Document:

exhibit10_78.htm

    
EXHIBIT 10.78

      

       

      Our
ref            :     08/BCPJ/HF/ANR/SB/rtmsWo

       

      Date                :    11th August
2008

      

       

      TRIO-TECH
(MALAYSIA) SDN BHD

      Lot 11 A,
Jalan SS8/2

      Sungai
Way Free Industrial Zone

      47300
Petaling Jaya

      Selangor
Darul Ehsan

       

      (Attn : Mr. Lim Hwee
Giap)

       

      Dear
Sir,

       

      RE       :                      BANKING
FACILITY

       

      We are
pleased to advise you that CIMB Bank Berhad ("the Bank") has at your request,
approved the following banking facility to Trio-Tech (Malaysia) Sdn. Bhd.
subject to the accompanying terms and conditions. This Letter of Offer
supercedes our earlier letter dated 18th June
2008, which is to be treated as cancelled.

       

       

      Lender                                          
:    CIMB Bank Berhad (CIMB/the Bank)

      

       

      Borrower                                       :   Trio-Tech
(Malaysia) Sdn Bhd (TTMSB/the Borrower)

       

      

      
        	
                1.0  

              	
                TERM LOAN
      (TL)

              

      

       

      
        	
                 
      

              	
                 Limit

              	
                :   RM9,625,000.00
      (Ringgit Malaysia Nine Million Six Hundred Twenty Five
      Thousand Only).

              

      

       

       

      
        
          	 	  
      Purpose    	 :  To
      finance 77% purchase of land and building

        

         

         

      

      
        	 	 Nature	 : 
      Non-Revolving

      

       

       

      
        	
                 
      

              	
                Tenor

              	
                :  Up
      to a maximum of fifteen (15) years or 180 months from the date of
      final drawdown/disbursement.

              

      

      

       

      
        	 	
                 Prescribed
      Lending Rate

              	
                :   1.
      Floating Rate: BLR - 1.5% per annum. (Option
1)

              

      

       

      OR

       

      
        	
                 
      

              	
                2.
      Fixed Rate: 5 years (All-in-Rate): 7.12% p.a. (Option 2) Thereafter:
      BLR-1.50% p.a.

              

      

      

                              BLR is the Bank's
Base Lending Rate, which is currently at 6.75% per annum. The BLR and spread are
adjustable from time to time depending on the prevailing cost of funds to the
Bank.

       

                              The All-in-Rate is
for the month of July only, the Fixed Rate Pricing is subject to change and,
will be determined at point of drawdown.

      

      
        	
                 
      

              	
                Availability
      Period

              	
                :   Within
      six (6) months from the date of this Letter of Offer. Any undrawn portion
      of the loan is deemed to be
cancelled.

              

      

       

      
        	
                 
      

              	
                Disbursement
      Clause

              	
                :    Disbursements
      will be made directly to vendor based on Sales & Purchase
      Agreement or reimbursed to TTMSB with evidence of
      payment.

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                Interest
      Payment

              	
                :

              	
                Monthly
      in arrears commencing one month from the date of first drawdown. The mode
      of payment will be made by debiting TTMSB's current account with us on the
      respective due date(s) provided always there are sufficient
      funds.

              

      

       

       

      
        	
                 
      

              	
                Interest
      Variation Clause

              	
                :    The
      Bank shall be entitled at any time and from time to time vary at its
      discretion the BLR and/or spread. Any interest due but not paid on due
      date will be added onto the principal outstanding and interest
      will accrue on such credit facility or
  accommodation.

              

      

       

      

       

      
        	
                 
      

              	
                Repayment

              	
                :

              	
                1.

              	
                Repayment
      of the principal and interest (inclusive) are to be paid over a period of
      15 years by ISO monthly installments of RM77.374.00 each under Floating
      Rate (Option 1).

              

      

       

      
        	
                 
      

              	
                2.

              	
                Repayment
      of the principal and interest (inclusive) are to be paid over period of 5
      years by 60 monthly installments of RM87,160.00 each under Fixed Rate. And
      over period of 10 years by 120 monthly installment of RM80,104.00 each
      under Floating rate (Option 2).

              

      

       

                          The first installment
will commence one (1) month after full/final disbursement or one (1) month after
expiry of availability period whichever is earlier and thereafter on the same
date of each month.  Interest is calculated on monthly rest and is payable
monthly in arrears. The Bank reserves the right to vary the installment amount
in the event of any change of interest rates on the loan.

       

      
        	
                 
      

              	
                Interest
      Variation Clause

              	
                :    The
      Bank shall be entitled at any time and from time to time vary at its
      discretion the BLR and/or spread. Any interest due but not paid on due
      date will be added onto the principal outstanding and interest will accrue
      on such credit facility or
accommodation.

              

      

       

       

      
        
          	
                	
                  Mode
      of Repayment 

                	
                  :   The
      mode of payment will be via debiting TTMSB's current account with us on
      the respective due date(s) provided always there are sufficient
      funds.

                

        

      

       

      
        
          	
                	
                  Late
      Repayment 

                	
                  :   Any
      late payment will attract an additional interest rate of 1.0% per annum or
      such other rates as determined by the Bank from time to time, above the
      prevailing prescribed lending
rate.

                

        

      

       

      
        	
              	
                Disbursement 

              	
                :  Disbursement
      shall be made in accordance with the following principal
      provisions:

              

      

       

      
        	
                (a)  

              	
                Seven
      (7) business days prior irrevocable written notice given to the Bank for
      each disbursement.

              

      

      
        	
                (b)  

              	
                Disbursement
      shall be made either on the business day of the middle of the month or on
      the last business day for the
month.

              

      

      
        	
                (c)  
      

              	
                Compliance
      with conditions precedent.

              

      

       

      

      

       

      
        	
              	
                QuitRent/Assessment 

              	
                :           You
      are required to pay quit rent annually and a copy of the receipt is to be
      submitted to the Bank before the 31st of May each year. You have also to
      settle all rate assessments and other taxes as they fall due and submit
      copies of the receipts to the Bank. The Bank can debit your account for
      these payments as well as other charges as and when they fall
      due.

              

      

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      2.0  SECURITY
ARRANGEMENT

       

      
        	
                (a)  
      

              	
                 General
      Facility Agreement for RM9,625,000.00.

              
	 	 

      

      
        	
                (b)  

              	
                Registered
      1" party 1" legal charge in our favour for RM9,625,000.00 to be created
      over the Factory A (Single storey), factory B (double storey) and factory
      C (three storey) held under Title No. PM33, 52540, Mukim of Damansara,
      District of Petaling, Selangor Darul Ehsan and H.S. (D) 108103 PT 6 Bandar
      Petaling Jaya, District of Petaling, Selangor Darul Ehsan known as Lot
      11A, Jalan SS 8/2, Sungai Way Free Industrial Zone, SS 8, 47300 Petaling
      Jaya, Selangor.

              
	 	 

      

      
        	
                (c)  

              	
                3
      months installment amounting to RM232,122.00 (Option 1) or RM261,477.69
      (Option 2) to be kept in Fixed Deposit & pledged to the
      Bank.

              

      

      

       

      3.0  OTHER
CONDITIONS

       

      
        	
                (a)  

              	
                Confirmation
      of issuance of Certificate of Fitness for the building to be furnished
      prior to drawdown.

              

      

       

      
        	
                (b)  

              	
                Submission
      of Fresh valuation report, to be obtained from Bank's panel of valuers
      indicating a minimum market value of RM12,500,000.00 for both properties
      mentioned under 2(b). The loan amount will be reduced proportionately in
      the event of reduction in current market
value.

              

      

       

      
        	
                (c)  
      

              	
                 Completion
      of all documentation in form substance acceptable to the
    Bank.

              

      

       

      
        	
                (d)  
      

              	
                 Facility
      fee of RM14,000.00 is payable upon acceptance of this letter of
      offer.

              

      

       

       

      4.0  INTEREST VARIATION
CLAUSE

       

      The Bank
shall be entitled at any time and from time to time vary at its discretion the
BLR and/or spread. Any interest due but not paid on due date will be added on to
the principal outstanding and interest will accrue on such credit facility. An
additional interest charge of 1.00% per annum or such other rate as determined
by the Bank from time to time, shall be levied over the prevailing interest rate
on all excesses over limits/drawing limit and/or any amount due (installments,
fees, etc) for which payment has been delayed.

      

      5.0  COSTS AND
EXPENSES

       

      
        	
                (a)  

              	
                All
      costs, charges and expenses incurred by the Bank in connection with or
      arising from or incidential to the credit facility (even though the said
      documents are not executed by you for any reasons whatsoever) to the
      Bank's enforcement of its rights thereunder including, but not limited to
      the Bank's solicitor's fees (on a solicitor and client basis) stamp duty
      (including penalty if applicable), insurance premium and others shall be
      borne by you and shall be payable
immediately.

              

      

       

      
        	
                (b)  
      

              	
                 The
      Bank may at its sole and absolute discretion debit to the Current Account
      the amount due.

              

      

       

      
        	
                (c)  

              	
                The
      amount if it remains unpaid shall bear interest at the Prevailing Rate
      and/or Default Rate whichever is applicable from the date of
      debiting.

              

      

      

       

      6.0  PREPAYMENT
CLAUSE

       

      
        	
                (a)  
      

              	
                 Any
      amounts prepaid shall be applied in the inverse order of
      maturity.

              
	 	 

      

      
        	
                (b)  

              	
                Any
      notice in writing received by the Bank for any prepayment shall be
      irrevocable and the amount prepaid shall not be available for
      redrawing.

              
	 	 

      

      
        	
                (c)  

              	
                Any
      prepayment shall be made on principal and/or interest payment dates where
      applicable, failing which an additional break funding cost which shall be
      at the discretion of the Bank to determine, shall be
    charged.

              
	 	 

      

      
        	
                (d)  
      

              	
                 Prepayment
      is only allowed after full disbursement of the
  loan.

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      
        	
                         
      (e)   

              	
                Any
      prepayment made shall be subject to a minimum amount of Ringgit Malaysia
      Two Hundred Fifty Thousand (RM250,000.00) for each prepayment at any one
      time.

              

      

       

      
        	
                (f)  
      

              	
                 Lock
      in period of 5 anniversary years from the date of full
      drawdown.

              

      

       

      
        	
                (g)  

              	
                Prepayment
      penalty charge of 3.0% on the approved loan amount will be imposed for
      full settlement of the loan during the lock-in
  period.

              

      

      

       

      7.0  LIABILITY

      

       

      Notwithstanding
anything to the contrary, in no event will the measure of damages payable by the
Bank include, nor will the Bank be liable for any amount for loss of income or
profit or savings or indirect, incidental, consequential, exemplary, punitive or
special damage of the Borrower even if the Bank has been advised of the
possibility of such damages in advance, and all such damages are expressly
disclaimed.

      

       

      8.0  CONDITIONS PRECEDENT TO
UTILIZATION OF CREDIT FACILITY

       

      
        	
                (a)  

              	
                To
      provide a certified copy of the necessary Board Resolution to accept the
      Facility stating the person or persons authorised to sign the Letter of
      Offer and other related documents and to operate the Facility from time to
      time together with their specimen
signature(s).

              

      

       

      
        	
                (b)  

              	
                All
      other terms and conditions specified in the Bank's General Facility
      Agreement shall be applicable.

              

      

      

       

      9.0  AVAILABILITY
CLAUSE

      

       

      The
facility are available only upon compliance with all the conditions precedent
and subject to completion of all security and loan documentation and any
statutory requirement, etc. in form and substance that is acceptable to the Bank
and its solicitors. In any case, the first disbursement of the facility not
availed within six (6) months from date of offer will be deemed
cancelled.

      

       

      10.0  RIGHT TO WITHDRAW,
ETC

      

       

      The
credit facility are extended at the sole discretion of the Bank and are
repayable on demand and will be reviewed, modified or cancelled at the sole
discretion of the Bank.

      

       

      11.0  INTEREST (PREVAILING
RATE)

      

       

      
        	
                 
      

              	
                (a)    Interest
      shall be calculated based on the daily outstanding balance at the
      Prescribed Spread above the Bank's Base Lending Rate (BLR). The total
      interest for the month shall be debited to the current account at the end
      of each month.

              

      

      

       

      
        	
                 
      

              	
                (b)     The
      Bank's BLR, which is currently at six point seven,five zero percent
      (6.75%) per annum, is subject to change depending on market conditions or
      such other reasons as the Bank at its sole discretion deems
      fit.

              

      

       

      
        	
                (c)  

              	
                The
      Bank shall communicate such change in the Bank's BLR by displaying a
      notice in the Bank's premises or by publication in a newspaper of the
      Bank's choice. Such change shall take effect on the date specified
      therein.

              

      

       

      
        	
                (d)  

              	
                Notwithstanding
      any change to the Bank's BLR, the Bank shall be at liberty to vary the
      Prevailing Rate. Such change shall be notified accordingly and shall take
      effect on the date specified
therein.

              

      

      

       

      12.0
DEFAULT INTEREST
(DEFAULT RATE)

      

       

      
        	
                 
      

              	
                (a)     You
      shall pay Default Rate (before and after judgment) at the rate of three
      point five percent (3.5%) or any variation above BLR per annum subject to
      a minimum of Ringgit Malaysia Five (RM 5-00):

              
	 	 

      

      
        	
                (i)

              	
                 on
      the amount in excess of your Approved
Limit;

              

      

       

      
        	
                (ii)

              	
                 on
      any amount due but remaining
unpaid;

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      
        	
                (iii) 

              	
                   on
      the balance outstanding if the Facility is recalled or after the Duration
      Tenure hadexpired;

              

      

      

       

      
        	
                 
      

              	
                (b)    Not-withstanding
      demand has not been made, Default Rate shall accrue until the account is
      within the Approved Limit or date of actual
  payment.

              

      

      

       

      13.0
TENURE

       

      
        	
                (a)   
      

              	
                 Subject
      to the Bank's sole discretion.

              

      

       

      
        	
                (b)  

              	
                Notwithstanding
      the Tenure determined by the Bank, the Bank reserves the right to recall
      the credit facilities in the event of default or breach of any of the
      terms of the credit facilities.

              

      

      

       

      14.0
PAYMENTS

       

      
        	
                (a)  

              	
                All
      payments to be made to the Bank shall be in full without set-off or
      counterclaim, free and clear of and without deduction for any taxes,
      levies, impost, duties, charges, fees, deductions, withholdings,
      restrictions or conditions of any
description.

              

      

       

      
        	
                (b)  

              	
                If
      the law requires such deduction from any payment, you shall ensure that
      the net amount received by the Bank shall equal the full amount which the
      Bank would have had received, had no such deduction been
    made.

              

      

      

       

      15.0
INCREASED
COSTS

      

       

      You shall
on demand promptly pay to the Bank such amount as the Bank may determine in its
absolute discretion and to indemnify the Bank against any cost or increased cost
if the Bank determines that the introduction or variation of any law, order,
regulation or official directive (whether or not having the force of law) from
the relevant authority which:

       

      
        	
                (a)  

              	
                taken
      together with the Bank's obligation under the Facility being made is that
      the Bank incur a cost; or

              

      

       

      
        	
                (b)  
      

              	
                 is
      to increase the cost to the Bank in funding or maintaining the
      Facility;

              

      

       

      16.0
APPLICATION OF
MONIES

      

       

      If any
sum paid or recovered is less than the amount due, the Bank may apply that sum
to principal, interest, fees or any other amount in such proportions and order
and generally in such manner as the Bank shall determine.

      

       

      17.0
CALCULATION
CONCLUSIVE

      

       

      The
Bank's calculation of the amount due shall be conclusive unless manifestly
incorrect.

      

       

      18.0
RIGHT TO
SET-OFF

      

       

      You
authorise the Bank to set-off, without prior notice to you, any credit balance
or asset in whatever form or account which is in the Bank's possession at any
branch or office to satisfy any payment outstanding under this Facility. This
specific power of set off shall be construed without prejudice to and shall not
in any way derogate from any right of set off at law accruing to the
Bank.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      

      

      19.0  STANDARD CONDITIONS /
COVENANTS

      

       

      Other
conditions:

      

       

      Audited
financial statements to be submitted within 6 months after each financial
year-end for as long as the above facility remains outstanding.

       

      Yearly
submission of debtors' and creditors ageing lists/stocks
statements.

       

      Any other
reports or statements as may reasonably be required by the Bank from time to
time to be submitted upon request.

       

      Other
information as may be reasonably requested by the Bank from time to time, and in
particular, information regarding the business condition, profits and operations
including all changes in senior management of the company/firm/concern.

       

      No change
in shareholding without prior consent of the Bank.

       

      Keep all
assets (property, stock, etc) insured to its full insurable value with reputable
insurance company on the Bank's panel and the Bank being named as mortgagee
against risk of fire, flood, earthquake, SRCC and other such risks as may be
required by the Bank. In the event you fail to do so, the Bank reserves the
right to take such policy and charge the amount of the insurance premiums paid
to your account. The original copy of the policy is to be lodged with the Bank
for safekeeping. 

       

      Keep all
assets unencumbered; for inevitable encumbrances to be created, the Bank's prior
consent to be obtained.

       

      Pay and
discharge all taxes, assessments, quit rent and other incidental government
charges. Copies of receipts for which payments have been made shall be furnished
to the Bank. All revaluation costs incurred if required are for your
account.

      

       

      20.0
MATERIAL ADVERSE
CHANGE CLAUSE

       

      The Bank
reserves the right to terminate the credit facility in the event of any material
adverse change in the financial condition of the borrower/guarantor which might
affect its ability to comply with the obligations under the terms and conditions
of approval prior to the first and subsequent disbursements.

       

      The
operation of your current account inter alia is also subject to the provisions
set by Bank Negara Malaysia under DCHEQS, wherein the Bank reserves the right
without notice to close the Borrower's account after a total of three (3)
incidence of cheques returned within twelve (12) months from the date of first
incidence following which a report shall be submitted to BNM's DCHEQS on such
closure of account.

       

      Compliance with
laws/regulatory requirements/section 62 of the Banking and Financial
Institutions Act 1989

       

      The offer
and availability of the Facilities in this Letter of Offer is conditional upon
there being no contravention of any laws in relation thereto.

       

      Without
prejudice to the generality of the foregoing, the offer and availability of the
Facilities In this Letter of Offer is conditional upon the Borrower representing
and undertaking that the financing by the Bank herein and the Bank's agreement
to grant or make or continue to make available the Facilities to the Borrower
will not contravene nor be in breach of any prevailing laws or regulatory
requirements or terms and conditions or provisions prescribed by or stipulated
in the directives or guidelines that are or may from time to time be issued by
Bank Negara Malaysia (BNM), the Association of Banks in Malaysia and/or any
governmental authority ('The Applicable Laws and Regulations'). The Applicable
Laws and Regulations to which the Facilities are subject shall include but are
not limited to(i) all prevailing provisions of the Banking and Financial
Institutions Act 1989 {'BAFIA') and all prevailing BNM's guidelines and
directives issued in respect thereof in particular provisions contained in
section 62 of BAFIA and all prevailing BNM's guidelines issued in respect of the
said section 62 and all prevailing BNM's guidelines issued pertaining or
applicable to grant of Facilities to persons connected to the Bank (ii) any
lending limits or restrictions that may be imposed upon the Bank from time to
time by BNM or any other governmental authority.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      

       

      The
Borrower shall immediately notify the Bank in writing if any of The Applicable
Laws and Regulations or any of the terms and conditions of this Letter of Offer
ceases to be satisfied or is discovered to have not been satisfied.

       

      The
Borrower in giving declaration(s) in respect of any of the aforementioned or any
terms and conditions of this Letter of Offer where required by and upon terms
stipulated by the Bank shall be deemed to represent and warrant to the bank that
the contents therein shall remain true and accurate in all respects so long as
the Facilities remain available or any sums remains payable.

       

      21.0
NOTICES

       

      
        	
                (a)  
      

              	
                 Any
      notice required to be given

              

      

      

      
        	
                (i)  

              	
                to
      the Bank, shall be addressed and delivered to the Branch, marked for the
      attention of the Manager

              
	 	 
	(ii) 	to
      you ,shall be addressed and delivered to you at your usual or last known
      address

      

       

      
        	
                (b)  

              	
                Every
      notice or other communication shall be in writing and be deemed to have
      been received (if sent by post) 24 hours after despatch and (if delivered
      personally) at the time of delivery or despatch if during normal business
      hours in the place and otherwise at the opening of business in that place
      on the next succeeding such working day, provided that any notice or
      communication to be made or delivered by you to the Bank shall be
      effective only when the Bank actually receives
  it.

              

      

      

       

      22.0
CONDUCT

      

          The credit
facility must be operated within the approved limits and payment of dues must be
current at all times.

       

      23.0
REVIEW

       

      The Bank
reserves the right to conduct a periodic review on the credit
facility.

       24.0
LAW

       

      The laws
of Malaysia shall apply and you shall be subject to jurisdiction of the courts
of Malaysia.

       

      25.0
GENERAL

       

      
        	
                (a) 

              	
                  You
      hereby consent to the disclosure by the Bank of any information relating
      to the credit facility:

              

      

       

      
        	
                (i)  
      

              	
                 to
      its auditors, legal counsel and other professional
    advisors;

              

      

       

      
        	
                (ii)  
      

              	
                 to
      any such person who gives any security under the credit
      facility;

              
	 	 

      

      
        	
                (iii)  

              	
                to
      the Central Credit Bureau or other relevant authorities to whom such
      Bureau or authorities are required to make such disclosure. Bank Negara
      Malaysia has established the Central Credit Bureau to collect information
      from Banks regarding the credit facilities which they grant to their
      customers in order to enable participating banks (of which the Bank is
      one), who are approached for credit facilities by a customer, to be
      informed by the Bureau of the aggregate credit facility granted to that
      customer by other banks. This information is kept strictly in confidence
      between the Bureau and all participating banks and it is a term of the
      credit facility offered herein that information regarding it, shall be
      given to the Bureau for the use of the Bureau and the participating
      banks;

              
	 	 
	(iv)  	 to
      the Companies within the Bank's Group;

      

       

      
        	
                (v)  

              	
                pursuant
      to any subpoena or other legal provisions or in connection with any
      action, suit or proceeding relating to the credit facility or
      security;

              
	 	 
	(vi) 	 pursuant
      to any law

      

       

      
        	
                (vii)  

              	
                The
      Bank reserves the right to convert the credit facility into a term loan
      facility on terms and conditions as the Bank deems
  fit.

              

      

       

      
        	
                (viii)  

              	
                The
      Bank may at any time impose additional terms or vary or modify the terms
      of the credit facility at its sole and absolute
  discretion.

              

      

       

      
        	
                (ix)  

              	
                The
      Bank reserves the right to close the Current Account if required pursuant
      to the Biro Maklumat Cek (a Central Bureau set up within Bank Negara
      Malaysia to monitor the "bad" cheque incidents)
  Blacklist.

              

      

      

       

      Subject
to any modifications or variations arising from the above, all other terms and
conditions contained in our earlier correspondences exchanged between us and all
of our rights and powers contained therein and in the security instruments
created in our favour shall remain in full force and effect.

       

      We trust
the aforesaid terms and conditions for the above facilities are acceptable to
you. Kindly signify your understanding and acceptance of the above offer by
signing on
all pages and
returning the duplicate copy of this letter together with Board of Director's
Resolution within fourteen (14) days from the date hereof, failing which this
offer will automatically lapse.

       

      Please do
not hesitate to contact us at any time should you have any queries. Meanwhile,
we would like to thank you for your support and look forward to a good banking
relationship.

       

      

       

      

      Yours
faithfully,

      

      for CIMB
BANK BERHAD

      

      

      /s/
AN.RAMANATHAN                                                                      /s/SAIFULIZAN
IBRAHIM                                                 /s/HELEN
FERNANDEZ

      

      AN.RAMANATHAN                                                                           SAIFULIZAN
IBRAHIM                                                      HELEN
FERNANDEZ

      

      Business
Relationship Manager – Group
Head                               Head
of Business
Credit                                                      Area
Business Manager

      Business
Banking Centre –
PJ                                                            Business
Banking Centre –
PJ                                             Business
Banking Centre - PJ

      

      

      1/ We,
TRIO-TECH (MALAYSIA) SDN BHD confirm, acceptance of the above banking facility
as per the terms and conditions herein.

       

      Authorised
Signatory/ies

       

      Name

      I.C.
No

      Date

       

      Company's
Stampswhiex105.htm

    
      
        

        

      

       

      Exhibit 10.2

      

       

      SONOMAWEST
HOLDINGS INC

       

      SECOND
AMENDED AND RESTATED 2002 STOCK INCENTIVE PLAN

       

      ARTICLE
ONE

       

      GENERAL
PROVISIONS

       

       

      I.  
   PURPOSE OF THE PLAN

       

              This
Second Amended And Restated 2002 Stock Incentive Plan is intended to promote the
interests of SonomaWest Holdings, Inc. (the “Corporation”) by providing eligible
persons with the opportunity to acquire a proprietary interest, or otherwise
increase their proprietary interest, in the Corporation as an incentive for them
to remain in the Service of the Corporation.

       

              Capitalized
terms shall have the meanings assigned to such terms in the attached
Appendix.

       

      II.    
STRUCTURE OF THE PLAN

       

      
        	 
      	
                 A.        The
      Plan shall be divided into two separate equity
  programs:

              

      

      

      

      
        	 
      	
                o

              	
                the
      Discretionary Option Grant Program under which eligible persons may, at
      the discretion of the Plan Administrator, be granted options to purchase
      shares of Common Stock and stock appreciation rights;
  and

              

      

      

      

      
        	 
      	
                o

              	
                the
      Stock Issuance Program under which eligible persons may, at the discretion
      of the Plan Administrator, be issued shares of Common Stock directly,
      either through the immediate purchase of such shares or as a bonus for
      services rendered the Corporation (or any Parent or
      Subsidiary).

              

      

       

                B.         
The provisions of Articles One and Four shall apply to all equity programs under
the Plan and shall govern the interests of all persons under the
Plan.

       

      III.    
ADMINISTRATION OF THE PLAN

       

               A.       
The Plan shall be administered by the Board or an Option Committee appointed by
the Board. Should administration of the Plan be vested in an Option Committee,
any discretionary option grants or stock issuances to members of the Option
Committee must be authorized and approved by a disinterested majority of the
Board.

       

                B.       
Members of the Option Committee shall serve for such period of time as the Board
may determine and may be removed by the Board at any time.

       

      

      
        
          
             

          

          
            1

            
              

            

          

          
             

          

        

      

       

                C.       
Each Plan Administrator shall, within the scope of its administrative functions
under the Plan, have full power and authority (subject to the provisions of the
Plan) to establish such rules and regulations as it may deem appropriate for
proper administration of the Discretionary Option Grant and Stock Issuance
Programs and to make such determinations under, and issue such interpretations
of, the provisions of such programs and any outstanding options or stock
issuances thereunder as it may deem necessary or advisable. Decisions of the
Plan Administrator within the scope of its administrative functions under the
Plan shall be final and binding on all parties who have an interest in the
Discretionary Option Grant and Stock Issuance Programs under its jurisdiction or
any option or stock issuance thereunder.

       

                D.       
Service on the Option Committee shall constitute service as a Board member, and
members of such committee shall accordingly be entitled to full indemnification
and reimbursement as Board members for their service on such committee. No
member of the Option Committee shall be liable for any act or omission made in
good faith with respect to the Plan or any option grants or stock issuances
under the Plan.

       

      IV.
ELIGIBILITY

       

               A.       
The persons eligible to participate in the Discretionary Option Grant and Stock
Issuance Programs are as follows:

       

      
        	 
      	
                (i)       
        Employees,

              

      

      

      

      
        	 
      	
                (ii)       
       Officers, members of the Board or the board of directors of any
      Parent or Subsidiary, and

              

      

      

      

      
        	 
      	
                (iii)       
      consultants and other independent advisors who provide services to the
      Corporation (or any Parent or
Subsidiary).

              

      

       

               B.       
Each Plan Administrator shall, within the scope of its administrative
jurisdiction under the Plan, have full authority to determine: (i) with respect
to the option grants or stock appreciation rights under the Discretionary Option
Grant Program, which eligible persons are to receive grants, the time or times
when such grants are to be made, the number of shares to be covered by each such
grant, the status of a granted option as either an Incentive Option or a
Non-Statutory Option, the time or times when each option is to become
exercisable, the vesting schedule (if any) applicable to the option shares and
the maximum term for which the option is to remain outstanding; and (ii) with
respect to stock issuances under the Stock Issuance Program, which eligible
persons are to receive stock issuances, the time or times when such issuances
are to be made, the number of shares to be issued to each Participant, the
vesting schedule (if any) applicable to the issued shares and the consideration
for such shares.

       

               C. 
      The Plan Administrator shall have the
absolute discretion either to grant options or stock appreciation rights in
accordance with the Discretionary Option Grant Program or to effect stock
issuances or grant share right awards in accordance with the Stock Issuance
Program.

       

      

      
        
          
             

          

          
            2

            
              

            

          

          
             

          

        

      

       

      V.    
STOCK SUBJECT TO THE PLAN

       

               A.       
The stock issuable under the Plan shall be shares of authorized but unissued or
reacquired Common Stock, including shares repurchased by the Corporation on the
open market. The maximum number of shares of Common Stock initially reserved for
issuance over the term of the Plan shall not exceed one hundred and fifty
thousand (150,000) shares. No one person participating in the Plan may receive
stock options, direct stock issuances and share right awards for more than
fifteen thousand (15,000) shares of Common Stock in the aggregate per calendar
year.

       

               B.       
Shares of Common Stock subject to outstanding options shall be available for
subsequent issuance under the Plan to the extent (i) those options expire or
terminate for any reason prior to exercise in full or (ii) the options are
canceled in accordance with the cancellation-regrant provisions of Article Two.
Unvested shares issued under the Plan and subsequently canceled or repurchased
by the Corporation at the original exercise or issue price paid per share,
pursuant to the Corporation’s repurchase rights under the Plan, shall be added
back to the number of shares of Common Stock reserved for issuance under the
Plan and shall accordingly be available for reissuance through one or more
subsequent option grants or direct stock issuances under the Plan. In addition,
should the exercise price of an option under the Plan be paid with shares of
Common Stock or should shares of Common Stock otherwise issuable under the Plan
be withheld by the Corporation in satisfaction of the withholding taxes incurred
in connection with the exercise of an option or the vesting of a stock issuance
under the Plan, then the number of shares of Common Stock available for issuance
under the Plan shall be reduced only by the net number of shares of Common Stock
issued to the holder of such option or stock issuance, and not by the gross
number of shares for which the option is exercised or which vest under the stock
issuance. However, shares of Common Stock underlying one or more stock
appreciation rights exercised under Section V of Article Two of the Plan shall
not be available for subsequent issuance under the Plan.

       

               C.       
If any change is made to the Common Stock by reason of any stock split, stock
dividend, recapitalization, combination of shares, exchange of shares or other
change affecting the outstanding Common Stock as a class without the
Corporation’s receipt of consideration, appropriate adjustments shall be made
to: (i) the maximum number and/or class of securities issuable under the Plan;
(ii) the number and/or class of securities for which any one person may be
granted stock options, direct stock issuances and share right awards under this
Plan per calendar year; and (iii) the number and/or class of securities and the
exercise price per share in effect under each outstanding option under the Plan.
Such adjustments to the outstanding options are to be effected in a manner which
shall preclude the enlargement or dilution of rights and benefits under such
options. The adjustments determined by the Plan Administrator shall be final,
binding and conclusive.

       

       

      ARTICLE
TWO

       

      DISCRETIONARY
OPTION GRANT PROGRAM

       

       

      I.    
OPTION TERMS

       

              Each
option shall be evidenced by one or more documents in the form approved by the
Plan Administrator; provided, however, that each such document shall comply with
the terms specified below. Each document evidencing an Incentive Option shall,
in addition, be subject to the provisions of the Plan applicable to Incentive
Options.

       

              A. 
       EXERCISE PRICE.

       

      
        	 
      	
                           1.          The
      exercise price per share shall be fixed by the Plan Administrator but
      shall not be less than one hundred percent (100%) of the Fair Market Value
      per share of Common Stock on the option grant date.

              

      

      
         

        

        
          
             

          

          
            3

            
              

            

          

          
             

          

        

      

       

      
        	 
      	
                            2.       
      The exercise price shall become immediately due upon exercise of the
      option and may, subject to the provisions of Section I of Article Four and
      the documents evidencing the option, be payable in one or more of the
      forms specified below:

              

      

       

      
        	 
      	
                        
         (i)       cash or
      check made payable to the Corporation,
or

              

      

       

      
        	 
      	
                        
        (ii)        shares of
      Common Stock held for the requisite period necessary to avoid a charge to
      the Corporation’s earnings for financial reporting purposes and valued at
      Fair Market Value on the Exercise Date,
or

              

      

       

      
        	 
      	
                        
       (iii)        to the extent the
      sale complies with all applicable laws relating to the regulation and sale
      of securities, through a special sale and remittance procedure pursuant to
      which the Optionee shall concurrently provide irrevocable written
      instructions to: (a) a Corporation-designated brokerage firm to effect the
      immediate sale of the purchased shares and remit to the Corporation, out
      of the sale proceeds available on the settlement date, sufficient funds to
      cover the aggregate exercise price payable for the purchased shares plus
      all applicable Federal, state and local income and employment taxes
      required to be withheld by the Corporation by reason of such exercise; and
      (b) the Corporation to deliver the certificates for the purchased shares
      directly to such brokerage firm in order to complete the sale,
      or

              

      

       

      
        	 
      	
                       
       (iv)              
      subject to such additional terms and conditions as the plan administrator
      shall determine, to have the number of shares deliverable to the option
      holder as a result of the exercise reduced by a number of shares
      sufficient to pay the amount the Corporation determines to be necessary to
      withhold for federal, state, local and other taxes as a result of the
      exercise of the option and, as long as no additional accounting expenses
      would result to the Corporation, to pay the exercise price of the
      option.

              

      

               Except
to the extent such sale and remittance procedure is utilized, payment of the
exercise price for the purchased shares must be made on the Exercise
Date.

       

               B.       
EXERCISE AND TERM OF OPTIONS. Each option shall be exercisable at such time or
times, during such period and for such number of shares as shall be determined
by the Plan Administrator and set forth in the documents evidencing the option.
However, no option shall have a term in excess of ten (10) years measured from
the option grant date.

       

      

      
        
          
             

          

          
            4

            
              

            

          

          
             

          

        

      

       

               C.       
EFFECT OF TERMINATION OF SERVICE.

       

      
        	 
      	
                          1.       
      The following provisions shall govern the exercise of any options held by
      the Optionee at the time of cessation of Service or
  death:

              

      

       

      
        	 
      	
                           (i)       Subject
      to subparagraph (iv) below, any option outstanding at the time of the
      Optionee’s cessation of Service for any reason shall remain exercisable
      for such period of time thereafter as shall be determined by the Plan
      Administrator and set forth in the documents evidencing the
      option.

              

      

       

      
        	 
      	
                          (ii)     
      Any option held by the Optionee at the time of death and exercisable in
      whole or in part at that time may be subsequently exercised by the
      personal representative of the Optionee’s estate or by the person or
      persons to whom the option is transferred pursuant to the Optionee’s will
      or in accordance with the laws of descent and distribution or by the
      Optionee’s designated beneficiary or beneficiaries of that
      option.

              

      

       

      
        	 
      	
                          (iii)       
      Except as otherwise determined in the discretion of the Plan Administrator
      either at the time the option is granted or at any time the option remains
      outstanding, should the Optionee’s Service be terminated for Misconduct or
      should the Optionee otherwise engage in Misconduct while one or more
      options granted to the Optionee under this Article Two are outstanding,
      then all those options shall terminate immediately and cease to be
      outstanding.

              

      

       

      
        	 
      	
                          (iv)       
      During the applicable post-Service exercise period, the option may not be
      exercised in the aggregate for more than the number of vested shares for
      which the option is exercisable on the date of the Optionee’s cessation of
      Service. Upon the expiration of the applicable exercise period or (if
      earlier) upon the expiration of the option term, the option shall
      terminate and cease to be outstanding for any vested shares for which the
      option has not been exercised. However, the option shall, immediately upon
      the Optionee’s cessation of Service, terminate and cease to be outstanding
      to the extent the option is not otherwise at that time exercisable for
      vested shares.

              

      

       

      
        	 
      	
                          2.       
      The Plan Administrator shall have complete discretion, either at the time
      an option is granted or at any time while the option remains outstanding,
      to:

              

      

       

      
        	 
      	
                         
       (i)        extend the period of
      time for which the option is to remain exercisable following the
      Optionee’s cessation of Service from the limited exercise period otherwise
      in effect for that option to such greater period of time as the Plan
      Administrator shall deem appropriate, but in no event beyond the latest
      date upon which the option could have expired by its original terms under
      any circumstances or, if earlier, the tenth (10th)
      anniversary of the option grant
  date,  and/or

              

      

      
         

        

        
          
             

          

          
            5

            
              

            

          

          
             

          

        

      

       

      
        	 
      	
                       
        (ii)        permit the
      option to be exercised, during the applicable post-Service exercise
      period, not only with respect to the number of vested shares of Common
      Stock for which such option is exercisable at the time of the Optionee’s
      cessation of Service but also with respect to one or more additional
      installments in which the Optionee would have vested had the Optionee
      continued in Service.

              

      

       

               D.       
STOCKHOLDER RIGHTS. The holder of an option shall have no stockholder rights
with respect to the shares subject to the option until such person shall have
exercised the option, paid the exercise price and become a holder of record of
the purchased shares.

       

               E.       
REPURCHASE RIGHTS. The Plan Administrator shall have the discretion to grant
options which are exercisable for unvested shares of Common Stock. Should the
Optionee cease Service while holding such unvested shares, the Corporation shall
have the right to repurchase, at the purchase price paid per share, any or all
of those unvested shares. The terms upon which such repurchase right shall be
exercisable (including the period and procedure for exercise and the appropriate
vesting schedule for the purchased shares) shall be established by the Plan
Administrator and set forth in the document evidencing such repurchase
right.

       

               F.       
LIMITED TRANSFERABILITY OF OPTIONS. During the lifetime of the Optionee,
Incentive Options shall be exercisable only by the Optionee and shall not be
assignable or transferable other than by will or by the laws of descent and
distribution following the Optionee’s death. Non-Statutory Options shall be
subject to the same limitation, except that a Non-Statutory Option may be
assigned in whole or in part during Optionee’s lifetime to one or more members
of the Optionee’s Immediate Family or to a trust established for the exclusive
benefit of Optionee or one or more members of the Optionee’s Immediate Family or
to the Optionee’s former spouse, to the extent such assignment is in connection
with Optionee’s estate plan or pursuant to a domestic relations order. The
assigned portion shall be exercisable only by the person or persons who acquire
a proprietary interest in the option pursuant to such assignment. The terms
applicable to the assigned portion shall be the same as those in effect for this
option immediately prior to such assignment and shall be set forth in such
documents issued to the assignee as the Plan Administrator may deem appropriate.
Notwithstanding the foregoing, the Optionee may also designate one or more
persons as the beneficiary or beneficiaries of his or her outstanding options
under this Article Two, and those options shall, in accordance with such
designation, automatically be transferred to such beneficiary or beneficiaries
upon the Optionee’s death while holding those options. Such beneficiary or
beneficiaries shall take the transferred option subject to all the terms and
conditions of the applicable agreement evidencing each such transferred option,
including (without limitation) the limited time period during which the option
may be exercised following the Optionee’s death.

       

      II.    
INCENTIVE OPTIONS

       

                The
terms specified below shall be applicable to all Incentive Options. Except as
modified by the provisions of this Section II, all the provisions of Articles
One, Two and Four shall be applicable to Incentive Options. Options which are
specifically designated as Non-Statutory Options when issued under the Plan
shall NOT be subject to the terms of this Section II.

       

               A.       
ELIGIBILITY. Incentive Options may only be granted to Employees.

       

               B.       
EXERCISE PRICE. The exercise price per share shall not be less than one hundred
percent (100%) of the Fair Market Value per share of Common Stock on the option
grant date.

       

      

      
        
          
             

          

          
            6

            
              

            

          

          
             

          

        

      

       

               C.       
DOLLAR LIMITATION. The aggregate Fair Market Value of the shares of Common Stock
(determined as of the respective date or dates of grant) for which one or more
options granted to any Employee under the Plan (or any other option plan of the
Corporation or any Parent or Subsidiary) may for the first time become
exercisable as Incentive Options during any one calendar year shall not exceed
the sum of One Hundred Thousand Dollars ($100,000). To the extent the Employee
holds two (2) or more such options which become exercisable for the first time
in the same calendar year, the foregoing limitation on the exercisability of
such options as Incentive Options shall be applied on the basis of the order in
which such options are granted.

       

               D.       
FAILURE TO QUALIFY AS INCENTIVE OPTION. To the extent that any option governed
by this Plan does not qualify as an Incentive Option by reason of the dollar
limitation described in Section II.C of Article Two or for any other reason,
such option shall be exercisable as a Non-Statutory Option under the Federal tax
laws.

       

               E.       
10% STOCKHOLDER. If any Employee to whom an Incentive Option is granted is a 10%
Stockholder, then the exercise price per share shall not be less than one
hundred ten percent (110%) of the Fair Market Value per share of Common Stock on
the option grant date, and the option term shall not exceed five (5) years
measured from the option grant date.

       

       

      III.   
CANCELLATION AND REGRANT OF OPTIONS

       

                The
Plan Administrator shall have the authority to effect, at any time and from time
to time, with the consent of the affected option holders, the cancellation of
any or all outstanding options under the Discretionary Option Grant Program and
to grant in substitution new options covering the same or different number of
shares of Common Stock but with an exercise price per share based on the Fair
Market Value per share of Common Stock on the new grant date.

       

      IV.   
CHANGE IN CONTROL/HOSTILE TAKE-OVER

       

               A.       
No option outstanding at the time of a Change in Control shall become
exercisable on an accelerated basis if and to the extent: (i) that option is, in
connection with the Change in Control, assumed by the successor corporation (or
parent thereof) or otherwise continued in full force and effect pursuant to the
terms of the Change in Control transaction, (ii) such option is replaced with a
cash incentive program of the successor corporation which preserves the spread
existing at the time of the Change in Control on the shares of Common Stock for
which the option is not otherwise at that time exercisable and provides for
subsequent payout in accordance with the same exercise/vesting schedule
applicable to those option shares or (iii) the acceleration of such option is
subject to other limitations imposed by the Plan Administrator at the time of
the option grant. However, if none of the foregoing conditions are satisfied,
then each option outstanding at the time of the Change in Control but not
otherwise exercisable for all the shares of Common Stock at that time subject to
such option shall automatically accelerate so that each such option shall,
immediately prior to the effective date of the Change in Control, become
exercisable for all the shares of Common Stock at the time subject to such
option and may be exercised for any or all of those shares as fully vested
shares of Common Stock.

       

               B.       
All of the Corporation’s outstanding repurchase rights under the Discretionary
Option Grant Program shall also terminate automatically, and the shares of
Common Stock subject to those terminated rights shall immediately vest in full,
in the event of any Change in Control, except to the extent: (i) those
repurchase rights are assigned to the successor corporation (or parent thereof)
or otherwise continued in full force and effect pursuant to the terms of the
Change in Control transaction or (ii) such accelerated vesting is precluded by
other limitations imposed by the Plan Administrator at the time the repurchase
right is issued.

      
         

        

        
          
             

          

          
            7

            
              

            

          

          
             

          

        

      

       

               C.       
Immediately following the consummation of the Change in Control, all outstanding
options shall terminate and cease to be outstanding, except to the extent
assumed by the successor corporation (or parent thereof) or otherwise expressly
continued in full force and effect pursuant to the terms of the Change in
Control transaction.

       

               D.       
Each option which is assumed in connection with a Change in Control or otherwise
continued in effect shall be appropriately adjusted, immediately after such
Change in Control, to apply to the number and class of securities which would
have been issuable to the Optionee in consummation of such Change in Control had
the option been exercised immediately prior to such Change in Control.
Appropriate adjustments to reflect such Change in Control shall also be made to:
(i) the exercise price payable per share under each outstanding option, provided
the aggregate exercise price payable for such securities shall remain the same;
(ii) the maximum number and/or class of securities available for issuance over
the remaining term of the Plan; and (iii) the maximum number and/or class of
securities for which any one person may be granted options, direct stock
issuances and share right awards under the Plan per calendar year. To the extent
the actual holders of the Corporation’s outstanding Common Stock receive cash
consideration for their Common Stock in consummation of the Change in Control
transaction, the successor corporation may, in connection with the assumption of
the outstanding options under the Discretionary Option Grant Program, substitute
one or more shares of its own common stock with a fair market value equivalent
to the cash consideration paid per share of Common Stock in such Change in
Control transaction.

       

               E.       
The Plan Administrator shall have the discretionary authority to structure one
or more outstanding options under the Discretionary Option Grant Program so that
those options shall, immediately prior to the effective date of a Change in
Control, become exercisable for all the shares of Common Stock at that time
subject to such options on an accelerated basis and may be exercised for any or
all of such shares as fully vested shares of Common Stock, whether or not those
options are to be assumed or otherwise continued in full force and effect or
replaced with a cash incentive program pursuant to the express terms of the
Change in Control transaction. In addition, the Plan Administrator shall have
the discretionary authority to structure one or more of the Corporation’s
repurchase rights under the Discretionary Option Grant Program so that those
rights shall immediately terminate at the time of such Change in Control and
shall not be assignable to the successor corporation (or parent thereof), and
the shares subject to those terminated rights shall accordingly vest in full at
the time of such Change in Control.

       

               F.       
The Plan Administrator shall have full power and authority to structure one or
more outstanding options under the Discretionary Option Grant Program so that
those options shall vest and become exercisable for all the shares of Common
Stock at that time subject to such options on an accelerated basis in the event
the Optionee’s Service is subsequently terminated by reason of an Involuntary
Termination within a designated period (not to exceed eighteen (18) months)
following the effective date of any Change in Control in which those options do
not otherwise accelerate. Any options so accelerated shall remain exercisable
for fully vested shares of Common Stock until the expiration or sooner
termination of the option term. In addition, the Plan Administrator may
structure one or more of the Corporation’s repurchase rights under the
Discretionary Option Grant Program so that those rights shall immediately
terminate with respect to any shares of Common Stock held by the Optionee at the
time of his or her Involuntary Termination, and the shares subject to those
terminated repurchase rights shall accordingly vest in full at that
time.

      
         

        

        
          
             

          

          
            8

            
              

            

          

          
             

          

        

      

       

               G.       
The Plan Administrator shall have the discretionary authority to structure one
or more outstanding options under the Discretionary Option Grant Program so that
those options shall, immediately prior to the effective date of a Hostile
Take-Over, vest and become exercisable for all the shares of Common Stock at
that time subject to such options on an accelerated basis and may be exercised
for any or all of such shares as fully vested shares of Common Stock. In
addition, the Plan Administrator shall have the discretionary authority to
structure one or more of the Corporation’s repurchase rights under the
Discretionary Option Grant Program so that those rights shall terminate
automatically upon the consummation of such Hostile Take-Over, and the shares
subject to those terminated rights shall thereupon immediately vest in full.
Alternatively, the Plan Administrator may condition the automatic acceleration
of one or more outstanding options under the Discretionary Option Grant Program
and the termination of one or more of the Corporation’s outstanding repurchase
rights under such program upon the Involuntary Termination of the Optionee’s
Service within a designated period (not to exceed eighteen (18) months)
following the effective date of such Hostile Take-Over. Each option so
accelerated shall remain exercisable for fully vested shares of Common Stock
until the expiration or sooner termination of the option term.

       

               H.       
The portion of any Incentive Option accelerated in connection with a Change in
Control or Hostile Take-Over shall remain exercisable as an Incentive Option
only to the extent the applicable One Hundred Thousand Dollar ($100,000)
limitation is not exceeded. To the extent such dollar limitation is exceeded,
the accelerated portion of such option shall be exercisable as a Non-Statutory
Option under the Federal tax laws.

       

               I.       
The grant of options under the Discretionary Option Grant Program shall in no
way affect the right of the Corporation 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.

       

      V.    
STOCK APPRECIATION RIGHTS

       

               The
Plan Administrator may, subject to such conditions as it may determine, grant to
selected Optionees stock appreciation rights which will allow the holders of
those rights to elect between the exercise of the underlying option for shares
of Common Stock and the surrender of that option in exchange for a distribution
from the Corporation in an amount equal to the excess of: (A) the Option
Surrender Value of the number of shares for which the option is surrendered;
over (B) the aggregate exercise price payable for such shares, which shall not
be less than one hundred percent (100%) of the Fair Market Value per share on
the grant date. The distribution may be made in shares of Common Stock valued at
Fair Market Value on the option surrender date, in cash, or partly in shares and
partly in cash, as the Plan Administrator shall in its sole discretion deem
appropriate.

       

       

      ARTICLE THREE

       

      STOCK ISSUANCE PROGRAM

       

      I.    
STOCK ISSUANCES

       

                Shares
of Common Stock may be issued under the Stock Issuance Program through direct
and immediate issuances without any intervening option grants. Each such stock
issuance shall be evidenced by a Stock Issuance Agreement which complies with
the terms specified below. Shares of Common Stock may also be issued under the
Stock Issuance Program pursuant to share right awards which entitle the
recipients to receive those shares upon the attainment of designated performance
goals.

      
         

        

        
          
             

          

          
            9

            
              

            

          

          
             

          

        

      

       

      II.    
STOCK ISSUANCE TERMS

       

               A.       
PURCHASE PRICE.

       

      
        	 
      	
                       
       1.        The purchase price per
      share shall be fixed by the Plan Administrator, but shall not be less than
      eighty-five percent (85%) of the Fair Market Value per share of Common
      Stock on the issuance date.

              

      

       

      
        	 
      	
                        
      2.        Subject to the provisions of
      Section I of Article Four, shares of Common Stock may be issued under the
      Stock Issuance Program for any of the following items of consideration
      which the Plan Administrator may deem appropriate in each individual
      instance:

              

      

       

      
        	 
      	
                                
        (i)      cash or check made payable
      to the Corporation, or

              

      

       

      
        	 
      	
                     (ii)     
      past services rendered to the Corporation (or any Parent or
      Subsidiary).

              

      

       

               B.       
VESTING PROVISIONS.

       

      
        	 
      	
                          1.         Shares
      of Common Stock issued under the Stock Issuance Program may, in the
      discretion of the Plan Administrator, be fully and immediately vested upon
      issuance or may vest in one or more installments over the Participant’s
      period of Service or upon attainment of specified performance objectives.
      The elements of the vesting schedule applicable to any unvested shares of
      Common Stock issued under the Stock Issuance Program shall be determined
      by the Plan Administrator and incorporated into the Stock Issuance
      Agreement. Shares of Common Stock may also be issued under the Stock
      Issuance Program pursuant to share right awards which entitle the
      recipients to receive those shares upon the attainment of designated
      performance goals. Upon the attainment of such performance goals, fully
      vested shares of Common Stock shall be issued upon satisfaction of those
      share right awards no later than two and one-half (2 1⁄2) months after the
      last day of the year in which such shares are no longer subject to
      substantial risk of forfeiture within the meaning of Section 409A of the
      Code.

              

      

       

      
        	 
      	
                           2.       
      Any new, substituted or additional securities or other property (including
      money paid other than as a regular cash dividend) which the Participant
      may have the right to receive with respect to the Participant’s unvested
      shares of Common Stock by reason of any stock dividend, stock split,
      recapitalization, combination of shares, exchange of shares or other
      change affecting the outstanding Common Stock as a class without the
      Corporation’s receipt of consideration shall be issued subject to: (i) the
      same vesting requirements applicable to the Participant’s unvested shares
      of Common Stock; and (ii) such escrow arrangements as the Plan
      Administrator shall deem
appropriate.

              

      

       

      
        	 
      	
                       
        3.        The Participant
      shall have full stockholder rights with respect to any shares of Common
      Stock issued to the Participant under the Stock Issuance Program, whether
      or not the Participant’s interest in those shares is vested. Accordingly,
      the Participant shall have the right to vote such shares and to receive
      any regular cash dividends paid on such
shares.

              

      

      
         

        

        
          
             

          

          
            10

            
              

            

          

          
             

          

        

      

       

      
        	 
      	
                      
         4.        Should the
      Participant cease to remain in Service while holding one or more unvested
      shares of Common Stock issued under the Stock Issuance Program or should
      the performance objectives not be attained with respect to one or more
      such unvested shares of Common Stock, then those shares shall be
      immediately surrendered to the Corporation for cancellation, and the
      Participant shall have no further stockholder rights with respect to those
      shares. To the extent the surrendered shares were previously issued to the
      Participant for consideration paid in cash or cash equivalent (including
      the Participant’s purchase-money indebtedness but not including services
      rendered by the Participant), the Corporation shall repay to the
      Participant the cash consideration paid for the surrendered shares and
      shall cancel the unpaid principal balance of any outstanding
      purchase-money note of the Participant attributable to the surrendered
      shares.

              

      

       

      
        	 
      	
                       
       5.        The Plan Administrator
      may in its discretion waive the surrender and cancellation of one or more
      unvested shares of Common Stock which would otherwise occur upon the
      cessation of the Participant’s Service or the non-attainment of the
      performance objectives applicable to those shares. Such waiver shall
      result in the immediate vesting of the Participant’s interest in the
      shares as to which the waiver applies. Such waiver may be effected at any
      time, whether before or after the Participant’s cessation of Service or
      the attainment or non-attainment of the applicable performance
      objectives.

              

      

       

      
        	 
      	
                      
        6.        Outstanding share
      right awards under the Stock Issuance Program shall automatically
      terminate, and no shares of Common Stock shall actually be issued in
      satisfaction of those awards, if the performance goals or Service
      requirements established for such awards are not attained. The Plan
      Administrator, however, shall have the discretionary authority to issue
      shares of Common Stock under one or more outstanding share right awards as
      to which the designated performance goals or Service requirements have not
      been attained.

              

      

       

       

      III.    
CHANGE IN CONTROL/HOSTILE TAKE-OVER

       

               A.       
All of the Corporation’s outstanding repurchase rights under the Stock Issuance
Program shall terminate automatically, and all the shares of Common Stock
subject to those terminated rights shall immediately vest in full, in the event
of any Change in Control, except to the extent (i) those repurchase rights are
assigned to the successor corporation (or parent thereof) or otherwise continued
in full force and effect pursuant to the express terms of the Change in Control
transaction or (ii) such accelerated vesting is precluded by other limitations
imposed in the Stock Issuance Agreement.

       

               B.       
The Plan Administrator shall have the discretionary authority to structure one
or more of the Corporation’s repurchase rights under the Stock Issuance Program
so that those rights shall automatically terminate in whole or in part upon the
occurrence of a Change in Control and shall not be assignable to the successor
corporation (or parent thereof), and the shares of Common Stock subject to those
terminated rights shall immediately vest in full at the time of such Change in
Control.

      
         

        

        
          
             

          

          
            11

            
              

            

          

          
             

          

        

      

       

               C.       
The Plan Administrator shall also have the discretionary authority to structure
one or more of the Corporation’s repurchase rights under the Stock Issuance
Program so that those rights shall automatically terminate in whole or in part,
and the shares of Common Stock subject to those terminated rights shall
immediately vest in full, upon the Involuntary Termination of the Participant’s
Service within a designated period (not to exceed eighteen (18) months)
following the effective date of any Change in Control in which those repurchase
rights do not otherwise terminate.

       

               D.       
The Plan Administrator shall also have the discretionary authority to structure
one or more of the Corporation’s repurchase rights under the Stock Issuance
Program so that those rights shall automatically terminate in whole or in part
upon the occurrence of a Hostile Take-Over, and the shares of Common Stock
subject to those terminated rights shall immediately vest in full at the time of
such Hostile Take-Over.

       

       

      ARTICLE FOUR

       

      MISCELLANEOUS

       

      I.
     FINANCING

       

               To
the extent permissible under applicable state and federal laws, the Plan
Administrator may permit any Optionee or Participant to pay the option exercise
price under the Discretionary Option Grant Program or the purchase price of
shares issued under the Stock Issuance Program by delivering a full-recourse,
interest bearing promissory note payable in one or more installments. The terms
of any such promissory note (including the interest rate and the terms of
repayment) shall be established by the Plan Administrator in its sole
discretion. In no event may the maximum credit available to the Optionee or
Participant exceed the sum of (i) the aggregate option exercise price or
purchase price payable for the purchased shares plus (ii) any Federal, state and
local income and employment tax liability incurred by the Optionee or the
Participant in connection with the option exercise or share
purchase.

       

      II.    
SHARE ESCROW/LEGENDS

       

               Unvested
shares issued under the Plan may, in the Plan Administrator’s discretion, be
held in escrow by the Corporation until the Participant’s interest in such
shares vests or may be issued directly to the Participant with restrictive
legends on the certificates evidencing those unvested shares.

       

      III.    
TAX WITHHOLDING

       

       
       A.       
The Corporation’s obligation to deliver shares of Common Stock upon the exercise
of options or the issuance or vesting of such shares under the Plan shall be
subject to the satisfaction of all applicable Federal, state and local income
and employment tax withholding requirements.

       

       
       B.       
The Plan Administrator may, in its discretion, provide any or all holders of
Non-Statutory Options or unvested shares of Common Stock under the Plan with the
right to use shares of Common Stock in satisfaction of all or part of the Taxes
incurred by such holders in connection with the exercise of their options or the
vesting of their shares. Such right may be provided to any such holder in either
or both of the following formats:

       

      
        	 
      	
                         1.              
      Stock Withholding: The election to have the Corporation withhold, from the
      shares of Common Stock otherwise issuable upon the exercise of such
      Non-Statutory Option or the vesting of such shares, a portion of those
      shares with an aggregate Fair Market Value equal to the amount of the
      Taxes (not to exceed one hundred percent (100%) of such Taxes) to be
      satisfied in such manner as designated by the holder in writing;
      or

              

      

       

      

      
        
          
             

          

          
            12

            
              

            

          

          
             

          

        

      

       

      
        	 
      	
                      
        2.              
      Stock Delivery: The election to deliver to the Corporation, at the time
      the Non-Statutory Option is exercised or the shares vest, one or more
      shares of Common Stock previously acquired by such holder (other than in
      connection with the option exercise or share vesting triggering the Taxes)
      with an aggregate Fair Market Value equal to the amount of the Taxes (not
      to exceed one hundred percent (100%) of such Taxes) to be satisfied in
      such manner as designated by the holder in
  writing.

              

      

      

      IV.    
EFFECTIVE DATE AND TERM OF THE PLAN

       

                A.       
The Plan shall become effective immediately upon the Plan Effective Date.
Options may be granted under the Discretionary Option Grant at any time on or
after the Plan Effective Date. However, no options granted under the Plan may be
exercised, and no shares shall be issued under the Plan, until the Plan is
approved by the Corporation’s stockholders. If such stockholder approval is not
obtained within twelve (12) months after the Plan Effective Date, then all
options previously granted under this Plan shall terminate and cease to be
outstanding, and no further options shall be granted and no shares shall be
issued under the Plan.

       

       

                B.       
The Plan shall terminate upon the EARLIEST of (i) the tenth anniversary of the
Plan Effective Date, (ii) the date on which all shares available for issuance
under the Plan shall have been issued as fully-vested shares or (iii) the
termination of all outstanding options in connection with a Change in Control.
Upon such plan termination, all outstanding option grants and unvested stock
issuances shall thereafter continue to have force and effect in accordance with
the provisions of the documents evidencing such grants or
issuances.

       

      V.    
AMENDMENT OF THE PLAN

       

                A.       
The Board shall have complete and exclusive power and authority to amend or
modify the Plan in any or all respects. However, no such amendment or
modification shall adversely affect the rights and obligations with respect to
stock options or unvested stock issuances at the time outstanding under the Plan
unless the Optionee or the Participant consents to such amendment or
modification. In addition, certain amendments may require stockholder approval
pursuant to applicable laws or regulations.

       

                B.       
Options to purchase shares of Common Stock may be granted under the
Discretionary Option Grant Program and shares of Common Stock may be issued
under the Stock Issuance Program that are in each instance in excess of the
number of shares then available for issuance under the Plan, provided any excess
shares actually issued under those programs shall be held in escrow until there
is obtained any required approval of an amendment sufficiently increasing the
number of shares of Common Stock available for issuance under the Plan. If such
approval is not obtained within twelve (12) months after the date the first such
excess issuances are made, then (i) any unexercised options granted on the basis
of such excess shares shall terminate and cease to be outstanding and (ii) the
Corporation shall promptly refund to the Optionees and the Participants the
exercise or purchase price paid for any excess shares issued under the Plan and
held in escrow, together with interest (at the applicable Short Term Federal
Rate) for the period the shares were held in escrow, and such shares shall
thereupon be automatically canceled and cease to be outstanding.

      
         

        

        
          
             

          

          
            13

            
              

            

          

          
             

          

        

      

       

      VI.    
USE OF PROCEEDS

       

                Any
cash proceeds received by the Corporation from the sale of shares of Common
Stock under the Plan shall be used for general corporate purposes.

       

      VII.    
REGULATORY APPROVALS

       

                A.       
The implementation of the Plan, the granting of any stock option under the Plan
and the issuance of any shares of Common Stock (i) upon the exercise of any
granted option or (ii) under the Stock Issuance Program shall be subject to the
Corporation’s procurement of all approvals and permits required by regulatory
authorities having jurisdiction over the Plan, the stock options granted under
it and the shares of Common Stock issued pursuant to it.

       

                B.       
No shares of Common Stock or other assets shall be issued or delivered under the
Plan unless and until there shall have been compliance with all applicable
requirements of Federal and state securities laws, including the filing and
effectiveness of the Form S-8 registration statement for the shares of Common
Stock issuable under the Plan, and all applicable listing requirements of the
Nasdaq SmallCap Market (or any stock exchange , if applicable) on which Common
Stock is then quoted for trading.

       

      VIII.    
NO EMPLOYMENT/SERVICE RIGHTS

       

                Nothing
in the Plan shall confer upon the Optionee or the Participant any right to
continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent or
Subsidiary employing or retaining such person) or of the Optionee or the
Participant, which rights are hereby expressly reserved by each, to terminate
such person’s Service at any time for any reason, with or without
cause.

       

      IX.    
SECTION 162(M)

       

                It
is the intent of the Corporation that any options granted under the Plan to a
“covered employee” (as that term is defined in Section 162(m) of the Code)
with an exercise price of not less than the Fair Market Value per share of
Common Stock on the date of grant shall qualify as “qualified performance-based
compensation” (within the meaning of Treas. Reg. § 1.162-27(e)) and the
Plan shall be interpreted consistently with such intent. In furtherance of the
foregoing, if and to the extent that the Corporation intends that an option
granted under the Plan to any covered employee shall qualify as qualified
performance-based compensation, all decisions regarding the grant of such option
shall be made only by members of the Committee who qualify as “outside
directors” within the meaning of Treas. Reg. § 1.162-27(e)(3).

       

      X.    
CONFORMANCE TO SECTION 409A

       

                It
is the intent of the Corporation that Options awarded pursuant to the Plan
qualify as Incentive Options or Non-Statutory Options not providing for the
deferral of compensation under Treasury Regulations §§ 1.409A-1(b)(5)(ii)
and 1.409A-1(b)(5)(i)(A), respectively.  It is also intended that
stock appreciation rights awarded pursuant to the Plan qualify as stock
appreciation rights not providing for the deferral of compensation under
Treasury Regulations § 1.409A-1(b)(5)(ii)(B) and that Common Stock issued
pursuant to the Stock Issuance Program be issued no later than two and one-half
(2 1⁄2) months after the last day of the year in which such Common Stock is no
longer subject to substantial risk of forfeitures, within the meaning of Section
409A of the Code.  However, if at any time, tax advisors to the
Company determine that the terms of any outstanding Option, stock appreciation
right or Stock Issuance Agreement result in additional tax or interest to the
holder under Section 409A of the Code, the Board shall have the authority
to enter into an amendment of such Option, stock appreciation right or Stock
Issuance Agreement, consistent with this Plan, that is designed to avoid such
additional tax or interest.  If any Option, stock appreciation right
or Stock Issuance Agreement nevertheless constitutes deferred compensation
within the meaning of Section 409A of the Code, any acceleration of the
payment of such Option, stock appreciation right or Stock Issuance Agreement
upon a Change in Control as provided under this Plan shall occur only if the
Change in Control constitutes, in the good-faith determination of the Board, a
change in the ownership or effective control of the Corporation, or in the
ownership of a substantial portion of the assets of the Corporation, under
Section 409A of the Code. If any other payment under this Plan constitutes
deferred compensation within the meaning of Section 409A of the Code and if
the Plan fails to satisfy the requirements of Section 409A(a)(2), (3) or
(4) of the Code with respect to such payment, such provision shall be operated
in a manner that, in the good-faith determination of the Board, seeks to bring
the provision into compliance with those requirements while preserving as
closely as possible the original intent of the provision.

      
         

        

        
          
             

          

          
            14

            
              

            

          

          
             

          

        

      

       

      APPENDIX

       

                The
following definitions shall be in effect under the Plan:

       

                A.       
BOARD shall mean the Corporation’s Board of Directors.

       

                B.       
CHANGE IN CONTROL shall mean a change in ownership or control of the Corporation
effected through any of the following transactions:

       

      
        	 
      	
                          
       (i)        a
      stockholder-approved merger or consolidation in which securities
      possessing more than fifty percent (50%) of the total combined voting
      power of the Corporation’s outstanding securities are transferred to a
      person or persons different from the persons holding those securities
      immediately prior to such transaction;
or

              

      

       

      
        	 
      	
                           
      (ii)         a sale, transfer or
      other disposition of all or substantially all of the Corporation’s assets;
      or

              

      

       

      
        	 
      	
                         
        (iii)         the
      acquisition, directly or indirectly by any person or related group of
      persons (other than the Corporation or a person that directly or
      indirectly controls, is controlled by, or is under common control with,
      the Corporation), of beneficial ownership (within the meaning of Rule
      13d-3 of the 1934 Act) of securities possessing more than fifty percent
      (50%) of the total combined voting power of the Corporation’s outstanding
      securities pursuant to a tender or exchange offer made directly to the
      Corporation’s stockholders which the Board recommends such stockholders
      accept;

              

      

       

                provided, however,
the Plan Administrator shall have the discretionary authority to determine that
a transaction or series of transactions does not constitute a Change in Control.
Such determination by the Plan Administrator shall govern notwithstanding the
fact that the determination is contrary to paragraphs (i) through (iii) set
forth above.

       

                C.       
CODE shall mean the Internal Revenue Code of 1986, as amended.

       

                D.       
COMMON STOCK shall mean the Corporation’s common stock.

       

                E.       
CORPORATION shall mean SonomaWest Holdings, Inc., a California corporation, and
its successors.

       

                F.       
DISCRETIONARY OPTION GRANT PROGRAM shall mean the discretionary option grant
program in effect under the Plan.

       

                G.       
EMPLOYEE shall mean an “employee” of the Corporation (or any Parent or
Subsidiary), within the meaning of Section 3401(c) of the Code and the
regulations thereunder.

      
         

        

        
          
             

          

          
            15

            
              

            

          

          
             

          

        

      

       

                H.       
EXERCISE DATE shall mean the date on which the Corporation shall have received
written notice of the option exercise.

       

                I.       
FAIR MARKET VALUE per share of Common Stock on any relevant date shall mean,
with respect to Common Stock or other property, as of any date, the value of
such Common Stock in accordance with Section 409A of the Code, or such other
property, as applicable, in either case as determined in good faith by the Plan
Administrator. In determining the fair market value, the Plan Administrator may
consider the following items:

       

      
        	 
      	
                      
       (i)        the closing selling
      price per share of common stock on the date of
  grant.

              

      

       

              This
closing selling price shall be determined as follows:

       

      
        	 
      	
                a.       If
      the Common Stock is at the time traded on the Nasdaq SmallCap Market, then
      the closing selling price per share of Common Stock on the date in
      question shall be used, as such price is reported on the Nasdaq SmallCap
      Market or any successor system.

              

      

       

      
        	 
      	
                b.       
      If the Common Stock is at the time listed on any other Stock Exchange,
      then the plan administrator shall use the closing selling price per share
      of Common Stock on the date in question on the Stock Exchange determined
      by the Plan Administrator to be the primary market for the Common Stock,
      as such price is officially quoted in the composite tape of transactions
      on such exchange.

              

      

       

      
        	 
      	
                   
        (ii)        the average
      trading volume of the Common Stock and the trading volume on the date of
      the grant;

              

      

       

      
        	 
      	
                       (iii)       
      the closing selling price per share of Common Stock on recent
      dates;

              

      

       

      
        	 
      	
                       (iv)       
      the spread between the “bid” and “ask” prices on the date of grant and on
      recent dates;

              

      

       

      
        	 
      	
                       (v)       
      the financial statements of the Company;
and

              

      

       

      
        	 
      	
                       (vi)       
      any other information the plan administrator determines is applicable in
      determining the fair market value.

              

      

       

       

      

      
        
          
             

          

          
            16

            
              

            

          

          
             

          

        

      

       

                J.       
HOSTILE TAKE-OVER shall mean:

       

      
        	 
      	
                       (i)       
      the acquisition, directly or indirectly, by any person or related group of
      persons (other than the Corporation or a person that directly or
      indirectly controls, is controlled by, or is under common control with,
      the Corporation) of beneficial ownership (within the meaning of Rule 13d-3
      of the 1934 Act) of securities possessing more than fifty percent (50%) of
      the total combined voting power of the Corporation’s outstanding
      securities pursuant to a tender or exchange offer made directly to the
      Corporation’s stockholders which the Board does not recommend such
      stockholders to accept; or

              

      

       

      
        	 
      	
                       (ii)       a
      change in the composition of the Board over a period of thirty-six (36)
      consecutive months or less such that a majority of the Board members
      ceases, by reason of one or more contested elections for Board membership,
      to be comprised of individuals who either: (a) have been Board members
      continuously since the beginning of such period; or (b) have been elected
      or nominated for election as Board members during such period by at least
      a majority of the Board members described in clause (a) who were still in
      office at the time the Board approved such election or
      nomination.

              

      

      

                K.       
IMMEDIATE FAMILY shall mean any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and shall include
adoptive relationships.

       

                L.       
INCENTIVE OPTION shall mean an option which satisfies the requirements of Code
Section 422.

       

                M.       
INVOLUNTARY TERMINATION shall mean the termination of the Service of any
individual which occurs by reason of:

       

      
        	 
      	
                       (i)       
      such individual’s involuntary dismissal or discharge by the Corporation
      for reasons other than Misconduct,
or

              

      

       

      
        	 
      	
                       (ii)       
      such individual’s voluntary resignation following (A) a change in his or
      her position with the Corporation which materially reduces his or her
      level of responsibility or the level of management to which Optionee
      reports, (B) a reduction in his or her level of compensation (including
      base salary, fringe benefits and participation in any
      corporate-performance based bonus or incentive programs) by more than
      fifteen percent (15%) or (C) a relocation of such individual’s place of
      employment by more than fifty (50) miles, provided and only if such
      change, reduction or relocation is effected by the Corporation without the
      individual’s consent.

              

      

      
         

        

        
          
             

          

          
            17

            
              

            

          

          
             

          

        

      

       

                N.       
MISCONDUCT shall mean the commission of any act of fraud, embezzlement or
dishonesty by the Optionee or Participant, any unauthorized use or disclosure by
such person of confidential information or trade secrets of the Corporation (or
any Parent or Subsidiary), or any other intentional misconduct by such person
adversely affecting the business or affairs of the Corporation (or any Parent or
Subsidiary) in a material manner. The foregoing definition shall not be deemed
to be inclusive of all the acts or omissions which the Corporation (or any
Parent or Subsidiary) may consider as grounds for the dismissal or discharge of
any Optionee, Participant or other person in the Service of the Corporation (or
any Parent or Subsidiary).

       

                O.       
1934 ACT shall mean the Securities Exchange Act of 1934, as
amended.

       

                P.       
NON-STATUTORY OPTION shall mean an option not intended to satisfy the
requirements of Code Section 422.

       

                Q.       
OFFICER shall mean any person serving as the president, chief executive officer,
chief financial officer, chief operating officer, treasurer, secretary or in any
other managerial or administrative capacity for the Corporation or a Parent or
Subsidiary of the Corporation, as determined in the Administrator’s
discretion.

       

                R.       
OPTION COMMITTEE shall mean the committee of two (2) or more non-employee Board
members appointed by the Board to administer the Discretionary Option Grant and
Stock Issuance Programs.

       

                S.       
OPTIONEE shall mean any person to whom an option is granted under the
Discretionary Option Grant Program.

       

                T.       
OPTION SURRENDER VALUE shall mean the Fair Market Value per share of Common
Stock on the date the option is surrendered to the Corporation or, in the event
of a Hostile Take-Over, effected through a tender offer, the highest reported
price per share of Common Stock paid by the tender offer or in effecting such
Hostile Take-Over, if greater. However, if the surrendered option is an
Incentive Option, the Option Surrender Value shall not exceed the Fair Market
Value per share.

       

                U.       
PARENT shall mean any corporation (other than the Corporation) in an unbroken
chain of corporations ending with the Corporation, provided each corporation in
the unbroken chain (other than the Corporation) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

       

                V.       
PARTICIPANT shall mean any person who is issued shares of Common Stock under the
Stock Issuance Program.

       

                W.       
PLAN shall mean the Corporation’s Amended and Restated 2002 Stock Incentive
Plan, as set forth in this document.

       

                X.       
PLAN ADMINISTRATOR shall mean the particular entity, whether the Option
Committee or the Board, which is authorized to administer the Discretionary
Option Grant and Stock Issuance Programs with respect to one or more classes of
eligible persons, to the extent such entity is carrying out its administrative
functions under those programs with respect to the persons under its
jurisdiction.

       

                Z.       
SECTION 16 INSIDER shall mean an officer or director of the Corporation subject
to the short-swing profit liabilities of Section 16 of the 1934
Act.

      
         

        

        
          
             

          

          
            18

            
              

            

          

          
             

          

        

      

       

                AA.       
SERVICE shall mean the performance of services for the Corporation (or any
Parent or Subsidiary) by a person in the capacity of an Employee, Officer,
member of the board of directors or a consultant or independent advisor, except
to the extent otherwise specifically provided in the documents evidencing the
option grant or stock issuance.

       

                BB.       
SHORT TERM FEDERAL RATE shall mean the federal short-term rate in effect under
Section 1274(d) of the Code for the period the shares were held in
escrow.

       

                CC.       
STOCK EXCHANGE shall mean either the American Stock Exchange or the New York
Stock Exchange.

       

                DD.       
STOCK ISSUANCE AGREEMENT shall mean the agreement entered into by the
Corporation and the Participant at the time of issuance of shares of Common
Stock under the Stock Issuance Program.

       

                EE.       
STOCK ISSUANCE PROGRAM shall mean the stock issuance program in effect under the
Plan.

       

                FF.       
SUBSIDIARY shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.

       

                GG.       
TAXES shall mean the Federal, state and local income and employment tax
liabilities incurred by the holder of options or unvested shares of Common Stock
in connection with the exercise of those options or the vesting of those
shares.

       

                HH.       
10% STOCKHOLDER shall mean the owner of stock (as determined under Code Section
424(d)) possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Corporation (or any Parent or
Subsidiary).

       
19

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00147-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00147-of-00352.parquet"}]]