nasdaq Global Market or the Nasdaq Capital 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 date of determination, as reported in The Wall Street Journal or such other
source as the Administrator deems reliable;

     

    (ii)      If
the Common Stock is regularly quoted by a recognized securities dealer but
selling prices are not reported, its Fair Market Value will be the mean of the
closing bid and asked prices for the Common Stock on the date 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
thereof will be determined in good faith by the Administrator.

     

    (q)    "Fiscal Year" means the fiscal
year of the Company.

     

    (r)     "New Exercise Date" means a
new Exercise Date set by shortening any Offering Period then in
progress.

     

    (s)     "Offering Date" means the
first Trading Day of each Offering Period.

     

    (t)      "Offering Periods" means the
periods of approximately six (6) months during which an option granted pursuant
to the Plan may be exercised, (i) commencing on the first Trading Day on or
after June 1 of each year and terminating on the last Trading Day on or
before November 30, approximately six (6) months later, and
(ii) commencing on the first Trading Day on or after December 1 of
each year and terminating on the last Trading Day on or before May 31,
approximately six (6) months later; provided, however, that the first Offering
Period under the Plan will commence on July 1, 2009, and end on
November 30, 2009. The duration and timing of Offering Periods may be
changed pursuant to Sections 4 and 20.

     

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

     

    (v)     "Participant" means an
Eligible Employee that participates in the Plan.

     

    (w)    "Plan" means this AltiGen
Communications, Inc. 2009 Employee Stock Purchase Plan.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (x)     "Purchase Price" means an
amount equal to eighty-five percent (85%) of the Fair Market Value of a share of
Common Stock on the Offering Date or on the Exercise Date, whichever is lower;
provided however, that the Purchase Price may be determined for subsequent
Offering Periods by the Administrator subject to compliance with
Section 423 of the Code (or any successor rule or provision or any other
applicable law, regulation or stock exchange rule) or pursuant to
Section 20.

     

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

     

    (z)     "Trading Day" means a day on
which the national stock exchange upon which the Common Stock is listed is open
for trading.

     

    3.      Eligibility.

     

    (a)     Any
Eligible Employee on a given Offering Date will be eligible to participate in
the Plan, subject to the requirements of Section 5.

     

    (b)     Limitations.  Any
provisions of the Plan to the contrary notwithstanding, no Eligible Employee
will be granted an option under the Plan (i) to the extent that,
immediately after the grant, such Eligible Employee (or any other person whose
stock would be attributed to such Eligible Employee pursuant to
Section 424(d) of the Code) would own capital stock of the Company or any
Parent or Subsidiary of the Company and/or hold outstanding options to purchase
such stock possessing five percent (5%) or more of the total combined voting
power or value of all classes of the capital stock of the Company or of any
Parent or Subsidiary of the Company, or (ii) to the extent that his or her
rights to purchase stock under all employee stock purchase plans (as defined in
Section 423 of the Code) of the Company or any Parent or Subsidiary of the
Company accrues at a rate which exceeds twenty-five thousand dollars ($25,000)
worth of stock (determined at the Fair Market Value of the stock at the time
such option is granted) for each calendar year in which such option is
outstanding at any time, as determined in accordance with Section 423 of
the Code and the regulations thereunder.

     

    4.      Offering
Periods.  The Plan will be implemented by consecutive Offering
Periods with a new Offering Period commencing on the first Trading Day on or
after June 1 and December 1 each year, or on such other date as the
Administrator will determine; provided, however, that the first Offering Period
under the Plan will commence on July 1, 2009, and end on November 30,
2009.  The Administrator will have the power to change the duration of
Offering Periods (including the commencement dates thereof) with respect to
future offerings without stockholder approval if such change is announced prior
to the scheduled beginning of the first Offering Period to be affected
thereafter.

     

    5.      Participation.  An
Eligible Employee may participate in the Plan by (i) submitting to the
Company's payroll office (or its designee), on or before a date determined by
the Administrator prior to an applicable Offering Date, a properly completed
subscription agreement authorizing payroll deductions in the form provided by
the Administrator for such purpose (which may be similar to the form attached
hereto as Exhibit A or which be an electronic form or procedure), or
(ii) following an electronic or other enrollment procedure determined by
the Administrator.

     

    6.      Payroll
Deductions.

     

    (a)    At
the time a Participant enrolls in the Plan pursuant to Section 5, he or she
will elect to have payroll deductions made on each pay day during the Offering
Period in an amount not exceeding fifteen percent (15%) of the Compensation
which he or she receives on each pay day during the Offering
Period.  A Participant's subscription agreement will remain in effect
for successive Offering Periods unless terminated as provided in Section 10
hereof.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b)    Payroll
deductions for a Participant will commence on the first pay day following the
Offering Date and will end on the last pay day prior to the Exercise Date of
such Offering Period to which such authorization is applicable, unless sooner
terminated by the Participant as provided in Section 10
hereof.

     

    (c)     All
payroll deductions made for a Participant will be credited to his or her account
under the Plan and will be withheld in whole percentages only.  A
Participant may not make any additional payments into such account.

     

    (d)     A
Participant may discontinue his or her participation in the Plan as provided in
Section 10, or may increase or decrease the rate of his or her payroll
deductions during the Offering Period by (i) properly completing and
submitting to the Company's payroll office (or its designee), on or before a
date determined by the Administrator prior to an applicable Exercise Date, a new
subscription agreement authorizing the change in payroll deduction rate in the
form provided by the Administrator for such purpose, or (ii) following an
electronic or other procedure prescribed by the Administrator. If a Participant
has not followed such procedures to change the rate of payroll deductions, the
rate of his or her payroll deductions will continue at the originally elected
rate throughout the Offering Period and future Offering Periods (unless
terminated as provided in Section 10).  The Administrator may, in
its sole discretion, limit the nature and/or number of payroll deduction rate
changes that may be made by Participants during any Offering Period, and may
establish such other conditions or limitations as it deems appropriate for Plan
administration.  Any change in payroll deduction rate made pursuant to
this Section 6(d) will be effective as of the first full payroll period
following five (5) business days after the date on which the change is made by
the Participant (unless the Administrator, in its sole discretion, elects to
process a given change in payroll deduction rate more quickly).

     

    (e)     Notwithstanding
the foregoing, to the extent necessary to comply with Section 423(b)(8) of
the Code and Section 3(b), a Participant's payroll deductions may be
decreased to zero percent (0%) at any time during an Offering
Period.  Subject to Section 423(b)(8) of the Code and
Section 3(b) hereof, payroll deductions will recommence at the rate
originally elected by the Participant effective as of the beginning of the first
Offering Period scheduled to end in the following calendar year, unless
terminated by the Participant as provided in Section 10.

     

    (f)     At
the time the option is exercised, in whole or in part, or at the time some or
all of the Common Stock issued under the Plan is disposed of, the Participant
must make adequate provision for the Company's or Employer's federal, state, or
any other tax liability payable to any authority, national insurance, social
security or other tax withholding obligations, if any, which arise upon the
exercise of the option or the disposition of the Common Stock.  At any
time, the Company or the Employer may, but will not be obligated to, withhold
from the Participant's compensation the amount necessary for the Company or the
Employer to meet applicable withholding obligations, including any withholding
required to make available to the Company or the Employer any tax deductions or
benefits attributable to sale or early disposition of Common Stock by the
Eligible Employee.

     

    7.      Grant of
Option.  On the Offering Date of each Offering Period, each
Eligible Employee participating in such Offering Period will be granted an
option to purchase on each Exercise Date during such Offering Period (at the
applicable Purchase Price) up to a number of shares of Common Stock determined
by dividing such Eligible Employee's payroll deductions accumulated prior to
such Exercise Date and retained in the Eligible Employee's account as of the
Exercise Date by the applicable Purchase Price; provided that in no event will
an Eligible Employee be permitted to purchase during each Offering Period more
than 10,000 shares of the Common Stock (subject to any adjustment pursuant to
Section 19), and provided further that such purchase will be subject to the
limitations set forth in Sections 3(b) and 13. The Eligible Employee may
accept the grant of such option with respect to any Offering Period under the
Plan, by electing to participate in the Plan in accordance with the requirements
of Section 5.  The Administrator may, for future Offering
Periods, increase or decrease, in its absolute discretion, the maximum number of
shares of Common Stock that an Eligible Employee may purchase during each
Offering Period.  Exercise of the option will occur as provided in
Section 8, unless the Participant has withdrawn pursuant to
Section 10.  The option will expire on the last day of the
Offering Period.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    8.      Exercise of
Option.

     

    (a)     Unless
a Participant withdraws from the Plan as provided in Section 10, his or her
option for the purchase of shares of Common Stock will be exercised
automatically on the Exercise Date, and the maximum number of full shares
subject to option will be purchased for such Participant at the applicable
Purchase Price with the accumulated payroll deductions from his or her
account.  No fractional shares of Common Stock will be purchased; any
payroll deductions accumulated in a Participant's account which are not
sufficient to purchase a full share will be retained in the Participant's
account for the subsequent Offering Period, subject to earlier withdrawal by the
Participant as provided in Section 10.  Any other funds left over
in a Participant's account after the Exercise Date will be returned to the
Participant.  During a Participant's lifetime, a Participant's option
to purchase shares hereunder is exercisable only by him or her.

     

    (b)     If
the Administrator determines that, on a given Exercise Date, the number of
shares of Common Stock with respect to which options are to be exercised may
exceed (i) the number of shares of Common Stock that were available for
sale under the Plan on the Offering Date of the applicable Offering Period, or
(ii) the number of shares of Common Stock available for sale under the Plan
on such Exercise Date, the Administrator may in its sole discretion provide that
the Company will make a pro rata allocation of the shares of Common Stock
available for purchase on such Offering Date or Exercise Date, as applicable, in
as uniform a manner as will be practicable and as it will determine in its sole
discretion to be equitable among all Participants exercising options to purchase
Common Stock on such Exercise Date, and continue all Offering Periods then in
effect or terminate all Offering Periods then in effect pursuant to
Section 20. The Company may make a pro rata allocation of the shares
available on the Offering Date of any applicable Offering Period pursuant to the
preceding sentence, notwithstanding any authorization of additional shares for
issuance under the Plan by the Company's stockholders subsequent to such
Offering Date.

     

    9.      Delivery.  As soon
as reasonably practicable after each Exercise Date on which a purchase of shares
of Common Stock occurs, the Company will arrange the delivery to each
Participant the shares purchased upon exercise of his or her option in a form
determined by the Administrator (in its sole discretion) and pursuant to rules
established by the Administrator.  The Company may permit or require
that shares be deposited directly with a broker designated by the Company or to
a designated agent of the Company, and the Company may utilize electronic or
automated methods of share transfer.  The Company may require that
shares be retained with such broker or agent for a designated period of time
and/or may establish other procedures to permit tracking of disqualifying
dispositions of such shares.  No Participant will have any voting,
dividend, or other stockholder rights with respect to shares of Common Stock
subject to any option granted under the Plan until such shares have been
purchased and delivered to the Participant as provided in this
Section 9.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    10.    Withdrawal.

     

    (a)     A
Participant may withdraw all but not less than all the payroll deductions
credited to his or her account and not yet used to exercise his or her option
under the Plan at any time by (i) submitting to the Company's payroll
office (or its designee) a written notice of withdrawal in the form determined
by the Administrator for such purpose (which may be similar to the form attached
hereto as Exhibit B), or (ii) following an electronic or other
withdrawal procedure determined by the Administrator. All of the Participant's
payroll deductions credited to his or her account will be paid to such
Participant promptly after receipt of notice of withdrawal and such
Participant's option for the Offering Period will be automatically terminated,
and no further payroll deductions for the purchase of shares will be made for
such Offering Period.  If a Participant withdraws from an Offering
Period, payroll deductions will not resume at the beginning of the succeeding
Offering Period, unless the Participant re-enrolls in the Plan in accordance
with the provisions of Section 5.

     

    (b)     A
Participant's withdrawal from an Offering Period will not have any effect upon
his or her eligibility to participate in any similar plan which may hereafter be
adopted by the Company or in succeeding Offering Periods which commence after
the termination of the Offering Period from which the Participant
withdraws.

     

    11.    Termination of
Employment.  Upon a Participant's ceasing to be an Eligible
Employee, for any reason, he or she will be deemed to have elected to withdraw
from the Plan and the payroll deductions credited to such Participant's account
during the Offering Period but not yet used to purchase shares of Common Stock
under the Plan will be returned to such Participant or, in the case of his or
her death, to the person or persons entitled thereto under Section 15, and
such Participant's option will be automatically terminated.

     

    12.    Interest.  No
interest will accrue on the payroll deductions of a participant in the
Plan.

     

    13.    Stock.

     

    (a)     Subject
to adjustment upon changes in capitalization of the Company as provided in
Section 19 hereof, the maximum number of shares of Common Stock which will
be made available for sale under the Plan will be 1,500,000 shares of Common
Stock.

     

    (b)     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), a Participant
will only have the rights of an unsecured creditor with respect to such shares,
and no right to vote or receive dividends or any other rights as a stockholder
will exist with respect to such shares.

     

    (c)     Shares
of Common Stock to be delivered to a Participant under the Plan will be
registered in the name of the Participant or in the name of the Participant and
his or her spouse.

     

    14.    Administration.  The
Plan will be administered by the Board or a Committee appointed by the Board,
which Committee will be constituted to comply with Applicable
Laws.  The Administrator will have full and exclusive discretionary
authority to construe, interpret and apply the terms of the Plan, to determine
eligibility and to adjudicate all disputed claims filed under the
Plan.  Every finding, decision and determination made by the
Administrator will, to the full extent permitted by law, be final and binding
upon all parties.  Notwithstanding any provision to the contrary in
this Plan, the Administrator may adopt rules or procedures relating to the
operation and administration of the Plan to accommodate the specific
requirements of local laws and procedures for jurisdictions outside of the
United States.  Without limiting the generality of the foregoing, the
Administrator is specifically authorized to adopt rules and procedures regarding
eligibility to participate, the definition of Compensation, handling of payroll
deductions, making of contributions to the Plan (including, without limitation,
in forms other than payroll deductions), establishment of bank or trust accounts
to hold payroll deductions, payment of interest, conversion of local currency,
obligations to pay payroll tax, determination of beneficiary designation
requirements, withholding procedures and handling of stock certificates which
vary with local requirements.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    15.    Designation of
Beneficiary.

     

    (a)     A
Participant may file a designation of a beneficiary who is to receive any shares
of Common Stock and cash, if any, from the Participant's account under the Plan
in the event of such Participant's death subsequent to an Exercise Date on which
the option is exercised but prior to delivery to such Participant of such shares
and cash.  In addition, a Participant may file a designation of a
beneficiary who is to receive any cash from the Participant's account under the
Plan in the event of such Participant's death prior to exercise of the
option.  If a Participant is married and the designated beneficiary is
not the spouse, spousal consent will be required for such designation to be
effective.

     

    (b)     Such
designation of beneficiary may be changed by the Participant at any time by
notice in a form determined by the Administrator.  In the event of the
death of a Participant and in the absence of a beneficiary validly designated
under the Plan who is living at the time of such Participant's death, the
Company will deliver such shares and/or cash to the executor or administrator of
the estate of the Participant, or if no such executor or administrator has been
appointed (to the knowledge of the Company), the Company, in its discretion, may
deliver such shares and/or cash to the spouse or to any one or more dependents
or relatives of the Participant, or if no spouse, dependent or relative is known
to the Company, then to such other person as the Company may
designate.

     

    (c)     All
beneficiary designations will be in such form and manner as the Administrator
may designate from time to time.

     

    16.    Transferability.  Neither
payroll deductions credited to a Participant's account nor any rights with
regard to the exercise of an option or to receive shares of Common Stock under
the Plan may be assigned, transferred, pledged or otherwise disposed of in any
way (other than by will, the laws of descent and distribution or as provided in
Section 15 hereof) by the Participant.  Any such attempt at
assignment, transfer, pledge or other disposition will be without effect, except
that the Company may treat such act as an election to withdraw funds from an
Offering Period in accordance with Section 10 hereof.

     

    17.    Use of Funds.  The
Company may use all payroll deductions received or held by it under the Plan for
any corporate purpose, and the Company will not be obligated to segregate such
payroll deductions.  Until shares of Common Stock are issued,
Participants will only have the rights of an unsecured creditor with respect to
such shares.

     

    18.    Reports.  Individual
accounts will be maintained for each Participant in the
Plan.  Statements of account will be given to participating Eligible
Employees at least annually, which statements will set forth the amounts of
payroll deductions, the Purchase Price, the number of shares of Common Stock
purchased and the remaining cash balance, if any.

     

    19.    Adjustments, Dissolution,
Liquidation, Merger or Change in Control.

     

    (a)     Adjustments.  In
the event that any dividend or other distribution (whether in the form of cash,
Common Stock, other securities, or other property), recapitalization, stock
split, reverse stock split, reorganization, merger, consolidation, split-up,
spin-off, combination, repurchase, or exchange of Common Stock or other
securities of the Company, or other change in the corporate structure of the
Company affecting the Common Stock occurs, the Administrator, in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan, will, in such manner as it may deem
equitable, adjust the number and class of Common Stock which may be delivered
under the Plan, the Purchase Price per share and the number of shares of Common
Stock covered by each option under the Plan which has not yet been exercised,
and the numerical limits of Sections 7 and 13.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b)     Dissolution or
Liquidation.  In the event of the proposed dissolution or
liquidation of the Company, any Offering Period then in progress will be
shortened by setting a New Exercise Date, and will terminate immediately prior
to the consummation of such proposed dissolution or liquidation, unless provided
otherwise by the Administrator.  The New Exercise Date will be before
the date of the Company's proposed dissolution or liquidation.  The
Administrator will notify each Participant in writing, at least ten (10)
business days prior to the New Exercise Date, that the Exercise Date for the
Participant's option has been changed to the New Exercise Date and that the
Participant's option will be exercised automatically on the New Exercise Date,
unless prior to such date the Participant has withdrawn from the Offering Period
as provided in Section 10 hereof.

     

    (c)     Merger or Change in
Control.  In the event of a merger or Change in Control, each
outstanding option will be assumed or an equivalent option 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 option, the Offering Period with respect to which
such option relates will be shortened by setting a New Exercise Date on which
such Offering Period will end.  The New Exercise Date will occur
before the date of the Company's proposed merger or Change in
Control.  The Administrator will notify each Participant in writing
prior to the New Exercise Date, that the Exercise Date for the Participant's
option has been changed to the New Exercise Date and that the Participant's
option will be exercised automatically on the New Exercise Date, unless prior to
such date the Participant has withdrawn from the Offering Period as provided in
Section 10 hereof.

     

    20.    Amendment or
Termination.

     

    (a)     The
Administrator, in its sole discretion, may amend, suspend, or terminate the
Plan, or any part thereof, at any time and for any reason.  If the
Plan is terminated, the Administrator, in its discretion, may elect to terminate
all outstanding Offering Periods either immediately or upon completion of the
purchase of shares of Common Stock on the next Exercise Date (which may be
sooner than originally scheduled, if determined by the Administrator in its
discretion), or may elect to permit Offering Periods to expire in accordance
with their terms (and subject to any adjustment pursuant to
Section 19).  If the Offering Periods are terminated prior to
expiration, all amounts then credited to Participants' accounts which have not
been used to purchase shares of Common Stock will be returned to the
Participants (without interest thereon, except as otherwise required under local
laws) as soon as administratively practicable.

     

    (b)     Without
stockholder consent and without limiting Section 20(a), the Administrator
will be entitled to change the Offering Periods, limit the frequency and/or
number of changes in the amount withheld during an Offering Period, establish
the exchange ratio applicable to amounts withheld in a currency other than U.S.
dollars, permit payroll withholding in excess of the amount designated by a
Participant in order to adjust for delays or mistakes in the Company's
processing of properly completed withholding elections, establish reasonable
waiting and adjustment periods and/or accounting and crediting procedures to
ensure that amounts applied toward the purchase of Common Stock for each
Participant properly correspond with amounts withheld from the Participant's
Compensation, and establish such other limitations or procedures as the
Administrator determines in its sole discretion advisable which are consistent
with the Plan.

     

    (c)     In
the event the Administrator determines that the ongoing operation of the Plan
may result in unfavorable financial accounting consequences, the Administrator
may, in its discretion and, to the extent necessary or desirable, modify, amend
or terminate the Plan to reduce or eliminate such accounting consequence
including, but not limited to:

     

    (i)         amending
the Plan to conform with the safe harbor definition under Statement of Financial
Accounting Standards 123(R), including with respect to an Offering Period
underway at the time;

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (ii)        altering
the Purchase Price for any Offering Period including an Offering Period underway
at the time of the change in Purchase Price;

     

    (iii)       shortening
any Offering Period by setting a New Exercise Date, including an Offering Period
underway at the time of the Administrator action;

     

    (iv)       reducing
the maximum percentage of Compensation a Participant may elect to set aside as
payroll deductions; and

     

    (v)        reducing
the maximum number of Shares a Participant may purchase during any Offering
Period.

     

    Such
modifications or amendments will not require stockholder approval or the consent
of any Plan Participants.

     

    21.    Notices.  All
notices or other communications by a Participant to the Company under or in
connection with the Plan will be deemed to have been duly given when received in
the form and manner specified by the Company at the location, or by the person,
designated by the Company for the receipt thereof.

     

    22.    Conditions Upon Issuance of
Shares.  Shares of Common Stock will not be issued with respect
to an option unless the exercise of such option and the issuance and delivery of
such shares pursuant thereto will comply with all applicable provisions of law,
domestic or foreign, including, without limitation, the Securities Act of 1933,
as amended, the Exchange Act, the rules and regulations promulgated thereunder,
and the requirements of any stock exchange upon which the shares may then be
listed, and will be further subject to the approval of counsel for the Company
with respect to such compliance.

     

    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 by any of the aforementioned
applicable provisions of law.

     

    23.    Term of Plan.  The
Plan will become effective upon the earlier to occur of its adoption by the
Board or its approval by the stockholders of the Company.  It will
continue in effect for a term of twenty (20) years, unless sooner terminated
under Section 20.

     

    24.    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 by the Board.  Such stockholder approval will be obtained in
the manner and to the degree required under Applicable Laws.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    EXHIBIT
A

     

    ALTIGEN
COMMUNICATIONS, INC.

     

    2009
EMPLOYEE STOCK PURCHASE PLAN

     

    SUBSCRIPTION
AGREEMENT

     

    _____
Original
Application                                                                                     Offering
Date:

     

    _____
Change in Payroll Deduction Rate

     

    _____
Change of Beneficiary(ies)

     

    1.      ____________________
hereby elects to participate in the AltiGen Communications, Inc. 2009 Employee
Stock Purchase Plan (the “Plan”) and subscribes to purchase shares of the
Company’s Common Stock in accordance with this Subscription Agreement and the
Plan.

     

    2.      I
hereby authorize payroll deductions from each paycheck in the amount of ____% of
my Compensation on each payday (from 1 to 15%) during the Offering Period in
accordance with the Plan.  (Please note that no fractional percentages
are permitted.)

     

    3.      I
understand that said payroll deductions will be accumulated for the purchase of
shares of Common Stock at the applicable Purchase Price determined in accordance
with the Plan.  I understand that if I do not withdraw from an
Offering Period, any accumulated payroll deductions will be used to
automatically exercise my option and purchase Common Stock under the
Plan.

     

    4.      I
have received a copy of the complete Plan and its accompanying
prospectus.  I understand that my participation in the Plan is in all
respects subject to the terms of the Plan.

     

    5.      Shares
of Common Stock purchased for me under the Plan should be issued in the name(s)
of (Eligible Employee or Eligible Employee and Spouse only).

     

    6.      I
understand that if I dispose of any shares received by me pursuant to the
Employee Stock Purchase Plan within two (2) years after the Offering Date
(the first day of the Offering Period during which I purchased such shares) or
one (1) year after the Exercise Date, I will be treated for federal income
tax purposes as having received ordinary income at the time of such disposition
in an amount equal to the excess of the fair market value of the shares at the
time such shares were purchased by me over the price which I paid for the
shares.  I
hereby agree to notify the Company in writing within thirty (30) days after
the date of any disposition of my shares and I will make adequate provision for
Federal, state or other tax withholding obligations, if any, which arise upon
the disposition of the Common Stock.  The Company may, but will
not be obligated to, withhold from my compensation the amount necessary to meet
any applicable withholding obligation including any withholding necessary to
make available to the Company any tax deductions or benefits attributable to
sale or early disposition of Common Stock by me.  If I dispose of such
shares at any time after the expiration of the two (2)-year and
one (1)-year holding periods, I understand that I will be treated for
federal income tax purposes as having received income only at the time of such
disposition, and that such income will be taxed as ordinary income only to the
extent of an amount equal to the lesser of (a) the excess of the fair
market value of the shares at the time of such disposition over the purchase
price which I paid for the shares, or (b) fifteen percent (15%) of the fair
market value of the shares on the first day of the Offering
Period.  The remainder of the gain, if any, recognized on such
disposition will be taxed as capital gain.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    7.      I
hereby agree to be bound by the terms of the Plan.  The effectiveness
of this Subscription Agreement is dependent upon my eligibility to participate
in the Plan.

     

    8.      In
the event of my death, I hereby designate the following as my beneficiary(ies)
to receive all payments and shares due me under the Employee Stock Purchase
Plan:

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  	
                                          NAME:
      (please print)

                                        	
                                              

                                        	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
                                          First

                                        	
                                          Middle

                                        	
                                          Last

                                        	 
      
	 
      	 
      	 
      	 
      	 
      
	
                                          Relationship

                                        	
                                              

                                        	 
      
	 
      	 
      	 
      	 
      	 
      
	
                                          Percentage
      Benefit

                                        	
                                              

                                        	 
      
	 
      	 
      	 
      	 
      	 
      
	
                                          Address

                                        	
                                              

                                        	 
      
	 
      	 
      	 
      	 
      	 
      
	
                                          NAME:
      (please print)

                                        	
                                              

                                        	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
                                          First

                                        	
                                          Middle

                                        	
                                          Last

                                        	 
      
	 
      	 
      	 
      	 
      	 
      
	
                                          Relationship

                                        	
                                              

                                        	 
      
	 
      	 
      	 
      	 
      	 
      
	
                                          Percentage
      Benefit

                                        	
                                              

                                        	 
      
	 
      	 
      	 
      	 
      	 
      
	
                                          Address

                                        	
                                              

                                        	 
      

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Employee’s
Social

     

    Security
Number:

     

    Employee’s
Address:

     

    I
UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT WILL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.

     

    
      
        	
                Dated:

              	
                    

              	 
      	
                    

              
	 
      	 
      	 
      	
                Signature
      of Employee

              
	 
      	 
      	 
      	 
      
	
                Dated:

              	
                    

              	 
      	
                    

              
	 
      	 
      	 
      	
                Spouse’s
      Signature (If beneficiary other than
spouse)

              

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    EXHIBIT
B

     

    ALTIGEN
COMMUNICATIONS, INC.

     

    2009
EMPLOYEE STOCK PURCHASE PLAN

     

    NOTICE
OF WITHDRAWAL

     

    The
undersigned participant in the Offering Period of the AltiGen Communications,
Inc. 2009 Employee Stock Purchase Plan that began on ____________, ______ (the
“Offering Date”) hereby notifies the Company that he or she hereby withdraws
from the Offering Period.  He or she hereby directs the Company to pay
to the undersigned as promptly as practicable all the payroll deductions
credited to his or her account with respect to such Offering
Period.  The undersigned understands and agrees that his or her option
for such Offering Period will be automatically terminated.  The
undersigned understands further that no further payroll deductions will be made
for the purchase of shares in the current Offering Period and the undersigned
will be eligible to participate in succeeding Offering Periods only by
delivering to the Company a new Subscription Agreement.

     

    
      
        	 
      	
                Name
      and Address of Participant:
              
	 
      	 
      
	 
      	
                     
              
	 
      	 
      
	 
      	
                     
              
	 
      	 
      
	 
      	
                     
              
	 
      	 
      
	  	Signature:
	     

	 
      	 
	 
      	 	 
	 
      	
                Date:

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