Document:

Exhibit 10.12

 

[Non-Employee Director
Form]

 

NON-QUALIFIED STOCK OPTION AGREEMENT 

OF

REXNORD HOLDINGS, INC.

 

THIS AGREEMENT (this “Agreement”), dated as of [                   ]
is made by and between Rexnord Holdings, Inc., a Delaware corporation (the
“Company”), and [                  ],
a non-employee director of the Company (as defined herein) (the “Optionee”)

 

WHEREAS, the Company wishes to carry out the 2006 Stock Option Plan of Rexnord
Holdings, Inc. (as may be amended from time to time, the “Plan”),
the terms of which are hereby incorporated by reference and made a part of this
Agreement; and

 

WHEREAS, in consideration for the Optionee’s agreement to serve as a member of
the Board, the Board has determined that it would be to the advantage and best interest
of the Company and its stockholders to grant the Optionee the Non-Qualified
Stock Option to purchase shares of the Company’s common stock, par value $0.01
per share (“Common Stock”), provided for herein.

 

NOW, THEREFORE, in consideration of the mutual covenants herein contained and other
good and valuable consideration, receipt and sufficiency of which is hereby
acknowledged, the parties hereto do hereby agree as follows:

 

ARTICLE I

DEFINITIONS

 

Capitalized
terms used in this Agreement and not defined herein shall have the meaning
given to such terms in the Plan.  The
singular pronoun shall include the plural, where the context so indicates.

 

ARTICLE II

GRANT OF OPTION

 

Section 2.1                                      Grant of Option

 

In
consideration of the Optionee’s service as a member of the Board, and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, on the date hereof the Company irrevocably grants to the Optionee
the Option to purchase any part or all of an aggregate of 4,211 shares of
Common Stock upon the terms and conditions set forth in the Plan and this
Agreement.

 

Section 2.2                                      Option Subject to Plan

 

The
Option granted hereunder is subject to the terms and provisions of the Plan,
including without limitation, Article V and Sections 7.1, 7.2, 7.3 and
7.10 thereof.

 

 

Section 2.3                                      Option Price

 

The
purchase price of the shares of Common Stock covered by the Option shall be
$47.50 per share (without commission or other charge).

 

ARTICLE III

EXERCISABILITY

 

Section 3.1                                      Exercisability 

 

The
Option shall become vested as to 100% of the shares of Common Stock subject
thereto on the first anniversary of the date hereof; provided that the Optionee
is a member of the Board on such anniversary date.

 

Section 3.2                                      Expiration of Option

 

The
Option may not be exercised to any extent by any Person after the first to
occur of the following events:

 

(a)                                  The expiration of ten years from the date the
Option was granted; or

 

(b)                                 The first anniversary of the Optionee’s
Termination of Directorship for any reason.

 

Section 3.3                                      Partial Exercise

 

Any
portion of the Option or the entire Option may be exercised in whole or in part
at any time prior to the time when the Option or portion thereof expires; provided, however,
that each partial exercise shall be for not less than 100 shares of Common
Stock and shall be for whole shares of Common Stock only.

 

Section 3.4                                      Exercise of Option

 

The
exercise of the Option shall be governed by the terms of this Agreement and the
terms of the Plan, including without limitation, the provisions of Article V
of the Plan, which, among other things, require that the Optionee (or, in the
event of the Optionee’s death or disability, the Optionee’s Eligible
Representative) deliver an executed copy of a Joinder to the Stockholders’
Agreement designated by the Company (in the form attached to such Stockholders’
Agreement) to the Secretary as a condition to the exercise of the Option.

 

ARTICLE IV

OTHER PROVISIONS

 

Section 4.1                                      Optionee’s Service as a Director

 

Nothing
in this Agreement or in the Plan shall confer upon the Optionee any right to
continue in the service of the Company or any of its affiliates (whether as a
director or otherwise).

 

 

Section 4.2                                      Shares Subject to Plan and Stockholder
Agreement

 

The
Optionee acknowledges that any shares of Common Stock acquired upon exercise of
the Option are subject to the terms of the Plan and the Stockholders’
Agreement, including without limitation, the restrictions set forth in Section 5.6
of the Plan.

 

Section 4.3                                      Construction

 

This
Agreement shall be administered, interpreted and enforced under the laws of the
state of New York, without regard to conflicts of laws provisions that would
give effect to the laws of another jurisdiction.

 

Section 4.4                                      Conformity to Securities Laws

 

The
Optionee acknowledges that the Plan is intended to conform to the extent
necessary with all provisions of the Securities Act and the Exchange Act and
any and all regulations and rules promulgated thereunder by the Securities
and Exchange Commission, including without limitation, Rule 16b-3.  Notwithstanding anything herein to the
contrary, the Plan shall be administered, and the Option is granted and may be
exercised, only in such a manner as to conform to such laws, rules and
regulations.  To the extent permitted by
applicable law, the Plan and this Agreement shall be deemed amended to the
extent necessary to conform to such laws, rules and regulations.

 

Section 4.5                                      Entire Agreement

 

The
parties hereto acknowledge that this Agreement and the Plan set forth the
entire agreement and understanding of the parties and supersede all prior
written or oral agreements or understandings with respect to the subject matter
hereof.  The obligations imposed by this
Agreement are severable and should be construed independently of each
other.  The invalidity of one provision
shall not affect the validity of any other provision.  If any provision of this Agreement shall be
invalid or unenforceable, in whole or in part, or as applied to any
circumstances, under the laws of any jurisdiction which may govern for such
purpose, then such provision shall be deemed, to the extent allowed by the laws
of such jurisdiction, to be modified or restricted to the extent and in the
manner necessary to render the same valid and enforceable, either generally or
as applied to such circumstance, or shall be deemed exercised from this
Agreement, as the case may require, and this Agreement shall be construed and
enforced to the maximum extent permitted by law, as if such provision had been
originally incorporated herein as so modified or restricted, or as if such
provision had not been originally incorporated herein, as the case may be.

 

 

Section 4.6                                      Amendment

 

The
Board at any time, and from time to time, may amend the terms of this
Agreement, provided, however,
that the rights of the Optionee shall not be adversely impaired without the
Optionee’s written consent.  The Company
shall provide the Optionee with notice and a copy of any amendment made to this
Agreement

 

Section 4.7                                      Arbitration; Waiver of Jury Trial

 

Any
dispute or controversy arising under, out of, or in connection with or in
relation to this Agreement or the Plan shall be finally determined and settled
by arbitration in New York, New York in accordance with the Commercial Rules of
the American Arbitration Association, and judgment upon the award may be
entered in any court having jurisdiction. 
Within 20 days of the conclusion of the arbitration hearing, the
arbitrator shall prepare written findings of fact and conclusions of law.  It is mutually agreed that the written
decision of the arbitrator shall be valid, binding, final and non-appealable; provided, however, that the parties hereto
agree that the arbitrator shall not be empowered to award punitive damages
against any party to such arbitration. 
To the extent permitted by law, the arbitrator’s fees and expenses will
be borne equally by each party.  In the
event that an action is brought to enforce the provisions of this Agreement or
the Plan pursuant to this Section 4.7, each party shall pay its own
attorney’s fees and expenses regardless of whether in the opinion of the court
or arbitrator deciding such action there is a prevailing party.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL, INCLUDING TRIAL BY JURY, IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THE PLAN OR THIS AGREEMENT.

 

Section 4.8                                      Notices

 

All
notices, requests, consents and other communications hereunder to any party
hereto shall be deemed to be sufficient if contained in a written instrument
and shall be deemed to have been duly given when delivered in person, by
telecopy, by nationally-recognized overnight courier, or by first class
registered or certified mail, postage prepaid, addressed to such party at the
address set forth below or such other address as may hereafter be designated in
writing by the addressee to the addressor:

 

(i)                                     if to the Company, to:

 

Rexnord
Holdings, Inc.

4701 Greenfield Avenue

Milwaukee, WI 53214

Attention:  Patty Whaley

 

with
copies to:

 

Rexnord
Holdings, Inc.

c/o
Apollo Management, L.P.

10250
Constellation Blvd, Suite 2900

Los
Angeles, CA 90067

 

 

Fax:  (310) 843-1933

Attention:  Larry Berg

 

and

 

Rexnord
Holdings, Inc.

c/o Apollo Management, L.P.

9 West 57th Street, 43rd Floor

New York, NY  10019

Fax:  (212) 515-3288

Attention:   Steven Martinez

 

and

 

O’Melveny &
Myers LLP

Times Square Tower

7 Times Square

New York, NY  10036

Fax:  (212) 326-2061

Attention:  John M. Scott, Esq.

 

(ii)                                  if to the Optionee, to the Optionee’s home
address on file with the Company.

 

Section 4.9                                      Counterparts

 

This
Agreement may be executed in several counterparts, including via facsimile
transmission, each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.

 

[Signature Page to Follow]

 

 

IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto
as of the day, month and year first set forth above.

 

	
   

  	
  THE
  COMPANY:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Rexnord Holdings, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Print Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE
  OPTIONEE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  	
   

  
	
   

  	
  Print Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Optionee’s
  Address:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Optionee’s
  Taxpayer Identification Number:Exhibit
10.1

UTSTARCOM,
INC.

2006
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, Restricted Stock,
Restricted Stock Units, Stock Appreciation Rights, Performance Units,
Performance Shares and other stock or cash awards as the Administrator may
determine.

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)                                  “Annual
Revenue” means the Company’s or a business unit’s net sales for the Performance
Period, determined in accordance with generally accepted accounting principles;
provided, however, that prior to the Performance Period, the Administrator
shall determine whether any significant item(s) shall be excluded or included from
the calculation of Annual Revenue with respect to one or more Participants.

(d)                                 “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.

(e)                                  “Award”
means, individually or collectively, a grant under the Plan of Options,
Restricted Stock, Restricted Stock Units, Stock Appreciation Rights,
Performance Units, Performance Shares and other stock or cash awards as the
Administrator may determine.

(f)                                    “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.

 

 

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

(h)                                 “Cash
Collections” means the actual cash or other freely negotiable
consideration, in any currency, received in satisfaction of accounts receivable
created by the sale of any Company products or services.

(i)                                     “Change
in Control” means the occurrence of any of the following events:

(i)                            Any
“person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act),
directly or indirectly, of securities of the Company representing fifty percent
(50%) or more of the total voting power represented by the Company’s then
outstanding voting securities;

(ii)                         The
consummation of the sale or disposition by the Company of all or substantially
all of the Company’s assets;

(iii)                      A
change in the composition of the Board occurring within a two-year period, as a
result of which fewer than a majority of the directors are Incumbent
Directors.  “Incumbent Directors” means
directors who either (A) are Directors as of the effective date of the Plan, or
(B) are elected, or nominated for election, to the Board with the affirmative
votes of at least a majority of the Incumbent Directors at the time of such
election or nomination (but will not include an individual whose election or
nomination is in connection with an actual or threatened proxy contest relating
to the election of directors to the Company); or

(iv)                     The
consummation of a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or its parent) at least fifty
percent (50%) of the total voting power represented by the voting securities of
the Company or such surviving entity or its parent outstanding immediately
after such merger or consolidation.

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

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

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

(m)                               “Company”
means UTStarcom, Inc., a Delaware corporation, or any successor thereto.

(n)                                 “Consultant”
means any person, including an advisor, engaged by the Company or its
Affiliates to render services to such entity.

 2
 

 

 

(o)                                 “Customer
Satisfaction MBOs” means as to any Participant, the objective and
measurable individual goals set by a “management by objectives” process and
approved by the Administrator, which goals relate to the satisfaction of
external or internal customer requirements.

(p)                                 “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.

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

(r)                                    “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.

(s)                                  “Earnings
Per Share” means as to any Performance Period, the Company’s Net Income or
a business unit’s Pro Forma Net Income, divided by a weighted average number of
Shares outstanding and dilutive common equivalent Shares deemed outstanding.

(t)                                    “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.

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

(v)                                 “Fair
Market Value” means, as of any date, the value of Common Stock as the
Administrator may determine in good faith by reference to the price of such
stock on any established stock exchange or a national market system on the day
of determination if the Common Stock is so listed on any established stock
exchange or a national market system.  If
the Common Stock is not listed on any established stock exchange or a national
market system, the value of the Common Stock will be determined by the
Administrator in good faith.

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

(x)                                   “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.

(y)                                 “Net
Income” means as to any Performance Period, the income after taxes of the
Company determined in accordance with generally accepted accounting principles,
provided that prior to the Performance Period, the Administrator shall
determine whether any significant item(s) shall be included or excluded from
the calculation of Net Income with respect to one or more participants.

(z)                                   “New
Orders” means as to any Performance Period, the firm orders for a system,
product, part, or service that are being recorded for the first time as defined
in the Company’s order recognition policy.

 3
 

 

 

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

(bb)                          “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.

(cc)                            “Operating
Profit” means as to any Performance Period, the difference between revenue
and related costs and expenses, excluding income derived from sources other
than regular activities and before income deductions.

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

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

(ff)                                “Participant” means the holder of an
outstanding Award.

(gg)                          “Performance
Goals” will have the meaning set forth in Section 11 of the Plan.

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

(ii)                                  “Performance
Share” means 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.

(jj)                                  “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.

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

(ll)                                  “Plan”
means this 2006 Equity Incentive Plan.

(mm)                      “Pro
Forma Net Income” means as to any business unit for any Performance Period,
the Net Income of such business unit, minus allocations of designated corporate
expenses.

(nn)                          “Product
Shipments” means as to any Performance Period, the quantitative and
measurable number of units of a particular product that shipped during such Performance
Period.

(oo)                          “Restricted
Stock” means Shares issued pursuant
to an Award of Restricted Stock under Section 8 of the Plan, or issued
pursuant to the early exercise of an Option.

 4
 

 

 

(pp)                          “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.

(qq)                          “Return
on Designated Assets” means as to any Performance Period, the Pro Forma Net
Income of a business unit, divided by the average of beginning and ending
business unit designated assets, or Net Income of the Company, divided by the
average of beginning and ending designated corporate assets.

(rr)                                “Return
on Equity” means, as to any Performance Period, the percentage equal to the
value of the Company’s or any business unit’s common stock investments at the
end of such Performance Period, divided by the value of such common stock
investments at the start of such Performance Period, excluding any common stock
investments so designated by the Administrator.

(ss)                            “Return
on Sales” means as to any Performance Period, the percentage equal to the
Company’s Net Income or the business unit’s Pro Forma Net Income, divided by
the Company’s or the business unit’s Annual Revenue.

(tt)                                “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.

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

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

(ww)                      “Share”
means a share of the Common Stock, as adjusted in accordance with
Section 14 of the Plan.

(xx)                              “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.

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

(zz)                              “Successor
Corporation” has the meaning given to such term in Section 14(c) of the
Plan.

3.                                       Stock Subject to the Plan.

(a)                                  Stock
Subject to the Plan.  Subject to the
provisions of Section 14 of the Plan,
the maximum aggregate number of Shares that may be awarded and sold
under the Plan is 4,500,000 Shares plus
(i) any Shares that, as of the date of stockholder approval of this Plan, have
been reserved but not issued pursuant to any awards granted under the Company’s
1997 Stock Plan (the “1997 Plan”), the Company’s Amended 2001 Director
Option Plan (the “2001 Plan”), and the Company’s 2003 Non-Statutory
Stock Option Plan (the “2003 Plan”) and are not subject to any awards
granted thereunder, and (ii) any Shares subject to stock options or
similar awards granted under the 1997 Plan, the 2001 Plan, and the 2003 Plan that
expire or otherwise terminate without 

 5
 

 

 

having
been exercised in full and Shares issued pursuant to awards granted under the
1997 Plan, the 2001 Plan, and the 2003 Plan that are forfeited to or
repurchased by the Company.  The Shares
may be authorized, but unissued, or reacquired Common Stock.

(b)                                 Lapsed
Awards.  If an Award expires or
becomes unexercisable without having been exercised in full, or, with respect
to Restricted Stock, Restricted Stock Units, Performance Shares or Performance
Units, is forfeited to or repurchased by the Company, the unpurchased Shares
(or for Awards other than Options and 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, all of the Shares covered by the Award
(that is, Shares actually issued pursuant to a Stock Appreciation Right, as
well as the Shares that represent payment of the exercise price) will cease to
be available under the Plan. 
However, 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 unvested Shares of
Restricted Stock, Restricted Stock Units, Performance Shares or Performance
Units are repurchased by the Company or are forfeited to the Company, such
Shares will become available for future grant under the Plan.  Shares used to pay the tax and exercise price
of an Award will not 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 provided in Section 14, 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, any Shares that become available for issuance
under the Plan under this Section 3(b).

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 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:

 6
 

 

 

(i)                            to
determine the Fair Market Value;

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

(iii)                      to
determine the terms and conditions, not inconsistent with the terms of the
Plan, of any Award granted hereunder;

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

(v)                        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;

(vi)                     to
modify or amend each Award (subject to Section 19(c) of the Plan). 
Notwithstanding the previous sentence, the Administrator may not modify
or amend an Option or Stock Appreciation Right to reduce the exercise price of
such Option or Stock Appreciation Right after it has been granted (except for
adjustments made pursuant to Section 14), and neither may the Administrator cancel
any outstanding Option or Stock Appreciation Right and immediately replace it
with a new Option or Stock Appreciation Right with a lower exercise price;

(vii)                  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;

(viii)               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

(ix)                       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.

5.                                       Eligibility.  Nonstatutory Stock Options, Restricted Stock,
Restricted Stock Units, Stock Appreciation Rights, Performance Units, Performance
Shares and such other cash or stock awards as the Administrator determines 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.  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 

 7
 

 

 

(under all plans of the Company and any Parent or Subsidiary) exceeds
$100,000, such Options will be treated as Nonstatutory Stock Options.  For purposes of this Section 6(a),
Incentive Stock Options will be taken into account in the order in which they
were granted.  The Fair Market Value of
the Shares will be determined as of the time the Option with respect to such
Shares is granted.

(b)                                 Number
of Shares.  The Administrator will
have complete discretion to determine the number of Options granted to any
Participant, provided that during any Fiscal Year, no Participant will be
granted Options covering more than 1,000,000 Shares.  Notwithstanding the foregoing limitation, in
connection with a Participant’s initial service as an Employee, an Employee may
be granted Options covering up to an additional 2,000,000 Shares.

(c)                                  Term
of Option.  The Administrator will determine
the term of each Option in its sole discretion. 
Any Option granted under the Plan will not be exercisable after the
expiration of seven (7) years from the date of grant or such shorter term as
may be provided in the Award Agreement. 
Moreover, 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.

(d)                                 Option
Exercise Price and Consideration.

(i)                            Exercise
Price.  The per share exercise price
for the Shares to be issued pursuant to exercise of an Option will be
determined by the Administrator, but will be no less than 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 who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the per Share exercise price
will be no less than 110% of the Fair Market Value per Share on the date of
grant.  Notwithstanding the foregoing
provisions of this Section 6(c), Options may be granted with a per Share
exercise price of less than 100% of the Fair Market Value per Share on the date
of grant pursuant to a transaction described in, and in a manner consistent
with, Section 424(a) of the Code. 
The Administrator may not modify or amend an Option to reduce the
exercise price of such Option after it has been granted (except for adjustments
made pursuant to Section 14 of the Plan) nor may the Administrator cancel any
outstanding Option and replace it with a new Option, Stock Appreciation Right,
or other Award with a lower exercise price, unless, in either case, such action
is approved by the Company’s stockholders.

(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.

 8
 

 

 

(e)                                  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 specify 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 an
applicable withholding taxes).  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 14 of
the Plan.

(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 

 9
 

 

 

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 may also 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 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.

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 1,000,000
Shares.  Notwithstanding the foregoing
limitation, in connection with a Participant’s initial service as an Employee,
an Employee may be granted Stock Appreciation Rights covering up to an
additional 2,000,000 Shares.

(c)                                  Exercise
Price and Other Terms.  The
Administrator, subject to the provisions of the Plan, will have complete
discretion to determine the terms and conditions of Stock Appreciation Rights
granted under the Plan, provided, however, that the exercise price will be not less than 100% of the Fair Market Value
of a Share on the date of grant.  The
Administrator may not modify or amend a Stock Appreciation Right to reduce the
exercise price of such Stock Appreciation Right after it has been granted
(except for adjustments made pursuant to Section 14 of the Plan) nor may the
Administrator cancel any outstanding Stock Appreciation Right and replace it
with a new Stock Appreciation Right, Option, or other Award with a lower
exercise price, unless, in either case, such action is approved by the Company’s
stockholders.

(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
conditions of exercise, and such other terms and conditions as the
Administrator, in its sole discretion, will determine.

 10
 

 

 

(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.  Notwithstanding the foregoing,
the rules of Section 6(e) 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.  Notwithstanding the foregoing sentence,
during any Fiscal Year no Participant will receive more than an aggregate of 300,000
Shares of Restricted Stock; provided, however, that in connection with a
Participant’s initial service as an Employee, an Employee may be granted an
aggregate of up to an additional 600,000 Shares of Restricted Stock.  Unless the Administrator determines
otherwise, Shares of Restricted Stock will be held by the Company as escrow
agent until the restrictions on such Shares have lapsed.

(c)                                  Transferability.  Except as provided in this Section 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.  The Administrator, in its discretion, may
accelerate the time at which any restrictions will lapse or be removed.

 11
 

 

 

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

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

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

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.  Each Restricted Stock
Unit grant will be evidenced by an Award Agreement that will specify such other
terms and conditions as the Administrator, in its sole discretion, will
determine, including all terms, conditions, and restrictions related to the
grant, the number of Restricted Stock Units and the form of payout, which,
subject to Section 9(d), may be left to the discretion of the
Administrator.  Notwithstanding the
anything to the contrary in this subsection (a), during any Fiscal Year of the
Company, no Participant will receive more than an aggregate of 300,000
Restricted Stock Units; provided, however, that in connection with a
Participant’s initial service as an Employee, an Employee may be granted an
aggregate of up to an additional 600,000 Restricted Stock Units.

(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.  After the grant of Restricted Stock Units,
the Administrator, in its sole discretion, may reduce or waive any restrictions
for such Restricted Stock Units.  Each
Award of Restricted Stock Units will be evidenced by an Award Agreement that
will specify the vesting criteria, and such other terms and conditions as the
Administrator, in its sole discretion, will determine.

(c)                                  Earning Restricted Stock Units.  Upon
meeting the applicable vesting criteria, the Participant will be entitled to
receive a payout as specified in the Award Agreement.  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.

(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.  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 be available for
grant under the Plan.

 12
 

 

 

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

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/Shares granted to each Participant provided that
during any Fiscal Year, (a) no Participant will receive Performance Units
having an initial value greater than $2,000,000, and (b) no Participant will
receive more than 300,000 Performance Shares. 
Notwithstanding the foregoing limitation, in connection with a Participant’s
initial service as an Employee, an Employee may be granted up to an additional 600,000
Performance Shares and additional Performance Units having an initial value up
to $2,000,000.

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

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

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

 13
 

 

 

(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.

11.                                 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 one or more of
the following measures: (a) Annual Revenue, (b) Cash Collections, (c)
Customer Satisfaction MBOs, (d) Earnings Per Share, (e) Net Income, (f) New
Orders, (g) Operating Profit, (h) Pro Forma Net Income, (i) Return on
Designated Assets, (j) Return on Equity, (k) Return on Sales, and (l) Product
Shipments.  Any Performance Goals may be
used to measure the performance of the Company as a whole or a business unit of
the Company 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.  Any criteria used may be (i) measured in
absolute terms, (ii) compared to another company or companies, (iii) measured
against the performance of the Company as a whole or a segment of the Company
and/or (iv) measured on a pre-tax or post-tax basis (if applicable).  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.

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

13.                                 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.  With the approval of the Administrator, a
Participant may, in a manner specified by the Administrator, (a) transfer
an Award to a Participant’s spouse or former spouse pursuant to a
court-approved domestic relations order which relates to the provision of child
support, alimony payments or marital property rights, and (b) transfer an
Option by bona fide gift and not for any consideration, to (i) a member or
members of the Participant’s immediate family, (ii) a trust established
for the exclusive benefit of the Participant and/or member(s) of the
Participant’s immediate family, (iii) a partnership, limited liability
company of other entity whose only partners or members are the Participant
and/or member(s) of the Participant’s immediate family, or (iv) a
foundation in which the Participant and/or member(s) of the Participant’s
immediate family control the management of the foundation’s assets.  For purposes of this Section 13, “immediate
family” shall mean the Participant’s spouse, former spouse, children,
grandchildren, parents, grandparents, siblings, nieces, nephews,
parents-in-law, sons-in-law, daughters-in-law, 

 14
 

 

 

brothers-in-law,
sisters-in-law, including adoptive or step relationships and any person sharing
the Participant’s household (other than as a tenant or employee).

14.                                 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, may (in its sole
discretion) 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, and the numerical Share limits set forth in
Sections 3, 6, 7, 8, 9 and 10.

(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 Change
in Control, each outstanding Award will be assumed or an equivalent option or
right substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation (the “Successor Corporation”).  In the event that the Successor Corporation
refuses to assume or substitute for the Award, the Participant will fully vest
in and have the right to exercise all of his or her outstanding Options and
Stock Appreciation Rights, including Shares as to which such Awards would not
otherwise be vested or exercisable, all restrictions on Restricted Stock will
lapse, and, with respect to Restricted Stock Units, Performance Shares and
Performance Units, all Performance Goals or other vesting criteria will be
deemed achieved at target levels and all other terms and conditions met.  In addition, if the Successor Corporation
refuses to assume or substitute an Option or Stock Appreciation Right 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 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, 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 

 15
 

 

 

payout of a
Restricted Stock Unit, Performance Share or Performance Unit, 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 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 14(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.

15.                                 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 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 amount required to be withheld, (c) delivering to the
Company already-owned Shares having a Fair Market Value equal to the amount
required to be withheld, or (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.  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.

16.                                 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.

17.                                 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.

 16
 

 

 

18.                                 Term
of Plan.  Subject to Section 22 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 unless terminated earlier under
Section 19 of the Plan.

19.                                 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.

20.                                 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.

21.                                 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.

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

 17

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