Document:

Exhibit 10.2(c) ECHELON CORPORATION NONQUALIFIED STOCK OPTION GRANT AGREEMENT

    Exhibit
      10.2(c)

    
      [EMPLOYEE
        NAME]

       

      Employee
        ID Number:        

       

      Grant
        Number:

      ECHELON
        CORPORATION

      NONQUALIFIED
        STOCK OPTION GRANT AGREEMENT

       

      Echelon
        Corporation (the “Company”) hereby grants you, [NAME OF EMPLOYEE] (the
“Employee”), an option under the Company’s 1997 Stock Plan (the “Plan”) to
        purchase shares of common stock of the Company. The date of this Agreement
        is
        [DATE] (the “Grant Date”). In general, the latest date this option will expire
        is the expiration date indicated on this Notice of Grant (the “Expiration
        Date”). However, as provided in this Agreement, this option may expire earlier
        than the Expiration Date. Subject to the provisions of Appendix A (attached
        to
        this Agreement) and of the Plan, the principal features of this option are
        as
        follows:

       

      
        
          	 Maximum Number of
                  Shares	 	 
	 Purchasable with this
                  Option: 	 [NUMBER]	  Exercise
                  Price per Share:    
                  US
                  $______
	 	 	 
	 Vesting Commencement
                  Date:	  [DATE]	 
	 	 	 
	 Scheduled Vesting
                  Dates:	 	 Number of
                  Shares
	 [DATE] 	 	
                  [NUMBER]

                
	 [DATE]	 	
                  [NUMBER]

                
	 [DATE]	 	
                  [NUMBER]

                
	 [DATE]	 	
                  [NUMBER]

                

        

         

        Expiration
          Date: Five
          Years from the Grant Date; provided, however, this option may terminate
          earlier
          than the Expiration Date, as set in Appendix A.

        

        IMPORTANT:

         

        By
          your
          signature and the signature of the Company’s representative below, you and the
          Company agree that this Option is granted under and governed by the terms
          and
          conditions of the Plan and this Agreement. Optionee has reviewed the Plan
          and
          this Agreement in their entirety, has had an opportunity to obtain the
          advice of
          counsel prior to executing this Agreement and fully understands all provisions
          of the Plan and Agreement. Optionee hereby agrees to accept as binding,
          conclusive and final all decisions or interpretations of the Administrator
          upon
          any questions relating to the Plan and Agreement. Optionee further agrees
          to
          notify the Company upon any change in the residence address indicated
          below.

         

        
          	 OPTIONEE:	 	 ECHELON CORPORATION
	 	 	 
	 	 	  
	 Signature	 	 By
	 	 	 
	 	 	 
	 Print Name	 	  Title
	 	 	 
	 Residence
                  Address	 	 
	 	 	 
	 	 	 

        

          

        
          
            

          

        

      

      APPENDIX
        A - TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTION GRANT

       

      

       

       

      1.  Vesting
        Schedule.
        The
        right to exercise this option will vest as to 25% of the total shares at
        each
        one year anniversary of the date of grant, until the right to exercise this
        option shall have vested with respect to one hundred percent (100%) of such
        Shares. Shares scheduled to vest on any such date actually will vest only
        if the
        Employee has not incurred a Termination of Service prior to such
        date.

       

      2.  Termination
        of Option.
        In the
        event of the Employee’s Termination of Service for any reason other than
        Disability or death, the Employee may, within thirty (30) days after the
        date of
        such Termination of Service, or prior to the Expiration Date, whichever shall
        first occur, exercise any then vested but unexercised portion of this option.
        In
        the event of the Employee’s Termination of Service due to Disability, the
        Employee may, within one (1) year after the date of Termination of Service
        due
        to Disability, or prior to the Expiration Date, whichever shall first occur,
        exercise any then vested but unexercised portion of this option. 

      

       

      For
        purposes of this Agreement, the Employee shall be deemed to have incurred
        a
        Termination of Service prior to any period of notice for termination of
        employment mandated under applicable law. The Employee’s date of Termination of
        Service shall mean the date upon which the Employee ceases active performance
        of
        services following the provision of a notification of termination or resignation
        from employment or service, and shall be determined solely by this Agreement
        and
        without reference to any other agreement, written or oral, express or implied,
        including the Employee’s contract of employment, if any.

       

       

      3.  Death
        of Employee.
        In the
        event that the Employee dies while an Employee or during the thirty (30)
        days or
        one (1) year periods referred to in Paragraph 2 above, the Employee’s designated
        beneficiary, or if no beneficiary survives the Employee, the administrator
        or
        executor of the Employee’s estate (the “Transferee”), may, within one (1) year
        after the date of death, exercise any unexercised portion of the option that
        was
        vested prior to the Employee’s Termination of Service. Any such Transferee must
        furnish the Company (a) written notice of his or her status as a
        Transferee, (b) evidence satisfactory to the Company to establish the validity
        of the transfer of this option and compliance with any laws or regulations
        pertaining to such transfer, and (c) written acceptance of the terms and
        conditions of this option as set forth in this Agreement.

       

      4.  Persons
        Eligible to Exercise Option.
        Except
        as provided in Paragraph 3 above or as otherwise determined by the Committee
        in
        its discretion, this option shall be exercisable during the Employee’s lifetime
        only by the Employee.

       

      5.  Option
        is Not Transferable.
        Except
        as provided in Paragraph 3 above, this option and the rights and privileges
        conferred hereby shall not be transferred, assigned, pledged or hypothecated
        in
        any way (whether by operation of law or otherwise) and shall not be subject
        to
        sale under execution, attachment or similar process. Upon any attempt to
        transfer, assign, pledge, hypothecate or otherwise dispose of this option,
        or of
        any right or privilege conferred hereby, or upon any attempted sale under
        any
        execution, attachment or similar process, this option and the rights and
        privileges conferred hereby immediately shall become null and void.

       

      6.  Exercise
        of Option.
        This
        option may be exercised by the person then entitled to do so as to any shares
        which may then be purchased by (a) giving notice in such form or manner as
        the
        Company may designate, (b) providing full payment of the Exercise Price (and
        the
        amount of any income tax the Company determines is required to be withheld
        by
        reason of the exercise of this option or as is otherwise required under
        Paragraph 8 below), and (c) giving satisfactory assurances in the form or
        manner
        requested by the Company that the shares to be purchased upon the exercise
        of
        this option are being purchased for investment and not with a view to the
        distribution thereof. Notwithstanding any contrary provision of this Agreement,
        if the expiration date of this option falls on a Saturday, Sunday or California
        holiday, the Employee may exercise any then vested but unexercised portion
        of
        this option at any time prior to the close of business on the first business
        day
        following that Saturday, Sunday or California holiday. 

       

      7.  Conditions
        to Exercise.
        Except
        as provided in Paragraph 6 above or as otherwise required as a matter of
        law,
        the (i) Exercise Price for this option and (ii) minimum federal, state and
        local
        income, employment and any other applicable taxes required to be withheld
        by the
        Company as a result of the exercise of this option shall be made by “net
        exercise” unless the person entitled to exercise otherwise elects to pay such
        amounts by cash, personal check, cashier’s check or money order. For this
        purpose, “net exercise” means a procedure by which such person will be issued a
        number of Shares determined in accordance with a formula X = Y(A - (B+C))
        / A
        (rounded up to the nearest whole Share), where:

       

      X
        = the
        number of Shares to be issued upon exercise of the option;

       

      Y
        = the
        total number of Shares with respect to which the person has elected to exercise
        the option;

       

      A
        = the
        Fair Market Value of one (1) Share;

       

      B
        = the
        exercise price per share; 

       

      C
        = the
        minimum federal, state and local income, employment and any other applicable
        taxes attributable to one (1) Share which are required to be withheld by
        the
        Company as a result of the exercise of the option.

       

      8.  Tax
        Withholding and Payment Obligations.
        The
        Company will assess its requirements regarding tax, social insurance and
        any
        other payroll tax withholding and reporting in connection with this option,
        including the grant, vesting or exercise of this option or sale of shares
        acquired pursuant to the exercise of this option (“tax-related items”). These
        requirements may change from time to time as laws or interpretations change.
        Regardless of the Company’s actions in this regard, the Employee hereby
        acknowledges and agrees that the ultimate liability for any and all tax-related
        items is and remains his or her responsibility and liability and that the
        Company (a) makes no representations or undertaking regarding treatment of
        any
        tax-related items in connection with any aspect of this option grant, including
        the grant, vesting or exercise of this option and the subsequent sale of
        shares
        acquired pursuant to the exercise of this option; and (b) does not commit
        to
        structure the terms of the grant or any aspect of this option to reduce or
        eliminate the Employee’s liability regarding tax-related items. In the event the
        Company determines that it and/or an affiliate must withhold any tax-related
        items as a result of the Employee’s participation in the Plan, the Employee
        agrees as a condition of the grant of this option to make arrangements
        satisfactory to the Company to enable it to satisfy all withholding
        requirements. The Employee authorizes the Company and/or an affiliate to
        withhold all applicable withholding taxes from the Employee’s wages.
        Furthermore, the Employee agrees to pay the Company and/or an affiliate any
        amount of taxes the Company and/or an affiliate may be required to withhold
        as a
        result of the Employee’s participation in the Plan that cannot be satisfied by
        deduction from the Employee’s wages or other cash compensation paid to the
        Employee by the Company and/or an affiliate. The Employee acknowledges that
        he
        or she may not exercise this option unless the tax withholding obligations
        of
        the Company and/or any affiliate are satisfied. Notwithstanding the foregoing,
        upon exercise of the option, the Company will withhold a portion of the Shares
        with respect to which the Employee (or such other authorized person) has elected
        to exercise the option that have an aggregate market value sufficient to
        pay the
minimum
        federal, state and local income, employment and any other applicable taxes
        required to be withheld by the Company
        as a
        result of the exercise of the option. No fractional Shares will be withheld
        or
        issued pursuant to the issuance of Shares; any additional withholding necessary
        for this reason will be done by the Company through the Employee’s paycheck.
        With respect to its executive officers (as determined by the Company), the
        Company will withhold an amount equal to the fair market value of two (2)
        Shares
        from the last paycheck due to such executive prior to the exercise of the
        option. With respect to other Employees, the Company, in its discretion,
        may
        withhold an amount equal to the fair market value of two (2) Shares from
        the
        first paycheck due to the Employee following the exercise of the option.
        In the
        event that the cash amounts withheld by the Company exceed the withholding
        taxes
        that are due after the automatic withholding of whole Shares, the Company
        will
        reimburse the Employee for the excess amounts. In the event the withholding
        requirements are not satisfied through the withholding of Shares (or, through
        the Employee’s paycheck, as indicated above), no Shares will be issued to the
        Employee (or his or her estate) unless and until satisfactory arrangements
        (as
        determined by the Administrator) have been made by the Employee with respect
        to
        the payment of any income and other taxes which the Company determines must
        be
        withheld or collected with respect to the exercise of the option. By accepting
        this option, the Employee expressly consents to the withholding of Shares
        and to
        any additional cash withholding as provided for in this
        paragraph 8.

       

      9.  Suspension
        of Exercisability.
        If at
        any time the Company shall determine, in its discretion, that the listing,
        registration or qualification of the shares upon any securities exchange
        or
        under any applicable law, or the consent or approval of any governmental
        regulatory authority, is necessary or desirable as a condition of the purchase
        of shares hereunder, this option may not be exercised, in whole or in part,
        unless and until such listing, registration, qualification, consent or approval
        shall have been effected or obtained free of any conditions not acceptable
        to
        the Company. The Company shall make reasonable efforts to meet the requirements
        of any applicable law or securities exchange and to obtain any required consent
        or approval of any governmental authority.

       

      10.  Address
        for Notices.
        Any
        notice to be given to the Company under the terms of this Agreement shall
        be
        addressed to the Company, in care of Human Resources Department, at Echelon
        Corporation, 550 Meridian Avenue., San Jose, CA 95126, or at such other address
        as the Company may hereafter designate in writing.

       

      11.  No
        Rights of Stockholder.
        Neither
        the Employee (nor any transferee) shall be or have any of the rights or
        privileges of a stockholder of the Company in respect of any of the shares
        issuable pursuant to the exercise of this option, unless and until certificates
        representing such shares shall have been issued, recorded on the records
        of the
        Company or its transfer agents or registrars, and delivered to the Employee
        (or
        transferee). Nothing in the Plan or this option shall create an obligation
        on
        the part of the Company to repurchase any shares purchased
        hereunder.

       

      12.  No
        Effect on Employment.
        The
        Employee's employment with the Company and its affiliates is on an at-will
        basis
        only, subject to the provisions of applicable law. Accordingly, the terms
        of the
        Employee's employment with the Company and its affiliates shall be determined
        from time to time by the Company or the affiliate employing the Employee
        (as the
        case may be), and the Company or the affiliate shall have the right, which
        is
        hereby expressly reserved, to terminate or change the terms of the employment
        of
        the Employee at any time for any reason whatsoever, with or without good
        cause
        (subject to the provisions of applicable law). 

       

      13.  Other
        Benefits.
        Except
        as provided below, nothing contained in this Agreement shall affect the
        Employee’s right to participate in and receive benefits under and in accordance
        with the then current provisions of any pension, insurance or other employee
        welfare plan or program of the Company or any affiliate. Notwithstanding
        any
        contrary provision of this Agreement, in the event that the Employee receives
        a
        hardship withdrawal from his or her pre-tax account under the Company’s 401(k)
        Plan (the “401(k) Plan”), this option may not be exercised during the six (6)
        month period following the receipt of such withdrawal, unless the Company
        determines that such exercise (or a particular manner of exercise) would
        not
        adversely affect the continued tax qualification of the 401(k)
        Plan.

       

      14.  Plan
        Governs.
        This
        Agreement is subject to all terms and provisions of the Plan. In the event
        of a
        conflict between one or more provisions of this Agreement and one or more
        provisions of the Plan, the provisions of the Plan shall govern. Terms used
        and
        not defined in this Agreement shall have the meaning set forth in the Plan.
        This
        option is not an incentive stock option as defined in Section 422 of the
        Internal Revenue Code. The Company may, in its discretion; issue newly issued
        shares or treasury shares pursuant to this option.

       

      15.  Maximum
        Term of Option.
        Except
        as provided in Paragraph 3 above, this option is not exercisable after the
        Expiration Date.

       

      16.  Binding
        Agreement.
        Subject
        to the limitation on the transferability of this option contained herein,
        this
        Agreement shall be binding upon and inure to the benefit of the heirs, legatees,
        legal representatives, successors and assigns of the parties
        hereto.

       

      17.  Committee
        Authority.
        The
        Committee shall have the power to interpret the Plan and this Agreement and
        to
        adopt such rules for the administration, interpretation and application of
        the
        Plan as are consistent therewith and to interpret or revoke any such rules.
        All
        actions taken and all interpretations and determinations made by the Committee
        in good faith shall be final and binding upon the Employee, the Company and
        all
        other interested persons. The Committee shall not be personally liable for
        any
        action, determination or interpretation made in good faith with respect to
        the
        Plan or this Agreement.

       

      18.  Captions.
        Captions provided herein are for convenience only and are not to serve as
        a
        basis for interpretation or construction of this Agreement.

       

      19.  Agreement
        Severable.
        In the
        event that any provision in this Agreement shall be held invalid or
        unenforceable, such provision shall be severable from, and such invalidity
        or
        unenforceability shall not be construed to have any effect on, the remaining
        provisions of this Agreement.

       

      20.  Modifications
        to the Agreement.
        This
        Agreement constitutes the entire understanding of the parties on the subjects
        covered. The Employee expressly warrants that he or she is not accepting
        this
        Agreement in reliance on any promises, representations, or inducements other
        than those contained herein. Modifications to this Agreement or the Plan
        can be
        made only in an express written contract executed by a duly authorized officer
        of the Company.

       

      21.  Amendment,
        Suspension, Termination.
        By
        accepting this option, the Employee expressly warrants that he or she has
        received an option to purchase stock under the Plan, and has received, read
        and
        understood a description of the Plan. The Employee understands that the Plan
        is
        discretionary in nature and may be modified, suspended or terminated by the
        Company at any time.

       

      22.  Labor
        Law.
        By
        accepting this option, the Employee acknowledges that: (a) the grant of this
        option is a one-time benefit which does not create any contractual or other
        right to receive future grants of options, or benefits in lieu of options;
        (b)
        all determinations with respect to any future grants, including, but not
        limited
        to, the times when the stock options shall be granted, the number of shares
        subject to each stock option, the Exercise Price, and the time or times when
        each stock option shall be exercisable, will be at the sole discretion of
        the
        Company; (c) the Employee’s participation in the Plan is voluntary; (d) the
        value of this option is an extraordinary item of compensation which is outside
        the scope of the Employee’s employment contract, if any; (e) this option is not
        part of the Employee’s normal or expected compensation for purposes of
        calculating any severance, resignation, redundancy, end of service payments,
        bonuses, long-service awards, pension or retirement benefits or similar
        payments; (f) the vesting of this option ceases upon termination of employment
        for any reason except as may otherwise be explicitly provided in the Plan
        or
        this Agreement; (g) the future value of the underlying shares is unknown
        and
        cannot be predicted with certainty; (h) if the underlying shares do not increase
        in value, this option will have no value; (i) this option has been granted
        to
        the Employee in the Employee’s status as an employee of the Company or its
        affiliates; (j) any claims resulting from this option shall be enforceable,
        if
        at all, against the Company; and (k) there shall be no additional obligations
        for any affiliate employing the Employee as a result of this
        option.

       

      23.  Disclosure
        of Employee Information.
        By
        accepting this option, the Employee consents to the collection, use and transfer
        of personal data as described in this paragraph. The Employee understands
        that
        the Company and its affiliates hold certain personal information about him
        or
        her, including his or her name, home address and telephone number, date of
        birth, social security or identity number, salary, nationality, job title,
        any
        shares of stock or directorships held in the Company, details of all stock
        options or any other entitlement to shares of stock awarded, canceled,
        exercised, vested, unvested or outstanding in his or her favor, for the purpose
        of managing and administering the Plan (“Data”). The Employee further
        understands that the Company and/or its affiliates will transfer Data amongst
        themselves as necessary for the purpose of implementation, administration
        and
        management of his or her participation in the Plan, and that the Company
        and/or
        any of its affiliates may each further transfer Data to any third parties
        assisting the Company in the implementation, administration and management
        of
        the Plan. The Employee authorizes the Company to receive, possess, use, retain
        and transfer the Data in electronic or other form, for the purposes of
        implementing, administering and managing his or her participation in the
        Plan,
        including any requisite transfer to a broker or other third party with whom
        he
        or she may elect to deposit any shares of stock acquired upon exercise of
        this
        option of such Data as may be required for the administration of the Plan
        and/or
        the subsequent holding of shares of stock on his or her behalf. The Employee
        understands that he or she may, at any time, view the Data, require any
        necessary amendments to the Data or withdraw the consent herein in writing
        by
        contacting the human resources department and/or the stock option administrator
        for his or her employer.

       

      24.  Notice
        of Governing Law.
        This
        option shall be governed by, and construed in accordance with, the laws of
        the
        State of California without
        regard to principles of conflict of laws.Exhibit 10.2(d) ECHELON CORPORATION PERFORMANCE SHARE AGREEMENT

    Exhibit
      10.2(d)

    ECHELON
      CORPORATION

     

    Performance
      Share Agreement

     

     

    Grant
      #__________

     

     

    Echelon
      Corporation (the “Company”) hereby grants you, [Name]
      (the
“Employee”), an award of Performance Shares under the Company’s 1997 Stock Plan
      (the “Plan”). The date of this Agreement is ______, 200__. Subject to the
      provisions of Appendix A (attached hereto) and of the Plan, the principal
      features of this award are as follows:

     

     

    Number
      of Performance Shares: [________]

     

    Vesting
      of Performance Shares: The
      Performance Shares will vest in accordance with the following schedule:
[insert
      vesting schedule],
      subject
      to your continued employment with the Company or its Subsidiaries through the
      applicable vesting date. 

     

     

    IMPORTANT:

    

    Your
      signature below indicates your agreement and understanding that this award
      is
      subject to all of the terms and conditions contained in Appendix A and the
      Plan. For example, important additional information on vesting and forfeiture
      of
      the Performance Shares is contained in paragraphs 3 through 6 of
      Appendix A. PLEASE
      BE SURE TO READ ALL OF APPENDIX A, WHICH CONTAINS THE SPECIFIC TERMS AND
      CONDITIONS OF THIS AGREEMENT.

     

    
      	 ECHELON
              CORPORATION	 	 EMPLOYEE
	 	 	 
	 	 	 
	 [NAME]	 	 [NAME]
	 	 	 
	 	 	 
	 [TITLE]	 	 
	 	 	 
	 Date: ___________, 200__	 	 Date: ___________,
              200__

 

     

     

     

     

        

     

    
       

      
        
          

        

      

      
        APPENDIX
          A

         

      

    

    TERMS
      AND CONDITIONS OF PERFORMANCE SHARES

     

    

     

    1. Grant.
      The
      Company hereby grants to the Employee under the 1997 Plan Performance Shares,
      subject to all of the terms and conditions in this Agreement and the Plan.
      When
      the Performance Shares are paid to the Employee, par value will be deemed paid
      by the Employee for each Performance Share by past services rendered by the
      Employee, and will be subject to the appropriate tax withholdings.

     

    2. Company’s
      Obligation to Pay.
      Each
      Performance Share has a value equal to the Fair Market Value of a Share on
      the
      date of grant. Unless and until the Performance Shares have vested in the manner
      set forth in paragraphs 3 or 4, the Employee will have no right to payment
      of such Performance Shares. Prior to actual payment of any vested Performance
      Shares, such Performance Shares will represent an unsecured obligation.

     

    3. Vesting
      Schedule/Period of Restriction.
      Except
      as otherwise provided in paragraph 4 of
      this
      Agreement, the Performance Shares awarded by this Agreement shall vest in
      accordance with the vesting schedule set forth in the Notice of Grant, subject
      to the Employee’s continuing to be a Service Provider on each relevant vesting
      date. Notwithstanding anything in this paragraph 3 to the contrary, and except
      as otherwise provided by the Administrator, vesting of the Performance Shares
      shall be suspended during any unpaid leave of absence other than military leave
      and will resume on the date the Employee returns to work on a regular schedule
      as determined by the Company; provided, however, that no vesting credit will
      be
      awarded for the time vesting has been suspended during such leave of
      absence.

     

    4. Administrator
      Discretion.
      The
      Administrator, in its discretion, may accelerate the vesting of the balance,
      or
      some lesser portion of the balance, of the Performance Shares at any time,
      subject to the terms of the Plan. If so accelerated, such Performance Shares
      will be considered as having vested as of the date specified by the
      Administrator. 

     

    5. Payment
      after Vesting.
      Any
      Performance Shares that vest in accordance with paragraph 3 or 4 will be paid
      to
      the Employee (or in the event of the Employee’s death, to his or her estate) in
      Shares which have an aggregate Fair Market Value equal to the value of the
      earned Performance Shares at vesting as soon as practicable following the date
      of vesting, subject to paragraph 8. 

     

    6. Forfeiture.
      Notwithstanding any contrary provision of this Agreement, the balance of the
      Performance Shares that have not vested pursuant to paragraphs 3 or 4 at the
      time of the Employee’s termination as a Service Provider for any or no reason
      will be forfeited and automatically transferred to and reacquired by the Company
      at no cost to the Company. The Employee shall not be entitled to a refund of
      the
      price paid for the Performance Shares forfeited to the Company pursuant to
      this
      paragraph 6. 

     

    7. Death
      of Employee.
      Any
      distribution or delivery to be made to the Employee under this Agreement will,
      if the Employee is then deceased, be made to the administrator or executor
      of
      the Employee’s estate. Any such administrator or executor must furnish the
      Company with (a) written notice of his or her status as transferee, and (b)
      evidence satisfactory to the Company to establish the validity of the transfer
      and compliance with any laws or regulations pertaining to said
      transfer.

     

    8. Withholding
      of Taxes.
      When
      the Shares are issued as payment for vested Performance Shares, the Employee
      will recognize immediate U.S. taxable income if the Employee is a U.S. taxpayer.
      If the Employee is a non-U.S. taxpayer, the Employee will be subject to
      applicable taxes in his or her jurisdiction. The Company will withhold a portion
      of the vested Performance Shares that have an aggregate market value sufficient
      to pay the minimum federal, state and local income, employment and any other
      applicable taxes required to be withheld by the Company. No fractional Shares
      will be withheld or issued pursuant to the grant of Performance Shares and
      the
      issuance of Shares thereunder; any additional withholding necessary for this
      reason will be done by the Company through the Employee’s paycheck. The Company,
      in its discretion, may, and with respect to its executive officers (as
      determined by the Company) will, withhold an amount equal to two (2) times
      the
      fair market value of a Share from the last paycheck due to the Employee prior
      to
      the vesting of the Performance Shares. In the event that the cash amounts
      withheld by the Company exceed the withholding taxes that are due after the
      automatic withholding of whole Shares, the Company will reimburse the Employee
      for the excess amounts. In the event the withholding requirements are not
      satisfied through the withholding of Shares (or, through the Employee’s
      paycheck, as indicated above), no payment will be made to the Employee (or
      his
      or her estate) for Performance Shares unless and until satisfactory arrangements
      (as determined by the Administrator) have been made by the Employee with respect
      to the payment of any income and other taxes which the Company determines must
      be withheld or collected with respect to such Performance Shares. By accepting
      this Award, the Employee expressly consents to the withholding of Shares and
      to
      any additional cash withholding as provided for in this
      paragraph 8.

     

    9. Rights
      as Stockholder.
      Neither
      the Employee nor any person claiming under or through the Employee will have
      any
      of the rights or privileges of a stockholder of the Company in respect of any
      Shares deliverable hereunder unless and until certificates representing such
      Shares (which may be in book entry form) will have been issued, recorded on
      the
      records of the Company or its transfer agents or registrars, and delivered
      to
      the Employee (including through electronic delivery to a brokerage account).
      After such issuance, recordation and delivery, the Employee will have all the
      rights of a stockholder of the Company with respect to voting such Shares and
      receipt of dividends and distributions on such Shares. 

     

    10. No
      Effect on Employment.
      Subject
      to any employment contract with the Employee, the terms of such employment
      will
      be determined from time to time by the Company, or the Affiliate employing
      the
      Employee, as the case may be, and the Company, or the Affiliate employing the
      Employee, as the case may be, will have the right, which is hereby expressly
      reserved, to terminate or change the terms of the employment of the Employee
      at
      any time for any reason whatsoever, with or without good cause. The transactions
      contemplated hereunder and the vesting schedule set forth in the Notice of
      Grant
      do not constitute an express or implied promise of continued employment for
      any
      period of time. 

     

    11. Address
      for Notices.
      Any
      notice to be given to the Company under the terms of this Agreement will be
      addressed to the Company, in care of Human Resources Department, at Echelon
      Corporation, 550 Meridian Avenue, San Jose, CA 95126, or at such other address
      as the Company may hereafter designate in writing.

     

    12. Grant
      is Not Transferable.
      Except
      to the limited extent provided in paragraph 7 above, this grant of Performance
      Shares and the rights and privileges conferred hereby will not be sold, pledged,
      assigned, hypothecated, transferred or disposed of any way (whether by operation
      of law or otherwise) and will not be subject to sale under execution, attachment
      or similar process, until you have been issued the Shares. Upon any attempt
      to
      sell, pledge, assign, hypothecate, transfer or otherwise dispose of this grant,
      or any right or privilege conferred hereby, or upon any attempted sale under
      any
      execution, attachment or similar process, this grant and the rights and
      privileges conferred hereby immediately will become null and void. 

     

    13. Restrictions
      on Sale of Securities.
      The
      Shares issued as payment for vested Performance Shares awarded under this
      Agreement will be registered under the federal securities laws and will be
      freely tradable upon receipt. However, your subsequent sale of the Shares will
      be subject to any market blackout-period that may be imposed by the Company
      and
      must comply with the Company’s insider trading policies, and any other
      applicable securities laws.

     

    14. Binding
      Agreement.
      Subject
      to the limitation on the transferability of this grant contained herein, this
      Agreement will be binding upon and inure to the benefit of the heirs, legatees,
      legal representatives, successors and assigns of the parties
      hereto.

     

    15. Additional
      Conditions to Issuance of Certificates for Shares.
      The
      Company shall not be required to issue any certificate or certificates for
      Shares hereunder prior to fulfillment of all the following conditions:
      (a) the admission of such Shares to listing on all stock exchanges on which
      such class of stock is then listed; (b) the completion of any registration
      or other qualification of such Shares under any state or federal law or under
      the rulings or regulations of the Securities and Exchange Commission or any
      other governmental regulatory body, which the Administrator shall, in its
      absolute discretion, deem necessary or advisable; (c) the obtaining of any
      approval or other clearance from any state or federal governmental agency,
      which
      the Administrator shall, in its absolute discretion, determine to be necessary
      or advisable; and (d) the lapse of such reasonable period of time following
      the date of vesting of the Performance Shares as the Administrator may establish
      from time to time for reasons of administrative convenience.

     

    16. Plan
      Governs.
      This
      Agreement is subject to all terms and provisions of the Plan. In the event
      of a
      conflict between one or more provisions of this Agreement and one or more
      provisions of the Plan, the provisions of the Plan will govern. Capitalized
      terms used and not defined in this Agreement will have the meaning set forth
      in
      the Plan.

     

    17. Administrator
      Authority.
      The
      Administrator will have the power to interpret the Plan and this Agreement
      and
      to adopt such rules for the administration, interpretation and application
      of
      the Plan as are consistent therewith and to interpret or revoke any such rules
      (including, but not limited to, the determination of whether or not any
      Performance Shares have vested). All actions taken and all interpretations
      and
      determinations made by the Administrator in good faith will be final and binding
      upon the Employee, the Company and all other interested persons. No member
      of
      the Administrator will be personally liable for any action, determination or
      interpretation made in good faith with respect to the Plan or this Agreement.
      

     

    18. Captions.
      Captions provided herein are for convenience only and are not to serve as a
      basis for interpretation or construction of this Agreement.

     

    19. Agreement
      Severable.
      In the
      event that any provision in this Agreement will be held invalid or
      unenforceable, such provision will be severable from, and such invalidity or
      unenforceability will not be construed to have any effect on, the remaining
      provisions of this Agreement.

     

    20. Modifications
      to the Agreement.
      This
      Agreement constitutes the entire understanding of the parties on the subjects
      covered. The Employee expressly warrants that he or she is not accepting this
      Agreement in reliance on any promises, representations, or inducements other
      than those contained herein. Modifications to this Agreement or the Plan can
      be
      made only in an express written contract executed by a duly authorized officer
      of the Company.

     

    21. Amendment,
      Suspension or Termination of the Plan.
      By
      accepting this Award, the Employee expressly warrants that he or she has
      received a right to purchase stock under the Plan, and has received, read and
      understood a description of the Plan. The Employee understands that the Plan
      is
      discretionary in nature and may be modified, suspended or terminated by the
      Company at any time.

     

    22. Notice
      of Governing Law.
      This
      grant of Performance Shares shall be governed by, and construed in accordance
      with, the laws of the State of California without regard to principles of
      conflict of laws.

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