Document:

Exhibit 10.2

 

TOWER TECH HOLDINGS INC.

2007 EQUITY INCENTIVE PLAN

 

SECTION 1.

DEFINITIONS

 

As used herein, the following terms shall have the meanings indicated
below:

 

(a)           “Administrator”  shall mean the Board of Directors of the
Company (herein after referred to as the “Board”), or one or more Committees
appointed by the Board, as the case may be.

 

(b)           “Affiliate(s)” shall
mean a Parent or Subsidiary of the Company.

 

(c)           “Award” shall mean any grant of an
Option, Restricted Stock Award, Stock Appreciation Right or Performance Award.

 

(d)           “Committee” shall mean a Committee of
two or more directors who shall be appointed by and serve at the pleasure of
the Board.  To the extent necessary for
compliance with Rule 16b-3, or any successor provision, each of the members
of the Committee shall be a “non-employee director.”  Solely for purposes of this Section 1(d),
“non-employee director” shall have the same meaning as set forth in Rule 16b-3,
or any successor provision, as then in effect, of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended.

 

(e)           The “Company” shall mean Tower Tech
Holdings Inc., a Nevada corporation.

 

(f)            “Fair Market Value”
as of any date shall mean (i) if such stock is listed on the Nasdaq Global
Market, Nasdaq Capital Market, or an established stock exchange, the price of
such stock at the close of the regular trading session of such market or
exchange on such date, as reported by The Wall Street Journal or a
comparable reporting service, or, if no sale of such stock shall have occurred
on such date, on the next preceding date on which there was a sale of stock; (ii) if
such stock is not so listed on the Nasdaq Global Market, Nasdaq Capital Market,
or an established stock exchange, the average of the closing “bid” and “asked”
prices quoted by the OTC Bulletin Board, the National Quotation Bureau, or any
comparable reporting service on such date or, if there are no quoted “bid” and “asked”
prices on such date, on the next preceding date for which there are such
quotes; or (iii) if such stock is not publicly traded as of such date, the
per share value as determined by the Board, or the Committee, in its sole
discretion by applying principles of valuation with respect to the Company’s
Common Stock.

 

(g)           The “Internal
Revenue Code” or “Code” is the Internal Revenue Code of 1986, as amended from
time to time.

 

 

(h)           “Option” means an
incentive stock option or nonqualified stock option granted pursuant to the
Plan.

 

(i)            “Parent” shall mean
any corporation which owns, directly or indirectly in an unbroken chain, fifty
percent (50%) or more of the total voting power of the Company’s outstanding
stock.

 

(j)            The “Participant”
means (i) a key employee or officer of the Company or any Affiliate to
whom an incentive stock option has been granted pursuant to Section 9; (ii) a
consultant or advisor to, or director, key employee or officer, of the Company
or any Affiliate to whom a nonqualified stock option has been granted pursuant
to Section 10; (iii) a consultant or advisor to, or director, key
employee or officer, of the Company or any Affiliate to whom a Restricted Stock
Award has been granted pursuant to Section 11; (iv) a consultant or
advisor to, or director, key employee or officer, of the Company or any
Affiliate to whom a Performance Award has been granted pursuant to Section 12;
or (v) a consultant or advisor to, or director, key employee or officer,
of the Company or any Affiliate to whom a Stock Appreciation Right has been
granted pursuant to Section 13.

 

(k)           “Performance Award”
shall mean any Performance Shares or Performance Units granted pursuant to Section 12
hereof.

 

(l)            “Performance Objective(s)” shall
mean one or more performance objectives established by the Administrator, in
its sole discretion, for Awards granted under this Plan.  Performance Objectives may include, but shall
not be limited to, any one, or a combination of, (i) revenue, (ii) net
income, (iii) earnings per share, (iv) return on equity, (v) return
on assets, (vi) increase in revenue, (vii) increase in share price or
earnings, (viii) return on investment, or (ix) increase in market
share, in all cases including, if selected by the Administrator, threshold,
target and maximum levels.

 

(m)          “Performance Period”
shall mean the period, established at the time any Performance Award is granted
or at any time thereafter, during which any Performance Objectives specified by
the Administrator with respect to such Performance Award are to be measured.

 

(n)           “Performance Share”
shall mean any grant pursuant to Section 12 hereof of an Award, which
value, if any, shall be paid to a Participant by delivery of shares of Common
Stock of the Company upon achievement of such Performance Objectives during the
Performance Period as the Administrator shall establish at the time of such
grant or thereafter.

 

(o)           “Performance Unit”
shall mean any grant pursuant to Section 12 hereof of an Award, which
value, if any, shall be paid to a Participant by delivery of cash upon
achievement of such Performance Objectives during the Performance Period as the
Administrator shall establish at the time of such grant or thereafter.

 

 

(p)           The “Plan” means the
Tower Tech Holdings Inc. 2007 Equity Incentive Plan, as amended hereafter from
time to time, including the form of Agreements as they may be modified by the
Administrator from time to time.

 

(q)           “Restricted Stock
Award” shall mean any grant of restricted shares of Stock of the Company
pursuant to Section 11 hereof.

 

(r)            “Stock,” “Option
Stock” or “Common Stock” shall mean the common stock, $0.001 par value of the
Company reserved for Options and Awards pursuant to this Plan.

 

(s)           “Stock Appreciation
Right” shall mean a grant pursuant to Section 13 hereof.

 

(t)            A “Subsidiary”
shall mean any corporation of which fifty percent (50%) or more of the total
voting power of the Company’s outstanding Stock is owned, directly or
indirectly in an unbroken chain, by the Company.

 

SECTION 2.

PURPOSE

 

The purpose of the Plan is to promote the success of the Company and
its Affiliates by facilitating the employment and retention of competent
personnel and by furnishing incentive to officers, directors, employees,
consultants, and advisors upon whose efforts the success of the Company and its
Affiliates will depend to a large degree.

 

It is the intention of the Company to carry out the Plan through the
granting of Options which will qualify as “incentive stock options” under the
provisions of Section 422 of the Internal Revenue Code, or any successor
provision, pursuant to Section 9 of this Plan; through the granting of “nonqualified
stock options” pursuant to Section 10 of this Plan; through the granting
of Restricted Stock Awards pursuant to Section 11 of this Plan; through
the granting of Performance Awards pursuant to Section 12 of this Plan;
and through the granting of Stock Appreciation Rights pursuant to Section 13
of this Plan.  Adoption of this Plan
shall be and is expressly subject to the condition of approval by the
stockholders of the Company within twelve (12) months before or after the adoption
of the Plan by the Board.  Any incentive
stock options granted after adoption of the Plan by the Board shall be treated
as nonqualified stock options if stockholder approval is not obtained within
such twelve-month period.

 

SECTION 3.

EFFECTIVE DATE OF PLAN

 

The Plan shall be effective as of the date of adoption by the Board,
subject to approval by the stockholders of the Company as required in Section 2.

 

 

SECTION 4.

ADMINISTRATION

 

The Plan shall be administered by the Board or by a Committee which may
be appointed by the Board from time to time to administer the Plan (hereinafter
collectively referred to as the “Administrator”).  Except as otherwise provided herein, the
Administrator shall have all of the powers vested in it under the provisions of
the Plan, including but not limited to exclusive authority to determine, in its
sole discretion, whether an Award shall be granted; the individuals to whom,
and the time or times at which, Awards shall be granted; the number of shares
subject to each Award; the option price, if any; and the performance criteria,
if any, and any other terms and conditions of each Award.  The Administrator shall have full power and
authority to administer and interpret the Plan, to make and amend rules,
regulations and guidelines for administering the Plan, to prescribe the form
and conditions of the respective agreements evidencing each Award (which may
vary from Participant to Participant), and to make all other determinations
necessary or advisable for the administration of the Plan.  The Administrator’s interpretation of the
Plan, and all actions taken and determinations made by the Administrator
pursuant to the power vested in it hereunder, shall be conclusive and binding
on all parties concerned.

 

No member of the Board or the Committee shall be liable for any action
taken or determination made in good faith in connection with the administration
of the Plan.  In the event the Board
appoints a Committee as provided hereunder, any action of the Committee with
respect to the administration of the Plan shall be taken pursuant to a majority
vote of the Committee members or pursuant to the written resolution of all
Committee members.

 

SECTION 5.

PARTICIPANTS

 

The Administrator shall from time to time, at its discretion and without
approval of the stockholders, designate those employees, officers, directors,
consultants, and advisors of the Company or of any Affiliate to whom Awards
shall be granted under this Plan; provided, however, that consultants or
advisors shall not be eligible to receive Awards hereunder unless such
consultant or advisor renders bona fide services to the Company or any
Affiliate and such services are not in connection with the offer or sale of
securities in a capital raising transaction and do not directly or indirectly
promote or maintain a market for the Company’s securities.  The Administrator may grant additional Awards
under this Plan to some or all Participants then holding Awards, or may grant
Awards solely or partially to new Participants. In designating Participants,
the Administrator shall also determine the number of shares to be optioned or
awarded to each such Participant and the performance criteria applicable to
each Performance Award. The Administrator may from time to time designate
individuals as being ineligible to participate in the Plan.

 

 

SECTION 6.

STOCK

 

The Stock to be optioned
under this Plan shall consist of authorized but unissued shares of common
stock.  Four million two hundred thousand
(4,200,000) shares of common stock shall be reserved and available for Awards
under the Plan; provided, however, that the total number of shares reserved for
Awards under this Plan shall be subject to adjustment as provided in Section 14
of the Plan; and provided, further, that all shares reserved and available
under the Plan shall constitute the maximum aggregate number of shares of Stock
that may be issued through incentive stock options.  The following shares of Stock shall continue
to be reserved and available for Awards granted pursuant to the Plan: (i) any
outstanding Award that expires for any reason, (ii) any portion of an
outstanding Option or Stock Appreciation Right that is terminated prior to
exercise, (iii) any portion of an Award that is terminated prior to the
lapsing of the risks of forfeiture on such Award, (iv) shares of common
stock used to pay the exercise price under any Award, (v) shares of common
stock used to satisfy any tax withholding obligation attributable to any Award,
whether such shares are withheld by the Company or tendered by the Participant,
and (vi) shares of Stock covered by an Award to the extent the Award is
settled in cash.

 

SECTION 7.

DURATION OF PLAN

 

Incentive stock options may be granted pursuant to the Plan from time
to time during a period of ten (10) years from the effective date as
defined in Section 3.  Other Awards
may be granted pursuant to the Plan from time to time after the effective date
of the Plan and until the Plan is discontinued or terminated by the
Administrator.

 

SECTION 8.

PAYMENT

 

Participants may pay for shares upon exercise of Options granted
pursuant to this Plan with cash, personal check, certified check or, if
approved by the Administrator in its sole discretion, previously-owned shares
of the Company’s common stock, or any combination thereof.  Any stock so tendered as part of such payment
shall be valued at such stock’s then Fair Market Value, or such other form of
payment as may be authorized by the Administrator.  The Administrator may, in its sole
discretion, limit the forms of payment available to the Participant and may
exercise such discretion any time prior to the termination of the Option
granted to the Participant or upon any exercise of the Option by the
Participant.  “Previously-owned shares”
means shares of the Company’s common stock which the Participant has owned for
at least six (6) months prior to the exercise of the Option, or for such
other period of time as may be required by generally accepted accounting
principles.

 

With respect to payment in the form of common stock of the Company, the
Administrator may require advance approval or adopt such rules as it deems
necessary to assure compliance 

 

 

with
Rule 16b-3, or any successor provision, as then in effect, of the General Rules and
Regulations under the Securities Exchange Act of 1934, if applicable.

 

SECTION 9.

TERMS
AND CONDITIONS OF INCENTIVE STOCK OPTIONS

 

Each incentive stock option
granted pursuant to this Section 9 shall be evidenced by a written
incentive stock option agreement (the “Option Agreement”).  The Option Agreement shall be in such form as
may be approved from time to time by the Administrator and may vary from
Participant to Participant; provided, however, that each Participant and each
Option Agreement shall comply with and be subject to the following terms and
conditions:

 

(a)           Number of Shares
and Option Price.  The Option
Agreement shall state the total number of shares covered by the incentive stock
option.  Except as permitted by Code Section 424(a),
or any successor provision, the option price per share shall not be less than
one hundred percent (100%) of the per share Fair Market Value of the Common
Stock on the date the Administrator grants the Option; provided, however, that
if a Participant owns stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or of its Parent
or any Subsidiary, the option price per share of an incentive stock option
granted to such Participant shall not be less than one hundred ten percent
(110%) of the per share Fair Market Value of the Company’s Common Stock on the
date of the grant of the Option.  The
Administrator shall have full authority and discretion in establishing the
option price and shall be fully protected in so doing.

 

(b)          Term and
Exercisability of Incentive Stock Option. 
The term during which any incentive stock option granted under the Plan
may be exercised shall be established in each case by the Administrator.  Except as permitted by Code Section 424(a),
in no event shall any incentive stock option be exercisable during a term of
more than ten (10) years after the date on which it is granted; provided,
however, that if a Participant owns stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or of its Parent or any Subsidiary, the incentive stock option granted to such
Participant shall be exercisable during a term of not more than five (5) years
after the date on which it is granted.

 

The Option Agreement shall state when the incentive stock option
becomes exercisable and shall also state the maximum term during which the
Option may be exercised.  In the event an
incentive stock option is exercisable immediately, the manner of exercise of the
Option in the event it is not exercised in full immediately shall be specified
in the Option Agreement.  The
Administrator may accelerate the exercisability of any incentive stock option
granted hereunder which is not immediately exercisable as of the date of grant.

 

(c)           Nontransferability.  No incentive stock option shall be
transferable, in whole or in part, by the Participant other than by will or by
the laws of descent and distribution. 
During the Participant’s lifetime, the incentive stock option may be
exercised only by the Participant.  If
the Participant shall attempt any transfer of any incentive stock option
granted under the Plan during 

 

 

the
Participant’s lifetime, such transfer shall be void and the incentive stock
option, to the extent not fully exercised, shall terminate.

 

(d)           No Rights as Stockholder.  A Participant (or the Participant’s successor
or successors) shall have no rights as a stockholder with respect to any shares
covered by an incentive stock option until the date the Participant is recorded
on the stock transfer books of the Company as the owner of the Stock.  No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property),
distributions or other rights for which the record date is prior to the date
such transfer is actually recorded (except as otherwise provided in Section 14
of the Plan).

 

(e)           Withholding.  The Company or its Affiliate shall be
entitled to withhold and deduct from future wages of the Participant all
legally required amounts necessary to satisfy any and all withholding and
employment-related taxes attributable to the Participant’s exercise of an
incentive stock option or a “disqualifying disposition” of shares acquired
through the exercise of an incentive stock option as defined in Code Section 421(b).  In the event the Participant is required
under the Option Agreement to pay the Company, or make arrangements
satisfactory to the Company respecting payment of, such withholding and
employment-related taxes, the Administrator may, in its discretion and pursuant
to such rules as it may adopt, require the Participant to satisfy such
obligation, in whole or in part, by delivering shares of the Company’s common
stock or by electing to have the Company withhold Common Stock otherwise
issuable to the Participant as a result of the exercise of the incentive stock
option.  Such shares shall have a Fair
Market Value equal to the minimum required tax withholding, based on the
minimum statutory withholding rates for federal and state tax purposes,
including payroll taxes, that are applicable to the supplemental income
resulting from such exercise.  In no
event may the Company or any Affiliate withhold shares having a Fair Market
Value in excess of such statutory minimum required tax withholding.  The Participant’s election to deliver shares
or to have shares withheld for this purpose shall be made on or before the date
the incentive stock option is exercised or, if later, the date that the amount
of tax to be withheld is determined under applicable tax law.  Such election shall be approved by the
Administrator and otherwise comply with such rules as the Administrator
may adopt to assure compliance with Rule 16b-3, or any successor
provision, as then in effect, of the General Rules and Regulations under
the Securities Exchange Act of 1934, if applicable.

 

(f)            Other Provisions.  The Option Agreement authorized under this Section 9
shall contain such other provisions as the Administrator shall deem
advisable.  Any such Option Agreement
shall contain such limitations and restrictions upon the exercise of the Option
as shall be necessary to ensure that such Option will be considered an “incentive
stock option” as defined in Section 422 of the Internal Revenue Code or to
conform to any change therein.

 

SECTION 10.

TERMS AND CONDITIONS OF
NONQUALIFIED STOCK OPTIONS

 

Each nonqualified stock option granted pursuant to this Section 10
shall be evidenced by a written nonqualified stock option agreement (the “Option
Agreement”).  The Option 

 

 

Agreement
shall be in such form as may be approved from time to time by the Administrator
and may vary from Participant to Participant; provided, however, that each
Participant and each Option Agreement shall comply with and be subject to the
following terms and conditions:

 

(a)           Number of Shares
and Option Price.  The Option
Agreement shall state the total number of shares covered by the nonqualified
stock option.  Unless otherwise
determined by the Administrator, the option price per share shall be one
hundred percent (100%) of the per share Fair Market Value of the Common Stock
on the date the Administrator grants the Option.

 

(b)           Term and Exercisability of
Nonqualified Stock Option.  The term
during which any nonqualified stock option granted under the Plan may be
exercised shall be established in each case by the Administrator.  The Option Agreement shall state when the
nonqualified stock option becomes exercisable and shall also state the maximum
term during which the Option may be exercised. 
In the event a nonqualified stock option is exercisable immediately, the
manner of exercise of the Option in the event it is not exercised in full
immediately shall be specified in the Option Agreement.   The Administrator may accelerate the
exercisability of any nonqualified stock option granted hereunder which is not
immediately exercisable as of the date of grant.

 

(c)           Transferability.  A nonqualified stock option shall be
transferable, in whole or in part, by the Participant by will or by the laws of
descent and distribution.  In addition,
the Administrator may, in its sole discretion, permit the Participant to
transfer any or all nonqualified stock options to any member of the Participant’s
“immediate family” as such term is defined in Rule 16a-1(e) promulgated
under the Securities Exchange Act of 1934, or any successor provision, or to
one or more trusts whose beneficiaries are members of such Participant’s “immediate
family” or partnerships in which such family members are the only partners;
provided, however, that the Participant cannot receive any consideration for
the transfer and such transferred nonqualified stock option shall continue to
be subject to the same terms and conditions as were applicable to such
nonqualified stock option immediately prior to its transfer.

 

(d)           No Rights as Stockholder.  A Participant (or the Participant’s successor
or successors) shall have no rights as a stockholder with respect to any shares
covered by a nonqualified stock option until the date the Participant is
recorded on the stock transfer books of the Company as the owner of the
Stock.  No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property), distributions or other rights for which the record date is prior to
the date such transfer is actually recorded (except as otherwise provided in Section 14
of the Plan).

 

(e)           Withholding.  The Company or its Affiliate shall be
entitled to withhold and deduct from future wages of the Participant all
legally required amounts necessary to satisfy any and all withholding and
employment-related taxes attributable to the Participant’s exercise of a
nonqualified stock option.  In the event
the Participant is required under the Option Agreement to pay the Company, or
make arrangements satisfactory to the Company respecting payment of, such
withholding and employment-related taxes, the Administrator may, in its
discretion and pursuant to such rules as it may adopt, require the
Participant to satisfy such obligation, in whole or in part, by delivering
shares of the Company’s common stock or by electing to have the Company
withhold Common Stock otherwise issuable to the Participant as a result of the 

 

 

exercise
of the nonqualified stock option.  Such
shares shall have a Fair Market Value equal to the minimum required tax
withholding, based on the minimum statutory withholding rates for federal and
state tax purposes, including payroll taxes, that are applicable to the
supplemental income resulting from such exercise.  In no event may the Company or any Affiliate
withhold shares having a Fair Market Value in excess of such statutory minimum
required tax withholding.  The
Participant’s election to deliver shares or to have shares withheld for this
purpose shall be made on or before the date the nonqualified stock option is
exercised or, if later, the date that the amount of tax to be withheld is
determined under applicable tax law. 
Such election shall be approved by the Administrator and otherwise
comply with such rules as the Administrator may adopt to assure compliance
with Rule 16b-3, or any successor provision, as then in effect, of the
General Rules and Regulations under the Securities Exchange Act of 1934,
if applicable.

 

(f)            Other Provisions.  The Option Agreement authorized under this Section 10
shall contain such other provisions as the Administrator shall deem advisable.

 

SECTION 11.

RESTRICTED STOCK AWARDS

 

Each Restricted Stock Award granted pursuant to the Plan shall be
evidenced by a written restricted stock agreement (the “Restricted Stock
Agreement”).  The Restricted Stock
Agreement shall be in such form as may be approved from time to time by the
Administrator and may vary from Participant to Participant; provided, however,
that each Participant and each Restricted Stock Agreement  shall comply with and be subject to the
following terms and conditions:

 

(a)           Number of Shares.  The Restricted Stock Agreement shall state
the total number of shares of Stock covered by the Restricted Stock Award.

 

(b)           Risks of
Forfeiture.  The Restricted Stock
Agreement shall set forth the risks of forfeiture, if any, including risks of
forfeiture based on Performance Objectives, which shall apply to the shares of
Stock covered by the Restricted Stock Award, and shall specify the manner in
which such risks of forfeiture shall lapse. 
The Administrator may, in its sole discretion, modify the manner in
which such risks of forfeiture shall lapse but only with respect to those
shares of Stock which are restricted as of the effective date of the modification.

 

(c)           Issuance of
Shares; Rights as Stockholder. With respect to a Restricted Stock Award,
the Company may cause to be issued a stock certificate representing such shares
of Stock in the Participant’s name and deliver such certificate to the
Participant; provided, however, that the Company shall place a legend on such
certificate describing the risks of forfeiture and other transfer restrictions
set forth in the Participant’s Restricted Stock Agreement and providing for the
cancellation and return of such certificate if the Stock subject to the
Restricted Stock Award are forfeited. 
Until the risks of forfeiture have lapsed or the shares subject to such
Restricted Stock Award have been forfeited, the Participant shall be entitled
to vote the shares of Stock represented by such stock certificates and shall
receive all dividends attributable to such shares, but the Participant shall
not have any other rights as a stockholder with respect to such shares.

 

 

(d)           Withholding Taxes.  The Company or its Affiliate shall be
entitled to withhold and deduct from future wages of the Participant all
legally required amounts necessary to satisfy any and all withholding and
employment-related taxes attributable to the Participant’s Restricted Stock
Award.  In the event the Participant is
required under the Restricted Stock Agreement to pay the Company, or make
arrangements satisfactory to the Company respecting payment of, such
withholding and employment-related taxes, the Administrator may, in its
discretion and pursuant to such rules as it may adopt, require the
Participant to satisfy such obligations, in whole or in part, by delivering
shares of common stock, including shares of Stock received pursuant to the
Restricted Stock Award on which the risks of forfeiture have lapsed.  Such shares shall have a Fair Market Value
equal to the minimum required tax withholding, based on the minimum statutory
withholding rates for federal and state tax purposes, including payroll taxes,
that are applicable to the supplemental income resulting from the lapsing of the
risks of forfeiture on such restricted stock. 
In no event may the Participant deliver shares having a Fair Market
Value in excess of such statutory minimum required tax withholding.  The Participant’s election to deliver shares
of common stock for this purpose shall be made on or before the date that the
amount of tax to be withheld is determined under applicable tax law.  Such election shall be approved by the
Administrator and otherwise comply with such rules as the Administrator
may adopt to assure compliance with Rule 16b-3, or any successor
provision, as then in effect, of the General Rules and Regulations under
the Securities Exchange Act of 1934, if applicable.

 

(f)            Nontransferability.  No Restricted Stock Award shall be
transferable, in whole or in part, by the Participant, other than by will or by
the laws of descent and distribution, prior to the date the risks of forfeiture
described in the Restricted Stock Agreement have lapsed.  If the Participant shall attempt any transfer
of any Restricted Stock Award granted under the Plan prior to such date, such
transfer shall be void and the Restricted Stock Award shall terminate.

 

(g)           Other Provisions.  The Restricted Stock Agreement Agreement
authorized under this Section 11 shall contain such other provisions as
the Administrator shall deem advisable.

 

SECTION 12.

PERFORMANCE AWARDS

 

Each
Performance Award granted pursuant to this Section 12 shall be evidenced
by a written performance award agreement (the “Performance Award Agreement”).  The Performance Award Agreement shall be in
such form as may be approved from time to time by the Administrator and may
vary from Participant to Participant; provided, however, that each Participant
and each Performance Award Agreement shall comply with and be subject to the
following terms and conditions:

 

(a)           Awards.  Performance Awards in the form of Performance
Units or Performance Shares may be granted to any Participant in the Plan.
Performance Units shall consist of monetary awards which may be earned or
become vested in whole or in part if the Company or the Participant achieves
certain Performance Objectives established by the Administrator over a
specified Performance Period. 
Performance Shares shall consist of shares of Stock or other 

 

 

Awards
denominated in shares of Stock that may be earned or become vested in whole or
in part if the Company or the Participant achieves certain Performance
Objectives established by the Administrator over a specified Performance
Period.

 

(b)           Performance Objectives,
Performance Period and Payment.  The
Performance Award Agreement shall set forth:

 

(i)            the number of Performance Units or
Performance Shares subject to the Performance Award, and the dollar value of
each Performance Unit;

 

(ii)           one or more Performance Objectives
established by the Administrator;

 

(iii)          the Performance Period over which
Performance Units or Performance Shares may be earned or may become vested;

 

(iv)          the extent to which partial
achievement of the Performance Objectives may result in a payment or vesting of
the Performance Award, as determined by the Administrator; and

 

(v)           the date upon which payment of
Performance Units will be made or Performance Shares will be issued, as the
case may be, and the extent to which such payment or the receipt of such Performance
Shares may be deferred.

 

(c)           Withholding Taxes.  The Company or its Affiliates shall be
entitled to withhold and deduct from future wages of the Participant all
legally required amounts necessary to satisfy any and all withholding and
employment-related taxes attributable to the Participant’s Performance
Award.  In the event the Participant is
required under the Performance Award Agreement to pay the Company or its
Affiliates, or make arrangements satisfactory to the Company or its Affiliates
respecting payment of, such withholding and employment-related taxes, the
Administrator may, in its discretion and pursuant to such rules as it may
adopt, require the Participant to satisfy such obligations, in whole or in
part, by delivering shares of the Company’s common stock or by electing to have
the Company withhold shares of Common Stock otherwise issuable to Participant
as a result of the grant of Performance Shares. 
Such shares shall have a Fair Market Value equal to the minimum required
tax withholding, based on the minimum statutory withholding rates for federal
and state tax purposes, including payroll taxes.  In no event may the Participant deliver
shares having a Fair Market Value in excess of such statutory minimum required
tax withholding.  The Participant’s
election to deliver shares or to have shares withheld for this purpose shall be
made on or before the date that the amount of tax to be withheld is determined
under applicable tax law.  Such election
shall be approved by the Administrator and otherwise comply with such rules as
the Administrator may adopt to assure compliance with Rule 16b-3, or any
successor provision, as then in effect, of the General Rules and
Regulations under the Securities Exchange Act of 1934, if applicable.

 

(d)           Nontransferability.  No Performance Award shall be transferable,
in whole or in part, by the Participant, other than by will or by the laws of
descent and distribution.  If the 

 

 

Participant
shall attempt any transfer of any Performance Award granted under the Plan,
such transfer shall be void and the Performance Award shall terminate.

 

(e)           No Rights as Stockholder.  A Participant (or the Participant’s successor
or successors) shall have no rights as a stockholder with respect to any shares
covered by a Performance Award until the date Participant is recorded on the
stock transfer books of the Company as the owners of the shares.  No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property),
distributions or other rights for which the record date is prior to the date
such transfer is actually recorded (except as otherwise provided in Section 14
of the Plan).

 

(f)            Other Provisions.  The Performance Award Agreement authorized
under this Section 12 shall contain such other provisions as the
Administrator shall deem advisable.

 

SECTION 13.

STOCK APPRECIATION RIGHTS

 

Each
Stock Appreciation Right granted pursuant to this Section 13 shall be
evidenced by a written stock appreciation right agreement (the “Stock Appreciation
Right Agreement”).  The Stock
Appreciation Right Agreement shall be in such form as may be approved from time
to time by the Administrator and may vary from Participant to Participant;
provided, however, that each Participant and each Stock Appreciation Right
Agreement shall comply with and be subject to the following terms and
conditions:

 

(a)           Awards.  A Stock Appreciation Right shall entitle the
Participant to receive, upon exercise, cash, shares of Stock, or any
combination thereof, having a value equal to the excess of (i) the Fair
Market Value of a specified number of shares of Stock on the date of such
exercise, over (ii) a specified exercise price.  Unless otherwise determined by the
Administrator, the specified exercise price shall not be less than 100% of the
Fair Market Value of such shares of Stock on the date of grant of the Stock
Appreciation Right.  A Stock Appreciation
Right may be granted independent of or in tandem with a previously or contemporaneously
granted Option.

 

(b)           Term and Exercisability.  The term during which any Stock Appreciation
Right granted under the Plan may be exercised shall be established in each case
by the Administrator.  The Stock
Appreciation Right Agreement shall state when the Stock Appreciation Right
becomes exercisable and shall also state the maximum term during which such
Stock Appreciation Right may be exercised. 
In the event a Stock Appreciation Right is exercisable immediately, the
manner of exercise of such Stock Appreciation Right in the event it is not
exercised in full immediately shall be specified in the Stock Appreciation
Right Agreement.  The Administrator may
accelerate the exercisability of any Stock Appreciation Right granted hereunder
which is not immediately exercisable as of the date of grant.

 

(c)           Withholding Taxes.  The Company or its Affiliate shall be
entitled to withhold and deduct from future wages of the Participant all
legally required amounts necessary to satisfy any and all withholding and
employment-related taxes attributable to the Participant’s Stock 

 

 

Appreciation
Right.  In the event the Participant is
required under the Stock Appreciation Right to pay the Company or its
Affiliate, or make arrangements satisfactory to the Company or its Affiliate
respecting payment of, such withholding and employment-related taxes, the
Administrator may, in its discretion and pursuant to such rules as it may
adopt, permit the Participant to satisfy such obligations, in whole or in part,
by delivering shares of common stock or by electing to have the Company
withhold Common Stock issuable to Participant as a result of the exercise of
the Stock Appreciation Right.  Such
shares shall have a Fair Market Value equal to the minimum required tax
withholding, based on the minimum statutory withholding rates for federal and
state tax purposes, including payroll taxes. 
In no event may the Participant deliver shares having a Fair Market
Value in excess of such statutory minimum required tax withholding.  The Participant’s election to deliver shares
of Common Stock for this purpose shall be made on or before the date that the
amount of tax to be withheld is determined under applicable tax law.  Such election shall be approved by the
Administrator and otherwise comply with such rules as the Administrator may
adopt to assure compliance with Rule 16b-3, or any successor provision, as
then in effect, of the General Rules and Regulations under the Securities
Exchange Act of 1934, if applicable.

 

(d)           Nontransferability.  No Stock Appreciation Right shall be transferable,
in whole or in part, by the Participant, other than by will or by the laws of
descent and distribution.  If the
Participant shall attempt any transfer of any Stock Appreciation Right granted
under the Plan, such transfer shall be void and the Stock Appreciation Right
shall terminate.

 

(e)           No Rights as Stockholder.  A Participant (or the Participant’s successor
or successors) shall have no rights as a stockholder with respect to any shares
covered by a Stock Appreciation Right until the date of the issuance of a stock
certificate evidencing such shares.  No
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property), distributions or other rights for which
the record date is prior to the date such stock certificate is actually issued
(except as otherwise provided in Section 14 of the Plan).

 

(f)            Other Provisions.  The Stock Appreciation Right Agreement
authorized under this Section 13 shall contain such other provisions as
the Administrator shall deem advisable, including but not limited to any
restrictions on the exercise of the Stock Appreciation Right which may be
necessary to comply with Rule 16b-3 of the Securities Exchange Act of
1934, as amended.

 

SECTION 14.

RECAPITALIZATION,
SALE, MERGER, EXCHANGE

OR
LIQUIDATION

 

In
the event of an increase or decrease in the number of shares of Common Stock
resulting from a stock dividend, stock split, reverse split, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company, the Administrator may, in its sole discretion,
adjust the number of shares of Stock reserved under Section 6 hereof, the
number of shares of Stock covered by each outstanding Award, and, if
applicable, the price per share 

 

 

thereof
to reflect such change.  Additional
shares which may become covered by the Award pursuant to such adjustment shall
be subject to the same restrictions as are applicable to the shares with
respect to which the adjustment relates.

 

Unless
otherwise provided in the agreement evidencing an Award, in the event of an
acquisition of the Company through: the sale of substantially all of the
Company’s assets and the consequent discontinuance of its business; an
acquisition of 50% or more of the total combined voting power of all classes of
securities of the Company; or a merger, consolidation, exchange,
reorganization, reclassification, extraordinary dividend, divestiture
(including a spin-off), liquidation, recapitalization, stock split, stock
dividend or otherwise (collectively referred to as a “transaction”), the
Administrator may provide for one or more of the following:

 

(a)           the equitable acceleration of the
exercisability of any outstanding Options or Stock Appreciation Rights, the
vesting and payment of any Performance Awards, or the lapsing of the risks of
forfeiture on any Restricted Stock Awards;

 

(b)           the complete termination of this
Plan, the cancellation of outstanding Options or Stock Appreciation Rights not
exercised prior to a date specified by the Board (which date shall give
Participants a reasonable period of time in which to exercise such Option or
Stock Appreciation Right prior to the effectiveness of such transaction), the
cancellation of any Performance Award and the cancellation of any Restricted
Stock Awards for which the risks of forfeiture have not lapsed;

 

(c)           that Participants holding outstanding
Options and Stock Appreciation Rights shall receive, with respect to each share
of Stock subject to such Option or Stock Appreciation Right, as of the
effective date of any such transaction, cash in an amount equal to the excess
of the Fair Market Value of such Stock on the date immediately preceding the
effective date of such transaction over the price per share of such Options or
Stock Appreciation Rights; provided that the Board may, in lieu of such cash
payment, distribute to such Participants shares of Common Stock of the Company
or shares of stock of any corporation succeeding the Company by reason of such
transaction, such shares having a value equal to the cash payment herein;

 

(d)           that Participants holding outstanding
Restricted Stock Awards and Performance Share Awards shall receive, with
respect to each share of Stock subject to such Awards, as of the effective date
of any such transaction, cash in an amount equal to the Fair Market Value of
such Stock on the date immediately preceding the effective date of such
transaction; provided that the Board may, in lieu of such cash payment,
distribute to such Participants shares of Common Stock of the Company or shares
of stock of any corporation succeeding the Company by reason of such
transaction, such shares having a value equal to the cash payment herein;

 

(e)           the continuance of the Plan with
respect to the exercise of Options or Stock Appreciation Rights which were
outstanding as of the date of adoption by the Board of such plan for such
transaction and the right to exercise such Options and Stock Appreciation
Rights as to an equivalent number of shares of stock of the corporation
succeeding the Company by reason of such transaction; and

 

 

(f)            the continuance of the Plan with
respect to Restricted Stock Awards for which the risks of forfeiture have not
lapsed as of the date of adoption by the Board of such plan for such
transaction and the right to receive an equivalent number of shares of stock of
the corporation succeeding the Company by reason of such transaction.

 

(g)           the continuance of the Plan with
respect to Performance Awards and, to the extent applicable, the right to
receive an equivalent number of shares of stock of the corporation succeeding
the Company by reason for such transaction.

 

The
Administrator may condition any acceleration of exercisability or other right
to which Participant is not entitled upon any additional agreements from
Participant, including, without limitation, a Participant agreeing to
additional restrictive covenants (e.g., confidentiality, noncompetition,
non-solicitation, non-circumvention, etc.) and Participant agreeing to continue
to perform services for the Company, a successor or purchaser of all or any
portion of the Company’s business or related assets for substantially the same
base salary for a period of up to six months.

 

The
Administrator may restrict the rights of or the applicability of this Section 14
to the extent necessary to comply with Section 16(b) of the
Securities Exchange Act of 1934, the Internal Revenue Code or any other
applicable law or regulation.  The grant
of an Award pursuant to the Plan shall not limit in any way the right or power
of the Company to make adjustments, reclassifications, reorganizations or
changes of its capital or business structure or to merge, exchange or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.

 

SECTION 15.

INVESTMENT PURPOSE

 

No shares of Stock shall be issued pursuant to the Plan unless and
until there has been compliance, in the opinion of Company’s counsel, with all
applicable legal requirements, including without limitation, those relating to
securities laws and stock exchange listing requirements.  As a condition to the issuance of Stock to
Participant, the Administrator may require Participant to (a) represent
that the shares of Stock are being acquired for investment and not resale and
to make such other representations as the Administrator shall deem necessary or
appropriate to qualify the issuance of the shares as exempt from the Securities
Act of 1933 and any other applicable securities laws, and (b) represent
that Participant shall not dispose of the shares of Stock in violation of the
Securities Act of 1933 or any other applicable securities laws.

 

As
a further condition to the grant of any Option or the issuance of Stock to
Participant, Participant agrees to the following:

 

(a)           In the event the Company advises
Participant that it plans an underwritten public offering of its Common Stock
in compliance with the Securities Act of 1933, as amended, and the underwriter(s) seek
to impose restrictions under which certain stockholders may not sell or
contract to sell or grant any option to buy or otherwise dispose of part or all
of their stock 

 

 

purchase
rights of the Common Stock underlying Awards, Participant will not, for a period
not to exceed 180 days from the prospectus, sell or contract to sell or grant
an option to buy or otherwise dispose of any Option granted to Participant
pursuant to the Plan or any of the underlying shares of Common Stock without
the prior written consent of the underwriter(s) or its representative(s).

 

(b)           In the event the Company makes any
public offering of its securities and determines in its sole discretion that it
is necessary to reduce the number of issued but unexercised stock purchase
rights so as to comply with any state’s securities or Blue Sky law limitations
with respect thereto, the Board of Directors of the Company shall have the
right (i) to accelerate the exercisability of any Option and the date on
which such Option must be exercised, provided that the Company gives
Participant prior written notice of such acceleration, and (ii) to cancel
any Options or portions thereof which Participant does not exercise prior to or
contemporaneously with such public offering.

 

(c)           In the event of a transaction (as
defined in Section 14 of the Plan), Participant will comply with Rule 145
of the Securities Act of 1933 and any other restrictions imposed under other
applicable legal or accounting principles if Participant is an “affiliate” (as
defined in such applicable legal and accounting principles) at the time of the
transaction, and Participant will execute any documents necessary to ensure
compliance with such rules.

 

The
Company reserves the right to place a legend on any stock certificate issued in
connection with an Award pursuant to the Plan to assure compliance with this Section 15.

 

SECTION 16.

AMENDMENT OF THE PLAN

 

The Board may from time to time, insofar as permitted by law, suspend
or discontinue the Plan or revise or amend it in any respect; provided,
however, that no such revision or amendment, except as is authorized in Section 14,
shall impair the terms and conditions of any Award which is outstanding on the
date of such revision or amendment to the material detriment of the Participant
without the consent of the Participant. 
Notwithstanding the foregoing, no such revision or amendment shall (i) materially
increase the number of shares subject to the Plan except as provided in Section 14
hereof, (ii) change the designation of the class of employees eligible to
receive Awards, (iii) decrease the price at which Options may be granted,
or (iv) materially increase the benefits accruing to Participants under
the Plan without the approval of the stockholders of the Company if such
approval is required for compliance with the requirements of any applicable law
or regulation.  Furthermore, the Plan may
not, without the approval of the stockholders, be amended in any manner that
will cause incentive stock options to fail to meet the requirements of Section 422
of the Internal Revenue Code.

 

 

SECTION 17.

NO OBLIGATION TO EXERCISE
OPTION

 

The granting of an Option
shall impose no obligation upon the Participant to exercise such Option.  Further, the granting of an Award hereunder
shall not impose upon the Company or any Affiliate any obligation to retain the
Participant in its employ for any period.Exhibit 10.81

 

FORM OF CHANGE OF CONTROL
AGREEMENT

 

OCCAM NETWORKS, INC.

 

CHANGE OF CONTROL SEVERANCE
AGREEMENT

 

This Change of Control
Severance Agreement (the “Agreement”) is made and entered into by and between
[NAME] (“Executive”) and Occam Networks, Inc. (the “Company”), effective
as of [DATE] (the “Effective Date”).

 

RECITALS

 

1.                                       It
is expected that the Company from time to time will consider the possibility of
an acquisition by another company or other change of control.  The Board of Directors of the Company (the “Board”)
recognizes that such consideration can be a distraction to Executive and can
cause Executive to consider alternative employment opportunities.  The Board has determined that it is in the
best interests of the Company and its stockholders to assure that the Company
will have the continued dedication and objectivity of Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control
(as defined herein) of the Company.

 

2.                                       The
Board believes that it is in the best interests of the Company and its
stockholders to provide Executive with an incentive to continue his or her
employment and to motivate Executive to maximize the value of the Company upon
a Change of Control for the benefit of its stockholders.

 

3.                                       The
Board believes that it is imperative to provide Executive with certain
severance benefits upon Executive’s termination of employment following a
Change of Control.  These benefits will
provide Executive with enhanced financial security and incentive and encouragement
to remain with the Company notwithstanding the possibility of a Change of
Control.

 

4.                                       Certain
capitalized terms used in the Agreement are defined in Section 8 below.

 

AGREEMENT

 

NOW, THEREFORE, in
consideration of the mutual covenants contained herein, the parties hereto
agree as follows:

 

1.                                       Term
of Agreement.  This Agreement is
effective as of the Effective Date and will remain in effect through the third
anniversary of the Effective Date, except in the event of a Change of Control
during such term, in which case this Agreement will remain in effect through,
and automatically terminate upon, the completion of all payments under the
terms of this Agreement (the “Agreement Term”), provided
that the Board of Directors of the Company or the Compensation
Committee thereof may, in its sole and absolute discretion, at any time extend
the term of this Agreement for such period of time as it may determine
appropriate.  No severance benefits will
be paid under this Agreement with respect to any termination of employment
effective after the date of the Agreement’s termination.

 

2.                                       At-Will
Employment.  The Company and
Executive acknowledge that Executive’s employment is and will continue to be
at-will, as defined under applicable law, except as may 

 

 

otherwise be specifically provided under the terms of any written
formal employment agreement between the Company and Executive (an “Employment
Agreement”).  If Executive’s employment
terminates for any reason, including (without limitation) any termination prior
to a Change of Control, Executive will not be entitled to any payments,
benefits, damages, awards or compensation other than as provided by this
Agreement.

 

3.                                       Termination
of Employment.  In the event
Executive’s employment with the Company terminates for any reason, Executive
will be entitled to any: (i) unpaid base salary accrued up to the
effective date of termination, (ii) unpaid, but earned and accrued annual
incentive for any completed fiscal year as of his or her termination of
employment, (iii) pay for accrued but unused vacation, (iv) benefits
or compensation as provided under the terms of any employee benefit and
compensation agreements or plans applicable to Executive, (v) unreimbursed
business expenses required to be reimbursed to Executive, and (vi) rights
to indemnification Executive may have under the Company’s Certificate of
Incorporation, Bylaws, or separate indemnification agreement, as
applicable.  In addition, if the
termination is by the Company (or any parent, subsidiary or successor of the
Company) without Cause (as defined herein) or if Executive resigns for Good
Reason (as defined herein), Executive will be entitled to the amounts and
benefits specified in Section 4.

 

4.                                       Severance
Benefits.

 

(a)                                  Termination
Without Cause or Resignation for Good Reason in Connection with a Change of
Control.  If on or within six (6) months
following a Change of Control, (i) Executive’s employment is terminated by
the Company (or any parent, subsidiary or successor of the Company) without
Cause or (ii) Executive resigns for Good Reason, and Executive signs and
does not revoke the release of claims required by Section 5, Executive
will receive the following severance benefits from the Company:

 

(i)                                     Severance
Payment.  Executive will receive a
lump sum cash payment equal to six (6) months of the Executive’s annual
base salary (as in effect immediately prior to (A) the Change of Control
or (B) Executive’s termination, whichever is greater).

 

(ii)                                  Equity
Awards.  Fifty percent (50%) of
Executive’s then outstanding and unvested awards relating to the Company’s
common stock (whether stock options, stock appreciation rights, shares of
restricted stock, restricted stock units, or otherwise (collectively, the “Equity
Awards”)) as of the date of Executive’s termination of employment will become
vested and will otherwise remain subject to the terms and conditions of the
applicable Equity Award agreement.

 

(iii)                               Benefits.  The Company agrees to
reimburse Executive for premiums paid
for the same level of group health coverage as in effect for Executive
on the day immediately preceding the date of termination; provided, however,
that (1) Executive constitutes a qualified beneficiary, as defined in Section 4980(B)(g)(1) of
the Internal Revenue Code of 1986, as amended (the “Code”); and (2) Executive
elects continuation coverage pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”), within the time period
prescribed pursuant to COBRA.  The
Company will continue to reimburse Executive for continuation coverage through
the earlier of (A) the date that is six (6) months following his or
her termination, or (B) the date upon which Executive and Executive’s
eligible dependents become covered under similar plans.  

 

2

 

Executive will thereafter be responsible for the payment of COBRA
premiums (including, without limitation, all administrative expenses) for the
remaining COBRA period.  COBRA reimbursements shall be made by the
Company to Executive consistent with the Company’s normal expense reimbursement
policy, provided that Executive submits documentation to the Company
substantiating his or her payments for COBRA coverage.

 

(b)                                 Timing
of Severance Payments.  Subject to Section 4(f) of
this Agreement, the Company will pay the severance payments to which Executive
is entitled pursuant to Section 4(a)(i) above in cash and in full,
within ten (10) calendar days after the date of the termination of
Employee’s employment as provided in Section 4(a) or, if later, on
the date the release of claims required pursuant to Section 5 of this
Agreement becomes effective.  If
Executive should die before all severance amounts have been paid, such unpaid
amounts will be paid in a lump-sum payment (less any withholding taxes) to
Executive’s designated beneficiary, if living, or otherwise to the personal
representative of Executive’s estate.

 

(c)                                  Voluntary
Resignation; Termination For Cause. 
If Executive’s employment with the Company terminates (i) voluntarily
by Executive (except upon a termination for Good Reason on or within six (6) months
following a Change of Control) or (ii) for Cause by the Company (or any
parent or subsidiary of the Company), then Executive will not be entitled to
receive severance or other benefits except for those (if any) as may then be
established under the Company’s then existing severance and benefits plans and
practices or pursuant to other written agreements with the Company, including,
without limitation, any Employment Agreement or Equity Award agreements.

 

(d)                                 Disability;
Death.  If the Company terminates
Executive’s employment as a result of Executive’s Disability (as defined
herein), or Executive’s employment terminates due to his or her death, then
Executive will not be entitled to receive severance or other benefits except
for those (if any) as may then be established under the Company’s then existing
written severance and benefits plans and practices or pursuant to other written
agreements with the Company, including, without limitation, any Employment
Agreement or Equity Award agreements.

 

(e)                                  Termination
Apart from Change of Control.  In the
event Executive’s employment is terminated for any reason, either prior to the
occurrence of a Change of Control or after the six (6) month period
following a Change of Control, then Executive will be entitled to receive
severance and any other benefits only as may then be established under the
Company’s existing written severance and benefits plans and practices or
pursuant to other written agreements with the Company, including, without
limitation, any Employment Agreement or Equity Award agreement.

 

(f)                                    Exclusive
Remedy.  In the event of a termination of Executive’s employment on or within
six (6) months following a Change of Control, the provisions of
this Section 4 are intended to be and are exclusive and in lieu of any
other rights or remedies to which Executive or the Company may otherwise be
entitled, whether at law, tort or contract, in equity, or under this
Agreement.  Executive will be entitled to
no benefits, compensation or other payments or rights upon termination of
employment other than those benefits expressly set forth in this Section 4,
except as may be provided in any Equity
Award agreement.

 

3

 

(g)                                 Section 409A.

 

(i)                                     Distributions.  Notwithstanding anything to the contrary in
this Agreement, if Executive is a “specified employee” within the meaning of Section 409A
of the Code and any final regulations and guidance promulgated thereunder (“Section 409A”) at the time of
Executive’s termination (other than due
to Executive’s death), and the payment of any portion of the severance
payments under this Agreement, when considered together with any other
severance payments or separation benefits which may be considered deferred
compensation under Section 409A (together, the “Deferred Compensation
Separation Benefits”), will result in the imposition of additional tax under Section 409A
if paid to Executive on or within the six (6) month period following
Executive’s termination, then the
portion of the Deferred Compensation Separation Benefits that would cause the
imposition of additional tax under Section 409A will accrue during
such six (6) month period and will become payable in a lump sum payment on
the date six (6) months and one (1) day following the date of
Executive’s termination of employment. 
All subsequent payments, if any, will be payable in accordance with the
payment schedule applicable to each payment or benefit.  Notwithstanding anything herein to the
contrary, if Executive dies following his or her termination of employment but
prior to the six (6) month anniversary of his or her date of termination,
then any payments delayed in accordance with this paragraph will be payable in
a lump sum (less applicable withholding taxes) to Executive’s estate as soon as
administratively practicable after the date of Executive’s death and all other
Deferred Compensation Separation Benefits will be payable in accordance with
the payment schedule applicable to each payment or benefit.

 

(ii)                                  Amendment.  This provision is
intended to comply with the requirements of Section 409A so that none of
the severance payments and benefits to be provided hereunder will be subject to
the additional tax imposed under Section 409A, and any ambiguities herein
will be interpreted to so comply.  The Company and Executive agree to work
together in good faith to consider amendments to this Agreement and to take
such reasonable actions which are necessary, appropriate or desirable to avoid
imposition of any additional tax or income recognition prior to actual payment
to Executive under Section 409A.

 

5.                                       Conditions
to Receipt of Severance; No Duty to Mitigate.

 

(a)                                  Separation
Agreement and Release of Claims.  The
receipt of any severance or other benefits pursuant to Section 4 will be
subject to Executive signing and not revoking a separation agreement and
release of claims in a form acceptable to the Company within the period
required by the release and in no event later than two and one-half (21⁄2) months
following the end of the calendar year in which Executive’s termination of
employment occurs.  No severance or other
benefits will be paid or provided until the separation agreement and release
agreement becomes effective.

 

(b)                                 Non-solicitation.  The receipt of any severance or other
benefits pursuant to Section 4 will be subject to Executive agreeing that
during the Agreement Term and Continuance Period, Executive will not solicit
any employee of the Company (other than Executive’s personal assistant) for
employment other than at the Company.

 

4

 

(c)                                  Nondisparagement.  During the Agreement Term and Continuance
Period, Executive will not knowingly and materially disparage, criticize, or
otherwise make any derogatory statements
regarding the Company. 
Notwithstanding the foregoing, nothing contained in this Agreement will
be deemed to restrict Executive, the Company or any of the Company’s current or
former officers and/or directors from (1) providing information to any
governmental or regulatory agency (or in any way limit the content of any such
information) to the extent they are requested or required to provide such
information pursuant to applicable law or regulation or (2) enforcing his or her or its rights pursuant to this Agreement.

 

(d)                                 Other
Requirements.  Executive’s receipt of
severance payments will be subject to Executive continuing to comply with the
terms of any agreement between the Company and Executive (or any written policy
of the Company) relating to treatment of confidential information, assignment
of inventions, or similar terms (any such agreement or policy, a “Confidentiality
Agreement”) and the provisions of this Section 5.

 

(e)                                  No
Duty to Mitigate.  Executive will not
be required to mitigate the amount of any payment contemplated by this
Agreement, nor will any earnings that Executive may receive from any other
source reduce any such payment

 

6.                                       Limitation
on Payments.  In the event that the
severance and other benefits provided for in this Agreement or otherwise
payable to Executive (i) constitute “parachute payments” within the
meaning of Section 280G of the Code, and (ii) but for this Section 6,
would be subject to the excise tax imposed by Section 4999 of the Code,
then Executive’s severance benefits under 

Section 4 will be either:

 

(a)                                  delivered
in full, or

 

(b)                                delivered as to such
lesser extent which would result in no portion of such severance benefits being
subject to excise tax under Section 4999 of the Code,

 

whichever of the foregoing amounts, taking into account the applicable
federal, state and local income taxes and the excise tax imposed by Section 4999,
results in the receipt by Executive on an after-tax basis, of the greatest amount
of severance benefits, notwithstanding that all or some portion of such
severance benefits may be taxable under Section 4999 of the Code.  Unless the Company and Executive otherwise
agree in writing, any determination required under this Section 7 will be
made in writing by the Company’s independent public accountants immediately
prior to the Change of Control (the “Accountants”), whose determination will be
conclusive and binding upon Executive and the Company for all purposes.  For purposes of making the calculations
required by this Section 6, the Accountants may make reasonable
assumptions and approximations concerning applicable taxes and may rely on
reasonable, good faith interpretations concerning the application of Sections
280G and 4999 of the Code.  The Company
and Executive will furnish to the Accountants such information and documents as
the Accountants may reasonably request in order to make a determination under
this Section.  The Company will bear all
costs the Accountants may reasonably incur in connection with any calculations
contemplated by this Section 6.

 

5

 

7.                                       Definition
of Terms.  The following terms
referred to in this Agreement will have the following meanings:

 

(a)                                  Cause.  For purposes of this Agreement, “Cause” will
mean:

 

(i)                                  Executive’s
willful and continued failure to perform the duties and responsibilities of his
or her position (other than as a result of Executive’s illness or injury) after
there has been delivered to Executive a written demand for performance from the
Board which describes the basis for the Board’s belief that Executive has not
substantially performed his or her duties and provides Executive with thirty
(30) days to take corrective action;

 

(ii)                               Any
material act of personal dishonesty taken by Executive in connection with his
or her responsibilities as an employee of the Company with the intention that
such action may result in the substantial personal enrichment of Executive;

 

(iii)                            Executive’s
conviction of, or plea of nolo contendere to, a felony that the Board
reasonably believes has had or will have a material detrimental effect on the
Company’s reputation or business;

 

(iv)                           A
willful breach of any fiduciary duty owed to the Company by Executive that has
a material detrimental effect on the Company’s reputation or business;

 

(v)                              A
willful breach of a Confidentiality Agreement or any written policy relating to
ethics or conduct;

 

(vi)                           Executive
being found liable in any Securities and Exchange Commission or other civil or
criminal securities law action (regardless of whether or not Executive admits
or denies liability), which the Board determines, in its reasonable discretion,
will have a material detrimental effect on the Company’s reputation or
business;

 

(vii)                        Executive
entering any cease and desist order with respect to any action which would bar
Executive from service as an executive officer or member of a board of
directors of any publicly-traded company (regardless of whether or not
Executive admits or denies liability);

 

(viii)                     Executive (A) obstructing
or impeding; (B) endeavoring to obstruct or impede, or (C) failing to
materially cooperate with, any investigation authorized by the Board or any
governmental or self-regulatory entity (an “Investigation”).  However, Executive’s failure to waive
attorney-client privilege relating to communications with Executive’s own
attorney in connection with an Investigation will not constitute “Cause”; or

 

6

 

(ix)                                    Executive’s
disqualification or bar by any governmental or self-regulatory authority from
serving in the capacity contemplated by this Agreement, if (A) the
disqualification or bar continues for more than thirty (30) days, and (B) during
that period the Company uses its commercially reasonable efforts to cause the
disqualification or bar to be lifted. While any disqualification or bar
continues during Executive’s employment, Executive will serve in the capacity
contemplated by this Agreement to whatever extent legally permissible and, if
Executive’s employment is not permissible, Executive will be placed on
administrative leave (which will be paid to the extent legally permissible).

 

(b)                                 Change
of Control.  “Change of Control” of the Company is defined as:

 

(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 more than fifty percent (50%) 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 one-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.

 

(c)                                  Continuance
Period.  “Continuance Period” will
mean the period of time beginning on the date of the termination of Executive’s
employment and ending on the date that is six (6) months following the
date of the termination of Executive’s employment.

 

(d)                                 Disability.  For purposes of this Agreement, “Disability”
will have the same meaning as that term is defined in the Company’s 2006 Equity
Incentive Plan.  Notwithstanding the
foregoing however, should the Company maintain a long-term disability plan at
any time during the Agreement Term, a determination of disability under such
plan shall also be considered a “Disability” for purposes of this Agreement.

 

7

 

(e)                                  Good
Reason.  “Good Reason” will mean
Executive’s termination of employment within ninety (90) days following the end
of the Cure Period (as defined below) as a result of the occurrence of any of the following without the Executive’s
consent:

 

(i)                                  a
material diminution of Executive’s authority, duties, or responsibilities,
relative to Executive’s authority, duties, or responsibilities in effect
immediately prior to such reduction; provided, however, that a reduction of
authority, duties, or responsibilities or a change in title or reporting
responsibility that occurs solely as a necessary and direct consequence of the
Company undergoing a Change of Control and being made part of a larger entity
will not be considered material (as, for example, when the Chief Financial
Officer of the Company remains the principal financial or accounting employee
of the Company (or the business unit comprising the Company) following a Change
of Control even though he or she is not made the Chief Financial Officer of the
acquiring corporation;

 

(ii)                               a
material diminution by the Company in the base salary of Executive as in effect
immediately prior to such reduction, other than pursuant to a reduction that
also is applied to substantially all other executive officers of the Company;

 

(iii)                            the
relocation of Executive to a facility or a location more than fifty (50) miles
from Executive’s then present location; or

 

(iv)                           the
failure of the Company to obtain the assumption of this Agreement by any
successor in accordance with Section 8(a) below.

 

Notwithstanding the
foregoing, Executive will not resign for Good Reason without first providing
the Board with written notice of the condition that could constitute a “Good
Reason” event within ninety (90) days of the initial existence of such
condition and such condition must not have been remedied by the Company within
thirty (30) days (the “Cure Period”) of such written notice.

 

8.                                       Successors.

 

(a)                                  The
Company’s Successors.  Any successor
to the Company (whether direct or indirect and whether by purchase, merger,
consolidation, liquidation or otherwise) to all or substantially all of the
Company’s business and/or assets will assume the obligations under this
Agreement and agree expressly to perform the obligations under this Agreement
in the same manner and to the same extent as the Company would be required to
perform such obligations in the absence of a succession.  For all purposes under this Agreement, the
term “Company” will include any successor to the Company’s business and/or
assets which executes and delivers the assumption agreement described in this Section 8(a) or
which becomes bound by the terms of this Agreement by operation of law.

 

(b)                                 Executive’s
Successors.  The terms of this
Agreement and all rights of Executive hereunder will inure to the benefit of,
and be enforceable by, Executive’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees.

 

8

 

9.                                       Notice.

 

(a)                                  General.  Notices and all other communications
contemplated by this Agreement will be in writing and will be deemed to have
been duly given when personally delivered or when mailed by U.S. registered or
certified mail, return receipt requested and postage prepaid.  In the case of Executive, mailed notices will
be addressed to him or her at the home address which he or she most recently
communicated to the Company in writing. 
In the case of the Company, mailed notices will be addressed to its
corporate headquarters, and all notices will be directed to the attention of
its President.

 

(b)                                 Notice
of Termination.  Any termination by
the Company for Cause or by Executive for Good Reason or as a result of a
voluntary resignation will be communicated by a notice of termination to the
other party hereto given in accordance with Section 9(a) of this
Agreement.  Such notice will indicate the
specific termination provision in this Agreement relied upon, will set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination under the provision so indicated, and will specify the termination
date (which will be not more than thirty (30) days after the giving of such
notice).  The failure by Executive to
include in the notice any fact or circumstance which contributes to a showing
of Good Reason will not waive any right of Executive hereunder or preclude
Executive from asserting such fact or circumstance in enforcing his or her
rights hereunder.

 

10.                                 Miscellaneous
Provisions.

 

(a)                                  Arbitration.  The parties agree that any and all disputes
arising out of, or relating to, the terms of this Agreement, their
interpretation, and any of the matters herein released, will be subject to
binding arbitration in Santa Barbara, California before the American
Arbitration Association under its National Rules for the Resolution of
Employment Disputes.  The parties agree
that the prevailing party in any arbitration will be entitled to injunctive
relief in any court of competent jurisdiction to enforce the arbitration
award.  The parties agree that the
prevailing party in any arbitration will be awarded its reasonable attorney
fees and costs.  The parties hereby agree to waive their right to have
any dispute between them resolved in a court of law by a jury.  This section will not prevent either party
from seeking injunctive relief (or any other provisional remedy) from any court
having jurisdiction over the parties and the subject matter of their dispute
relating to Executive’s obligations under this Agreement and the agreements
incorporated herein by reference.

 

(b)                                 Waiver.  No provision of this Agreement will be
modified, waived or discharged unless the modification, waiver or discharge is
agreed to in writing and signed by Executive and by an authorized officer of
the Company (other than Executive).  No
waiver by either party of any breach of, or of compliance with, any condition
or provision of this Agreement by the other party will be considered a waiver
of any other condition or provision or of the same condition or provision at
another time.

 

(c)                                  Headings.  All captions and section headings used in
this Agreement are for convenient reference only and do not form a part of this
Agreement.

 

9

 

(d)                                 Entire
Agreement.  This Agreement, together
with any Employment Agreement (to the extent not otherwise superseded herein),
any Equity Award agreements that describe Executive’s outstanding Equity Awards
and/or any Confidentiality Agreement, constitutes the entire agreement of the
parties hereto and supersedes in their entirety all prior representations,
understandings, undertakings or agreements (whether oral or written and whether
expressed or implied) of the parties with respect to the subject matter
hereof.  To the extent that any
provisions of this Agreement conflict with those of any other agreement between
the Executive and the Company, the terms in this Agreement will prevail.  However, with respect to Equity Awards
granted on or after the date hereof, the acceleration of vesting provided
herein will apply to such awards except to the extent otherwise explicitly
provided in the applicable Equity Award agreement.

 

(e)                                  Choice
of Law.  The validity,
interpretation, construction and performance of this Agreement will be governed
by the laws of the State of California (with the exception of its conflict of
laws provisions).

 

(f)                                    Severability.  The invalidity or unenforceability of any
provision or provisions of this Agreement will not affect the validity or
enforceability of any other provision hereof, which will remain in full force
and effect.  The remainder of this
Agreement will be interpreted so as best to effect the intent of the Company
and the Executive.

 

(g)                                 Withholding.  All payments made pursuant to this Agreement
will be subject to withholding of applicable income and employment taxes.

 

(h)                                 Counterparts.  This Agreement may be executed in
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.

 

IN WITNESS WHEREOF, each
of the parties has executed this Agreement, in the case of the Company by its
duly authorized officer, as of the day and year set forth below.

 

 

	
  COMPANY

  	
  OCCAM NETWORKS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EXECUTIVE

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
						

 

10

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00135-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00135-of-00352.parquet"}]]