Document:

Tivo 07/31/13 EX 10.2

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

                                                                                                            Exhibit 10.2

SETTLEMENT AND PATENT LICENSE AGREEMENT
This Settlement and Patent License Agreement (“Agreement”), effective as of July 2, 2013 (“Effective Date”), is made by and between TiVo Inc., a Delaware corporation (“TiVo”); and ARRIS Group, Inc., a Delaware corporation (“Arris”). TiVo and Arris are each referred to herein as a “Party” and collectively as the “Parties.” 
A.    TiVo and Arris are parties to the following lawsuit pending in the Eastern District of Texas: C.A. No. 5:11-CV-00053-JRG, involving TiVo, Motorola Mobility LLC (formerly Motorola Mobility, Inc., and now owned by Google Inc. (“Google”)), General Instrument Corporation (now owned by Arris), Time Warner Cable Inc. and Time Warner Cable LLC (the “Pending Google Litigation”). 
B.    TiVo and Cisco Systems, Inc. (“Cisco”) are parties to the following lawsuit pending in the Eastern District of Texas: C.A. Nos. 2:12-CV-00311-JRG and 2:12-CV-00434-JRG (consolidated), involving TiVo, Cisco, Time Warner Cable Inc. and Time Warner Cable LLC (the “Pending Cisco Litigation”). The Pending Google Litigation and Pending Cisco Litigation are collectively referred to herein as the “Pending Litigation.”
C.    Contemporaneously with entering into this Agreement, TiVo is entering into an agreement with Cisco and Google, under which, among other things, Cisco, Google, and TiVo are settling the Pending Litigation and granting each other certain releases and patent licenses (the “Cisco & Google Agreement”). 
D.    The Parties have agreed, among other things, in connection with the settlement of the Pending Google Litigation, for TiVo to grant Arris a release and patent license under only the patents asserted by TiVo in the Pending Litigation pursuant to the terms set forth below.
In consideration of the mutual covenants, representations, warranties, and other terms and conditions contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:
Section 1.  DEFINITIONS
In this Agreement, capitalized terms have the meanings set forth below or otherwise ascribed herein: 
1.1.    “Acquired DVR Business” has the meaning given to it in Section 8.2.
1.2.    “Acquired DVR Supplier” has the meaning given to it in Section 8.2.
1.3.    “Acquired Party” has the meaning given to it in Section 8.1.
1.4.    “Acquirer” has the meaning given to it in Section 8.1.
1.5.    “Affiliate” means, with respect to a given Person (the “Subject Person”), any other Person that now or hereafter controls, is under the control of, or is under common control with the Subject Person, where “control” means direct or indirect ownership or control of more than 50% of the Voting 

Power of another Person. A Person will be deemed to be an Affiliate of the Subject Person under this Agreement only so long as such control exists. 
1.6.    “Agreement” has the meaning given to it in the preamble of this Agreement. 
1.7.    “Arris Authorized Customers” means [***], including [***], with respect to [***].
1.8.    “Arris Authorized Suppliers” means [***] with respect to [***].
1.9.    “Arris Authorized Third Parties” means the Arris Authorized Customers and/or Arris Authorized Suppliers, as applicable. 
1.10.    “Arris Combination Product” means any Combination Product of Arris. 
1.11.    “Arris Licensed Product” means (a) any Arris Product in the Video Field, or (b) any Arris Combination Product in the Video Field; but in each case excluding any [***] and any Foundry Products.
1.12.    “Arris Product” means any Standalone Product of Arris. 
1.13.    “Arris Term” means the time period commencing on the Effective Date and ending on the date of the expiration of the last to expire of the Licensed Patents.
1.14.    “Assert” (or “Assertion”) means to initiate or pursue an action, investigation, or other proceeding alleging patent infringement, whether direct or indirect, before any legal, judicial, arbitration, administrative, executive or other type of body or tribunal, anywhere in the world, that has or claims to have authority to adjudicate such action.
1.15.    “Change of Control” of a Person (“Subject Entity”) means any of the following: (a) any merger, reorganization, share exchange, consolidation, business combination or other transaction or series of related transactions in which the holders of more than 50% of the Voting Power of the Subject Entity immediately prior to such transaction or series of related transactions will not hold more than 50% of the Voting Power of the surviving Person immediately after such transaction or series of transactions; (b) any sale, lease, transfer or other disposition of all or substantially all of the Subject Entity’s assets where the current holders of more than 50% of the Voting Power of the Subject Entity immediately prior to such transaction or series of related transactions will not hold more than 50% of the Voting Power of the acquiring Person immediately after such transaction or series of transactions; or (c) any Person or “group” (as such term is used in Rule 13d-5 under the United States Securities Exchange Act of 1934) who does not hold more than 50% of the total Voting Power of the Subject Entity as of the Effective Date becomes the “beneficial owner” (as that term is used in Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of more than 50% of the total Voting Power of the Subject Entity.
1.16.    “Combination Product” means, with respect to [***], the combination of [***] with [***] where: (a) [***]; or (b) [***]. Any such combination constitutes a Combination Product [***].
1.17.    “[***]” means [***], a [***] corporation having a primary place of business at [***], and its Subsidiaries.
1.18.    “Dismissal Motions” has the meaning given to it in Section 2.4.

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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1.19.    “DVR” means [***] Product that enables [***] to a [***] storage medium (e.g., a hard disk drive), and [***] the play back of recorded content. 
1.20.    “DVR Supplier” means: (a) [***] and each of their respective Subsidiaries; and (b) any other Third Party with [***] that [***].
1.21.    “Effective Date” has the meaning given to it in the preamble of this Agreement.
1.22.    “Existing Licensed Products” has the meaning given to it in Section 8.1.
1.23.    “Foundry Product” means, with respect to Arris: (1) any Product [***], or [***], without [***], and: (a) manufactured and sold or otherwise transferred from Arris or its Subsidiaries [***]; (b) [***]; or (c) purchased from a Third Party and [***]; and (2) any [***]. For the avoidance of doubt, an Arris Product that [***] is not a Foundry Product where [***]. 
1.24.    “Licensed Patents” means only the following four issued U.S. patents: 6,233,389; 6,792,195; 7,493,015; and 7,529,465. 
1.25.    “Non-Acquired Party” has the meaning given to it in Section 8.1.
1.26.    “[***]” means any (a) [***], and (b) Products [***].
1.27.    “Patents” means all classes or types of patents (including originals, divisions, continuations, continuations-in-part, extensions, reissues or counterparts) and all applications (including provisional applications) for these classes or types of patents, and any other patent rights, in all cases, throughout the world.
1.28.    “Pending Cisco Litigation” has the meaning given to it in recital B of this Agreement.
1.29.    “Pending Google Litigation” has the meaning given to it in recital A of this Agreement.
1.30.    “Pending Litigation” has the meaning given to it in recital B of this Agreement.
1.31.    “Person” means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, limited liability company, institution, public benefit corporation, other entity or government (whether federal, state, county, city, municipal, local, foreign, or otherwise, including any instrumentality, division, agency, body or department thereof).
1.32.    “Product” means any product, system, apparatus, method, software, service, website or process, or other technology, including any portions thereof.
1.33.    “Standalone Product” means, with respect to a Party, any Product of such Party or any of its Subsidiaries provided, directly or indirectly, by or on behalf of such Party or any of its Subsidiaries.
1.34.    “Subsidiary” means, as to any Person (“Subject Person”), any other Person that is now or hereafter controlled by the Subject Person, where control means direct or indirect ownership or control of more than 50% of the Voting Power of another Person. A Person shall be a Subsidiary of the Subject Person only during such time as such control exists. 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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1.35.    “Third Party” means any Person other than TiVo, Arris, or any of their respective Subsidiaries as of the pertinent time. For clarity, the fact that Cisco and Google are each a Third Party under this Agreement in no way limits or expands the rights or obligations of Cisco or Google under the Cisco & Google Agreement.
1.36.    “TWC” means Time Warner Cable Inc., a Delaware corporation having a principal place of business at 60 Columbus Circle, New York, New York 10023, and its Subsidiaries. 
1.37.    “Video Field” means any system, apparatus, method, software, service, website, process, or other technology (or any combinations thereof) for [***]. All Licensed Patents are deemed to be in the Video Field.
1.38.    “Voting Power” means the right to exercise voting power with respect to the election of directors or similar managing authority of a Person (whether through direct or indirect beneficial ownership of shares or securities of such Person or otherwise).
Unless context otherwise clearly requires, whenever used in this Agreement: (i) the words “include” or “including” shall be construed as incorporating also “but not limited to” or “without limitation”; (ii) the word “day” or “month” means a calendar day or calendar month unless otherwise specified; (iii) the words “notice” and “requests” mean notice or request in writing (whether or not specifically stated) and shall include notices, consents, approvals, and other legally operative communications contemplated under this Agreement; (iv) the words “hereof,” “herein,” “hereby,” and derivative or similar words refer to this Agreement; (v) “and/or” shall be defined to be inclusive and not exclusive and “A, B and/or C” shall mean any and all of A; B; C; A and B; A and C; B and C; and A, B and C; (vi) words of any gender include the other gender; (vii) words using the singular or plural number also include the plural or singular number, respectively; and (viii) references to any specific article, section, or other division thereof shall be deemed to include the then-current amendments thereto.
Section 2.    RELEASES AND DISMISSALS
2.1.    TiVo Limited Releases. TiVo, on behalf of itself and its current Subsidiaries, hereby irrevocably releases, acquits, and forever discharges (and agrees to release, acquit, and forever discharge) as of the Effective Date:
(a)    Arris and its current and former Subsidiaries and their respective current and former agents, representatives, officers, employees, directors and attorneys in their capacity as such, from any and all claims, losses, damages, or liability of any kind and nature, at law, in equity, or otherwise, known and unknown, with respect to: (i) all claims based on or arising from activities that would have been within the scope of the licenses under this Agreement if the accused activity had occurred after the Effective Date, and (ii) all claims asserted or that could have been asserted (known or unknown) in the Pending Google Litigation under the Licensed Patents; and 
(b)    Arris Authorized Third Parties from any and all claims, losses, damages, or liability of any kind and nature, at law, in equity, or otherwise, known and unknown, with respect to Arris Licensed Products that would have been within the scope of the licenses under this Agreement if the accused activity had occurred after the Effective Date.
2.2.    Former Subsidiary Releases. Notwithstanding Section 2.1 above, former Subsidiaries are released only with respect to activities during such time as control existed for such former Subsidiary.

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2.3.    Waiver of Cal. Civ. Code Sec. 1542. TiVo, on behalf of itself and its current Subsidiaries, hereby irrevocably and forever waives all rights it and they may have arising under California Civil Code Section 1542 (or any analogous requirement of law) with respect to the foregoing releases. TiVo, on behalf of itself and its current Subsidiaries, understands that Section 1542 provides that:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.
TiVo, on behalf of itself and its current Subsidiaries, acknowledges that it has been fully informed by its counsel concerning the effect and import of this Agreement under California Civil Code Section 1542 and other requirements of law.
2.4.    Dismissal of Pending Litigation. Concurrently with the execution of this Agreement, Arris shall cause counsel of record to the Pending Google Litigation to complete, execute and deliver (or have delivered) to TiVo the joint motion and proposed order requesting that the Pending Google Litigation be dismissed in the form attached hereto as Exhibit A (the “Dismissal Motions”). TiVo shall complete, execute and file the Dismissal Motions when and as provided in the Cisco & Google Agreement. Arris shall cooperate and shall cause any other parties to the Pending Litigation to cooperate, in taking reasonable actions as might be required to dismiss the Pending Google Litigation.
2.5.    No Admission. This Agreement is entered into in order to compromise and settle disputed claims, without any admission of liability or other acquiescence on the part of any Party as to the merit of any claim, defense, affirmative defense or counterclaim in the Pending Google Litigation.
2.6.    Attorneys’ Fees and Costs. Each Party shall be responsible for its own costs and attorneys’ fees in connection with the Pending Google Litigation and the negotiation of this Agreement.
Section 3.    LICENSES
3.1.    Perpetual License. TiVo, on behalf of itself and its Subsidiaries, hereby grants and agrees to grant to Arris, its Subsidiaries (except as provided in Section 8.2), and [***] a fully paid-up, perpetual, worldwide, non-exclusive, non-transferable (except as provided in Sections 8.1 and 8.3) license, with no right to grant sublicenses, under the Licensed Patents, to make, have made for Arris and its Subsidiaries, use, offer for sale, sell, import and otherwise dispose of Arris Licensed Products. For the avoidance of doubt, no license is granted in this Agreement under any Patent that is not a Licensed Patent (“Other Patents”), even if an Arris Licensed Product practices a Licensed Patent while substantially embodying an Other Patent.
3.2.    Application of Licenses to [***]. The foregoing licenses with respect to [***] with respect to [***].
3.3.    Non-Circumvention. Arris, on behalf of itself and its Subsidiaries, agrees not to enter into any transaction or arrangement that would circumvent the limitations on the licenses herein or extend any rights or benefits under such licenses to any Products that are not otherwise covered under such licenses, including through: (i) any joint venture, resale arrangement, or other business combination or transaction where the primary purpose of such joint venture, resale arrangement, or other business combination or 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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transaction is to circumvent the limitations on such licenses or extend any rights or benefits under such licenses to any Products that are not otherwise covered under such licenses; or (ii) any agreement to indemnify any Third Party entered into for the primary purpose of causing a Product to be licensed or immune under the Licensed Patents. The sole and exclusive remedy for any non-compliance with this Section 3.3 is that such Products shall not be considered Licensed Products.
3.4.    Subsidiary Licenses.
(a)    Application to Subsidiaries. TiVo intends for this Agreement to extend to all of its Subsidiaries with respect to the applicable licenses granted by TiVo and its Subsidiaries to Arris and its Subsidiaries under this Agreement (except as provided in Section 8.2). TiVo agrees that, to the extent they are not already bound, TiVo shall ensure that all such Subsidiaries are bound by the terms of this Agreement.
(b)    Departing Subsidiaries. If a Subsidiary (“Departing Subsidiary”) ceases to be a Subsidiary of Arris on a date after the Effective Date (“Departure Date”), then the licenses granted to such Departing Subsidiary under Section 3 shall continue, but only for Arris Licensed Products of such Departing Subsidiary that are in inventory or were distributed during the time period prior to the Departure Date. If a Departing Subsidiary of TiVo holds, at or before the Departure Date, any Licensed Patent under which Arris and/or its Subsidiaries is licensed, such license shall continue for the Arris Term with respect to such Licensed Patent.
(c)    New Subsidiaries. If a Person becomes a Subsidiary of Arris after the Effective Date, then such Person, upon becoming a Subsidiary, is hereby granted the applicable license set forth in this Section 3 (except as provided in Section 8.2).
3.5.    No Other Rights. No releases, rights, licenses or covenants are granted to any Person or under any Patents except as expressly provided herein, whether by implication, estoppel or otherwise. Without limiting the foregoing sentence: (i) no right to grant sublicenses is granted under the licenses set forth this Agreement; and (ii) no right or license is granted under any copyrights, trademarks, mask work rights, or trade secret rights of either Party or any of its Subsidiaries. 
3.6.    Marking. During the Term, [***], Arris shall mark those Standalone Products manufactured and shipped for use in the United States that have been identified by TiVo ([***]) as covered under the licenses granted in Section 3.1 above in a commercially reasonable manner with up to 4 TiVo Licensed Patents, a commercially reasonable time after the receipt of written notice from TiVo specifying the applicable Patents and the Standalone Products that are identified as being licensed (as updated by written notice from time to time), unless [***], in which case [***]. The obligations under this Section 3.6 may be satisfied by fixing (or having fixed) on such Standalone Products the word ‘patent’ or the abbreviation ‘pat.’ together with an address of a posting on the Internet, accessible to the public without charge for accessing the address, that associates the patented article with the number of the patent as permitted under 35 U.S.C. § 287(a). Compliance with this Section 3.6 will not be and not deemed to be an admission or agreement by Arris or any of its suppliers or customers that the assertion of TiVo that a particular Product is covered by a particular Licensed Patent is correct, advisable, or required, or that any such Product infringes any of such identified patents.
3.7.    No Territoriality. If a particular claim of a Licensed Patent would be exhausted by [***], then the Parties agree and acknowledge that [***].

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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3.8.    Software. Where an Arris Licensed Product is or includes substantially complete software in object code, byte code or executable form, [***] with respect to [***] includes [***].
Section 4.    COVENANTS
4.1.    No Discovery or Evidence. Each Party agrees not to [***]. Notwithstanding the foregoing, if [***] TiVo will be permitted to [***].
4.2.    Willfulness; Enhanced Damages. In the event of any action between any Party and another Party, another Party’s Affiliate’s and/or [***], such Party will not [***] related thereto to claim or support any argument for [***]: (a) against a Party, any of its Affiliates, and/or [***]; or (b) in any future litigation related to [***]. 
Section 5.    TERM AND TERMINATION
5.1.    Term.    The term of this Agreement shall commence on the Effective Date and shall continue in full force and effect until the expiration of the Arris Term. 
5.2.    Remedies; Effect of Termination and Expiration.    
(a)    Remedies for Breach. Except as provided in Section 5.2(b), this Agreement is not terminable under any circumstance and no Party has the right to seek rescission of this Agreement or any other remedy that seeks to invalidate, terminate, void, or undo this Agreement. If a Party breaches any of its obligations under Section 2.4 and such Party does not cure such failure within [***] days after written notice from the other Party, then the other Party shall be entitled to obtain (and the breaching Party hereby waives any right to object to) specific performance of such obligations, without any requirement that such other Party post a bond or other security. In addition, in the event of any proceeding to obtain specific performance of this Agreement, the prevailing Party (as determined by the court) shall be entitled to reasonable attorneys’ fees as determined by the court. 
(b)    If the Cisco & Google Agreement is terminated by reason of non-payment, this Agreement will automatically be void ab initio and no provisions of this Agreement shall be effective.
(c)    Upon expiration of this Agreement pursuant to Section 5.1, this sentence and Sections 2, 3, 4, 6.2, 7, 8.1, 8.3 and 9 will survive.
Section 6.    REPRESENTATIONS, WARRANTIES, AND COVENANTS
6.1.    Representations and Warranties. Each Party represents and warrants to the other Party that: (a) it is a corporation, duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation and has all requisite power and authority, corporate or otherwise, to execute, deliver and perform this Agreement; and (b) it has the right to grant the releases, licenses, and covenants set forth herein.
6.2.    Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN SECTION 6.1, RIGHTS WITH RESPECT TO PATENTS ARE PROVIDED “AS IS,” AND NO PARTY MAKES ANY OTHER REPRESENTATIONS OR WARRANTIES BY VIRTUE OF THIS AGREEMENT, WHETHER EXPRESS OR IMPLIED. Without limiting the foregoing disclaimer, it is understood and agreed that nothing in this Agreement shall be construed as:

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(a)    a warranty or representation by any Party as to the validity or scope of any of its Patents;
(b)    a warranty or representation by any Party that any manufacture, sale, use or other disposition of Products by another Party has been or will be free from infringement of any Patents;
(c)    an agreement by any Party to bring or prosecute actions or suits against any other Person for infringement, or conferring any right to another Party to bring or prosecute actions or suits against any other Person for infringement;
(d)    except to comply with requirements under Section 3.6, conferring upon any Party or its Subsidiaries any right to include in advertising, packaging or other commercial activities related to its Products licensed under this Agreement, any reference to another Party (or any of its Subsidiaries), its trade names, trademarks or service marks in any manner;
(e)    conferring by implication, estoppel or otherwise, upon either Party, any right or license under any Patents except for the releases, licenses, and other rights expressly granted hereunder; or
(f)    an obligation to furnish any technical information, copyrights, mask works or know-how.
Section 7.    CONFIDENTIALITY
7.1.    Confidentiality. Each Party hereby agrees not to disclose to Third Parties without the prior written consent of the other Party the terms and conditions of this Agreement. Notwithstanding the foregoing, no Party shall be liable for the disclosure of the terms and conditions of this Agreement or such confidential information (a) pursuant to judicial action or decree, or any requirement of any government or any agency or department thereof having jurisdiction over such Party, provided that in the reasonable opinion of counsel for such Party such disclosure is required and such Party to the extent reasonably practical shall have given the other Party notice prior to such disclosure sufficient to allow the other Party to seek a protective order; (b) pursuant to a duly issued subpoena, provided that in the reasonable opinion of counsel for such Party such disclosure is required and such Party shall have given the other Party notice prior to such disclosure and such disclosure is made only pursuant to a duly entered protective order under the highest level of designated confidentiality (for example, outside counsel’s eyes only); (c) for the purposes of disclosure in connection with the Securities and Exchange Act of 1934, as amended, the Securities Act of 1933, as amended, any other reports filed with the Securities and Exchange Commission, or any other filings, reports or disclosures that may be required under applicable laws or regulations or stock exchange rules, provided that, in the reasonable opinion of counsel of such Party, such disclosure is required (and such Party shall give the other Parties an opportunity to review the initial disclosure of this Agreement and provide comments on its proposed redactions and, in good faith, incorporate such comments into such disclosure to the extent consistent with legal and regulatory obligations); (d) to a Party’s Subsidiaries, employees, consultants, contractors, auditors, legal or financial advisors, accountants, banks, or financing sources and their advisors, actual or prospective investors or acquirers of a Party or a Subsidiary (and their legal and financial advisors), or other representatives so long as such parties have a need to know such confidential information and are expressly bound to keep such information confidential and not use such information for any unauthorized purpose; (e) as reasonably required for due diligence in connection with any proposed assignment of this Agreement or a transaction involving such Party or its Subsidiary, so long as the Person to whom such terms and conditions are disclosed has a reasonable need to know such confidential information in connection with 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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such transaction and is expressly bound in writing to keep such information confidential and not use such information for any unauthorized purpose; (f) as reasonably required in connection with the enforcement of this Agreement or any rights hereunder; (g) to the extent such terms and conditions have become generally known or available to the public other than through the breach of this Section 7 by the Party making the disclosure; or (h) to a good faith purchaser or potential purchaser of any Licensed Patent(s), so long as such purchaser is under a suitable non-disclosure agreement and only receives information regarding the scope of licenses, releases, or other rights granted under such Licensed Patent(s). Arris may disclose to any of its [***], provided that such disclosure is subject to substantially similar confidentiality obligations as the terms and conditions of this Section 7. A Party may also disclose to [***] under this Agreement, provided that such disclosure is subject to substantially similar confidentiality obligations as the terms and conditions of this Section 7. In addition, any Party may disclose to any Third Party that “the dispute between the parties has been resolved.”
Section 8.    CHANGE OF CONTROL; DVR SUPPLIER ACQUISITIONS; ASSIGNMENT
8.1.    Change of Control. If a Party (the “Acquired Party”) undergoes a Change of Control involving a Third Party (the “Acquirer”), then each of the following subsections shall apply:
(a)    The Acquired Party shall give notice to the other Party (“Non-Acquired Party”) describing in reasonable detail the transaction or series of related transactions no later than 60 days following the closing of such transaction. 
(b)    Where Arris is the Acquired Party, the licenses granted to Arris and its Subsidiaries will be limited to Products marketed, sold, licensed or publicly announced by Arris or any of its Subsidiaries prior to the Change of Control in accordance with the terms and conditions of Section 3 (“Existing Licensed Products”), updates, upgrades, and bug fixes thereto, and new versions thereof that are substantially similar in function and features. The licenses will not otherwise extend to the Acquirer or any of its Affiliates. 
(c)    Except as otherwise expressly set forth in this Section 8.1, the licenses granted to Arris and its Subsidiaries (and permitted successors and permitted assigns) will remain in effect after such Change of Control in accordance with the terms and conditions of this Agreement.
8.2.    DVR Supplier Acquisitions. If Arris or one of its Subsidiaries acquires (whether through merger, asset purchase or otherwise, and whether through a single transaction or a series of related transactions) all or substantially all of (i) [***] (an Acquired DVR Supplier), or (ii) [***] (an Acquired DVR Business), then each of the following subsections shall apply: 
(a)    Arris shall give notice to TiVo describing in reasonable detail the transaction or series of related transactions no later than 60 days following the closing of such transaction.
(b)    The licenses granted to Arris and its Subsidiaries under this Agreement [***]. 
(c)    Except as otherwise expressly set forth above in this Section 8.2, [***] after such acquisition in accordance with the terms and conditions of this Agreement.
8.3.    Assignment. 

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(a)    This Agreement may not be assigned by any Party without the prior written consent of the other Party, including by operation of law, except in connection with a Change of Control subject to Section 8.1.
(b)    TiVo acknowledges and agrees that the Licensed Patents are intended to be encumbered by the licenses and releases contained in this Agreement within the scope of such licenses and releases, and that such licenses and releases shall run with such Licensed Patents and apply to any assignee or transferee of such Licensed Patents. Neither TiVo nor any Subsidiary thereof shall assign or grant any exclusive right or any right to enforce under any Licensed Patent unless the applicable assignee or grantee agrees, on or prior to the date of such assignment or grant, in writing to be bound by the terms and conditions of this Agreement with respect to such Licensed Patent. Failure to make such assignment or grant subject to this Agreement shall render such assignment or grant void ab initio. Any breach of this Section 8.3(b) by TiVo or any of its Subsidiaries shall be regarded as a material breach of this Agreement by TiVo, and TiVo shall indemnify and hold harmless Arris, its Subsidiaries and Arris Authorized Third Parties for any and all costs and expenses (including reasonable fees of attorneys and other professionals), liabilities, damages and losses arising out of or resulting from any such breach of this Section 8.3(b), including from any Assertion of any Licensed Patent by a third party that would have been prevented by compliance with this Section 8.3.
(c)    Subject to the foregoing, this Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective permitted successors and permitted assigns. 
Section 9.    GENERAL
9.1.    Notices. All notices that are required or permitted to be given hereunder shall be in writing and shall be sent by overnight courier service, charges prepaid, written signature of the receiving party requested and received, to the Party to be notified, addressed to such Party at the physical address set forth below. The receipt of such notice (in the case of delivery by overnight courier service) or, if the addressee refuses to accept the tender of such notice, then the tender of such notice for delivery shall constitute the giving thereof. 
if to TiVo:    TiVo Inc.
Attn: Office of the General Counsel
2160 Gold Street
Alviso, California 95002-2160

if to Arris:    ARRIS Group, Inc.
Attn: General Counsel
3871 Lakefield Drive 
Suwanee, Georgia 30024

9.2.    Governing Law; Venue. This Agreement is governed by the laws of the state of California, without regards to conflict of law rules. The Parties shall bring any disputes arising out of or related to this Agreement exclusively in a state or federal court in the county of Santa Clara County, California, and submit to the personal jurisdiction of such courts. The Parties agree that the United Nations Convention on Contracts for the International Sale of Goods will not apply in any respect to this Agreement or sales of goods.

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9.3.    Relationship of Parties. Nothing contained in this Agreement shall be deemed or construed as creating a joint venture, partnership, agency, employment or fiduciary relationship between the Parties. No Party or any of its agents has any authority of any kind to bind any other Party in any respect whatsoever, and the relationship of the Parties is, and at all times shall continue to be, that of independent contractors. [***]
9.4.    Waiver. A waiver, express or implied, of any right under this Agreement or of any failure to perform or breach hereof will not constitute or be deemed to be a waiver of any other right hereunder or of any other failure to perform or breach hereof, whether of the same, or a similar or dissimilar nature thereto. 
9.5.    Severability. If any provision of this Agreement is unenforceable or invalid under any applicable law or is so held by applicable court decision, such unenforceability or invalidity will not render this Agreement unenforceable or invalid as a whole, and, in such event, such provision shall be changed and interpreted so as to best accomplish the objectives of the Parties within the limits of applicable law or applicable court decision.
9.6.    Bankruptcy. All licenses to Patents granted under or pursuant to this Agreement are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the Bankruptcy Code, licenses of rights of “intellectual property” and rights to “intellectual property” under agreements supplementary thereto as “intellectual property” is defined under Section 101 of the Bankruptcy Code. The Parties agree that any Party shall retain and may fully exercise all of its rights and elections under the Bankruptcy Code in the event of any bankruptcy or insolvency proceeding of any kind or nature. Each Party acknowledges that if a Party granting a license hereunder, as a debtor in possession, or a trustee-in-bankruptcy for such Party, in a case under the Bankruptcy Code, rejects this Agreement, the Party receiving such license and its Subsidiaries may elect to retain their rights under this Agreement as provided in Section 365(n) of the Bankruptcy Code. 
9.7.    Cumulative Remedies. The rights and remedies of the Parties as set forth in this Agreement are not exclusive and are in addition to any other rights and remedies now or hereafter provided by law or at equity.
9.8.    Captions and Headings. The captions and headings used in this Agreement are inserted for convenience only, do not form a part of this Agreement, and are not to be used in any way to construe or interpret this Agreement.
9.9.    Construction. This Agreement has been negotiated by the Parties and shall be interpreted fairly in accordance with its terms and without any construction in favor of or against any Party.
9.10.    Sophisticated Parties Represented by Counsel. The Parties each acknowledge that they are sophisticated Parties represented at all relevant times during the negotiation and execution of this Agreement by counsel of their choice, and that they and their counsel have engaged in robust, arm’s-length negotiation of this Agreement.
9.11.    Counterparts. This Agreement may be executed (including by electronic transmission of scanned signature pages) in one or more counterparts with the same effect as if the Parties had signed the same document. Each counterpart so executed shall be deemed to be an original, and all such counterparts shall be construed together and shall constitute one agreement.

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
11

9.12.    Entire Agreement; Amendment. This Agreement, including the Exhibit(s) attached hereto which are incorporated herein by reference, constitutes the entire understanding and only agreement between the Parties with respect to the subject matter hereof and supersedes any and all prior negotiations, representations, term sheets, memorandums of understanding, agreements, and understandings, written or oral, that the Parties may have reached with respect to the subject matter hereof. No agreements altering or supplementing the terms hereof may be made except by means of a written document signed by the duly authorized representatives of each of the Parties hereto.
[Remainder of page intentionally left blank.]

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
12

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives.

TIVO INC.

By:    /s/ Naveen Chopra_______
Name: Naveen Chopra
Title: Chief Financial Officer
Date: July 2, 2013

ARRIS GROUP, INC.

By:    /s/ Larry Margolis_______
Name: Larry Margolis
Title: Executive Vice President
Date: July 2, 2013

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
13

Exhibit A
Dismissal Motions
See attached.

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TEXAS
TEXARKANA DIVISION

	
		
	

MOTOROLA MOBILITY, INC. and GENERAL INSTRUMENT CORPORATION

                                    Plaintiffs,

vs.

TIVO INC., 

                                    Defendant.
_______________________________________

TIVO INC.,

Counterclaim Plaintiff

v.

MOTOROLA MOBILITY, INC., GENERAL INSTRUMENT CORPORATION, TIME WARNER CABLE INC., and TIME WARNER CABLE LLC,

Counterclaim Defendants.

	

Civil Action No. 5:11-00053-JRG

JURY TRIAL DEMANDED

STIPULATION AND JOINT MOTION TO DISMISS PURSUANT TO 
RULE 41 OF THE FEDERAL RULES OF CIVIL PROCEDURE

Pursuant to Rule 41 of the Federal Rules of Civil Procedure and the agreements of the Parties, Plaintiffs and Counterclaim Defendants Motorola Mobility, Inc. and General Instrument Corporation (collectively, "Motorola"), and Counterclaim Defendants Time Warner Cable, Inc. and Time Warner Cable LLC (collectively, "Time Warner Cable") and Defendant and Counterclaim 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Plaintiff TiVo Inc. ("TiVo") (collectively the "Parties"), by and through counsel, hereby stipulate to the dismissal of this entire action as follows:
		
	1.
	Motorola's Eight and Ninth Causes of Action are dismissed with prejudice in their entirety.  All other claims and counterclaims Motorola asserted against TiVo in the above-captioned action are dismissed with prejudice in their entirety, except that all Motorola claims and counterclaims asserting invalidity of TiVo's U.S. Patent No. 6,233,389 ("the '389 patent"), U.S. Patent No. 7,529,465 ("the '465 patent"), and U.S. Patent No. 6,792,195 ("the '195 patent"), are dismissed without prejudice. 

		
	2.
	All claims and counterclaims TiVo asserted against Motorola in the above-captioned action are dismissed with prejudice in their entirety, except that all TiVo claims and counterclaims asserting invalidity of Motorola's U.S. Patent No. 6,304,714 ("the '714 patent"), 5,949,948 ("the '948 patent"), and 6,356,708 ("the '708 patent"), are dismissed without prejudice.

		
	3.
	All claims and counterclaims that TiVo asserted against Time Warner Cable in the above-captioned action are dismissed in their entirety without prejudice.  

		
	4.
	The Parties shall each bear their own costs and attorney's fees in this action.

Text of an Order of Dismissal has been lodged concurrently herewith.

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

	
		
	Dated:  July __, 2013

Respectfully submitted,
By:  /s/ Jennifer H. Doan                              
Jennifer Haltom Doan 
Texas Bar No. 08809050
Shawn Alexander Latchford
Texas Bar No. 24066603
Stephen W. Creekmore, IV
Texas Bar No. 24080844
Haltom & Doan 
6500 Summerhill Road 
Crown Executive Center, Suite 100 
Texarkana, TX 75503 
Telephone:  (903)  255-1000 
Fax:  (903) 255-0800 
Email: jdoan@haltomdoan.com 
Email: slatchford@haltomdoan.com
Email: screekmore@haltomdoan.com

Lance Lee
Texas Bar No. 24004762
5511 Plaza Drive
Texarkana, TX 75503
Telephone: (903) 223-0276
Facsimile: (903) 233-0210
wlancelee@aol.com

Mark Mann
Texas Bar No. 12926150
The Mann Firm
300 West Main Street
Henderson, TX 75652
Phone (903)657-8540
Fax (903)657-6003
mm@themannfirm.com

Charles K. Verhoeven (Pro Hac Vice)
Quinn Emanuel Urquhart & Sullivan, LLP
50 California Street, 22nd Floor
San Francisco, California 94111
Telephone: (415) 875-6600
Facsimile:  (415) 875-6700
charlesverhoeven@quinnemanuel.com

Edward J. DeFranco (Pro Hac Vice)
eddefranco@quinnemanuel.com
Matthew Traupman (Pro Hac Vice)
matthewtraupman@quinnemanuel.com
51 Madison Avenue, 22nd Floor
New York, New York 10010
Telephone: (212) 849-7000
Facsimile: (212) 849-7100

	/s/ Richard Birnholz                                  
Richard M. Birnholz

Sam Baxter, Lead Attorney
Texas State Bar No. 01938000
sbaxter@mckoolsmith.com
Garret W. Chambers
Texas State Bar No. 00792160
gchambers@mckoolsmith.com
McKool Smith
300 Crescent Court, Suite 1500
Dallas, Texas 75201
TEL: 214.978.4016
FAX: 214.978.4044

IRELL & MANELLA LLP
Morgan Chu (Pro Hac Vice)
mchu@irell.com
Andrei Iancu (Pro Hac Vice)
aiancu@irell.com
Richard M. Birnholz (Pro Hac Vice)
rbirnholz@irell.com
Joseph M. Lipner (Pro Hac Vice)
jlipner@irell.com
Thomas C. Werner (Pro Hac Vice)
twerner@irell.com
1800 Avenue of the Stars, Suite 900
Los Angeles, California 90067-4276
Telephone:(310) 277-1010
Facsimile:(310) 203-7199
ATTORNEYS FOR TIVO INC.

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

	
		
	Marrisa R. Ducca
Quinn manuel Urquhart & Sullivan, LLP
1299 Pennsylvania Ave. NW, Suite 825
Washington, D.C. 20004
Telephone: (202) 538-8109
Facsimile: (202) 538-8100
marissaducca@quinnemanuel.com

Brian K. Erickson
Texas Bar No. 24012594
brian.erickson@dlapiper.com
John Guaragna
Texas Bar No. 24043308
john.guaragna@dlapiper.com
Aaron Fountain
Texas Bar No. 24050619
aaron.fountain@dlapiper.com
Todd Patterson
Texas Bar No. 24060396
todd.patterson@dlapiper.com
401 Congress Avenue, Suite 2500
Austin, TX  78701-3799
Phone: 512.457.7000
Fax: 512.457.7001

John Allcock (admitted pro hac vice)
john.allcock@dlapiper.com
Sean Cunningham (admitted pro hac vice)
sean.cunningham@dlapiper.com
Erin Gibson (admitted pro hac vice)
erin.gibson@dlapiper.com
Edward H. Sikorski (admitted pro hac vice)
ed.sikorski@dlapiper.com
401 B Street, Suite 1700
San Diego, CA 92101
Telephone:  619-699-2700
Facsimile:  619-699-2701                 

Andrew N. Stein
D.C. Bar No. 1005411
andrew.stein@dlapiper.com
500 Eighth Street, NW
Washington, DC 20004
Telephone:  202-799-4000
Facsimile:  202-799-5000

Attorneys for Plaintiffs Motorola Mobility, Inc. and General Instrument Corporation and Counterclaim Defendants TIME WARNER CABLE, INC. and TIME WARNER CABLE LLC
	 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

CERTIFICATE OF SERVICE

The undersigned certifies that the foregoing document was filed electronically in compliance with Local Rule CV-5(a).  All other counsel of record not deemed to have consented to electronic service were served with a true and correct copy of the foregoing by certified mail, return receipt requested, on this the 4th day of June, 2013.

/s/ Jennifer H. Doan                
           Jennifer H. Doan

            

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TEXAS
TEXARKANA DIVISION

	
		
	

MOTOROLA MOBILITY, INC. and GENERAL INSTRUMENT CORPORATION

                                    Plaintiffs,

vs.

TIVO INC., 

                                    Defendant.
_______________________________________

TIVO INC.,

Counterclaim Plaintiff

v.

MOTOROLA MOBILITY, INC., GENERAL INSTRUMENT CORPORATION, TIME WARNER CABLE INC., and TIME WARNER CABLE LLC,

Counterclaim Defendants.

	

Civil Action No. 5:11-00053-JRG

JURY TRIAL DEMANDED

[PROPOSED] ORDER ON STIPULATION AND JOINT MOTION TO DISMISS PURSUANT TORULE 41 OF THE FEDERAL RULES OF CIVIL PROCEDURE

The Court has considered the Stipulation and Joint Motion to Dismiss Pursuant to Rule 41 of the Federal Rules of Civil Procedure and agreements of the Parties filed by Plaintiffs and Counterclaim Defendants Motorola Mobility, Inc. and General Instrument Corporation (collectively, "Motorola"), and Counterclaim Defendants Time Warner Cable, Inc. and Time Warner 

	
			
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Cable LLC (collectively, "Time Warner Cable") and Defendant and Counterclaim Plaintiff TiVo Inc. ("TiVo") (collectively the "Parties").  The motion is hereby GRANTED.  
Accordingly, it is ORDERED that the entire action is dismissed in accordance with Rule 41 of the Federal Rules of Civil Procedure and the Parties' Stipulation as follows:
		
	1.
	Motorola's Eight and Ninth Causes of Action are dismissed with prejudice in their entirety.  All other claims and counterclaims Motorola asserted against TiVo in the above-captioned action are dismissed with prejudice in their entirety, except that all Motorola claims and counterclaims asserting invalidity of TiVo's U.S. Patent No. 6,233,389 ("the '389 patent"), U.S. Patent No. 7,529,465 ("the '465 patent"), and U.S. Patent No. 6,792,195 ("the '195 patent"), are dismissed without prejudice. 

		
	2.
	All claims and counterclaims TiVo asserted against Motorola in the above-captioned action are dismissed with prejudice in their entirety, except that all TiVo claims and counterclaims asserting invalidity of Motorola's U.S. Patent No. 6,304,714 ("the '714 patent"), 5,949,948 ("the '948 patent"), and 6,356,708 ("the '708 patent"), are dismissed without prejudice.

		
	3.
	All claims and counterclaims that TiVo asserted against Time Warner Cable in the above-captioned action are dismissed in their entirety without prejudice.  

		
	4.
	The Parties shall each bear their own costs and attorney's fees in this action.

	
	
	 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.vu1exh101.htm

Exhibit 10.1

VU1 CORPORATION

2007 STOCK INCENTIVE PLAN

SECTION 1.  PURPOSE

The purpose of this 2007 Stock Incentive Plan (the “Plan”) is to enhance the long-term stockholder value of Vu1 Corporation, a California corporation (the “Company”), by offering opportunities to employees, directors, officers, consultants, agents, advisors and independent contractors of the Company and its Subsidiaries (as defined in Section 2) to participate in the Company’s growth and success, and to encourage them to remain in the service of the Company and its Subsidiaries and to acquire and maintain stock ownership in the Company.

SECTION 2.  DEFINITIONS

For purposes of the Plan, the following terms shall be defined as set forth below:

“Award” means an award or grant made pursuant to the Plan, including, without limitation, awards or grants of Options and Stock Awards, or any combination of the foregoing.

 

“Board” means the Board of Directors of the Company.

“Cause” means dishonesty, fraud, misconduct, unauthorized use or disclosure of confidential information, trade secrets or other intellectual property, or conviction or confession (including a plea of no contest) of a crime punishable by law (except minor violations), or conduct that adversely affects the Company’s business or reputation, in each case as determined by the Plan Administrator in its sole discretion, and its determination as to whether an action constitutes Cause shall be conclusive and binding.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

 

“Common Stock” means the Company common stock, no par value per share.

 

“Corporate Transaction” means any of the following events:

(a)           Consummation of any merger or consolidation of the Company in which the Company is not the continuing or surviving corporation, or pursuant to which shares of the Common Stock are converted into cash, securities or other property, if following such merger or consolidation the holders of the Company’s outstanding voting securities immediately prior to such merger or consolidation own less than 50% of the outstanding voting securities of the surviving corporation;

(b)           Consummation of any sale, lease, exchange or other transfer in one transaction or a series of related transactions of all or substantially all of the Company’s assets other than a transfer of the Company’s assets to a majority-owned subsidiary corporation of the Company; or

  

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(c)           Approval by the holders of the Common Stock of any plan or proposal for the liquidation or dissolution of the Company.

Ownership of voting securities shall take into account and shall include ownership as determined by applying Rule 13d-3(d)(1)(i) (as in effect on the date of adoption of the Plan) under the Exchange Act.

“Disability” means “disability” as that term is defined for purposes of Section 22(e)(3) of the Code.  As of the date of adoption of this Plan, such terms means the inability to engage in any substantial gainful activity by reason of any medically determinable mental or physical impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.

“Employee” means any person, including officers and directors, employed by the Company (or one of its parent corporations or subsidiary corporations), with the status of employment determined based upon such minimum number of hours or periods worked as shall be determined by the Plan Administrator in its discretion, subject to any requirements of the Code.  For purposes of this provision, “parent corporation” and “subsidiary corporation” shall have the meanings attributed to those terms for purposes of Section 422 of the Code.

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

“Fair Market Value” shall be the fair market value of the Common Stock, as of any date, as determined by the Plan Administrator as follows:

(a)           if the Common Stock is listed on any established stock exchange or a national market system, or quoted on a quotation system, including the OTC Bulletin Board, the Fair Market Value shall be the closing sales price for such stock (or if no sales were reported, the closing sales price on the date of determination, as quoted on such system or exchange, or the system or exchange with the greatest volume of trading in Common Stock, on the date of determination, as reported in The Wall Street Journal or such other source as the Plan Administrator deems reliable; or

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

  

2

  

 

“Grant Date” means the date the Plan Administrator adopted the granting resolution or a later date designated in a resolution of the Plan Administrator as the date an Award is to be granted.

“Holder” means (a) the person to whom an Award is granted, (b) for a Holder who has died, the personal representative of the Holder’s estate, the person(s) to whom the Holder’s rights under the Award have passed by will or by the applicable laws of descent and distribution, or the beneficiary designated in accordance with Section 10, or (c) the person(s) to whom an Award has been transferred in accordance with Section 10.

“Incentive Stock Option” means an Option to purchase Common Stock granted under Section 7 with the intention that it qualify as an “incentive stock option” as that term is defined in Section 422 of the Code.

“Nonqualified Stock Option” means an Option to purchase Common Stock granted under Section 7 other than an Incentive Stock Option.

“Option” means the right to purchase Common Stock granted under Section 7.

“Plan Administrator” means the Board or any committee of the Board designated to administer the Plan under Section 3.1.

“Restricted Stock” means shares of Common Stock granted under Section 9, the rights of ownership of which are subject to restrictions prescribed by the Plan Administrator.

“Securities Act” means the Securities Act of 1933, as amended.

 

“Stock Award” means an Award granted under Section 9.

 

“Subsidiary” means any entity that is directly or indirectly controlled by the Company or in which the Company has a significant ownership interest, as determined by the Plan Administrator, and any entity that may become a direct or indirect parent of the Company.

“Successor Corporation” has the meaning set forth under Section 11.2.

SECTION 3.  ADMINISTRATION

3.1           Plan Administrator.  The Plan shall be administered by the Board, or a committee or committees (which term includes subcommittees) appointed by, and consisting of two or more members of, the Board.  For so long as the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, the Board shall consider in selecting the Plan Administrator and the membership of any committee acting as Plan Administrator, with respect to any persons subject or likely to become subject to Section 16 of the Exchange Act, the provisions regarding (a) “outside directors” as contemplated by Section 162(m) of the Code, (b) “nonemployee directors” as contemplated by Rule 16b-3 under the Exchange Act, and (c) any requirements as to “independent directors” pursuant to rules of any securities exchange on which the Common Stock is quoted or listed for trading.  The Board may delegate the responsibility for administering the Plan with respect to designated classes of eligible persons to different committees consisting of two or more members of the Board, subject to such limitations as the Board deems appropriate.  Committee members shall serve for such term as the Board may determine, subject to removal by the Board at any time.

  

3

  

 

3.2           Administration and Interpretation by the Plan Administrator.  Except for the terms and conditions explicitly set forth in the Plan, the Plan Administrator shall have exclusive authority, in its discretion, to determine all matters relating to Awards under the Plan, including the selection of individuals to be granted Awards, the type of Awards, the number of shares of Common Stock subject to an Award, all terms, conditions, restrictions and limitations, if any, of an Award and the terms of any document, agreement or instrument that evidences the Award.  The Plan Administrator shall also have exclusive authority to interpret the Plan and may from time to time adopt, and change, rules and regulations of general application for the Plan’s administration.  The Plan Administrator’s interpretation of the Plan and its rules and regulations, and all actions taken and determinations made by the Plan Administrator pursuant to the Plan, shall be conclusive and binding on all parties involved or affected.  The Plan Administrator may delegate administrative duties to such of the Company’s officers as it so determines.

3.3           Replacement of Options.  Without limiting the authority granted to the Plan Administrator under Section 3.2, the Plan Administrator, in its sole discretion, shall have the authority, among other things, to (a) grant Options subject to the condition that Options previously granted at a higher or lower exercise price under the Plan be canceled or exchanged in connection with such grant (the number of shares covered by the new Options, the exercise price, the term and the other terms and conditions of the new Option, shall be determined in accordance with the Plan and may be different from the provisions of the canceled or exchanged Options), and (b) amend or modify outstanding and unexercised Options, with the consent of the Holder, to, among other things, reduce the exercise price per share, establish the exercise price at the then-current Fair Market Value or accelerate or defer the exercise date, vesting schedule or expiration date of any Option.

SECTION 4.  STOCK SUBJECT TO THE PLAN

4.1           Authorized Number of Shares.  Subject to adjustment from time to time as provided in Section 11.1, a maximum of 2,500,000 (two million five hundred thousand) shares of Common Stock shall be available for issuance under the Plan.  Shares issued under the Plan shall be drawn from authorized and unissued shares or shares now held or subsequently acquired by the Company.

4.2           Reuse of Shares.  Any shares of Common Stock that have been made subject to an Award that cease to be subject to the Award (other than by reason of exercise or payment of the Award to the extent it is exercised for or settled in shares) shall again be available for issuance in connection with future grants of Awards under the Plan.

SECTION 5.  ELIGIBILITY

Awards may be granted under the Plan to those Employees, officers and directors of the Company and its Subsidiaries as the Plan Administrator from time to time selects.  Awards may also be made to consultants, agents, advisors and independent contractors who provide services to the Company and its Subsidiaries, as the Plan Administrator from time to time selects.  In granting Awards to consultants, agents, advisors and independent contractors, the Plan Administrator shall give consideration to the requirements set forth in the instructions to the use of Form S-8 registration statement under the Securities Act.  A member of the Board may be eligible to participate in or receive or hold Awards under this Plan; provided, however, that no member of the Board shall vote with respect to the granting of an Award to himself or herself.

  

4

  

 

SECTION 6.  AWARDS

6.1           Form and Grant of Awards.  The Plan Administrator shall have the authority, in its sole discretion, to determine the type or types of Awards to be made under the Plan.  Such Awards may include, but are not limited to, Incentive Stock Options, Nonqualified Stock Options and Stock Awards.  Awards may be granted singly or in combination.  An eligible person may receive one or more grants of Awards as the Plan Administrator shall from time to time determine, and such determinations may be different as to different Holders and may vary as to different grants, even when made simultaneously.

6.2           Number of Shares.  The maximum number of shares that may be issued pursuant to the grant of an Award shall be as established by the Plan Administrator.

6.3           Acquired Company Awards.  Notwithstanding anything in the Plan to the contrary, the Plan Administrator may grant Awards under the Plan in substitution for awards issued under other plans, or assume under the Plan awards issued under other plans, if the other plans are or were plans of other acquired entities (“Acquired Entities”) (or the parent of the Acquired Entity) and the new Award is substituted, or the old award is assumed, by reason of a merger, consolidation, acquisition of property or of stock, reorganization or liquidation (the “Acquisition Transaction”).  In the event that a written agreement pursuant to which the Acquisition Transaction is completed is approved by the Board and said agreement sets forth the terms and conditions of the substitution for or assumption of outstanding awards of the Acquired Entity, said terms and conditions shall be deemed to be the action of the Plan Administrator without any further action by the Plan Administrator, except as may be required for compliance with Rule 16b-3 under the Exchange Act, and the persons holding such Awards shall be deemed to be Holders.

SECTION 7.  AWARDS OF OPTIONS

7.1           Grant of Options.  The Plan Administrator is authorized under the Plan, in its sole discretion, to issue Options as Incentive Stock Options or as Nonqualified Stock Options, which shall be appropriately designated.

7.2           Option Exercise Price.  The exercise price for shares purchased under an Option shall be as determined by the Plan Administrator, but shall not be less than 100% of the Fair Market Value of the Common Stock on the Grant Date.

7.3           Term of Options.  The term of each Option shall be as established by the Plan Administrator or, if not so established, shall be 10 years from the Grant Date.

7.4           Vesting / Exercisability of Options.  The Plan Administrator shall establish and set forth in each agreement that evidences an Option the time at which or the installments in which, if any, the Option shall vest and become exercisable.  In the absence of a defined vesting schedule in the agreement evidencing the Option, the Option covered by such agreement will vest and become exercisable ratably over 36 (thirty-six) months from the date of grant.  The Plan Administrator, in its absolute discretion, may waive or accelerate any vesting requirement contained in outstanding and unexercised Options.

  

5

  

 

7.5           Exercise of Options.  Options shall be exercised in accordance with the following terms and conditions:

(a)           Procedure.  To the extent that an Option has vested and is currently exercisable, an Option may be exercised from time to time by written notice to the Company, in accordance with procedures established by the Plan Administrator, setting forth the number of shares with respect to which the Option is being exercised and accompanied by payment in full of the exercise price.  The Plan Administrator may determine at any time that an Option may not be exercised as to less than 100 shares at any one time (or the lesser number of remaining shares covered by the Option).  Only whole shares shall be issued pursuant to the exercise of any Option.

(b)           Payment of Exercise Price.

(1)           The exercise price for shares purchased under an Option shall be paid in full to the Company by delivery of consideration equal to the product of the Option exercise price and the number of shares being purchased.  Such consideration must be paid in any combination of cash and/or bank-certified or cashier’s check (or personal check if determined acceptable by the Plan Administrator in its sole discretion), either at the time the Option is granted or within three days after notice of exercise is tendered to the Company.

(2)           In addition, to the extent permitted by the Plan Administrator in its sole discretion, the exercise price for shares purchased under an Option may be paid, either singly or in combination with one or more of the alternative forms of payment authorized by this Section 7.5, by (y) delivery of a full-recourse promissory note or (z) such other consideration as the Plan Administrator may permit.  The terms of any such promissory note, including the interest rate, terms of and security for repayment, and maturity, will be subject to the Plan Administrator’s discretion.  Any such promissory note shall bear interest at a rate specified by the Plan Administrator but in no case less than the rate required to avoid imputation of interest (taking into account any exceptions to the imputed interest rules) for federal income tax purposes.

(3)           For so long as the Common Stock is registered under Section 12 of the Exchange Act, then, to the extent permitted by applicable laws and regulations (including, but not limited to, federal tax and securities laws and regulations) and unless the Plan Administrator determines otherwise, an Option also may be exercised by (a) delivery of shares of Common Stock (which shares, if tendered by an affiliate of the Company, shall have been held by the Holder for at least six months) having a Fair Market Value equal to the aggregate exercise price (such payment in stock may occur in the context of a single exercise of an option or successive and simultaneous exercises, sometimes referred to as “pyramiding,” which provides that, rather than physically exchanging certificates for a series of exercises, bookkeeping entries will be made pursuant to which the Holder is permitted to retain his existing stock certificate and a new stock certificate is issued for the net shares), or (b) delivery of a properly executed exercise notice together with irrevocable instructions to (i) a brokerage firm acceptable to the Company to deliver promptly to the Company the aggregate amount of sale or loan proceeds to pay the Option exercise price and any withholding tax obligations that may arise in connection with such exercise, and (ii) the Company to deliver the certificates for such purchased shares directly to such brokerage firm, all in accordance with the requirements of the Federal Reserve Board.

  

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7.6           Rights as Stockholder.  Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) of the stock certificate evidencing such shares, no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to shares of Common Stock acquired on exercise of an Option, notwithstanding the exercise of the Option.  The Company shall issue (or cause to be issued) such stock certificate promptly upon proper exercise of the Option and payment in full of the aggregate exercise price.  In the event that the exercise of an Option is treated in part as the exercise of a Nonqualified Stock Option (pursuant to the provisions of Section 8.1), the Company shall issue a stock certificate evidencing the shares treated as acquired upon the exercise of an Incentive Stock Option and a separate stock certificate evidencing the shares treated as acquired upon the exercise of a Nonqualified Stock Option, and shall identify each such certificate accordingly in its stock transfer records.  No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 11 of this Plan.

7.7           Post-Termination Exercises.  The Plan Administrator shall establish and set forth in each agreement that evidences an Option whether the Option will continue to be exercisable, and the terms and conditions of such exercise, if a Holder ceases to be employed by, or to provide services to, the Company or its Subsidiaries, which provisions may be waived or modified by the Plan Administrator at any time.  If not so established in the instrument evidencing the Option, the Option will be exercisable according to the following terms and conditions, which may be waived or modified by the Plan Administrator at any time.

(a)           Termination other than Death, Disability or Cause.  In case of termination of the Holder’s employment or services other than by reason of death, Disability or Cause, the Holder may exercise his or her Options at any time prior to the expiration of three months after the date the Holder ceases to be an Employee, director, officer, consultant, agent, advisor or independent contractor of the Company or a Subsidiary (but in no event later than the remaining term of the Option), but only if and to the extent the Holder was entitled to exercise the option at the date of such termination.  A transfer of employment or services between or among the Company and its Subsidiaries shall not be considered a termination of employment or services.  The effect of a Company-approved leave of absence on the terms and conditions of an Option shall be determined by the Plan Administrator, in its sole discretion.

  

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(b)           Disability.  In case of termination of the Holder’s employment or services by reason of the Holder’s Disability, the Holder (or personal representative) may exercise his or her Options at any time prior to the expiration of one year after the date of such termination (but in no event later than the remaining term of the Option), but only if and to the extent the Holder was entitled to exercise the option at the date of such termination.

(c)           Death.  In the event of the death of a Holder, any Options held may be exercised at any time on or prior to the expiration of one year after the date of death (but in no event later than the remaining term of the Option), but only if and to the extent the Holder was entitled to exercise the option at the date of his or her death, and only by the Holder’s personal representative (if then subject to administration as part of the Holder’s estate) or by the person(s) to whom the Holder’s rights under the Option shall have passed by will or by the applicable laws of descent and distribution or by Holder’s Permitted Transferee.

(d)           Cause.  In case of termination of the Holder’s employment or services for Cause, all Options held by Holder or his or her Permitted Transferee shall automatically terminate upon first notification to the Holder of such termination, unless the Plan Administrator determines otherwise.  If a Holder’s employment or services with the Company are suspended pending an investigation of whether the Holder shall be terminated for Cause, all the Holder’s rights under any Option likewise shall be suspended during the period of investigation.

7.8           Waiver or Extension of Time Periods.  The Plan Administrator shall have the authority, prior to or within the times specified in this Section 7 for the exercise of any such Option, to extend such time period or waive in its entirety any such time period to the extent that such time period expires prior to the expiration of the term of such option.  In addition, the Plan Administrator may modify or eliminate the time periods specified in this Section 7 with respect to particular Option grants.  However, no Incentive Stock Option may be exercised after the expiration of ten years from the date such option is granted.  If a Holder holding an Incentive Stock Option exercises such Option, by express permission of the Plan Administrator, after the expiration of the time periods specified in this Section 7, the Option will no longer be treated as an Incentive Stock Option under the Code and shall automatically be converted into a Nonqualified Stock Option.

7.9           Termination of Options.  Any portion of an Option that is not vested and exercisable on the date of termination of the Holder’s employment or services shall terminate on such date, unless the Plan Administrator determines otherwise.  In addition, to the extent that any Options of any Holder whose employment or services have terminated shall not have been exercised within the limited periods prescribed in this Section 7, the Options and all further rights to purchase shares pursuant to such Options shall cease and terminate at the expiration of such period.

SECTION 8.  INCENTIVE STOCK OPTION LIMITATIONS

To the extent required by Section 422 of the Code, Incentive Stock Options shall be subject to the following additional terms and conditions:

  

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8.1           Limitation on Amount of Grants to any one Holder.  To the extent that a Holder is granted Incentive Stock Options that in the aggregate (together with all other Incentive Stock Options granted by the Company or Subsidiaries to such Holder under this Plan and any other stock option plans of the Company) entitle the Holder to purchase, in any calendar year during which such Options first become exercisable, Common Stock having a Fair Market Value (determined as of the Grant Date) in excess of $100,000, such portion of the Options in excess of $100,000 shall be treated as a Nonqualified Stock Option.  In the event the Holder holds two or more such Options that become exercisable for the first time in the same calendar year, such limitation shall be applied on the basis of the order in which such Options are granted.

8.2           Grants to 10% Stockholders.  Incentive Stock Options may be granted to a person who, at the time the option is granted, owns more than 10% of the total combined voting power of all classes of stock of the Company or any Subsidiary only if (a) the exercise price per share shall not be less than 110% of the Fair Market Value of the Common Stock on the Grant Date, and (b) the Option term shall not exceed five years from the Grant Date.  The determination of 10% ownership shall be made by the Plan Administrator in accordance with Section 422 of the Code.

8.3           Eligible Persons.  Only persons who are Employees may receive Incentive Stock Options.  Persons who are not Employees may not be granted Incentive Stock Options and will only be eligible to receive Nonqualified Stock Options.

8.4           Term.  The term of an Incentive Stock Option shall not exceed 10 years.

8.5           Exercisability.  To qualify for Incentive Stock Option tax treatment, an Option designated as an Incentive Stock Option must be exercised within three months after termination of employment for reasons other than death, except that, in the case of termination of employment due to Disability, such Option must be exercised within one year after such termination.  Employment shall not be deemed to continue beyond the first 90 days of a leave of absence unless the Holder’s reemployment rights are guaranteed by statute or contract.

8.6           Taxation of Incentive Stock Options.  In order to obtain certain tax benefits afforded to Incentive Stock Options under Section 422 of the Code, the Holder must hold the shares issued upon the exercise of an Incentive Stock Option for (a) at least two years after the Grant Date of the Incentive Stock Option and (b) at least one year from the date of exercise.  The Plan Administrator may require a Holder to give the Company prompt notice of any disposition of shares acquired upon exercise of an Incentive Stock Option which occurs prior to the expiration of such holding periods.  A Holder may be subject to the alternative minimum tax at the time of exercise of an Incentive Stock Option.

SECTION 9.  STOCK AWARDS

9.1           Grant of Stock Awards.  The Plan Administrator is authorized to make Awards of Common Stock on such terms and conditions and subject to such restrictions, if any (which may be based on continuous service with the Company or the achievement of performance goals) as the Plan Administrator shall determine, in its sole discretion, which terms, conditions and restrictions shall be set forth in the instrument evidencing the Award.  The terms, conditions and restrictions that the Plan Administrator shall have the power to determine shall include, without limitation, the manner in which shares subject to Stock Awards are held during the periods they are subject to restrictions, the circumstances under which forfeiture of Restricted Stock shall occur by reason of termination of the Holder’s services, and the purchase price, if any.

  

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9.2           Issuance of Shares.  Upon the satisfaction of any terms, conditions and restrictions prescribed in respect to a Stock Award, or upon the Holder’s release from any terms, conditions and restrictions of a Stock Award, as determined by the Plan Administrator, the Company shall release, as soon as practicable, to the Holder or, in the case of the Holder’s death, to the personal representative of the Holder’s estate or as the appropriate court directs, the appropriate number of shares of Common Stock.

9.3           Waiver of Restrictions.  Notwithstanding any other provisions of the Plan, the Plan Administrator may, in its sole discretion, waive the forfeiture period and any other terms, conditions or restrictions on any Restricted Stock under such circumstances (including the death or Disability of Holder, or material change in the Holder’s circumstances after the date of the Award) and subject to such terms and conditions (including forfeiture of the shares) as the Plan Administrator shall deem appropriate.

SECTION 10.  ASSIGNABILITY

No Option granted under the Plan may be assigned or transferred by the Holder other than by will or by the applicable laws of descent and distribution, and, during the Holder’s lifetime, such Awards may be exercised only by the Holder.  Notwithstanding the foregoing, and to the extent permitted by Section 422 of the Code, the Plan Administrator, in its sole discretion, may permit such assignment, transfer and exercisability and may permit a Holder of such Awards to designate a beneficiary who may exercise the Award or receive compensation under the Award after the Holder’s death; provided, however, that any Award so assigned or transferred shall be subject to all the same terms and conditions contained in the instrument evidencing the Award.

SECTION 11.  ADJUSTMENTS

11.1           Adjustments Upon Changes in Capitalization.  In the event that, at any time or from time to time, a stock dividend, stock split, spin-off, combination or exchange of shares, recapitalization, merger, consolidation, distribution to stockholders other than a normal cash dividend, or other similar change in the Company’s corporate or capital structure results in (a) the outstanding shares of Common Stock, or any securities exchanged therefor or received in their place, being exchanged for a different number or class of securities of the Company or of any other corporation, or (b) new, different or additional securities of the Company or of any other corporation being received by the holders of shares of Common Stock, then the Plan Administrator shall make proportional adjustments in (i) the maximum number and kind of securities subject to the Plan as set forth in Section 4.1, and (ii) the number and kind of securities that are subject to any outstanding Award and the per share price of such securities (but without any change in the aggregate price to be paid therefor).  The determination by the Plan Administrator as to the terms of any of the foregoing adjustments shall be conclusive and binding.  Notwithstanding the foregoing, a Corporate Transaction shall not be governed by this Section 11.1 but shall be governed by Section 11.2.

  

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11.2           Adjustments upon a Corporate Transaction.  Except as otherwise provided in the instrument that evidences the Award, in the event of any Corporate Transaction, each Award that is at the time outstanding shall automatically accelerate so that each such Award shall, immediately prior to the specified effective date for the Corporate Transaction, become 100% vested and exercisable.  Such Award shall not so accelerate, however, if and to the extent that such Award is, in connection with the Corporate Transaction, either to be assumed by the successor corporation or parent thereof (the “Successor Corporation”) or to be replaced with a comparable award for the purchase of shares of the capital stock of the Successor Corporation.  The determination of Award comparability shall be made by the Plan Administrator, and its determination shall be conclusive and binding.  All outstanding Awards shall terminate and cease to remain outstanding immediately following the consummation of the Corporate Transaction, except to the extent assumed by the Successor Corporation.

11.3           Further Adjustment of Awards.  Subject to Section 11.2, the Plan Administrator shall have the discretion, exercisable at any time before a sale, merger, consolidation, reorganization, liquidation or change in control of the Company, as defined by the Plan Administrator, to take such further action as it determines to be necessary or advisable, and fair and equitable to Holders, with respect to Awards.  Such authorized action may include (but shall not be limited to) establishing, amending or waiving the type, terms, conditions or duration of, or restrictions on, Awards so as to provide for earlier, later, extended or additional time for exercise, lifting restrictions and other modifications, and the Plan Administrator may take such actions with respect to all Holders, to certain categories of Holders or only to individual Holders.  The Plan Administrator may take such action before or after granting Awards to which the action relates and before or after any public announcement with respect to such sale, merger, consolidation, reorganization, liquidation or change in control that is the reason for such action.

11.4           No Fractional Shares.  In the event of any adjustment in the number of shares covered by any Award, any fractional shares resulting from such adjustment shall be disregarded and each such option shall cover only the number of full shares resulting from such adjustment.

11.5           Determination of Plan Administrator to be Final.  All adjustments made pursuant to this Section 11 shall be made by the Plan Administrator and its determination as to what adjustments shall be made, and the extent thereof, shall be final, binding and conclusive.

11.6           Limitations.  The grant of Awards will in no way affect the Company’s right to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

SECTION 12.  WITHHOLDING

The Company may require the Holder to pay to the Company the amount of any withholding taxes that the Company is required to withhold with respect to the grant, vesting or exercise of any Award.  Upon exercise of an Award, the Holder shall, upon notification of the amount due and prior to or concurrently with the delivery of the certificates representing the shares, pay to the Company all amounts necessary to satisfy applicable federal, state and local withholding tax requirements or shall otherwise make arrangements satisfactory to the Company for such requirements.  Subject to the Plan and applicable law, the Plan Administrator may, in its sole discretion, permit the Holder to satisfy withholding obligations, in whole or in part, by paying cash, by electing to have the Company withhold shares of Common Stock or by transferring shares of Common Stock to the Company, in such amounts as are equivalent to the Fair Market Value of the withholding obligation.  The Company shall have the right to withhold from any Award or any shares of Common Stock issuable pursuant to an Award or from any cash amounts otherwise due or to become due from the Company to the Holder an amount equal to such taxes.  The Company may also deduct from any Award any other amounts due from the Holder to the Company or a Subsidiary.

  

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SECTION 13.  SECURITIES REGULATIONS

13.1           Compliance with Laws.  Shares shall not be issued with respect to an Award granted under this Plan unless the adoption of this Plan, the grant and exercise of such Award and the issuance and delivery of such shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation, any applicable state securities laws, the Securities Act, the Exchange Act, the rules and regulations promulgated thereunder, and the requirements of any stock exchange, national market system, over the counter system, or any electronic bulletin board, upon which the Common Stock may then be listed, quoted or traded, and shall further be subject to the approval of counsel for the Company with respect to such compliance.  Inability of the Company to obtain from any regulatory body having jurisdiction the authority deemed by the Company’s counsel to be necessary for the lawful issuance and sale of any shares hereunder shall relieve the Company of any liability in respect of the nonissuance or sale of such shares as to which such requisite authority shall not have been obtained.  In addition, notwithstanding anything in the Plan to the contrary, the Board, in its sole discretion, may bifurcate the Plan so as to restrict, limit or condition the use of any provision of the Plan to Holders who are officers or directors subject to Section 16 of the Exchange Act without so restricting, limiting or conditioning the Plan with respect to other Holders.

13.2           Representations by Holder.  With respect to the exercise of an Option or any other receipt of Common Stock pursuant to an Award under the Plan, the Company may require the Holder to represent and warrant at the time of such exercise or receipt that the shares are being purchased or received only for Holder’s own account investment and without any present intention to sell or distribute such shares, if, in the opinion of counsel for the Company, such representation is required by any relevant provision of the laws referred to in Section 13.1 above.  At the option of the Company, a stop transfer order against any shares of stock may be placed on the official stock books and records of the Company, and a legend indicating that the stock may not be pledged, sold or otherwise transferred unless an opinion of counsel was provided (concurred in by counsel for the Company) stating that such transfer is not in violation of any applicable law or regulation, may be stamped on the stock certificate in order to assure exemption from registration.  The Plan Administrator may also require such other action or agreement by the Holder as may from time to time be necessary to comply with the federal and state securities laws.

  

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13.3           No Registration Required.  The Company shall be under no obligation to any Holder to register for offering or resale or to qualify for exemption under the Securities Act, or to register or qualify under state securities laws, any shares of Common Stock, security or interest in a security paid or issued under, or created by, the Plan, or to continue in effect any such registrations or qualifications if made.  The Company may issue certificates for shares with such legends and subject to such restrictions on transfer and stop-transfer instructions as counsel for the Company deems necessary or desirable for compliance by the Company with federal and state securities laws.

SECTION 14.  AMENDMENT AND TERMINATION OF PLAN

14.1           Amendment of Plan.  The Board may modify or amend the Plan in such respects as it shall deem advisable or in order to conform to any changes in law or regulation applicable thereto, or in other respects; provided, however, that, to the extent required for compliance with Section 422 of the Code or any applicable law or regulation, the Board may not, without further approval by the stockholders of the Company, effect any amendment that will (a) increase the total number of shares as to which Awards may be granted under the Plan, (b) modify the class of persons eligible to receive Awards, or (c) change the terms of the Plan which causes the Plan to lose its qualification as an incentive stock option plan under Section 422(b) of the Code, or (d) otherwise require stockholder approval under any applicable law, regulation or rule of any stock exchange.

The Plan shall comply with the requirements of, and shall be operated, administered, and interpreted in accordance with, a good faith interpretation of Code Section 409A and Section 885 of the American Jobs Creation Act of 2004 (the “AJCA”) to the extent applicable.  If any provision of the Plan is inconsistent with the restrictions imposed by Code Section 409A, that provision shall be deemed to be amended to the extent necessary to reflect the new restrictions imposed by Code Section 409A.  Any Award granted under the Plan prior to issuance of definitive guidance from the Internal Revenue Service or the Department of Treasury with regard to any issue related to Code Section 409A shall be subject to the condition that the Plan Administrator may make such changes to the Award as necessary or appropriate in the Plan Administrator’s discretion to reflect the restrictions imposed by Code Section 409A, without the consent of the Participant.

 

14.2           Termination of Plan.  The Board may suspend or terminate the Plan at any time.  The Plan will have no fixed expiration date; provided, however, that no Incentive Stock Options may be granted more than 10 years after the earlier of the Plan’s adoption by the Board and approval by the stockholders.

14.3           Consent of Holder.  The amendment or termination of the Plan shall not, without the consent of the Holder of any Award under the Plan, impair or diminish any rights or obligations under any Award theretofore granted under the Plan.  Any change or adjustment to an outstanding Incentive Stock Option shall not, without the consent of the Holder, be made in a manner so as to constitute a “modification” that would cause such Incentive Stock Option to fail to continue to qualify as an Incentive Stock Option.

  

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SECTION 15.  GENERAL

15.1           Award Agreements.  Each Award granted under the Plan shall be evidenced by a written agreement that shall contain such terms, conditions, limitations and restrictions as the Plan Administrator shall deem advisable and that are not inconsistent with the Plan.  In addition, all such agreements evidencing Options shall include or incorporate by reference the following terms and conditions:  number of shares, exercise price, vesting schedule, term and termination.

15.2           No Rights to Continued Employment or Service.  Nothing in this Plan or any Award granted pursuant hereto, or any action of the Plan Administrator taken under the Plan, shall confer upon any Holder any right to be retained in the employment or service of the Company or any Subsidiary, or to remain a director thereof or a consultant thereto, or to interfere in anyway with the right of the Company or any Subsidiary, in its sole discretion, to terminate such Holder’s employment or service at any time or to remove the Holder as a director or consultant at any time.

15.3           No Rights as a Stockholder.  No Option shall entitle the Holder to any cash dividend, voting or other right of a stockholder unless and until the date of issuance under the Plan of the shares that are the subject of such Option, free of all applicable restrictions.

15.4           No Trust or Fund.  The Plan is intended to constitute an “unfunded” plan.  Nothing contained herein shall require the Company to segregate any monies or other property, or shares of Common Stock, or to create any trusts, or to make any special deposits for any immediate or deferred amounts payable to any Holder, and no Holder shall have any rights that are greater than those of a general unsecured creditor of the Company.

15.5           Severability.  If any provision of the Plan or any Award is determined to be invalid, illegal or unenforceable in any jurisdiction, or as to any person, or would disqualify the Plan or any Award under any law deemed applicable by the Plan Administrator, such provision shall be construed or deemed amended to conform to applicable laws, or, if it cannot be so construed or deemed amended without, in the Plan Administrator’s determination, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, person or Award, and the remainder of the Plan and any such Award shall remain in full force and effect.

SECTION 16.  EFFECTIVE DATE

This Plan shall become effective on the date of its adoption by the Board and Awards Options may be granted immediately thereafter, but no Option may be exercised under the Plan unless and until the Plan shall have been approved by the stockholders within 12 months after the date of adoption of the Plan by the Board of Directors.  If such approval is not obtained within such period the Plan and any Options granted shall be null and void.

  

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Adopted by the Board of Directors on October 26, 2007, and approved by the Company’s stockholders on May 22, 2008.

PLAN ADOPTION AND AMENDMENTS/ADJUSTMENTS

	
Date of Adoption/

Amendment/Adjustment

	
 

Section

	
 

Effect of Amendment

	
Date of

Stockholder Approval

	 	 	 	 
	
March, 2011

	
4.1 and 6.2

	
Increase number of total shares eligible for issuance and delete share limitation of IRC 162(m)

	
October 10, 2011

	
August 26, 2013

	
4.1

	
Increase number of total shares eligible for issuance

	  

 

 

 

 

 

15

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