Document:

Exhibit 10.3

 

SEPARATION AGREEMENT AND
RELEASE OF CLAIMS

 

This Separation Agreement and Release of Claims (“Agreement”), is
entered into by Linda C. Heller, and Power-One, Inc. (“Power-One”) for the
purpose of resolving all matters between Ms. Heller and Power-One including
those concerning Ms. Heller’s employment with Power-One and the termination of
that employment.

 

1.                                       Termination of
Employment. Ms. Heller’s employment with Power-One will
terminate effective August 13, 2010 (the “Separation Date”).

 

2.                                       Final Wages, Vacation
Pay, Company Contribution to Retirement Plan. On Ms. Heller’s last day
of employment, Power-One will pay the following:

 

(a)                             All wages or
salary earned and unpaid through and including Ms. Heller’s last day of employment;
and

 

(b)                            Accrued, unused
vacation, if any, as of Ms. Heller’s Separation Date.

 

Ms. Heller will receive these sums whether or not
she enters into this Agreement. Payment of these sums will be subject to
appropriate deductions and withholdings. Ms. Heller is also entitled to
one-hundred percent (100%) of the Company’s contribution to her retirement
plan, which vested in full on the second anniversary of her employment, subject
to the terms of the plan.

 

3.                                       Separation
Payment. On the eighth day following the execution and return of this
Agreement by Ms. Heller (or on the next business day, if the eighth day is a
weekend day or a holiday), and provided that Ms. Heller has not exercised her
right to revoke this Agreement, Power-One will pay to Ms. Heller the gross sum
of $280,000, less appropriate payroll tax deductions and withholdings. This
amount will be paid to Ms. Heller in a lump sum through Power-One’s regular
payroll system.

 

4.                                       Benefits. Power-One
acknowledges that, regardless of whether Ms. Heller enters into this Agreement,
she is eligible to elect continuation of current medical, dental and vision
benefit coverage under the Consolidated Omnibus Budget Reconciliation Act, as
amended (“COBRA”), in accordance with its terms. Regardless of whether Ms.
Heller enters into this Agreement, Ms. Heller’s rights and responsibilities
under the benefit plans and programs offered by Power-One to its employees are
subject to applicable law and plan documents as they apply to terminated
employees.

 

If Ms. Heller enters into this Agreement and elects
to continue her current medical, dental, and/or vision insurance coverage
through COBRA following her Separation Date, as additional consideration for
entering into this Agreement, Power-One will pay one hundred percent (100%) of
the applicable total COBRA premium payable for such coverage for a term of one
year following the Separation Date. Power-One will also continue Ms. Heller’s
executive medical supplement through December 31, 2010. Payment of the premium
will be made directly to the insurance company by Power-One. Power-One’s
obligation to pay COBRA premiums will terminate if Ms. Heller becomes eligible
to participate in any medical benefits coverage provided by a subsequent
employer. COBRA premiums due and payable after the one year anniversary of the
Separation Date will become the sole responsibility of Ms. Heller, as outlined
in separate COBRA rights information provided to Ms. Heller by COBRA source.

 

Ms. Heller acknowledges that except as provided in
paragraph 7 below, she is not entitled to participate in any other Power-One
benefit plans after the Separation Date, and further acknowledges that she will
not accrue further benefits under the plans, including, but not limited to,
allowances of any type, accruals of paid time off, incentive payments and
bonuses. Her eligibility to make further contributions to any Power-One
retirement plan such as the 401-K plan will end as of the Separation Date.

 

1

 

5.                                       Equity Awards. On the
Separation Date, Ms. Heller will fully vest in 75,000 restricted stock units
previously awarded to Ms. Heller that have not vested and were not scheduled to
vest prior to the Separation Date. The stock units are fully paid shares of
Power-One, Inc. common stock that Ms. Heller will own; provided however, that
taxes due on the shares must be paid by Ms. Heller prior to distribution of the
stock. Alternatively, Ms. Heller may direct Power-One to trade a sufficient
number of her shares to pay her estimated tax liability. There are no
restrictions, time limits, expiration dates or other limitations upon Ms.
Heller’s ownership of the shares or on her freedom to hold, sell, exchange,
donate or dispose of any or all of such shares, although Ms. Heller will remain
subject to Rule 16(b) of the Securities Exchange Act of 1934, which governs
short-swing profits, for a term of six (6) months following the Separation Date.

 

6.                                       Outplacement. Power-One
will pay the cost of outplacement services for Ms. Heller in an amount not to
exceed Fifteen Thousand Dollars ($15,000) for a period of up to one year
following Ms. Heller’s Separation Date, after which any unused amount allocated
for outplacement services will be forfeited.

 

7.                                       Acknowledgment
of Consideration. Ms. Heller acknowledges that she is not entitled
to the payment set forth in Paragraph 3 above, to the payment by Power-One of
COBRA premiums as described in Paragraph 4 above, to the full vesting of the
75,000 restricted stock units described in paragraph 5 or to the outplacement
services described in paragraph 6 (collectively the “Separation Benefits”), and
that she has been offered the Separation Benefits in return for entering into
this Agreement. Ms. Heller acknowledges that separate and apart from this
Agreement, Ms. Heller is entitled only to the monies and benefits described in
paragraph 2 of this Agreement, to participate in COBRA coverage in accordance
with COBRA, as amended, and to certain rights under Power-One’s 401K plan, such
as her right to the vested portion of the Company’s contribution to her plan.

 

8.                                       Return of
Property and Documents. On or before her Separation Date, Ms.
Heller will return to Power-One all property, documents, electronic information
and materials of Power-One including any copies thereof, that were in her
possession, including, but not limited to, Ms. Heller’s laptop computer, cell
phone and American Express credit card. Ms. Heller agrees that she will provide
any passwords, access codes or other information necessary for Power-One to
access her files and records created and maintained by her during her term of
employment with Power-One. Ms. Heller further agrees to advise Richard Thompson
of the date time and place of any scheduled meetings with analysts, bankers,
tax advisors or any other person or entity as of the Separation Date.

 

9.                                       8-K Disclosure. Ms. Heller
acknowledges that the termination of her employment is an event that must be
timely disclosed in a Current Report on Form 8-K. Ms. Heller will cooperate
with Power-One to timely prepare and file the report. Power-One has agreed that
the report will be subject to Ms. Heller’s review and approval, which shall not
be unreasonably delayed or withheld.

 

10.                                 Mutual Release.

 

(a) Excepting only those obligations expressly
recited to be performed hereunder, Ms. Heller (for herself and her agents,
heirs, successors, assigns, executors and/or administrators) does hereby and
forever release and discharge Power-One and its subsidiary corporations and the
successors, assigns, agents, employees, Board of Directors, officers, attorneys
and representatives of each of them, past, present and future, and Power-One
and its subsidiary corporations and the successors, assigns and agents of
Power-One hereby and forever release and discharge Ms. Heller (collectively Ms.
Heller and Power-One are referred to as the “Released Persons”) from any and
all causes of action, actions, judgments, liens, debts, contracts,
indebtedness, damages, losses, claims, liabilities, rights, interests and
demands of whatsoever kind or character, known or unknown, suspected to exist
or not suspected to exist, vested or contingent, anticipated or not
anticipated, whether or not heretofore brought before any state or federal
court or before any other governmental agency or entity, which the Released
Persons have or may have against the other Released

 

 

Person or entity, by reason of any and all acts, omissions, events or
facts occurring or existing as of date of this Agreement.

 

(b)                                 Matters
released by this Agreement include, without limitation, all claims attributable
to the employment of Ms. Heller or the termination of that employment, under
any theory of pleading or proof, including but not limited to any claim for
breach of contract, breach of implied covenant, breach of oral or written
promise, wrongful termination, infliction of emotional distress, defamation,
discrimination, interference with contractual relations or prospective economic
advantage, negligence, misrepresentation or and including, without limitation,
any claim arising under or alleging violation of any federal, state or other
governmental statute, regulation or ordinance, such as, for example and without
limitation, Title VII of the Civil Rights Act of 1964 which prohibits
discrimination on the basis of sex, race, color, national origin and religion,
the Age Discrimination in Employment Act which prohibits discrimination on the
basis of age 40 and over, the Civil Rights Act of 1866, the Americans With
Disabilities Act, the California Fair Employment and Housing Act which
prohibits discrimination on the basis of race, religious creed, color, national
origin, ancestry, physical disability, mental disability, medical condition,
marital status, age 40 and over, sexual orientation, gender identity and sex,
the California Constitution and the California Labor Code. Provided, however,
anything to the contrary in this Separation Agreement notwithstanding, this
Agreement does not release or waive workers’ compensation claims or any other
claims that cannot be released as a matter of law.

 

(c)                                  The Released
Persons intend that this release extend to any and all claims of whatsoever
kind or character, known or unknown, and therefore expressly waive any and all
rights granted by California Civil Code Section 1542 (or any other analogous
federal or state law or regulation). Section 1542 reads as follows:

 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH
THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME
OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY
AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.

 

Cal. Civ. Code § 1542.

 

11.                                 No Admissions. Nothing
contained herein is an admission of wrongdoing or liability by Ms. Heller or
Power-One.

 

12.                                 Entire
Agreement, California Law. This Agreement constitutes a single
integrated contract expressing the entire agreement of the parties with respect
to the subject matter hereof and supersedes and controls over all prior and
contemporaneous oral and written agreements and discussions with respect to the
subject matter hereof. There are no other agreements, written or oral, express
or implied, between the parties hereto, concerning the subject matter of this
Agreement, except as set forth herein. This Agreement may be amended or
modified only in writing. This Agreement is governed by California law.

 

13.                                 Partial
Invalidity. The invalidity or unenforceability of any
provision or portion of this Agreement will not affect the validity or
enforceability of the other provisions or portions of this Agreement. Should
any provision or portion of this Agreement be declared invalid or
unenforceable, the remaining provisions of this Agreement shall remain in full
force and effect.

 

14.                                 Confidentiality. Ms. Heller
acknowledges that during her employment with Power-One she had access to
confidential and proprietary information about the Company as part of her job,
including, but not limited to, financial information, key performance indices,
strategic plans, roadmaps, inventions and other sensitive information. Power-One
employees, including Ms. Heller, invested substantial time, energy and
resources in developing the information to which Ms. Heller had access as a
representative of Power-One and as a consequence, Ms. Heller gained significant
insight into Power-One’s past, present and future business operations. Ms.
Heller acknowledges that Power-One is in a highly competitive industry and
agrees that she will remain obligated to maintain the confidentiality of
information about Power-One even after her separation

 

 

from the company. Ms. Heller represents that she has not and will not
copy, record, save or otherwise retain confidential Power-One information,
whether in electronic format or otherwise, and that she will (if she has not
already done so), prior to her Separation Date, return or destroy any and all
confidential information in her possession, including electronic data and
including information stored on a personal home computer or on any type of
remote storage device. Ms. Heller and Power-One and its senior executives (the
Chief Executive Officer and employees who report directly to him on a permanent
basis) further agree that except as required to be disclosed by the Securities
Exchange Act of 1934, they will keep the existence and the terms and conditions
of this Agreement strictly confidential and will not disclose or discuss this
Agreement with any other person or entity, including any current, former or
prospective employees of Power-One, other than (a) Ms. Heller may discuss the
Agreement with members of her immediate family, (b) the parties may discuss the
Agreement with legal and/or financial advisors, (c) as required by law, or (d)
to enforce this Agreement. It shall not be considered a breach of this
Agreement for the parties to disclose any terms hereof in compliance with any
court order or subpoena. In addition, both parties acknowledge and agree that
the duty to keep Power-One information confidential, including the existence
and terms of this Agreement, does not in any way prohibit Ms. Heller from
testifying truthfully under oath if ever called upon to do so or to cooperate,
if required by law and subject to advice of counsel, in any investigation in
which either of them might be required to testify or provide information

 

15.                                 Non-disparagement. Both Ms.
Heller and Power-One, on behalf of itself and its senior executives (the Chief
Executive Officer and employees who report directly to him on a permanent
basis), agree not to make any statements, written or verbal, or cause or
encourage others to make any statements, written or verbal, that defame,
disparage or in any way criticize the personal or business reputation,
practices, or conduct of Ms. Heller, Power-One, or any of its senior
executives. Ms. Heller and Power-One acknowledge and agree that this
prohibition extends to statements, written or verbal, made to anyone, whether
public or private, including statements made to investors, potential investors,
analysts, members of the board of directors, employees of Power-One (past and
present), competitors, strategic partners, vendors, and customers. Ms. Heller
and Power-One understand and agree that this paragraph is a material provision
of this Agreement and that any breach of this paragraph shall be a material
breach of this Agreement that would irreparably harm the non-breaching party
and may entitle the damaged party to damages and other legal remedies. Nothing
in this Paragraph 15 shall prohibit Ms. Heller or any representative, employee
or officer of Power-One from testifying truthfully about any matter in any
legal proceeding or in any statements to any federal or state regulators.

 

16.                                 WAITING PERIOD
AND RIGHT OF REVOCATION. MS. HELLER ACKNOWLEDGES AND IS AWARE, AND
IS HEREBY EXPRESSLY ADVISED OF HER RIGHT TO CONSIDER THIS AGREEMENT FOR TWENTY-ONE
DAYS BEFORE SIGNING IT AND THAT IF SHE SIGNS THIS AGREEMENT PRIOR TO THE
EXPIRATION OF TWENTY-ONE DAYS, SHE IS WAIVING THIS RIGHT FREELY AND VOLUNTARILY.
MS. HELLER FURTHER ACKNOWLEDGES THAT SHE IS AWARE OF AND THAT SHE IS HEREBY
EXPRESSLY ADVISED OF HER RIGHT TO REVOKE THIS AGREEMENT FOR A PERIOD OF SEVEN
DAYS FOLLOWING THE SIGNING OF THIS AGREEMENT AND THAT IT SHALL NOT BECOME
EFFECTIVE OR ENFORCEABLE UNTIL THE REVOCATION PERIOD HAS EXPIRED. TO REVOKE
THIS AGREEMENT, MS HELLER MUST NOTIFY POWER-ONE WITHIN SEVEN DAYS OF SIGNING IT
BY SENDING A FACSIMILE OF HER REVOCATION TO TINA MCKNIGHT, GENERAL COUNSEL, AT
(805) 383-5898 OR BY CAUSING THE NOTICE TO BE DELIVERED TO TINA MCKNIGHT AT 740
CALLE PLANO, CAMARILLO, CALIFORNIA 93012.

 

17.                                 ATTORNEY ADVICE. MS HELLER
ACKNOWLEDGES THAT SHE IS AWARE OF HER RIGHT TO CONSULT AN ATTORNEY, THAT SHE IS
HEREBY EXPRESSLY ADVISED TO CONSULT WITH AN ATTORNEY, AND THAT SHE HAS HAD THE
OPPORTUNITY TO CONSULT WITH AN ATTORNEY, IF DESIRED, PRIOR TO SIGNING THIS
AGREEMENT.

 

 

18.                                 Understanding
of Agreement. Ms. Heller represents to Power-One, and Power-One
hereby relies upon Ms. Heller’s representation that she has carefully read this
Agreement, that she fully understands its final and binding effect, that the
only promises made to her in connection with signing this Agreement are those
stated above, and that she is signing this Agreement voluntarily.

 

 

	
  Dated: August 10, 2010

  	
  /s/ Linda C. Heller

  
	
   

  	
  Linda C. Heller

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated: August 10, 2010

  	
  POWER-ONE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Tina McKnight

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Tina McKnight

  
	
   

  	
   

  	
  General CounselExhibit 10.2

 

SEMILEDS CORPORATION

 

2010 EQUITY INCENTIVE PLAN

 

(AS ADOPTED NOVEMBER 2, 2010)

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 1.

  	
  INTRODUCTION

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 2.

  	
  ADMINISTRATION

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
  Committee
  Composition

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  2.2

  	
  Committee
  Responsibilities

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  2.3

  	
  Non-Officer
  Grants

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3.

  	
  SHARES AVAILABLE FOR GRANTS

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
  3.1

  	
  Basic
  Limitation

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
  3.2

  	
  Shares
  Returned to Reserve

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
  3.3

  	
  Dividend
  Equivalents

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4.

  	
  GENERAL

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
  Eligibility

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  4.2

  	
  Incentive
  Stock Options

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  4.3

  	
  Other
  Grants

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  4.4

  	
  Restrictions
  on Shares

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  4.5

  	
  Beneficiaries

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  4.6

  	
  Performance
  Conditions

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5.

  	
  OPTIONS

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  5.1

  	
  Stock
  Option Agreement

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  5.2

  	
  Number
  of Shares

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  5.3

  	
  Exercise
  Price

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  5.4

  	
  Exercisability
  and Term

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  5.5

  	
  Modification
  or Assumption of Options

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  5.6

  	
  Buyout
  Provisions

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  5.7

  	
  Assignment
  or Transfer of Options

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 6.

  	
  PAYMENT FOR OPTION SHARES

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
  6.1

  	
  General
  Rule

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
  6.2

  	
  Surrender
  of Stock

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
  6.3

  	
  Exercise/Sale

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
  6.4

  	
  Other
  Forms of Payment

  	
   

  	
  5

  

 

i

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 7.

  	
  STOCK APPRECIATION RIGHTS

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
  7.1

  	
  SAR
  Agreement

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
  7.2

  	
  Number
  of Shares

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
  7.3

  	
  Exercise
  Price

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
  7.4

  	
  Exercisability
  and Term

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
  7.5

  	
  Exercise
  of SARs

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
  7.6

  	
  Modification
  or Assumption of SARs

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 8.

  	
  RESTRICTED SHARES

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
  8.1

  	
  Restricted
  Stock Agreement

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
  8.2

  	
  Payment
  for Awards

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
  8.3

  	
  Vesting
  Conditions

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
  8.4

  	
  Voting
  and Dividend Rights

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 9.

  	
  STOCK UNITS

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
  9.1

  	
  Stock
  Unit Agreement

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
  9.2

  	
  Payment
  for Awards

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
  9.3

  	
  Vesting
  Conditions

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
  9.4

  	
  Voting
  and Dividend Rights

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  9.5

  	
  Form and
  Time of Settlement of Stock Units

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  9.6

  	
  Death
  of Recipient

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  9.7

  	
  Creditors’
  Rights

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 10.

  	
  PROTECTION AGAINST DILUTION

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  10.1

  	
  Adjustments

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  10.2

  	
  Dissolution
  or Liquidation

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  10.3

  	
  Change
  in Control

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 11.

  	
  AWARDS UNDER OTHER PLANS

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 12.

  	
  PAYMENT OF DIRECTOR’S FEES IN SECURITIES

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  12.1

  	
  Effective
  Date

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  12.2

  	
  Elections
  to Receive NSOs, Restricted Shares or Stock Units

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  12.3

  	
  Number
  and Terms of NSOs, Restricted Shares or Stock Units

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 13.

  	
  LIMITATION ON RIGHTS

  	
   

  	
  11

  

 

ii

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  13.1

  	
  Retention
  Rights

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  13.2

  	
  Stockholders’
  Rights

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  13.3

  	
  Regulatory
  Requirements

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 14.

  	
  WITHHOLDING TAXES

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  14.1

  	
  General

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  14.2

  	
  Share
  Withholding

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 15.

  	
  FUTURE OF THE PLAN

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  15.1

  	
  Term
  of the Plan

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  15.2

  	
  Amendment
  or Termination

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  15.3

  	
  Stockholder
  Approval

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 16.

  	
  DEFINITIONS

  	
   

  	
  12

  

 

iii

 

SEMILEDS CORPORATION

2010 EQUITY INCENTIVE PLAN

 

ARTICLE 1.                        INTRODUCTION.

 

The Plan was adopted by the Board effective as of the IPO Date.  The purpose of the Plan is to promote the
long-term success of the Company and the creation of stockholder value by
(a) encouraging Employees, Outside Directors and Consultants to focus on
critical long-range objectives, (b) encouraging the attraction and
retention of Employees, Outside Directors and Consultants with exceptional
qualifications and (c) linking Employees, Outside Directors and
Consultants directly to stockholder interests through increased stock
ownership.  The Plan seeks to achieve
this purpose by providing for Awards in the form of Restricted Shares, Stock
Units, Options (which may constitute ISOs or NSOs) or stock appreciation
rights.

 

The Plan shall be governed by, and construed in accordance with, the
laws of the State of Delaware (except their choice-of-law provisions).

 

ARTICLE 2.                        ADMINISTRATION

 

2.1                               Committee
Composition.  The
Compensation Committee of the Board shall administer the Plan.  The Committee shall consist exclusively of
members of the Board, who shall be appointed by the Board.  In addition, each member of the Committee
shall meet the following requirements:

 

(a)                                 Any listing
standards prescribed by the principal securities market on which the Company’s
equity securities are traded;

 

(b)                                 Such
requirements as the Internal Revenue Service may establish for outside
directors acting under plans intended to qualify for exemption under
section 162(m)(4)(C) of the Code;

 

(c)                                  Such
requirements as the Securities and Exchange Commission may establish for
administrators acting under plans intended to qualify for exemption under
Rule 16b-3 (or its successor) under the Exchange Act; and

 

(d)                                 Any other requirements
imposed by applicable law, regulations or rules.

 

2.2                               Committee
Responsibilities.  The
Committee shall (a) select the Employees, Outside Directors and
Consultants who are to receive Awards under the Plan, (b) determine the
type, number, vesting requirements and other features and conditions of such
Awards, (c) amend any outstanding Awards, (d) accelerate the vesting
or extend the post-termination exercise term of Awards at any time and under
such terms and conditions as it deems appropriate, (e) correct any defect,
supplying any omission or reconciling any inconsistency in 

 

 

the Plan or any agreement evidencing an Award, (f) interpret
the Plan, (g) make all other decisions relating to the operation of the
Plan, (h) adopt such plans or subplans as may be deemed necessary or
appropriate to provide for the participation by service providers of the
Company, its Parent, Subsidiaries and Affiliates who reside outside of the
U.S., which plans and/or subplans shall be attached hereto as Appendices and (i) carry
out any other duties delegated to it by the Board under the Plan.  The Committee may adopt such rules or
guidelines as it deems appropriate to implement the Plan.  The Committee’s determinations under the Plan
shall be final and binding on all persons.

 

2.3                               Non-Officer
Grants.  The Board may also appoint
additional committees of the Board composed of one or more directors of the
Company.  The additional committees need
not satisfy the requirements of Section 2.1.  Such committees may (a) administer the
Plan with respect to Employees and Consultants who are not Outside Directors
and are not considered executive officers of the Company under section 16
of the Exchange Act, (b) grant Awards under the Plan to such Employees and
Consultants and (c) determine all features and conditions of such
Awards.  Within the limitations of this
Section 2.3, any reference in the Plan to the Committee shall include
these additional committees to whom the Board has delegated the required
authority under this Section 2.3.

 

ARTICLE 3.                        SHARES
AVAILABLE FOR GRANTS.

 

3.1                               Basic
Limitation.  Common
Shares issued pursuant to the Plan may be authorized but unissued shares or
treasury shares.  The aggregate number of
Common Shares issued under the Plan shall not exceed (a)  thirty-eight
million (38,000,000) Common Shares plus (b) the additional Common Shares
described in Sections 3.2.  The
number of Common Shares that are subject to Awards outstanding at any time
under the Plan shall not exceed the number of Common Shares that then remain
available for issuance under the Plan. 
All Common Shares available under the Plan may be issued upon the
exercise of ISOs.  The limitation of this
Section 3.1 shall be subject to adjustment pursuant to Article 10.

 

3.2                               Shares
Returned to Reserve.  If Options,
SARs or Stock Units are forfeited or terminate for any other reason before
being exercised or settled, then the Common Shares subject to such Options,
SARs or Stock Units shall again become available for issuance under the
Plan.  If SARs are exercised, then only
the number of Common Shares (if any) actually issued in settlement of such SARs
shall reduce the number available under Section 3.1 and the balance shall
again become available for issuance under the Plan.  If Stock Units are settled, then only the
number of Common Shares (if any) actually issued in settlement of such Stock
Units shall reduce the number available under Section 3.1 and the balance
shall again become available for issuance under the Plan.  If Restricted Shares or Common Shares issued
upon the exercise of Options are reacquired by the Company pursuant to a
forfeiture provision or for any other reason, then such Common Shares shall
again become available for issuance under the Plan.

 

3.3                               Dividend
Equivalents.  Any
dividend equivalents paid or credited under the Plan shall not be applied
against the number of Common Shares that may be issued under the Plan, whether
or not such dividend equivalents are converted into Stock Units.

 

2

 

ARTICLE 4.                        GENERAL.

 

4.1                               Eligibility.  Only Employees, Outside
Directors, and Consultants shall be eligible to participate in the Plan.

 

4.2                               Incentive
Stock Options.  Only
Employees who are common-law employees of the Company, a Parent or a Subsidiary
shall be eligible for the grant of ISOs. 
In addition, an Employee who owns more than 10% of the total combined
voting power of all classes of outstanding stock of the Company or any of its
Parents or Subsidiaries shall not be eligible for the grant of an ISO unless
the additional requirements set forth in section 422(c)(5) of the
Code are satisfied.

 

4.3                               Other
Grants.  Only Employees, Outside
Directors and Consultants shall be eligible for the grant of Restricted Shares,
Stock Units, NSOs or SARs.

 

4.4                               Restrictions
on Shares.  Any Shares
issued pursuant to an Award shall be subject to such rights of repurchase and
other transfer restrictions as the Committee may determine, in its sole
discretion.  Such restrictions shall
apply in addition to any restrictions that may apply to holders of Shares
generally and shall also comply to the extent necessary with applicable
law.  In no event shall the Company be
required to issue fractional Shares under this Plan.

 

4.5                               Beneficiaries.  Unless stated otherwise in an agreement
evidencing an Award and then only to the extent permitted by applicable law, a
Participant may designate one or more beneficiaries with respect to an Award by
timely filing the prescribed form with the Company.  A beneficiary designation may be changed by
filing the prescribed form with the Company at any time before the Participant’s
death.  If no beneficiary was designated
or if no designated beneficiary survives the Participant, then after a
Participant’s death any vested Award(s) shall be transferred or
distributed to the Participant’s estate.

 

4.6                               Performance
Conditions.  The
Committee may, in its discretion, include performance conditions in an
Award.  If performance conditions are
included in Awards to Covered Employees and such Awards are intended to qualify
as “performance-based compensation” under Code Section 162(m), then such
Awards will be subject to the achievement of Performance Goals with respect to
a Performance Period established by the Committee.  Such Awards shall be granted and administered
pursuant to the requirements of Code Section 162(m).  Before any Shares underlying an Award or any
Award payments are released to a Covered Employee with respect to a Performance
Period, the Committee shall certify in writing that the Performance Goals for
such Performance Period have been satisfied. 
Awards with performance conditions that are granted to Participants who
are not Covered Employees need not comply with the requirements of Code Section 162(m).

 

ARTICLE 5.                        OPTIONS.

 

5.1                               Stock
Option Agreement.  Each grant
of an Option under the Plan shall be evidenced by a Stock Option Agreement
between the Optionee and the Company. 
Such Option shall be subject to all applicable terms of the Plan and may
be subject to any other terms that are not inconsistent with the Plan.  The Stock Option Agreement shall specify
whether the 

 

3

 

Option is an ISO or an NSO.  The provisions of the various Stock Option
Agreements entered into under the Plan need not be identical.  Subject
to an Optionee’s consent, Options may be
granted in consideration of a reduction in the Optionee’s other compensation.

 

5.2                               Number
of Shares.  Each Stock
Option Agreement shall specify the number of Common Shares subject to the
Option, which shall be subject to adjustment in accordance with Article 10.  Options granted to an Optionee in a single
fiscal year of the Company shall not cover more than 3,000,000 Common Shares,
except that Options granted to a new Employee in the fiscal year of the Company
in which his or her Service commences may cover up to 4,000,000 Common
Shares.  The limitations set forth in the
preceding sentence shall be subject to adjustment in accordance with Article 10.

 

5.3                               Exercise
Price.  Each Stock Option Agreement
shall specify the Exercise Price.  In the
case of an ISO (a) granted to an Employee who owns more than 10% of the
total combined voting power of all classes of outstanding stock of the Company
or any of its Parents or Subsidiaries, the Exercise Price shall be no less than
110% of the Fair Market Value on the date of grant; and (b) granted to any
other Employee, the Exercise Price shall be no less than 100% of the Fair
Market Value on the date of grant.

 

5.4                               Exercisability
and Term.  Each Stock
Option Agreement shall specify the date or event when all or any installment of
the Option is to become exercisable.  The
Stock Option Agreement shall also specify the term of the Option; provided that
the term of an ISO shall in no event exceed 10 years from the date of
grant, except that the term of an ISO granted to an Employee who owns more than
10% of the total combined voting power of all classes of outstanding stock of
the Company or any of its Parents or Subsidiaries shall in no event exceed
5 years from the date of grant.  A
Stock Option Agreement may provide for accelerated exercisability in the event
of the Optionee’s death, disability or retirement or other events and may
provide for expiration prior to the end of its term in the event of the
termination of the Optionee’s Service. 
Options may be awarded in combination with SARs, and such an Award may
provide that the Options will not be exercisable unless the related SARs are
forfeited.

 

5.5                               Modification
or Assumption of Options. 
Within the limitations of the Plan, the Committee may modify, reprice,
extend or assume outstanding options or may accept the cancellation of
outstanding options (whether granted by the Company or by another issuer) in
return for the grant of new options for the same or a different number of
shares and at the same or a different exercise price.  The foregoing notwithstanding, no
modification of an Option shall, without the consent of the Optionee, alter or
impair his or her rights or obligations under such Option.

 

5.6                               Buyout
Provisions.  The
Committee may at any time (a) offer to buy out for a payment in cash or
cash equivalents an Option previously granted or (b) authorize an Optionee
to elect to cash out an Option previously granted, in either case at such time
and based upon such terms and conditions as the Committee shall establish.

 

5.7                               Assignment
or Transfer of Options.  No
Option or interest therein shall be transferred, assigned, pledged or
hypothecated by the Optionee during his or her lifetime, whether by operation
of law or otherwise, or be made subject to execution, attachment or similar 

 

4

 

process, other than (i) by will or by the laws
of descent and distribution, or (ii) in the case of an NSO, as otherwise
expressly permitted by the Committee including, if so permitted, pursuant to a
transfer to such Optionee’s Immediate Family. 
An Option may be exercised, subject to the terms of the Plan and the
applicable Stock Option Agreement, only by the Optionee, the guardian or legal
representative of the Optionee, a beneficiary designated pursuant to Section 4.5,
or any person to whom such Option is transferred pursuant to this paragraph.

 

ARTICLE 6.                        PAYMENT
FOR OPTION SHARES.

 

6.1                               General
Rule.  The entire Exercise Price of
Common Shares issued upon exercise of Options shall be payable in cash or cash
equivalents at the time when such Common Shares are purchased, except that the
Committee at its sole discretion may accept payment of the Exercise Price in
any other form(s) described in this Article 6.  However, if the Optionee is an Outside
Director or executive officer of the Company, he or she may pay the Exercise
Price in a form other than cash or cash equivalents only to the extent permitted
by section 13(k) of the Exchange Act.

 

6.2                               Surrender
of Stock.  With the
Committee’s consent, all or any part of the Exercise Price may be paid by
surrendering, or attesting to the ownership of, Common Shares that are already
owned by the Optionee.  Such Common
Shares shall be valued at their Fair Market Value on the date when the new
Common Shares are purchased under the Plan.

 

6.3                               Exercise/Sale.  With the Committee’s consent, all or any part
of the Exercise Price and any withholding taxes may be paid by delivering (on a
form prescribed by the Company) an irrevocable direction to a securities broker
approved by the Company to sell all or part of the Common Shares being
purchased under the Plan and to deliver all or part of the sales proceeds to
the Company.

 

6.4                               Other
Forms of Payment.  With the
Committee’s consent, all or any part of the Exercise Price and any withholding
taxes may be paid in any other form that is consistent with applicable laws,
regulations and rules.

 

ARTICLE 7.                        STOCK
APPRECIATION RIGHTS.

 

7.1                               SAR
Agreement.  Each grant
of an SAR under the Plan shall be evidenced by an SAR Agreement between the
Optionee and the Company.  Such SAR shall
be subject to all applicable terms of the Plan and may be subject to any other
terms that are not inconsistent with the Plan. 
The provisions of the various SAR Agreements entered into under the Plan
need not be identical.  Subject to an Optionee’s
consent, SARs may be granted in consideration of a reduction in the Optionee’s
other compensation.

 

7.2                               Number
of Shares.  Each SAR
Agreement shall specify the number of Common Shares to which the SAR pertains
and shall be subject to adjustment in accordance with Article 10.  SARs granted to an Optionee in a single
fiscal year shall in no event pertain to more than 3,000,000 Common Shares,
except that SARs granted to a new Employee in the fiscal year of the Company in
which his or her Service commences may pertain to a maximum of 4,000,000 Common
Shares.  The limitations set forth in the
preceding sentence shall be subject to adjustment in accordance with Article 10.

 

5

 

7.3                               Exercise
Price.  Each SAR Agreement shall
specify the Exercise Price.

 

7.4                               Exercisability
and Term.  Each SAR
Agreement shall specify the date when all or any installment of the SAR is to
become exercisable and/or may include time-based vesting or performance-based
vesting (including Performance Goals pursuant to Section 4.6).  The SAR Agreement shall also specify the term
of the SAR, which shall not exceed ten (10) years from the date of
grant.  An SAR Agreement may provide for
accelerated exercisability in the event of the Optionee’s death, disability or
retirement or other events and may provide for expiration prior to the end of
its term in the event of the termination of the Optionee’s Service.  SARs may be awarded in combination with
Options or Restricted Shares, and such an Award may provide that the SARs will
not be exercisable unless the related Options or Restricted Shares are
forfeited.  An SAR may be included in an
ISO only at the time of grant but may be included in an NSO at the time of
grant or thereafter.  Notwithstanding any
other provision of the Plan or the SAR Agreement, no SAR can be exercised after
the expiration date provided in the applicable SAR Agreement.

 

7.5                               Exercise
of SARs.  Upon exercise of an SAR, the
Optionee (or any person having the right to exercise the SAR after his or her
death) shall receive from the Company (a) Common Shares, (b) cash or
(c) a combination of Common Shares and cash, as the Committee shall
determine.  The amount of cash and/or the
Fair Market Value of Common Shares received upon exercise of SARs shall, in the
aggregate, be equal to the amount by which the Fair Market Value (on the date
of surrender) of the Common Shares subject to the SARs exceeds the Exercise
Price.  If, on the date when an SAR
expires, the Exercise Price is less than the Fair Market Value on such date but
any portion of such SAR has not been exercised or surrendered, then such SAR
shall automatically be deemed to be exercised as of such date with respect to
such portion.  An SAR Agreement may also
provide for an automatic exercise of the SAR on an earlier date.

 

7.6                               Modification
or Assumption of SARs. 
Within the limitations of the Plan, the Committee may modify, reprice,
extend or assume outstanding SARs or may accept the cancellation of outstanding
SARs (whether granted by the Company or by another issuer) in return for the
grant of new SARs for the same or a different number of shares and at the same
or a different exercise price.  The
foregoing notwithstanding, no modification of an SAR shall, without the consent
of the Optionee, alter or impair his or her rights or obligations under such
SAR.

 

ARTICLE 8.                        RESTRICTED
SHARES.

 

8.1                               Restricted
Stock Agreement.  Each grant
of Restricted Shares under the Plan shall be evidenced by a Restricted Stock
Agreement between the recipient and the Company.  Such Restricted Shares shall be subject to
all applicable terms of the Plan and may be subject to any other terms that are
not inconsistent with the Plan.  The
provisions of the various Restricted Stock Agreements entered into under the
Plan need not be identical.

 

8.2                               Payment
for Awards.  Restricted
Shares may be sold or awarded under the Plan for such consideration as the
Committee may determine, including (without limitation) cash, cash equivalents,
property, past services and future services.

 

6

 

8.3                               Vesting
Conditions.  Each Award
of Restricted Shares may or may not be subject to vesting.  Vesting shall occur, in full or in
installments, upon satisfaction of the conditions specified in the Restricted
Stock Agreement.  The Committee may
include among such conditions the requirement that the performance of the
Company or a business unit of the Company for a specified period of one or more
fiscal years equal or exceed a target determined in advance by the
Committee.  The Committee shall determine
such performance.  Such target may be
based on one or more of the criteria set forth in the Performance Goals.  The Committee shall identify such target not
later than the 90th day of such period.  In no event shall more than 3,000,000
Restricted Shares that are subject to performance-based vesting conditions be
granted to any Participant in a single fiscal year of the Company, except that
up to 4,000,000 Restricted Shares subject to performance-based vesting
conditions may be granted to a new Employee in the fiscal year of the Company
in which his or her Service commences. 
The limitations set forth in the preceding sentence shall be subject to
adjustment in accordance with Article 10. 
A Restricted Stock Agreement may provide for accelerated vesting in the
event of the Participant’s death, disability or retirement or other events.

 

8.4                               Voting
and Dividend Rights.  The holders
of Restricted Shares awarded under the Plan shall have the same voting,
dividend and other rights as the Company’s other stockholders.  A Restricted Stock Agreement, however, may
require that any cash dividends paid on Restricted Shares (a) be
accumulated and paid when such Restricted Shares vest or (b) be invested
in additional Restricted Shares.  Such
additional Restricted Shares shall be subject to the same conditions and restrictions
as the Award with respect to which the dividends were paid.

 

ARTICLE 9.                        STOCK
UNITS.

 

9.1                               Stock
Unit Agreement.  Each grant
of Stock Units under the Plan shall be evidenced by a Stock Unit Agreement
between the recipient and the Company. 
Such Stock Units shall be subject to all applicable terms of the Plan
and may be subject to any other terms that are not inconsistent with the
Plan.  The provisions of the various
Stock Unit Agreements entered into under the Plan need not be identical.  Subject
to a recipient’s consent, Stock Units may
be granted in consideration of a reduction in the recipient’s other
compensation.

 

9.2                               Payment
for Awards.  To the
extent that an Award is granted in the form of Stock Units, no cash
consideration shall be required of the Award recipients.

 

9.3                               Vesting
Conditions.  Each Award
of Stock Units may or may not be subject to vesting.  Vesting shall occur, in full or in
installments, upon satisfaction of the conditions specified in the Stock Unit
Agreement.  The Committee may include
among such conditions the requirement that the performance of the Company or a
business unit of the Company for a specified period of one or more fiscal years
equal or exceed a target determined in advance by the Committee.  The Committee shall determine such
performance.  Such target may be based on
one or more of the criteria set forth in the Performance Goals.  The Committee shall identify such target not
later than the 90th day of such period.  In no event shall more than 3,000,000 Stock
Units that are subject to performance-based vesting conditions be granted to
any Participant in a single fiscal year of the Company, except that up to
4,000,000 Stock Units subject to performance-based vesting conditions may be
granted to a new Employee in the fiscal year of the Company in which his or her
Service commences.  The limitations set
forth in the 

 

7

 

preceding sentence shall be subject to adjustment in
accordance with Article 10.  A Stock
Unit Agreement may provide for accelerated vesting in the event of the
Participant’s death, disability or retirement or other events.

 

9.4                               Voting
and Dividend Rights.  The holders
of Stock Units shall have no voting rights. 
Prior to settlement or forfeiture, any Stock Unit awarded under the Plan
may, at the Committee’s discretion, carry with it a right to dividend
equivalents.  Such right entitles the
holder to be credited with an amount equal to all cash dividends paid on one
Common Share while the Stock Unit is outstanding.  Dividend equivalents may be converted into
additional Stock Units.  Settlement of
dividend equivalents may be made in the form of cash, in the form of Common
Shares, or in a combination of both. 
Prior to distribution, any dividend equivalents that are not paid shall
be subject to the same conditions and restrictions as the Stock Units to which
they attach.

 

9.5                               Form and
Time of Settlement of Stock Units.  Settlement of vested Stock Units may be made
in the form of (a) cash, (b) Common Shares or (c) any
combination of both, as determined by the Committee.  The actual number of Stock Units eligible for
settlement may be larger or smaller than the number included in the original
Award, based on predetermined performance factors.  Methods of converting Stock Units into cash
may include (without limitation) a method based on the average Fair Market
Value of Common Shares over a series of trading days.  Vested Stock Units may be settled in a lump
sum or in installments.  The distribution
may occur or commence when all vesting conditions applicable to the Stock Units
have been satisfied or have lapsed, or it may be deferred to any later
date.  The amount of a deferred
distribution may be increased by an interest factor or by dividend equivalents.  Until an Award of Stock Units is settled, the
number of such Stock Units shall be subject to adjustment pursuant to Article 10.

 

9.6                               Death
of Recipient.  Any Stock
Units Award that becomes payable after the recipient’s death shall be
distributed to the recipient’s beneficiary or beneficiaries.  Each recipient of a Stock Units Award under
the Plan shall designate one or more beneficiaries for this purpose by filing
the prescribed form with the Company.  A
beneficiary designation may be changed by filing the prescribed form with the
Company at any time before the Award recipient’s death.  If no beneficiary was designated or if no
designated beneficiary survives the Award recipient, then any Stock Units Award
that becomes payable after the recipient’s death shall be distributed to the
recipient’s estate.

 

9.7                               Creditors’
Rights.  A holder of Stock Units shall
have no rights other than those of a general creditor of the Company.  Stock Units represent an unfunded and
unsecured obligation of the Company, subject to the terms and conditions of the
applicable Stock Unit Agreement.

 

ARTICLE 10.                 PROTECTION
AGAINST DILUTION.

 

10.1                        Adjustments.  In the event of a subdivision of the
outstanding Common Shares, a stock split, a reverse stock split, a declaration
of a dividend payable in Common Shares or a combination or consolidation of the
outstanding Common Shares (by reclassification or otherwise) into a lesser
number of Common Shares, or any other increase or decrease in the 

 

8

 

number of issued Common Shares effected
without receipt of consideration by the Company, corresponding adjustments
shall automatically be made in each of the following:

 

(a)                                 The number of
Options, SARs, Restricted Shares and Stock Units available for future Awards
under Article 3;

 

(b)                                 The limitations
set forth in Sections 5.2, 7.2, 8.3 and 9.3;

 

(c)                                  The number of
Common Shares covered by each outstanding Option and SAR;

 

(d)                                 The Exercise
Price under each outstanding Option and SAR; and

 

(e)                                  The number of
Stock Units included in any prior Award that has not yet been settled.

 

In
the event of a declaration of an extraordinary dividend with respect to the
Common Shares payable in a form other than Common Shares in an amount that has
a material effect on the price of Common Shares, a recapitalization, a rights
offering, a reorganization, a merger, a spin-off or a similar occurrence, the
Committee shall make such adjustments as it, in its sole discretion, deems
appropriate in one or more of the foregoing, and its determination shall be
final, binding and conclusive.  Except as
provided in this Article 10, a Participant shall have no rights by reason
of any issuance by the Company of stock of any class or securities convertible
into stock of any class, any subdivision or consolidation of shares of stock of
any class, the payment of any stock dividend or any other increase or decrease
in the number of shares of stock of any class.

 

10.2                        Dissolution
or Liquidation.  To the
extent not previously exercised or settled, Options, SARs and Stock Units shall
terminate immediately prior to the dissolution or liquidation of the Company.

 

10.3                        Change
in Control.  Individual
agreements evidencing Awards may provide for vesting acceleration if the
Company is subject to a Change in Control. 
In addition, in the event that the Company is subject to a Change in
Control, outstanding Options, SARs, Stock Units and Restricted Shares acquired
under the Plan shall be subject to the agreement evidencing the Change in
Control, which need not treat all outstanding Options, SARs or Stock Units (or
portion thereof) in an identical manner. 
Such agreement, without each Participant’s consent, may dispose of
Options, SARs or Stock Units (or portions thereof) that are not vested as of
the effective date of such Change in Control in any manner permitted by
applicable law, including (without limitation) the cancellation of such
Options, SARs or Stock Units (or portions thereof) without the payment of any
consideration.  Such agreement, without
each Participant’s consent, may provide for one or more of the following with
respect to Options, SARs or Stock Units (or portions thereof) granted to each
Participant that are vested and exercisable as of the closing date of such
Change in Control:

 

(a)                                 The
continuation of such outstanding Awards (or portion thereof) by the Company (if
the Company is the surviving corporation).

 

9

 

(b)                                 The assumption
of such outstanding Awards (or portion thereof) by the surviving corporation or
its parent, provided that the assumption of Options or SARs shall comply with
section 424(a) of the Code (whether or not the Options are ISOs).

 

(c)                                  The
substitution by the surviving corporation or its parent of new awards for such
outstanding Awards (or portion thereof), provided that the substitution of
Options or SARs shall comply with section 424(a) of the Code (whether
or not the Options are ISOs).

 

(d)                                 The
cancellation of outstanding Options and SARs (or portion thereof) and a payment
to the Participants equal to the excess of (i) the Fair Market Value of
the Common Shares subject to such Options and SARs as of the closing date of
such Change in Control over (ii) their Exercise Price.  Such payment shall be made in the form of
cash, cash equivalents, or securities of the surviving corporation or its
parent with a Fair Market Value equal to the required amount or any combination
of the foregoing consideration.  If the
Exercise Price of the Common Shares subject to such Options and SARs exceeds
the Fair Market Value of such Common Shares, then such Options and SARs may be
cancelled without making a payment to the Optionees.  For purposes of this Subsection (d), the
Fair Market Value of any security shall be determined without regard to any
vesting conditions that may apply to such security.

 

(e)                                  The
cancellation of outstanding Stock Units (or portion thereof) and a payment to
the Participants equal to the Fair Market Value of the Common Shares subject to
such Stock Units as of the closing date of such Change in Control.  Such payment shall be made in the form of
cash, cash equivalents, or securities of the surviving corporation or its
parent with a Fair Market Value equal to the required amount or any combination
of the foregoing consideration.  For purposes
of this Subsection (e), the Fair Market Value of any security shall be
determined without regard to any vesting conditions that may apply to such
security.

 

(f)                                   The
cancellation of outstanding Options and SARs (or portion thereof) for no
consideration.

 

Immediately
following a Change in Control, all outstanding Options, SARs and Stock Units
shall terminate and cease to be outstanding, except to the extent such Options,
SARs and Stock Units (or portion thereof) have been continued or assumed, as
described in Sections 10.3(a) and/or 10.3(b).

 

ARTICLE 11.                 AWARDS
UNDER OTHER PLANS.

 

The Company may grant awards under other plans or programs.  Such awards may be settled in the form of
Common Shares issued under this Plan. 
Such Common Shares shall be treated for all purposes under the Plan like
Common Shares issued in settlement of Stock Units and shall, when issued,
reduce the number of Common Shares available under Article 3.

 

10

 

ARTICLE 12.                                              PAYMENT
OF DIRECTOR’S FEES IN SECURITIES.

 

12.1        Effective Date.  No provision of this Article 12 shall be
effective unless and until the Board has determined to implement such
provision.

 

12.2        Elections to Receive NSOs,
Restricted Shares or Stock Units.  An Outside Director may elect to receive his
or her annual retainer payments and/or meeting fees from the Company in the
form of cash, NSOs, Restricted Shares or Stock Units, or a combination thereof,
as determined by the Board.  Such NSOs,
Restricted Shares and Stock Units shall be issued under the Plan.  An election under this Article 12 shall
be filed with the Company on the prescribed form.

 

12.3        Number and Terms of NSOs,
Restricted Shares or Stock Units.  The number of NSOs, Restricted Shares or
Stock Units to be granted to Outside Directors in lieu of annual retainers and
meeting fees that would otherwise be paid in cash shall be calculated in a
manner determined by the Board.  The
Board shall also determine the terms of such NSOs, Restricted Shares or Stock
Units.

 

ARTICLE 13.                                              LIMITATION
ON RIGHTS.

 

13.1        Retention Rights.  Neither the Plan nor any Award granted under
the Plan shall be deemed to give any individual a right to remain an Employee,
Outside Director or Consultant.  The
Company and its Parents, Subsidiaries and Affiliates reserve the right to
terminate the Service of any Employee, Outside Director or Consultant at any
time, with or without cause or notice, subject to applicable laws, the Company’s
certificate of incorporation and by-laws and a written employment or consulting
agreement (if any).

 

13.2        Stockholders’ Rights.  A Participant shall have no dividend rights,
voting rights or other rights as a stockholder with respect to any Common
Shares covered by his or her Award prior to the time when a stock certificate
for such Common Shares is issued or, if applicable, the time when he or she
becomes entitled to receive such Common Shares by filing any required notice of
exercise and paying any required Exercise Price.  No adjustment shall be made for cash
dividends or other rights for which the record date is prior to such time,
except as expressly provided in the Plan.

 

13.3        Regulatory Requirements.  Any other provision of the Plan
notwithstanding, the obligation of the Company to issue Common Shares under the
Plan shall be subject to all applicable laws, rules and regulations and
such approval by any regulatory body as may be required.  The Company reserves the right to restrict,
in whole or in part, the delivery of Common Shares pursuant to any Award prior
to the satisfaction of all legal requirements relating to the issuance of such
Common Shares, to their registration, qualification or listing or to an
exemption from registration, qualification or listing.

 

ARTICLE 14.                                              WITHHOLDING
TAXES.

 

14.1        General.  To the extent required by applicable federal,
state, local or foreign law, a Participant or his or her successor shall make
arrangements satisfactory to the Company for the satisfaction of any
withholding tax obligations that arise in connection with the 

 

11

 

Plan.  The
Company shall not be required to issue any Common Shares or make any cash
payment under the Plan until such obligations are satisfied.

 

14.2        Share Withholding.  To the extent that applicable law subjects a
Participant to tax withholding obligations, the Committee may permit such
Participant to satisfy all or part of such obligations by having the Company
withhold all or a portion of any Common Shares that otherwise would be issued
to him or her or by surrendering all or a portion of any Common Shares that he
or she previously acquired.  Such Common
Shares shall be valued at their Fair Market Value on the date when they are
withheld or surrendered.  This
Section 14.2 shall apply only to the minimum extent required by applicable
tax laws.

 

ARTICLE 15.                                              FUTURE
OF THE PLAN.

 

15.1        Term of the Plan.  The Plan, as set forth herein, shall become
effective on the IPO Date.  The Plan
shall remain in effect until the earlier of (a) the date when the Plan is
terminated under Section 15.2 or (b) the 10th anniversary of the date when the Board adopted
the Plan.

 

15.2        Amendment or Termination.  The Board may, at any time and for any
reason, amend or terminate the Plan.  No
Awards shall be granted under the Plan after the termination thereof.  The termination of the Plan, or any amendment
thereof, shall not affect any Award previously granted under the Plan.

 

15.3        Stockholder Approval.  An amendment of the Plan shall be subject to
the approval of the Company’s stockholders only to the extent required by
applicable laws, regulations or rules. 
However, section 162(m) of the Code may require that the
Company’s stockholders approve:

 

(a)           The Plan not later than the
first regular meeting of stockholders that occurs in the fourth calendar year
following the calendar year in which the IPO Date occurred; and

 

(b)           The Performance Goals not
later than the first meeting of stockholders that occurs in the fifth year
following the year in which the Company’s stockholders previously approved such
criteria.

 

ARTICLE 16.                                              DEFINITIONS.

 

16.1         “Affiliate”
means any entity other than a Subsidiary, if the Company and/or one or more
Subsidiaries own not less than 50% of such entity.

 

16.2         “Award” means
any award of an Option, an SAR, a Restricted Share or a Stock Unit under the
Plan.

 

16.3         “Board” means
the Company’s Board of Directors, as constituted from time to time.

 

16.4         “Change in Control”
means:

 

12

 

(a)           The consummation of a merger
or consolidation of the Company or any other corporate reorganization or
business combination transaction of the Company with or into another
corporation, entity or person;

 

(b)           The sale, transfer or other
disposition of all or substantially all of the Company’s assets;

 

(c)           A change in the composition
of the Board, as a result of which fewer than 50% of the incumbent directors
are directors who either:

 

(i)            Had been directors of the
Company on the date 24 months prior to the date of such change in the
composition of the Board (the “Original Directors”); or

 

(ii)           Were appointed to the Board,
or nominated for election to the Board, with the affirmative votes of at least
a majority of the aggregate of (A) the Original Directors who were in
office at the time of their appointment or nomination and (B) the
directors whose appointment or nomination was previously approved in a manner
consistent with this Paragraph (ii); or

 

(d)           Any transaction as a result
of which any person is the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing at least 50% of the total voting power represented by the Company’s
then outstanding voting securities.  For
purposes of this Subsection (d), the term “person” shall have the same
meaning as when used in sections 13(d) and 14(d) of the Exchange
Act but shall exclude (i) a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or of a Parent or Subsidiary and
(ii) a corporation owned directly or indirectly by the stockholders of the
Company in substantially the same proportions as their ownership of the common
stock of the Company.

 

A
transaction shall not constitute a Change in Control if its sole purpose is to
change the state of the Company’s incorporation or 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.

 

16.5         “Code” means the
Internal Revenue Code of 1986, as amended.

 

16.6         “Committee”
means the Compensation Committee of the Board, as further described in
Article 2.

 

16.7         “Common Share”
means one share of the common stock of the Company.

 

16.8         “Company” means
SemiLEDs Corporation, a Delaware corporation.

 

13

 

16.9         “Consultant”
means a consultant or adviser who provides bona fide services to the Company, a
Parent, a Subsidiary or an Affiliate as an independent contractor.

 

16.10       “Covered Employees”
means those persons identified by the Company who are or who may be subject to
the limitations of Code Section 162(m).

 

16.11       “Employee” means
a common-law employee of the Company, a Parent, a Subsidiary or an Affiliate.

 

16.12       “Exchange Act”
means the Securities Exchange Act of 1934, as amended.

 

16.13       “Exercise Price,”
in the case of an Option, means the amount for which one Common Share may be
purchased upon exercise of such Option, as specified in the applicable Stock
Option Agreement.  “Exercise Price,” in
the case of an SAR, means an amount, as specified in the applicable SAR
Agreement, which is subtracted from the Fair Market Value of one Common Share
in determining the amount payable upon exercise of such SAR.

 

16.14       “Fair Market Value”
means the market price of a Common Share as determined in good faith by the
Committee.  Such determination shall be
conclusive and binding on all persons. 
The Fair Market Value shall be determined by the following:

 

(i)       If the Common Shares are admitted
to trading on any established national stock exchange or market system on the
date in question then the Fair Market Value shall be equal to the closing sales
price for such Common Shares as quoted on such national exchange or system on
such date; or

 

(ii)      if the Common Shares are
admitted to quotation or are regularly quoted by a recognized securities dealer
but selling prices are not reported on the date in question, then the Fair
Market Value shall be equal to the mean between the bid and asked prices of the
Common Shares reported for such date.

 

In each case, the applicable price shall be the
price reported in The Wall Street Journal or such other source as the Committee
deems reliable; provided, however, that if there is no such reported price for
the Common Shares for the date in question, then the Fair Market Value shall be
equal to the price reported on the last preceding date for which such price
exists.  If neither (i) or (ii) are
applicable, then the Fair Market Value shall be determined by the Committee in
good faith on such basis as it deems appropriate.

 

16.15       “Immediate Family”
means, except as otherwise defined by the Committee, any child, sibling,
stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
sister-in-law, or brother-in-law, including adoptive relationships, any person
sharing the Participant’s household (other than a tenant or employee), a trust
in which these persons have more than fifty percent (50%) of the beneficial
interest, a foundation in which these persons (or the Participant) own more
than fifty percent (50%) or more of the voting interests.

 

14

 

16.16       “IPO Date” means
the effective date of the registration statement filed by the Company with the
Securities and Exchange Commission for its initial offering of Common Shares to
the public.

 

16.17       “ISO” means an
incentive stock option described in section 422(b) of the Code.

 

16.18       “NSO” means a
stock option not described in sections 422 or 423 of the Code.

 

16.19       “Option” means
an ISO or NSO granted under the Plan and entitling the holder to purchase
Common Shares.

 

16.20       “Optionee” means
an individual, estate or other person holding an Option or SAR.

 

16.21       “Outside Director”
means a member of the Board who is not an Employee.

 

16.22       “Parent” means
any corporation (other than the Company) in an unbroken chain of corporations
ending with the Company, if each of the corporations other than the Company
owns stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.  A corporation that attains the status of a
Parent on a date after the adoption of the Plan shall be considered a Parent
commencing as of such date.

 

16.23       “Participant”
means an individual, estate or other person holding an Award.

 

16.24       “Performance Goals”
means specific financial performance criteria determined by the Committee with
respect to each Performance Period utilizing one or more of the following
factors and any objectively verifiable adjustment(s) thereto permitted and
pre-established by the Committee in accordance with Code Section 162(m):
revenue, operating income, adjusted operating income (adjusted to add back
items such as non-cash stock compensation expense), EBITDA and/or net earnings
(either before or after interest, taxes, depreciation and amortization),
adjusted EBITDA, net income (either before or after taxes), earnings per share,
earnings as determined other than pursuant to United States generally accepted
accounting principles (“GAAP”), return on gross or net assets, return on
equity, return on invested capital, cash flow (including, but not limited to,
operating cash flow and free cash flow), operating or gross margins, net
margins, stock price appreciation, total stockholder return, customer
satisfaction metrics, customer count, customer retention, cost per customer
acquisition, and transaction volume, any of which may be measured with respect
to the Company, or any Subsidiary, affiliate or other business unit of the
Company, either in absolute terms, terms of growth or as compared to any
incremental increase, as compared to results of a peer group.  Awards that are not intended to comply with
Code Section 162(m) may take into account other factors (including
subjective factors).

 

15

 

The Committee may, in its discretion, provide that
one or more objectively determinable adjustments shall be made to one or more
of the Performance Goals. Such adjustments may include one or more of the
following: (i) items related to a change in accounting principle; (ii) items
relating to financing activities; (iii) expenses for restructuring or productivity
initiatives; (iv) other non-operating items; (v) items related to
acquisitions; (vi) items attributable to the business operations of any
entity acquired by the Company during the Performance Period; (vii) items
related to the disposal of a business or segment of a business; (viii) items
related to discontinued operations that do not qualify as a segment of a
business under GAAP; (ix) items attributable to any stock dividend, stock
split, combination or exchange of shares occurring during the Performance
Period; or (x) any other items of significant income or expense which are
determined to be appropriate adjustments; (xi) items relating to unusual
or extraordinary corporate transactions, events or developments, (xii) items
related to amortization of acquired intangible assets; (xiii) items that
are outside the scope of the Company’s core, on-going business activities; or (xiv) items
relating to any other unusual or nonrecurring events or changes in applicable
laws, accounting principles or business conditions. For all Awards intended to
comply with Code Section 162(m), such determinations shall be made within
the time prescribed by, and otherwise in compliance with, Section 162(m) of
the Code.

 

16.25       “Performance Period”
means any period not exceeding seven (7) years as determined by the
Committee, in its sole discretion.  The
Committee may establish different Performance Periods for different
Participants and the Committee may establish concurrent or overlapping
Performance Periods.

 

16.26       “Plan” means
this SemiLEDs Corporation 2010 Equity Incentive Plan, as amended from time to
time.

 

16.27       “Restricted Share”
means a Common Share awarded under the Plan.

 

16.28       “Restricted Stock Agreement”
means the agreement between the Company and the recipient of a Restricted Share
that contains the terms, conditions and restrictions pertaining to such
Restricted Share.

 

16.29       “SAR” means a
stock appreciation right granted under the Plan.

 

16.30       “SAR Agreement”
means the agreement between the Company and a Participant that contains the
terms, conditions and restrictions pertaining to his or her SAR.

 

16.31       “Service” means
service as an Employee, Outside Director or Consultant.

 

16.32       “Stock Option Agreement”
means the agreement between the Company and an Optionee that contains the
terms, conditions and restrictions pertaining to his or her Option.

 

16.33       “Stock Unit”
means a bookkeeping entry representing the equivalent of one Common Share, as
awarded under the Plan.

 

16

 

16.34       “Stock Unit Agreement”
means the agreement between the Company and the recipient of a Stock Unit that
contains the terms, conditions and restrictions pertaining to such Stock Unit.

 

16.35       “Subsidiary”
means any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company, if each of the corporations other than
the last corporation in the unbroken chain owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.  A
corporation that attains the status of a Subsidiary on a date after the
adoption of the Plan shall be considered a Subsidiary commencing as of such
date.

 

17

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00180-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00180-of-00352.parquet"}]]