Document:

Exhibit
4.2

 

SEMILEDS CORPORATION

 

AMENDED AND RESTATED

 

INVESTOR RIGHTS AGREEMENT

 

This
Amended and Restated Investor Rights Agreement (this “Agreement”) is made
and entered into as of April 1, 2010, by and among SemiLEDs Corporation, a
Delaware corporation (the “Company”), the
persons listed on Exhibit A
attached hereto (the “Stockholders”),
and the persons listed on Exhibits B
and C attached hereto or as may be
added in the future as signatories to this Agreement in connection with
purchases of Series E Preferred Stock of the Company (collectively, the “Investors”).

 

WHEREAS, certain of the Investors (the “Existing Investors”) hold
shares of the Company’s Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock and Series D Preferred Stock and
possess registration rights and other rights pursuant to the Amended and
Restated Investor Rights Agreement, dated September 30, 2008, by and between the Company and the Existing
Investors and Stockholders (the “Prior
Rights Agreement”);

 

WHEREAS,
the Existing Investors and the Stockholders agree to terminate the Prior Rights
Agreement and to accept the rights created pursuant hereto in lieu of the
rights granted to them under the Prior Rights Agreement;

 

WHEREAS,
the Existing Investors and the Stockholders possess a sufficient number of
shares required to amend the Prior Rights Agreement; and

 

WHEREAS,
certain Investors have agreed to purchase from the Company, and the Company has
agreed to sell to such Investors, shares of the Company’s Series E Preferred
Stock (the “Series E Preferred Stock”)
as set forth in Exhibit C
hereto, such purchase being on the terms and conditions set forth in that
certain Series E Preferred Stock Purchase Agreement, of even date
herewith, by and between the Company and such Investors (the “Series E Agreement”), certain
of the Company’s and such Investors’ obligations under which are conditioned
upon the execution and delivery of this Agreement by the Existing Investors,
the Stockholders and the Company.

 

NOW,
THEREFORE, in consideration of the foregoing recitals and the mutual promises
herein contained, and for other consideration, the receipt and adequacy of
which is hereby acknowledged, the Investors, the Stockholders and the Company
hereby agree that the Prior Rights Agreement is hereby terminated and shall be
superseded and replaced in its entirety by this Agreement, and the parties
further agree as follows:

 

1.             INFORMATION
RIGHTS.

 

1.1          Basic Financial Information.  The Company covenants and agrees that,
commencing on the date of this Agreement, the Company will deliver to each
Major Investor (as defined below):

 

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(a)           Annual Reports.  As soon as practicable and in any event
within one hundred twenty (120) days after the end of each fiscal year of the
Company, an annual audited financial report as of the end of such fiscal year
from a qualified certified public accounting firm, together with a copy of the
auditor’s letter to management, all prepared in accordance with United States
generally accepted accounting principles and practices (“US
GAAP”).

 

(b)           Annual Budget:  At least thirty (30) days before the end of
each fiscal year, a budget, including projected income statement, cash flow and
balance sheet, on a monthly basis for the ensuing fiscal year together with a
brief qualitative description of the Company’s plan by the Chief Executive
Officer in support of that budget.

 

(c)           Quarterly Reports.  As soon as practicable, and in any case
within forty-five (45) days after the end of each fiscal quarter of the Company
(except the last quarter of the Company’s fiscal year), a quarterly financial
report prepared in accordance with US GAAP, including an unaudited income
statement, schedule as to the sources and application of funds for such fiscal
quarter, an unaudited balance sheet and a statement of stockholder’s equity as
of the end of such fiscal quarter.

 

(d)           Non-Compliance.  Within ten (10) days after the discovery
of any material default in the terms of the Series E Agreement or any of
the Related Agreements as defined therein, a statement outlining such default
and management’s proposed response. 
Notwithstanding elsewhere to the contrary, the right under this Section 1.1(d) will
be applicable to only the original holder of the Company’s Series A
Preferred Stock or its affiliates.

 

(e)           Other Information.  Upon the written request by Major Investor,
such other information as Major Investor shall reasonably request.

 

1.2          Inspection Rights.  The Major Investor, at the Major Investor’s
expense, shall have the right to visit and inspect the Company’s properties, to
examine its books of account and records and to discuss the Company’s affairs,
finances and accounts with its officers, all at such reasonable times as may be
requested by such Major Investor.

 

1.3          Confidentiality.  Investor agrees to hold all information
received pursuant to this Section 1 in confidence, and not to use or
disclose any of such information to any third party, except to the extent such
information may be made publicly available by the Company; provided, however,
that Investor may disclose confidential information to any of its affiliates or
to any employee of such affiliate. 
Notwithstanding the foregoing, Investor may, if required and upon
advance written notice to the Company, disclose such information concerning the
Company as may be required to be disclosed to any regulator/stock exchange to
which Investor or its affiliates are subject, such notice shall state the
information to be disclosed, the party to whom such information is to be
disclosed, the date such disclosure is to be made and the reason such
disclosure is required.

 

1.4          Termination of Certain Rights.  The Company’s obligations under
Sections 1.1 and 1.2 above will terminate upon the closing of the Company’s
initial public offering of Common Stock pursuant to an effective registration
statement filed under the U.S.

 

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Securities Act of 1933, as amended (the “Securities Act”);
provided, however, that continuing for so long as Major Investor holds any
Preferred Stock, the Company shall deliver to such Major Investor copies of the
Company’s 10-K’s, 10-Q’s, 8-K’s and Annual Reports to Shareholders promptly
after such documents are filed with the Securities and Exchange Commission (the
“SEC”).

 

2.             REGISTRATION
RIGHTS.

 

2.1          Definitions.  For purposes of this Section 2:

 

(a)           Form S-3.  The term “Form S-3” means such form under the
Securities Act as is in effect on the date hereof or any successor registration
form under the Securities Act subsequently adopted by the SEC which permits
inclusion or incorporation of substantial information by reference to other
documents filed by the Company with the SEC.

 

(b)           Holder.  The term “Holder” means any person owning of
record Registrable Securities or any assignee of record of such Registrable
Securities to whom rights set forth herein have been duly assigned in
accordance with this Agreement; provided, however, that for
purposes of this Agreement, a record holder of shares of Preferred Stock
convertible into such Registrable Securities shall be deemed to be the Holder
of such Registrable Securities; provided  further, that a holder of Excluded
Shares (as defined in Section 2.1(d)) shall not be a Holder with
respect to such Excluded Shares for purposes of Sections 2.2, 2.4 or 3 of this
Agreement; and provided, further, that the Company shall
in no event be obligated to register shares of Preferred Stock, and that
Holders of Registrable Securities will not be required to convert their shares
of Preferred Stock into Common Stock in order to exercise the registration
rights granted hereunder, until immediately before the closing of the offering
to which the registration relates.

 

(c)           Major Investor.  The term “Major Investor” means:

 

(1)           a person or entity which, together with its
affiliates holds at least ten percent (10%) of the Registrable Securities
(subject to appropriate adjustments for stock splits, stock dividends,
combinations and other recapitalizations); and

 

(2)           Lite-On Technology USA, Inc (“Lite-On”), WI Harper
Inc. Fund VI Ltd. (“WI
Harper”), Powerchip Semiconductor Corp. (“PSC”) and Luxxon
Technology Corporation (“Luxxon”),
so long as Lite-On, WI Harper, PSC or Luxxon, as the case might be, continues
to hold all of the Registrable Securities originally purchased.  For purpose of this Section 2.1(c), (i) inspection
of facilities of the Company shall be excluded from the application of this Section 2.1(c),
and (ii) the application of Section 1.1 and 2.1(c) shall not
include any equipment list, suppliers, names of employees, consultants,
processes, technologies related information, specifications and related
documentations.

 

(d)           Registrable Securities.  The term “Registrable Securities” means:

 

(1)           all the shares of Common
Stock of the Company issued or issuable upon the conversion of any shares of
Preferred Stock  that are now owned or may hereafter be acquired by any Investor or any
Investor’s permitted successors and assigns;

 

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(2)           the shares of Common Stock
of the Company now held by the Stockholders and set forth in Exhibit A attached hereto (the
“Stockholders’ Shares”);
and

 

(3)           any shares of Common Stock
of the Company issued (or issuable upon the conversion or exercise of any
warrant, right or other security which is issued) (i) as a dividend or
other distribution with respect to, or in exchange for or in replacement of,
all such shares of Common Stock described in clause (1) or (2) of this subsection (b); or
(ii) in a transaction that is excluded from the definition of “New
Securities” under Section 3.2 hereof if the Board of Directors determines
that such shares should receive registration rights under Section 2.3
hereof (the “Additional
Shares”); excluding in all cases, however, any
Registrable Securities sold by a person in a transaction in which rights under
this Section 2 are not assigned in accordance with this Agreement or any
Registrable Securities with respect to which, pursuant to Section 2.11
hereof, the holders are no longer entitled to registration rights pursuant to
Sections 2.2, 2.3 or 2.4 hereof, provided, however, that notwithstanding
anything herein to the contrary, the Additional Shares, the Stockholders’
Shares and any shares of Common Stock described in clause (3) of this
Section 2.1(d) that are issued in respect of any Stockholders’ Shares
(which with the Stockholders’ Shares are collectively hereinafter referred to
as the “Excluded Shares”), shall not be Registrable Securities for
purposes of Sections 2.2, 2.4, 2.12 or 3 of this Agreement.

 

(e)           Registrable Securities Then
Outstanding.  The number
of shares of “Registrable
Securities then outstanding” shall mean the number of shares of
Common Stock which are Registrable Securities that are then (1) issued and
outstanding or (2) issuable pursuant to the exercise or conversion of then
outstanding and then exercisable and qualifying options, warrants or
convertible securities.

 

(f)            Registration.  The terms “register,” “registration” and “registered” refer to
a registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of
effectiveness of such registration statement.

 

(g)           SEC.  The term “SEC” or “Commission” means the U.S. Securities
and Exchange Commission.

 

2.2          Demand Registration.

 

(a)           Request by Holders.  If the Company shall receive at any time
after the earlier of (i) five (5) years from the date of this
Agreement or (ii) six (6) months after the effective date of the
Company’s initial public offering of its securities pursuant to a registration
filed under the Securities Act, a written request from the Holders of at least
forty percent (40%) of the Registrable Securities then outstanding that the
Company file a registration statement under the Securities Act covering the
registration of Registrable Securities pursuant to this Section 2.2, then
the Company shall, within twenty (20) days after the receipt of such written
request, give written notice of such request (the “Request Notice”) to
all Holders, and effect, as soon as practicable, the registration under the
Securities Act of all Registrable Securities which Holders request to be
registered and included in such registration by written notice given by such
Holders to the Company within twenty
(20) days after receipt of the Request Notice, subject only to the
limitations of this Section 2; provided that the Registrable
Securities requested by all

 

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Holders to be registered pursuant to such request
must either (i) be at least thirty percent (30%) of all Registrable
Securities then outstanding or (ii) have an anticipated aggregate public
offering price (before any underwriting discounts and commissions) of not less
than Seven Million Five Hundred Thousand Dollars ($7,500,000).

 

(b)           Underwriting.  If the Holders initiating the registration
request under this Section 2.2 (the “Initiating Holders”) intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
then they shall so advise the Company as a part of their request made pursuant
to this Section 2.2 and the Company shall include such information in the
written notice referred to in subsection 2.2(a).  In such event, the right of any Holder to
include his, her, or its Registrable Securities in such registration shall be
conditioned upon such Holder’s participation in such underwriting and the
inclusion of such Holder’s Registrable Securities in the underwriting (unless
otherwise mutually agreed by a majority in interest of the Initiating Holders
and such Holder) to the extent provided herein. 
All Holders proposing to distribute their securities through such
underwriting shall enter into an underwriting agreement in customary form with
the managing underwriter or underwriters selected for such underwriting by the
Company.  The Company shall not be required to include any securities of any Holder
in such underwriting unless such Holder accepts the terms of the underwriting
as agreed upon between the Company and the underwriters selected by the Company
and enters into an underwriting agreement in customary form with the
underwriter or underwriters selected by the Company.  Notwithstanding any other provision of this
Section 2.2, if the underwriter(s) advise(s) the Company in
writing that marketing factors require a limitation of the number of securities
to be underwritten then the Company shall so advise all Holders of Registrable
Securities that would otherwise be registered and underwritten pursuant hereto,
and the number of Registrable Securities that may be included in the
underwriting shall be reduced as required by the underwriter(s) and
allocated among the Holders of Registrable Securities on a pro rata basis
according to the number of Registrable Securities then outstanding held by each
Holder requesting registration (including the Initiating Holders); provided,
however, that the number of shares of Registrable Securities to be
included in such underwriting and registration shall not be reduced unless all
other securities of the Company are first entirely excluded from the
underwriting and registration.  Any
Registrable Securities excluded and withdrawn from such underwriting shall be
withdrawn from the registration.

 

(c)           Maximum Number of Demand
Registrations.  The Company
is obligated to effect only three (3) such registrations pursuant to this
Section 2.2.

 

(d)           Deferral.   Notwithstanding the foregoing, if the
Company shall furnish to Holders requesting the filing of a registration
statement pursuant to this Section 2.2, a certificate signed by the
President or Chief Executive Officer of the Company stating that in the good
faith judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company and its stockholders for such registration statement
to be filed and it is therefore essential to defer the filing of such
registration statement, then the Company shall have the right to defer such
filing for a period of not more than one hundred twenty (120) days after
receipt of the request of the Initiating Holders; provided, however,
that the Company may not utilize this right more than once in any twelve-month
period.

 

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(e)           Expenses.  All expenses incurred in connection with a
registration pursuant to this Section 2.2, including without limitation
all registration and qualification fees, printers’ and accounting fees, fees
and disbursements of counsel for the Company,  and the reasonable fees and disbursements of
one counsel for the selling Holders (but excluding underwriters’
discounts and commissions), shall be borne by the Company.  Each Holder participating in a registration
pursuant to this Section 2.2 shall bear such Holder’s proportionate share
(based on the number of shares sold by such Holder over the total number of shares included in such registration at the
time it is declared effective) of all discounts, commissions or other
amounts payable to underwriters or brokers in connection with such offering.  Notwithstanding the foregoing, the Company
shall not be required to pay for any expenses of any registration proceeding
begun pursuant to this Section 2.2 if the registration request is
subsequently withdrawn at the request of the Holders of a majority of the
Registrable Securities to be registered, unless the Holders of a majority of
the Registrable Securities then outstanding agree to forfeit their right to one
(1) demand registration pursuant to this Section 2.2 (in which case
such right shall be forfeited by all Holders of Registrable Securities); provided,
further, however, that if at the time of such withdrawal, the
Holders have learned of a material adverse change in the condition, business,
or prospects of the Company not known to the Holders at the time of their
request for such registration and have withdrawn their request for registration
with reasonable promptness after learning of such material adverse change, then
the Holders shall not be required to pay any of such expenses and shall retain
their demand registration rights pursuant to this Section 2.2.

 

(f)            No Right to Registration.  The Company shall not be required to effect a
registration pursuant to this Section 2.2:

 

(i)            during the period starting
with the date of filing of, and ending on the date one hundred eighty (180)
days following the effective date of the registration statement pertaining to
the Company’s initial public offering; provided that the Company uses its reasonable best efforts
to cause such registration statement to become effective;

 

(ii)           if within 30 days of receipt
of a written request from the Initiating Holders pursuant to this Section 2.2,
the Company gives notice to the Initiating Holders of the Company’s intention
to file a registration statement pertaining to such initial public offering
within 90 days;

 

(iii)         if the Initiating Holders
propose to dispose of shares of Registrable Securities which may be immediately
registered on Form S-3 pursuant to a request made under Section 2.4
hereof; and

 

(iv)          the registration statement
filed pursuant to the request of the Initiating Holders may include other
securities of the Company, with respect to which registration rights have been
granted, and may include securities of the Company being sold for the account
of the Company.

 

2.3          Piggyback Registrations.  The Company shall notify all Holders of
Registrable Securities in writing at least thirty (30) days prior to filing any
registration statement under the Securities Act for purposes of effecting a
public offering of securities of the Company

 

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(including, but not limited to, registration
statements relating to secondary offerings of securities of the Company, but excluding
registration statements relating to any registration under Section 2.2 or
Section 2.4 of this Agreement or to any employee benefit plan or a
corporate reorganization or other transaction covered by Rule 145
promulgated under the Securities Act, or a registration on any registration
form which does not permit secondary sales or does not include substantially
the same information as would be required to be included in a registration
statement covering the sale of Registrable Securities,) and will afford each
such Holder an opportunity to include in such registration statement all or any
part of the Registrable Securities then held by such Holder.  Each Holder desiring to include in any such
registration statement all or any part of the Registrable Securities held by such
Holder shall, within twenty (20) days after receipt of the above-described
notice from the Company, so notify the Company in writing, and in such notice
shall inform the Company of the number of Registrable Securities such Holder
wishes to include in such registration statement.  If a Holder decides not to include all of its
Registrable Securities in any registration statement thereafter filed by the
Company, such Holder shall nevertheless continue to have the right to include
any Registrable Securities in any subsequent registration statement or
registration statements as may be filed by the Company with respect to
offerings of its securities, all upon the terms and conditions set forth
herein.

 

(a)           Underwriting.  If a registration statement under which the
Company gives notice under this Section 2.3 is for an underwritten
offering, then the Company shall so advise the Holders of Registrable
Securities.  In such event, the right of
any such Holder’s Registrable Securities to be included in a registration
pursuant to this Section 2.3 shall be conditioned upon such Holder’s
participation in such underwriting and the inclusion of such Holder’s
Registrable Securities in the underwriting to the extent provided herein.  All Holders proposing to distribute their
Registrable Securities through such underwriting shall enter into an
underwriting agreement in customary form with the managing underwriter or
underwriter(s) selected for such underwriting.  Notwithstanding any other provision of this
Agreement, if the managing underwriter determine(s) in good faith that
marketing factors require a limitation of the number of shares to be
underwritten, then the managing underwriter(s) may exclude shares
(including Registrable Securities) from the registration and the underwriting,
and the number of shares that may be included in the registration and the
underwriting shall be allocated, first, to the Company, second to
Holders requesting inclusion of Registrable Securities in such registration
statement on a pro rata basis based on the number of such Registrable Securities
each such Holder has requested to be included in the registration, and third,
to each of the Holders of Excluded Shares on a pro rata basis based on the
total number of Registrable Securities then held by each such Holder;  provided  however, that the right of the
underwriters to exclude shares (including Registrable Securities) from the
registration and underwriting as described above shall be restricted so that
the number of Registrable Securities included in any such registration is not
reduced below thirty percent (30%) of the shares included in the registration,
except for a registration relating to the Company’s initial public offering,
from which all Registrable Securities may be excluded.  If any Holder disapproves of the terms of any
such underwriting, such Holder may elect to withdraw therefrom by written
notice, given in accordance with Section 6.1 hereof, to the Company and
the underwriter, delivered at least twenty (20) days prior to the effective
date of the registration statement.  Any Registrable
Securities excluded or withdrawn from such underwriting shall be excluded and
withdrawn from the registration.  For any
Holder that is a partnership or corporation, the partners, retired partners and
stockholders of such Holder, or the estates and family members of any such
partners and retired partners and any

 

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trusts for the benefit of any of the foregoing
persons shall be deemed to be a single “Holder,” and any pro rata reduction
with respect to such “Holder” shall be based upon the aggregate amount of
shares carrying registration rights owned by all entities and individuals
included in such “Holder,” as defined in this sentence.

 

(b)           Expenses.  All expenses incurred in connection with a
registration pursuant to this Section 2.3, including without limitation
all registration and qualification fees, printers’ and accounting fees, fees
and disbursements of counsel for the Company,  and the reasonable fees and disbursements of
one counsel for the selling Holders (but excluding underwriters’
discounts and commissions), shall be borne by the Company.  Each Holder participating in a registration
pursuant to this Section 2.3 shall bear such Holder’s proportionate share
(based on the number of shares sold by such Holder over the total number of shares included in such registration at the
time it goes effective) of all discounts, commissions or other amounts
payable to underwriters or brokers in connection with such offering.

 

(c)           Not Demand Registration.  Registration pursuant to this Section 2.3
shall not be deemed to be a demand registration as described in
Section 2.2 above.  Except as
otherwise provided herein, there shall be no limit on the number of times the
Holders may request registration of Registrable Securities under this
Section 2.3.

 

2.4          Form S-3 Registration.  In case the Company shall receive from any
Holder or Holders of at least thirty percent (30%) of all Registrable
Securities then outstanding a
written request or requests that the Company effect a registration on Form S-3
and any related qualification or compliance with respect to all or a part of
the Registrable Securities owned by such Holder or Holders, then the Company
will do the following:

 

(a)           Notice.  Promptly give written notice of the proposed
registration and the Holder’s or Holders’ request therefor, and any related
qualification or compliance, to all other Holders of Registrable Securities.

 

(b)           Registration.  As soon as practicable, effect such
registration and all such qualifications and compliances as may be so requested
and as would permit or facilitate the sale and distribution of all or such
portion of such Holder’s or Holders’ Registrable Securities as are specified in
such request, together with all or such portion of the Registrable Securities
of any other Holder or Holders joining in such request as are specified in a
written request given within twenty (20) days after receipt of such written
notice from the Company; provided, however, that the Company
shall not be obligated to effect any such registration, qualification or
compliance pursuant to this Section 2.4:

 

(1)           if Form S-3 is not
available for such offering;

 

(2)           if the Holders, together
with the holders of any other securities of the Company entitled to inclusion
in such registration, propose to sell Registrable Securities and such other
securities (if any) at an aggregate price to the public of less than Three
Million Dollars ($3,000,000);

 

(3)           if the Company shall furnish
to the Holders a certificate signed by the President or Chief Executive Officer
of the Company stating that in the good faith

 

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judgment of the Board of Directors of the Company,
it would be seriously detrimental to the Company and its stockholders for such
Form S-3 Registration to be effected at such time, in which event the
Company shall have the right to defer the filing of the Form S-3
registration statement no more than once during any twelve (12) month period
for a period of not more than one hundred twenty (120) days after receipt of
the request of the Holder or Holders under this Section 2.4;

 

(4)           if the Company has, within
the twelve (12) month period preceding the date of such request, already
effected two (2) registrations on Form S-3 for the Holders pursuant
to this Section 2.4; or

 

(5)           in any particular
jurisdiction in which the Company would be required to qualify to do business
or to execute a general consent to service of process in effecting such
registration, qualification or compliance.

 

(c)           Expenses.  Subject to the foregoing, the Company shall
file a Form S-3 registration statement covering the Registrable Securities
and other securities so requested to be registered pursuant to this
Section 2.4 as soon as practicable after receipt of the request or
requests of the Holders for such registration. 
The Company shall pay all expenses incurred in connection with each registration requested pursuant
to this Section 2.4, (excluding underwriters’ or brokers’ discounts and
commissions), including without limitation all filing, registration and
qualification, printers’ and
accounting fees and the reasonable fees and disbursements of one (1) counsel
for the selling Holder or Holders and counsel for the Company.  Each Holder participating in a registration
pursuant to this Section 2.3 shall bear such Holder’s proportionate share
(based on the number of shares sold by such Holder over the total number of shares included in such registration at the
time it goes effective) of all discounts, commissions or other amounts
payable to underwriters or brokers in connection with such offering.

 

(d)           Not Demand Registration.  Form S-3 registrations shall not be
deemed to be demand registrations as described in Section 2.2 above.  Except as otherwise provided herein, there
shall be no limit on the number of times the Holders may request registration
of Registrable Securities under this Section 2.4.

 

2.5          Obligations of the Company.  Whenever required to effect the registration
of any Registrable Securities under this Agreement, the Company shall, subject
to the provisions of Section 2.5(i) below,  as expeditiously as reasonably possible:

 

(a)           Prepare and file with the
SEC a registration statement with respect to such Registrable Securities and
use reasonable efforts to cause such registration statement to become
effective, and, upon the request of the Holders of a majority of the
Registrable Securities registered thereunder, keep such registration statement
effective for up to one hundred twenty (120) days.

 

(b)           Prepare and file with the
SEC such amendments and supplements to such registration statement and the
prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement.

 

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(c)           Furnish to the Holders such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by them that are included in such registration.

 

(d)           Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities
or Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions
unless the Company is already subject to service in such jurisdiction and
except as may be required by the Securities Act.

 

(e)           In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter(s) of such offering.

 

(f)            Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.

 

(g)           Cause all such Registrable Securities registered pursuant
to this Section 2 to be listed on a national exchange or trading system
and on each securities exchange and trading system on which similar securities
issued by the Company are then listed.

 

(h)           Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.

 

(g)           Notwithstanding any other provision
of this Agreement, from and after the time a registration statement filed under
this Section 2 covering Registrable Securities is declared effective, the
Company shall have the right to suspend the registration statement and the
related prospectus in order to, in the good faith judgment of the Board of
Directors of the Company, prevent premature disclosure of any material
non-public information that, if disclosed at such time, would be materially
harmful to the interests of the Company and its stockholders by delivering
notice of such suspension to the Holders, provided,
however, that the Company may exercise the right to such suspension
only once in any 12-month period and for a period not to exceed 120 days, and provided, however, further that during any such period all
executive officers and directors of the Company are also prohibited from
selling securities of the Company (or any security of any of the Company’s
subsidiaries or affiliates).  From and
after the date of a notice of suspension under this Section 2.5(g), each
Holder agrees not to use the registration statement or the related prospectus
for resale of any Registrable Security until the earlier of (1) notice
from the Company that such suspension has been lifted or (2) the 120th day following the giving of the notice of
suspension.  In the event of the
suspension of effectiveness of any registration statement pursuant to this Section 2.5(g),
the applicable time period during which

 

10

 

such
registration statement is to remain effective shall be extended by that number
of days equal to the number of days the effectiveness of such registration
statement was suspended.

 

2.6          Furnish Information.  It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Sections 2.2,
2.3 or 2.4 that the selling Holders shall furnish to the Company such
information regarding themselves, the Registrable Securities held by them, and
the intended method of disposition of such securities as shall be required to
timely effect the registration of their Registrable Securities.

 

2.7          Delay of Registration.  No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 2.

 

2.8          Indemnification.  In the event any Registrable Securities are
included in a registration statement under Sections 2.2, 2.3 or 2.4 :

 

(a)           By the Company. 
To the extent permitted by law, the Company will indemnify and hold
harmless each Holder, the partners, officers and directors of each Holder, any
underwriter (as defined in the Securities Act) for such Holder and each person,
if any, who controls such Holder or underwriter within the meaning of the
Securities Act or the Securities
Exchange Act of 1934, as amended, (the “Exchange Act”), against any losses,
claims, damages, or liabilities (joint or several) to which they may become
subject under the Securities Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively, the “Violations” and,
individually, a “Violation”):

 

(1)           any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto; or

 

(2)           the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the
statements therein not misleading; or

 

(3)           any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any federal or state securities law or any rule or
regulation promulgated under the Securities Act, the Exchange Act or any
federal or state securities law in connection with the offering covered by such
registration statement.

 

The
Company will reimburse each such Holder, partner, officer or director,
underwriter or controlling person for any legal or other expenses reasonably
incurred by them, as incurred, in connection with investigating or defending
any such loss, claim, damage, liability or action; provided  however,
that the indemnity agreement contained in this subsection 2.8(a) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability
or action to the extent that it arises out of or is based upon a Violation

 

11

 

which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by such Holder, partner,
officer, director, underwriter or controlling person of such Holder.

 

(b)           By Selling Holders. 
To the extent permitted by law, each selling Holder will indemnify and
hold harmless the Company, each of its directors, each of its officers who have
signed the registration statement, each person, if any, who controls the
Company within the meaning of the Securities Act, any underwriter and any other
Holder selling securities under such registration statement or any of such
other Holder’s partners, directors or officers or any person who controls such
Holder within the meaning of the Securities Act or the Exchange Act, against
any losses, claims, damages or liabilities (joint or several) to which the Company
or any such director, officer, controlling person, underwriter or other such
Holder, partner or director, officer or controlling person of such other Holder
may become subject under the Securities Act, the Exchange Act or other federal
or state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such registration.  Each such Holder will reimburse any legal or
other expenses reasonably incurred by the Company or any such director,
officer, controlling person, underwriter or other Holder, partner, officer,
director or controlling person of such other Holder in connection with
investigating or defending any such loss, claim, damage, liability or action;
within three months after a request for reimbursement has been received by the
indemnifying Holder, provided, however, that the indemnity
agreement contained in this subsection 2.8(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Holder, which consent
shall not be unreasonably withheld; and provided  further, that
the total amounts payable in indemnity by a Holder under this Section 2.8(b) in
respect of any Violation shall not exceed the net proceeds received by such Holder
in the registered offering out of which such Violation arises.

 

(c)           Notice. 
Promptly after receipt by an indemnified party under this
Section  2.8 of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this
Section  2.8, deliver to the indemnifying party a written notice of
the commencement thereof.  The
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an
indemnified party shall have the right to retain its own counsel, with the fees
and expenses to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential conflict of interests between such
indemnified party and any other party represented by such counsel in such
proceeding.  The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 2.8, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this
Section 2.8.

 

12

 

(d)           Defect Eliminated in Final Prospectus.  The foregoing indemnity agreements of the
Company and Holders are subject to the condition that, insofar as they relate
to any Violation made in a preliminary prospectus but eliminated or remedied in
the amended prospectus on file with the SEC at the time the registration
statement in question becomes effective or the amended prospectus filed with
the SEC pursuant to SEC Rule 424(b) (the “Final Prospectus”),
such indemnity agreement shall not inure to the benefit of any person if a copy
of the Final Prospectus was furnished to the indemnified party and was not
furnished to the person asserting the loss, liability, claim or damage at or
prior to the time such action is required by the Securities Act.

 

(e)           Contribution. 
If the indemnification provided for in this Section 2.8 is held by
a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any loss, liability, claim, damage or expense referred to
herein, then the indemnifying party, in lieu of indemnifying the indemnified
party, shall contribute to the amount paid or payable by such indemnified party
with respect to such loss, liability, claim, damage or expense in the
proportion that is appropriate to reflect the relative fault of the
indemnifying party and the indemnified party in connection with the statements
or omissions that resulted in such loss, liability, claim, damage or expense,
as well as any other relevant equitable considerations. The relative fault of
the indemnifying party and the indemnified party shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party, and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.  In any such case, (A) no such Holder
will be required to contribute any amount in excess of the public offering
price of all such Registrable Securities offered and sold by such Holder
pursuant to such registration statement; and (B) no person or entity
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) will be entitled to contribution from any person or entity
who was not guilty of such fraudulent misrepresentation; provided further, that
in no event shall a Holder’s liability pursuant to this Section 2.8(e),
when combined with the amounts paid or payable by such holder pursuant to Section 2.8(b),
exceed the proceeds from the offering (net of any underwriting discounts or
commissions) received by such Holder, except in the case of willful fraud by
such Holder.

 

(f)            Conflict with Underwriting Agreement.  Notwithstanding the foregoing, to the extent
that the provisions on indemnification and contribution contained in the
underwriting agreement entered into in connection with the underwritten public
offering are in conflict with the foregoing provisions, the provisions in the
underwriting agreement will control.

 

(g)           Survival. 
The obligations of the Company and Holders under this Section 2.8
shall survive the completion of any offering of Registrable Securities in a
registration statement, and otherwise.

 

2.9          “Market Stand-Off” Agreement.  Each Holder hereby agrees that it shall not,
to the extent requested by the Company or an underwriter of securities of the
Company, sell or otherwise transfer or dispose of any Registrable Securities or
other shares of stock of the Company then owned by such Holder (other than to
donees or partners of the Holder who agree to be similarly bound) for up to one hundred eighty (180) days
following the effective date of

 

13

 

any registration statement of the Company filed
under the Securities Act; provided,
however, that:

 

(a)           such agreement shall be applicable only to the first such
registration statement of the Company which covers securities to be sold on its
behalf to the public in an underwritten offering but not to Registrable
Securities sold pursuant to such registration statement; and

 

(b)           (i) all officers and
directors of the Company then holding Common Stock of the Company and
(ii) all stockholders holding in the aggregate at least 1% of the total
equity of the Company, enter into similar agreements.

 

For
purposes of this Section 2.9, the term “Company” shall include any
wholly-owned subsidiary of the Company into which the Company merges or
consolidates.  In order to enforce the
foregoing covenant, the Company shall have the right to place restrictive
legends on the certificates representing the shares subject to this Section and
to impose stop transfer instructions with respect to the Registrable Securities
and such other shares of stock of each Holder (and the shares or securities of
every other person subject to the foregoing restriction) until the end of such
period.  Each Holder further agrees to
enter into any agreement reasonably required by the underwriters to implement
the foregoing within any reasonable timeframe so requested.

 

2.10        Rule 144 Reporting.  With a view to making available the benefits
of certain rules and regulations of the Commission which may at any time
permit the sale of the Registrable Securities to the public without
registration, after such time as a public market exists for the Common Stock of
the Company, the Company agrees to:

 

(a)           Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all
times after the effective date of the first registration under the Securities
Act filed by the Company for an offering of its securities to the general
public;

 

(b)           Use reasonable, diligent efforts to file with the
Commission in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act (at any time after it has
become subject to such reporting requirements); and

 

(c)           So long as a Holder owns any Registrable Securities, to
furnish to the Holder forthwith upon request a written statement by the Company
as to its compliance with the reporting requirements of said Rule 144 (at
any time after ninety (90) days after the effective date of the first
registration statement filed by the Company for an offering of its securities
to the general public), and of the Securities Act and the Exchange Act (at any time
after it has become subject to the reporting requirements of the Exchange Act),
a copy of the most recent annual or quarterly report of the Company, and such
other reports and documents of the Company as a Holder may reasonably request
in availing itself of any rule or regulation of the Commission allowing a
Holder to sell any such securities without registration (at any time after the
Company has become subject to the reporting requirements of the Exchange Act).

 

14

 

2.11        Termination of the Company’s Obligations.  The Company shall have no obligations
pursuant to Sections 2.2 through 2.4 with respect to:  (a) any request or requests for
registration made by any Holder on a date more than five (5) years after
the closing date of a firm commitment underwritten public offering of the
Company’s Common Stock; or (b) any Registrable Securities proposed to be
sold by a Holder in a registration pursuant to Section 2.2, 2.3 or 2.4 if,
in the opinion of counsel to the Company, all such Registrable Securities
proposed to be sold by a Holder may be sold in a three (3) month period
without registration under the Securities Act pursuant to Rule 144 under
the Securities Act.

 

2.12        Limitations on Subsequent
Registration Rights.  From and after the date of this Agreement,
the Company shall not, without the prior written consent of the Holders of at
least a majority of the Registrable Securities then outstanding, enter into any
agreement with any holder or prospective holder of any securities of the
Company which would allow such holder or prospective holder (a) to include
such securities in any registration filed under Section 2.2 hereof, unless
under the terms of such agreement, such holder or prospective holder may
include such securities in any such registration only to the extent that the
inclusion of his securities will not reduce the amount of the Registrable
Securities of the Holders which is included, or (b) to make a demand
registration which could result in such registration statement being declared
effective prior to the earlier of either of the dates set forth in
subsection 2.2(a), or within one hundred twenty (120) days of the
effective date of any registration effected pursuant to Section 2.2.

 

3.             RIGHT OF FIRST REFUSAL.

 

3.1          General.  Each Major Investor and any party to whom
such Major Investor’s rights under this Section 3 have been duly assigned
in accordance with Section 5.1(b) (each such Major Investor or
assignee being hereinafter referred to as a “Rights Holder”) has the right of first
refusal to purchase such Rights Holder’s Pro Rata Share (as defined below), of
all (or any part) of any “New Securities” (as defined in Section 3.2) that
the Company may from time to time issue after the date of this Agreement, provided,
however, such Rights Holder shall have no right to purchase any such New
Securities if such Rights Holder cannot demonstrate to the Company’s reasonable
satisfaction that such Rights Holder is at the time of the proposed issuance of
such New Securities an “accredited investor” as such term is defined in
Regulation D under the Securities Act. 
A Rights Holder’s “Pro
Rata Share” for purposes of this right of first refusal is the
ratio of (a) the number of Registrable Securities as to which such Rights
Holder is the Holder (and/or is deemed to be the Holder under
Section 2.1(b)), to (b) a number of shares of Common Stock of the
Company equal to the sum of (1) the total number of shares of Common Stock
of the Company then outstanding, (2) the total number of shares of Common
Stock of the Company into which all then outstanding shares of Preferred Stock
of the Company are then convertible, (3) the
number of shares of Common Stock of the Company outstanding under any stock
purchase and stock option plans of the Company and outstanding warrants, and (4) the
number of shares of capital stock of the Company reserved for issuance under
any then outstanding agreements, commitments or other rights to acquire capital
stock of the Company.

 

3.2          New Securities.  “New Securities” shall mean any Common Stock
or Preferred Stock of the Company, whether now authorized or not, and rights,
options or warrants to purchase such Common Stock or Preferred Stock, and
securities of any type whatsoever that

 

15

 

are, or may become, convertible or exchangeable into
such Common Stock or Preferred Stock; provided, however, that the
term “New Securities” does  not  include:

 

(a)           shares of Company Common Stock issued or issuable upon
conversion of the outstanding shares of the Preferred Stock;

 

(b)           any  shares of Company Common Stock (or options, warrants or
rights therefor) or Preferred Stock (or options, warrants or rights therefor)
granted or issued hereafter to employees, officers, directors, contractors,
consultants or advisers to, the Company or any Subsidiary pursuant to incentive
agreements, stock purchase or stock option plans, stock bonuses or awards,
warrants, contracts or other arrangements that are approved by the Company’s
Board of Directors;

 

(c)           any  shares of the Company’s Common Stock or Preferred Stock
(and/or options or warrants therefore) issued to parties that are strategic
partners in connection with a commercial relationship with the Company, in each
case, approved by the Company’s Board of Directors;

 

(d)           any  shares of the Company’s Common Stock or Preferred Stock
(and/or options or warrants therefore) issued to parties that are providing the
Company with equipment leases, real property leases, loans, credit lines, guaranties
of indebtedness, or bank credit or the like, under arrangements, in each case,
approved by the Board of Directors;

 

(e)           shares of Common Stock or Preferred Stock issued pursuant
to the acquisition of another corporation or entity by the Company by consolidation,
merger, purchase of all or substantially all of the assets, or other
reorganization in which the Company acquires, in a single transaction or series
of related transactions, all or substantially all of the assets of such other
corporation or entity or fifty percent (50%) or more of the voting power of
such other corporation or entity or fifty percent (50%) or more of the equity
ownership of such other entity; provided that such transaction or series of transactions has been approved by the
Company’s Board of Directors or
pursuant to the purchase of less than a fifty percent (50%) equity ownership in
connection with a joint venture or other strategic arrangement or other
commercial relationship, provided such an arrangement is approved by the Board
of Directors;

 

(f)            shares of Common Stock or Preferred Stock issuable upon
exercise of any options, warrants or rights to purchase any securities of the
Company outstanding as of the date hereof and any securities issuable upon the
conversion thereof; and

 

(g)           any shares of Common Stock or Preferred Stock (or options,
or warrants or rights to acquire same), issued or issuable hereafter that are (i) approved
by the Board, and (ii) approved by the vote of the holders of a majority
of the Preferred Stock (voting as a single class on an as-converted basis) as
being excluded from the definition of “New Securities” under this section 3.2.

 

3.3          Procedures.  In the event that the Company proposes to
undertake an issuance of New Securities, it shall give to each Rights Holder a
written notice of its intention to issue New Securities (the “Notice”), describing
the type of New Securities and the price and the general terms upon which the
Company proposes to issue such New Securities given in

 

16

 

accordance with Section 6.1 hereof.  Each Rights Holder shall have thirty (30)
days from the date such Notice is effective, as determined pursuant to
Section 6.1 hereof based upon the manner or method of notice, to agree in
writing to purchase such Rights Holder’s Pro Rata Share of such New Securities
for the price and upon the general terms specified in the Notice by giving
written notice to the Company and stating therein the quantity of New
Securities to be purchased (not to exceed such Rights Holder’s Pro Rata
Share).  If any Rights Holder fails to so
agree in writing within such thirty (30) day period to purchase such Rights
Holder’s full Pro Rata Share of an offering of New Securities (a “Nonpurchasing Holder”),
then such Nonpurchasing Holder shall forfeit the right hereunder to purchase
that part of his Pro Rata Share of such New Securities that he, she or it did
not so agree to purchase and the
Company shall promptly give each Rights Holder who has timely agreed to purchase
his full Pro Rata Share of such offering of New Securities (a “Purchasing Holder”)
written notice of the failure of any Nonpurchasing Holder to purchase such
Nonpurchasing Rights Holder’s full Pro Rata Share of such offering of New
Securities (the “Overallotment
Notice”).  Each Purchasing
Holder shall have a right of overallotment such that such Purchasing Holder may
agree to purchase a portion of the Nonpurchasing Holders’ unpurchased Pro Rata
Shares of such offering on a pro rata basis according to the relative Pro Rata
Shares of the Purchasing Rights Holders, at any time within five (5) days
after receiving the Overallotment Notice.

 

3.4          Failure to Exercise.  In the event that the Rights Holders fail to
exercise in full the right of first refusal within such thirty (30) plus five (5) day
period, then the Company shall have one hundred twenty (120) days thereafter to
sell the New Securities with respect to which the Rights Holders’ rights of
first refusal hereunder were not exercised, at a price and upon general terms
not materially more favorable to the purchasers thereof than specified in the
Company’s Notice to the Rights Holders. 
In the event that the Company has not issued and sold the New Securities
within such one hundred twenty (120) day period, then the Company shall not
thereafter issue or sell any New Securities without again first offering such
New Securities to the Rights Holders pursuant to this Section 3.

 

3.5          Termination.  This right of first refusal shall terminate
at the earlier of:  (a) the sale of
securities pursuant to a registration statement filed by the Company under the
Securities Act in connection with its initial public offering; (b) when
the Company first becomes subject to the periodic reporting requirement of Section 13
or 15 of the Exchange Act; or (c) upon (1) the acquisition of all or
substantially all the assets of the Company or (2) a reorganization,
consolidation or merger (or similar transaction or series of transactions) of
the Company with or into any other corporation or corporations in which the
holders of the Company’s outstanding shares immediately before such transaction
or series of related transactions do not, immediately after such transaction or
series of related transactions, retain stock representing a majority of the
voting power of the surviving corporation (or its parent corporation if the
surviving corporation is wholly owned by the parent corporation) of such
transaction or series of related transactions.

 

4.             COVENANTS.

 

4.1          Employees.  Unless approved by the Board of Directors of
the Company, following the date of this Agreement, all employees of the Company
who shall purchase, or receive options to purchase, shares of the Company’s
Common Stock shall be required to

 

17

 

execute stock purchase or option agreements
providing for vesting of shares over a four-year period with the first 25% of
such shares vesting following twelve (12) months of continued employment or
services, and the remaining shares vesting in equal quarterly installments over
the following 12 quarters thereafter. 
The vesting commencement date for each such employee shall be the
employee’s first day of employment with the Company.

 

4.2          Confidential
Information and Invention Assignment Agreement.  The Company and each person now or hereafter
employed, whether as an officer, employee, consultant or advisor, shall enter
into the Company’s form of Employee Invention Assignment and Confidentiality
Agreement, or an employment or consulting agreement containing substantially
similar terms.

 

5.             ASSIGNMENT AND AMENDMENT.

 

5.1          Assignment.  Notwithstanding anything herein to the
contrary:

 

(a)           Information Rights. 
The rights of a Major Investor under Section 1 hereof may be
assigned only to a party who acquires at least the minimum number of shares of
Registrable Securities as would qualify such assignee as a Major Investor, or
that such assignee is an affiliate to, or subsidiary, parent or partner of, a
Major Investor.

 

(b)           Registration Rights.  The registration rights of a Holder under
Section 2 hereof may be assigned only to a party who acquires 1,500,000
shares of Preferred Stock and/or an equivalent number (on an as-converted
basis) of Registrable Securities issued upon conversion thereof, or who is an affiliate,
subsidiary, parent or partner of a Holder; provided, however that
no party may be assigned any of the foregoing rights unless the Company is
given written notice by the assigning party at the time of such assignment
stating the name and address of the assignee and identifying the securities of
the Company as to which the rights in question are being assigned;  provided  further,
that any such assignee of such rights is not deemed by the Board of Directors
of the Company, in its reasonable judgment, to be a competitor of the Company;
and provided  further that any such assignee shall receive such
assigned rights subject to all the terms and conditions of this Agreement,
including without limitation the provisions of this Section 5.

 

(c)           Refusal Rights. 
The rights of first refusal of a
Rights Holder under Section 3 hereof may be assigned only to a
party who acquires at least the minimum number of shares of Preferred Stock
and/or an equivalent number (on an as-converted basis) of Registrable
Securities issued upon conversion thereof as would qualify such assignee as a
Major Investor, or who is an affiliate, subsidiary, parent or partner of a
Holder; provided, however that no party may be assigned any of
the foregoing rights unless the Company is given written notice by the
assigning party at the time of such assignment stating the name and address of
the assignee and identifying the securities of the Company as to which the
rights in question are being assigned;  provided  further, that any
such assignee of such rights is not deemed by the Company, in its reasonable
judgment, to be a competitor of the Company; and provided  further
that any such assignee shall receive such assigned rights subject to all the
terms and conditions of this Agreement, including without limitation the
provisions of this Section 5.

 

18

 

5.2                               Amendment
and Waiver of Rights.  Subject to Section 5.3, any
provision of this Agreement may be amended and the observance thereof may be
waived (either generally or in a particular instance and either retroactively
or prospectively), only with the written consent of the Company and Investors
holding at least a majority of the Preferred Stock, provided, however,
that the piggyback registration rights granted to the Stockholders under
Section 2 of this Agreement may not be eliminated or materially and adversely
changed without the written consent of persons holding a majority of the
Stockholders’ Shares; and provided, further, that the grant to
third parties of piggyback registration rights under Section 2.3 hereof on
a pari passu basis with the piggyback registration rights of the Stockholders’
Shares under Section 2.3 shall not be deemed to be a material and adverse
change to the piggyback registration rights of the Stockholders under this
Agreement and shall not require the consent of either the Stockholders or the
Investors.

 

6.                                      GENERAL
PROVISIONS.

 

6.1                               Notices.  Any and all notices required or permitted to
be given to a party pursuant to the provisions of this Agreement will be in
writing and will be effective and deemed to provide such party sufficient
notice under this Agreement on the earliest of the following:  (i) at the time of personal delivery, if
delivery is in person; (ii) the same business day after transmission by
confirmed electronic mail, facsimile or telecopier, addressed to the other party
at its confirmed electronic mail address or facsimile number or telecopier
address specified herein (or hereafter noticed to the parties hereto), with
confirmation of transmission, if sent during normal business hours of the
recipient (if not, then on the next business day); (iii) one (1) business
day after deposit with an express overnight courier for United States
deliveries, or five (5) business days after such deposit for deliveries
outside of the United States, with proof of delivery from the courier
requested; or (iv) three (3) business days after deposit in the
United States mail by certified mail (return receipt requested) for United
States deliveries.

 

All
notices not delivered personally will be sent with postage and/or other charges
prepaid and properly addressed to the party to be notified at the address as
follows, or at such other address as such other party may designate by one of
the indicated means of notice herein to the other parties hereto as follows:

 

(a)                                  if to an
Investor, at such Investor’s respective address as set forth on Exhibit B or C attached hereto.

 

(b)                                 if to the
Company, marked “Attention:  Corporate
Secretary”, at 999 Main St, Suite 1010, Boise, Idaho 83702; Fax:
+1-208-389-7515, with a copy to: 
Attention:  Thomas H. Tobiason,
Orrick, Herrington & Sutcliffe LLP, 1000 Marsh Road, California 94025;
Fax: +1-650-614-7401.

 

(c)                                  if to a
Stockholder, at such Stockholder’s address as set forth on Exhibit A
hereto.

 

6.2                               Entire
Agreement.  This
Agreement and the documents referred to herein, together with all the Exhibits
hereto, constitute the entire agreement and understanding of the parties with
respect to the subject matter of this Agreement, and supersede any and all
prior

 

19

 

understandings and agreements, whether oral or
written, between or among the parties hereto with respect to the specific
subject matter hereof.

 

6.3                               Governing
Law.  This Agreement will be
governed by and construed in accordance with the laws of the State of
California, without giving effect to that body of laws pertaining to conflict
of laws.

 

6.4                               Severability.  If any provision of this Agreement is
determined by any court or arbitrator of competent jurisdiction to be invalid,
illegal or unenforceable in any respect, such provision will be enforced to the
maximum extent possible given the intent of the parties hereto.  If such clause or provision cannot be so
enforced, such provision shall be stricken from this Agreement and the
remainder of this Agreement shall be enforced as if such invalid, illegal or
unenforceable clause or provision had (to the extent not enforceable) never
been contained in this Agreement. 
Notwithstanding the forgoing, if the value of this Agreement based upon
the substantial benefit of the bargain for any party is materially impaired,
which determination as made by the presiding court or arbitrator of competent
jurisdiction shall be binding, then both parties agree to substitute such
provision(s) through good faith negotiations.

 

6.5                               Third
Parties.  Nothing in
this Agreement, express or implied, is intended to confer upon any person,
other than the parties hereto and their successors and assigns, any rights or
remedies under or by reason of this Agreement.

 

6.6                               Successors
and Assigns.  Subject to
the provisions of Section 5.1, this Agreement, and the rights and
obligations of the parties hereunder, will be binding upon and inure to the
benefit of their respective successors, assigns, heirs, executors,
administrators and legal representatives.

 

6.7                               Titles
and Headings.  The titles,
captions and headings of this Agreement are included for ease of reference only
and will be disregarded in interpreting or construing this Agreement.  Unless otherwise specifically stated, all
references herein to “sections” and “exhibits” will mean “sections” and “exhibits”
to this Agreement.

 

6.8                               Counterparts.  This Agreement may be executed in any number
of counterparts, each of which when so executed and delivered will be deemed an
original, and all of which together shall constitute one and the same
agreement.

 

6.9                               Adjustments
for Stock Splits, Etc.  Wherever in this Agreement there is a
reference to a specific number of shares of Common Stock or Preferred Stock of
the Company of any class or series, then, upon the occurrence of any
subdivision, combination or stock dividend of such class or series of stock,
the specific number of shares so referenced in this Agreement shall
automatically be proportionally adjusted to reflect the affect on the
outstanding shares of such class or series of stock by such subdivision,
combination or stock dividend.

 

6.10                        Further
Assurances.  The parties
agree to execute such further documents and instruments and to take such
further actions as may be reasonably necessary to carry out the purposes and
intent of this Agreement.

 

20

 

6.11                        Facsimile
Signatures.  This
Agreement may be executed and delivered by facsimile and upon such delivery the
facsimile signature will be deemed to have the same effect as if the original
signature had been delivered to the other party.

 

6.12                        Subsequent
Closings.  In the
event that the Company will conduct subsequent sales of Series E Preferred
Stock or otherwise sell Series E Preferred Stock or grant options or
warrants therefor, any holder of such shares of Series E Preferred Stock
or securities convertible into Series E Preferred Stock will be deemed a
Holder with all of the rights of a Holder under this Agreement; provided that,
as a condition thereto such holder and the Company will sign a counterpart
signature page to this Agreement.

 

7.                                      DISPUTE.

 

7.1                               Dispute
Resolution.  Any and all
disputes, controversies or claims concerning or relating to this Agreement (a “Dispute”) will be addressed in
accordance with the procedures specified in this Section 7, which will be
the sole and exclusive procedures for the resolution of such Disputes.  All negotiations pursuant to this provision
are confidential and shall be treated as compromise and settlement negotiations
for purpose of the United States Federal Rules of Evidence and state rules of
evidence.

 

7.2                               Negotiation.  The parties will attempt in good faith to
resolve any Dispute promptly by negotiation. 
If the Dispute has not been resolved within sixty (60) days of a party’s
request for negotiation, either party may initiate mediation as provided in Section 7.3.

 

7.3                               Nonbinding
Mediation.  A party may
initiate mediation by giving notice to the other party.  Mediation will be nonbinding and before the
Judicial Arbitration and Mediation Services, Inc. (“JAMS”) under the then
effective JAMS Rules of Practice and Procedure.  The Mediation shall take place in Santa Clara
County, California.  The parties shall
attempt to reach agreement on the appointment of a mediator.  If they cannot so agree, the mediator shall
be appointed by JAMS and pursuant to JAMS Rules of Practice and
Procedure.  The mediator will be a former
judge of a federal or state court.  The
mediation shall be completed within sixty (60) days of its initiation, unless
the parties otherwise agree.  The parties
will bear their own costs and expenses for participating in mediation under
this Section 7.3, including, without limitation, attorney’s fees, and
shall shares equally the mediator’s fees and expenses.

 

7.4                               Binding
Arbitration.  Any Dispute
that has not been resolved by mediation as provided in Section 7.3 may be
submitted to binding arbitration by the American Arbitration Association (“AAA”).  There will be one (1) neutral,
independent and impartial arbitrator selected in accordance with the AAA rules and
procedures then in effect; provided, however, the arbitrator may not vary,
modify or disregard any of the provisions contained in this
Section 7.  The parties shall
attempt to reach agreement on the appointment of an arbitrator.  If they cannot so agree, the arbitrator shall
be appointed by the AAA.  The arbitration
shall take place in Santa Clara County, California.  As part of any arbitration conducted under
this Section 7.4, each party may (a) request from the other party
documents and other materials relevant to the Dispute and likely to bear on the
issues in such Dispute, (b) conduct no more than five (5) oral
depositions each of which will be limited to a maximum of seven hours in

 

21

 

testimony, (c) propound to the other party no
more than two sets of interrogatories comprising a total of 35 questions, and (d) two
sets of requests for admissions comprising a total of 10 requested admissions
maximum.  The decision and any award
resulting from such arbitration shall be final and binding.  Any final decision or award from arbitration
will be in writing and reasoned.  The
judgment upon the award rendered by the arbitrator may be entered by any court
having jurisdiction thereof.  The
arbitrator is not empowered to award damages in excess of compensatory damages
and each party hereby irrevocably waives any right to recover such damages with
respect to any Dispute resolved by arbitration. 
Each party shall bear its own expenses (including attorney’s fees) and
an equal share of the expenses of the arbitrator and the AAA fees.

 

7.5                               Confidentiality
in Dispute Resolution.  The parties, their representatives, other
participants and the mediator and arbitrator shall hold the existence, content
and result of the mediation and arbitration in confidence.  All the dispute resolution proceedings
contemplated in this Section 7 will be as confidential and private as
permitted by law.  The parties will not
disclose the existence, content or results of any proceedings conducted in
accordance with this Section 7, and materials submitted in connection with
such proceedings will not be admissible in any other proceeding, provided
however, that this confidentiality provision will not prevent a petition to
vacate or enforce an arbitration award, and shall not bar disclosures required
by law.

 

7.6                               Injunctions;
Waiver.  Nothing in this Section 7 shall be
construed to preclude any party from seeking injunctive relief from a court
without posting bond or other security, in order to protect its rights pending
mediation or arbitration.  If either
party chooses to seek such relief from a court, the parties consent to the
exclusive jurisdiction and venue of the courts located in Santa Clara County,
California.  A request by a party to a
court for such injunctive relief shall not be deemed a waiver of the obligation
to mediate or arbitrate.  EACH PARTY
ACKNOWLEDGES THAT THIS AGREEMENT TO ARBITRATE DISPUTES WAIVES THE PARTY’S RIGHT
TO TRIAL BY JURY OR COURT OR TO HAVE DISCOVERY UNDER COURT RULES.

 

[Signature Page Follows]

 

22

 

IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date and year first written above.

 

 

	
  Company:

  	
   

  	
  SEMILEDS
  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Trung Tri Doan

  
	
   

  	
   

  	
   

  	
  Trung
  Tri Doan, Chairman & CEO

  

 

SIGNATURE PAGE TO SEMILEDS
CORPORATION

AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date and year first written above.

 

 

	
  Stockholders:

  	
   

  	
  /s/
  Trung Tri Doan

  
	
   

  	
   

  	
  TRUNG
  TRI DOAN

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/
  Anh Chuong Tran

  
	
   

  	
   

  	
  ANH
  CHUONG TRAN

  

 

SIGNATURE PAGE TO SEMILEDS
CORPORATION

AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date and year first written above.

 

 

	
  Investors:

  	
   

  	
  /s/
  Trung Tri Doan

  
	
   

  	
   

  	
  TRUNG
  TRI DOAN

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/
  Anh Chuong Tran

  
	
   

  	
   

  	
  ANH
  CHUONG TRAN

  

 

SIGNATURE PAGE TO SEMILEDS
CORPORATION

AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date and year first written above.

 

 

	
  Investors:

  	
   

  	
  SIMPLOT
  TAIWAN, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Scott R. Simplot

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

SIGNATURE PAGE TO SEMILEDS
CORPORATION

AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date and year first written above.

 

 

	
  Investors:

  	
   

  	
  WI
  HARPER INC. FUND VI LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

SIGNATURE PAGE TO SEMILEDS
CORPORATION

AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date and year first written above.

 

 

	
  Investors:

  	
   

  	
  LITE-ON
  TECHNOLOGY USA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  David Lin

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  David
  Lin

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

SIGNATURE PAGE TO SEMILEDS
CORPORATION

AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date and year first written above.

 

 

	
  Investors:

  	
   

  	
  JRS
  PROPERTIES III L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Scott R. Simplot

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

SIGNATURE PAGE TO SEMILEDS
CORPORATION

AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date and year first written above.

 

 

	
  Investors:

  	
   

  	
  /s/
  Cm Chen

  
	
   

  	
   

  	
  CM
  CHEN

  

 

SIGNATURE PAGE TO SEMILEDS
CORPORATION

AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date and year first written above.

 

 

	
  Investors:

  	
   

  	
  /s/
  James Chen

  
	
   

  	
   

  	
  JAMES
  CHEN

  

 

SIGNATURE PAGE TO SEMILEDS
CORPORATION

AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date and year first written above.

 

 

	
  Investors:

  	
   

  	
  [

  	
   ]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Wan-Tsai, Chien

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Chien,
  Wan-Tsai

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					

 

SIGNATURE PAGE TO SEMILEDS
CORPORATION

AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT

 

 

EXHIBIT A

 

List of Stockholders

 

	
  Name and Address

  	
   

  	
  Number
  of Shares

  of Common Stock Held

  	
   

  
	
  Trung Tri Doan

  101 Lasuen Ct

  Los Gatos, CA 95032

  	
   

  	
  45,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Anh
  Chuong Tran

  Ln
  81 N1 Songcui Rd

  Baoshan
  Hsinchu 308

  Taiwan

  	
   

  	
  45,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Tan
  Dinh

  146
  Greenwood Drive

  Pleasant
  Hill, CA 94523

  	
   

  	
  5,664,063

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
  95,664,063

  	
   

  

 

 

EXHIBIT B

 

LIST OF EXISTING INVESTORS

 

	
  Name and
  Address

  	
   

  	
  Number
  of Shares of

  Series A, Series B, Series C

  and Series D Preferred Stock

  	
   

  
	
  Simplot
  Taiwan, Inc.

  999
  Main Street, Suite 1300

  Boise, Idaho
  83702

  	
   

  	
  123,546,324

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Trung
  Tri Doan

  101
  Lasuen Court

  Los
  Gatos, California 95032-3900

  	
   

  	
  666,666

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Anh
  Chuong Tran

  Lane
  81, No.1, Songcuei Rd.

  Baoshan
  Township, Taiwan 308

  	
   

  	
  333,333

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Shawn
  B. Smith

  201
  Lavaca Street #630

  Austin,
  Texas 78701

  	
   

  	
  333,333

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Khe
  Chanh Nguyen

  	
   

  	
  266,666

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Brad
  L. Sargent

  	
   

  	
  250,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Thomas
  G. & N. Robertson

  	
   

  	
  100,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Steven C. Cintron

  10 Mounds Road #3C

  San Mateo, CA 94402

  	
   

  	
  66,666

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  D. &
  J. Schatz Family Trust

  	
   

  	
  84,745

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Andy
  Tran

  	
   

  	
  84,745

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  WK
  Growth Enterprise

  	
   

  	
  169,491

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Michael Gough

  1166 Ruth Drive

  San Jose, California 95125

  	
   

  	
  66,666

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Powerchip
  Semiconductor Corp.

  15F,
  68, Sec.3, Nanking E. Rd.

  Taipei,
  Taiwan, R.O.C

  	
   

  	
  6,101,694

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Nanoteco,
  Japan

  	
   

  	
  508,475

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Luxxon
  Technology Corporation

  Taoyuan
  County, Taiwan

  	
   

  	
  10,169,491

  	
   

  

 

 

	
  Name and
  Address

  	
   

  	
  Number
  of Shares of

  Series A, Series B, Series C

  and Series D Preferred Stock

  	
   

  
	
  WI
  Harper Inc. Fund VI Ltd.

  P.O. Box
  309 GT

  Ugland
  House, South Church Street

  George
  Town, Grand Cayman

  	
   

  	
  10,169,491

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Lite-On
  Technology USA, Inc.

  90
  Chien 1 Road, Chung Ho

  Taipei
  Hsien 235, Taiwan

  	
   

  	
  15,351,550

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
  168,269,336

  	
   

  

 

 

EXHIBIT C

 

LIST OF SERIES E INVESTORS

 

	
  Name and
  Address

  	
   

  	
  Number of

  Shares

  	
   

  
	
  Simplot Taiwan, Inc.

  999 Main Street, Suite 1300

  Boise, Idaho 83702

  	
   

  	
  15,044,519

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  JRS Properties III L.P.

  999 W. Main Street, Suite 1300

  Boise, Idaho 83702

  	
   

  	
  4,345,169

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  WI Harper Inc. Fund VI Ltd.

  P.O. Box 309 GT

  Ugland House, South Church Street

  George Town, Grand Cayman

  	
   

  	
  871,179

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Trung Tri Doan

  101 Lasuen Court

  Los Gatos, California 95032-3900

  	
   

  	
  57,111

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Anh Chuong Tran

  Lane 81, No.1, Songcuei Rd.

  Baoshan Township, Taiwan 308

  	
   

  	
  28,555

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Lite-On Technology USA, Inc.

  90 Chien 1 Road, Chung Ho

  Taipei Hsien 235, Taiwan

  	
   

  	
  1,315,104

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  CM Chen

  	
   

  	
  688,096

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  James Chen

  	
   

  	
  12,856

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Chien, Wan-Tsai

  308 

  No.8, Ln. 8, Zhu’an 3rd Rd., Daqi Village
  District 8, Baoshan Township, Hsinchu County 308

  	
   

  	
  119,793

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Liu,Ming-Cheng

  300 

  No.1, Bochuan 2nd Rd., Caiqiao Zone #20,
  East Dist., Hsinchu City 300

  	
   

  	
  33,854

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Chen, Chih-Ming

  302 

  8F., No.78, Xianzheng 10th St., Beilun Zone
  #5, Zhubei City, Hsinchu County 302

  	
   

  	
  97,657

  	
   

  

 

 

	
  Name and
  Address

  	
   

  	
  Number of

  Shares

  	
   

  
	
  Huang, Fei-Chi

  302 

  8F., No.78, Xianzheng 10th St., Beilun Zone
  #5, Zhubei City, Hsinchu County 302

  	
   

  	
  47,526

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Ho, Kuei-Chang

  300

  No.142, Zefan Rd., Caiqiao Zone #21, East
  Dist., Hsinchu City 300

  	
   

  	
  1,171

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Lu,  Hui-Yun

  300 

  No.11, Aly. 2, Ln. 173, Gaocui Rd., Gaofeng
  Zone #1, East Dist., Hsinchu City 300

  	
   

  	
  6,510

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Chen, Chiang-Yuan

  304 

  No.239, Hongmao, Xinfeng Village District
  3, Xinfeng Township, Hsinchu County 304

  	
   

  	
  2,604

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Chen, Cheng-Chin

  103 

  3F., No.55, Ln. 282, Sec. 4, Yanping N.
  Rd., Laoshi Zone #22, Datong Dist., Taipei City 103

  	
   

  	
  42,188

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Yang,Shih-Yi

  300 

  No.3, Ln. 65, Dunfeng Rd., Xiangshan Dist.
  #14, Hsinchu City 300

  	
   

  	
  65,105

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Chien, Yu-Chi

  308

  No.8, Ln. 8, Zhu’an 3rd Rd., Daqi Village
  District 8, Baoshan Township, Hsinchu County 308

  	
   

  	
  39,063

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Chien, Fan-Tse

  308 

  No.8, Ln. 8, Zhu’an 3rd Rd., Daqi Village
  District 8, Baoshan Township, Hsinchu County 308

  	
   

  	
  39,193

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Lung, Hsing-Chu

  300 

  No.25, Ln. 349, Niupu Rd., Xiangshan Dist.,
  Hsinchu City 300

  	
   

  	
  19,531

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Teng,Ming-Yu

  302

  No.37, Shengli 6th St., Shixing Zone #28,
  Zhubei City, Hsinchu County 302

  	
   

  	
  13,021

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Teng,Ming-Hui

  302 

  No.7, Ln. 35, Guangming 10th St., Doulun
  Zone #11, Zhubei City, Hsinchu County 302

  	
   

  	
  6,510

  	
   

  

 

 

	
  Name and
  Address

  	
   

  	
  Number of

  Shares

  	
   

  
	
  Wu, Hsin-Hsien

  300 

  5F., No.3, Aly. 7, Ln. 384, Sec. 1,
  Zhonghua Rd., Fuxing Zone #14, East Dist., Hsinchu City 300

  	
   

  	
  39,063

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Tsai,Chao-Chieh

  704 

  No.19, Ln. 182, Yude 2nd Rd., Chengde Zone
  #29, North Dist., Tainan City 704

  	
   

  	
  52,084

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Lin, Shao-Min

  302 

  No.3, Aly. 19, Ln. 285, Sec. 2, Dongxing
  Rd., Donghai Zone #2, Zhubei City, Hsinchu County 302

  	
   

  	
  13,021

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Jong, Charng-Shyang

  300 

  6F-2, No.133, Puding Rd., Puding Zone #2,
  East Dist., Hsinchu City 300

  	
   

  	
  2,604

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Lin, Hsin-Chen

  358 

  No.87-1, Jiaopu, Jiaopu Zone #8, Yuanli
  Township, Miaoli County 358

  	
   

  	
  1,302

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Chang, Yu-Hui

  741

  No.32, Aly. 71, Xinyi Rd., Zuojia Zone #13,
  Shanhua Township, Tainan County 741

  	
   

  	
  2,604

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Hsu, Yung-Tzu

  712 

  No.289, Zhongzheng Rd., Wuan Zone #3,
  Xinhua Township, Tainan County 712

  	
   

  	
  2,604

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Wu,Chun-Fan

  830 

  No.1-4, Ln. 338, Zhongshan W. Rd., Zhongyi
  Zone #7, Fengshan City, Kaohsiung County 830

  	
   

  	
  2,604

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Hsieh, Kuang-Yu

  402 

  No.178, Deji St., Shude Zone #30, South
  Dist., Taichung City 402

  	
   

  	
  1,953

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Huang, Jin-Ten

  709 

  No.24, Ln. 42, Sec. 1, Gongxue Rd., Gongqin
  Zone #7, Annan Dist., Tainan City 709

  	
   

  	
  2,604

  	
   

  

 

 

	
  Name and
  Address

  	
   

  	
  Number of

  Shares

  	
   

  
	
  Chien, Tien-Sheng

  201

  No.1-42, Shen’aokeng Rd., Xiaoxian Zone
  #11, Xinyi Dist., Keelung City 201

  	
   

  	
  13,021

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Chuang,Wei-Chou

  302

  No.6, Ln. 88, Wenping Rd., Shixing Zone
  #40, Zhubei City, Hsinchu County 302

  	
   

  	
  6,510

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Tu Chien, Yueh

  220 

  No.181-3, Siwei Rd., Mingcui Zone #20,
  Banqiao City, Taipei County 220

  	
   

  	
  13,021

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Shen, Teng-Hsien

  202 

  2F-3, No.213, Zhongzheng Rd., Zhongzheng
  Dist. #11, Keelung City 202

  	
   

  	
  3,906

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Tu, Yi-Ju

  220 

  6F., No.157, Hansheng W. Rd., Wende Zone
  #11, Banqiao City, Taipei County 220

  	
   

  	
  6,510

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Chien, Su-Ying

  220 

  2F., No.15, Zhuangjing Rd., Zhongcui Zone
  #20, Banqiao City, Taipei County 220

  	
   

  	
  6,510

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Chien, Chun-Hua

  235

  No.3-2, Aly. 33, Ln. 335, Yuantong Rd.,
  Jinchang Zone #5, Zhonghe City, Taipei County 235

  	
   

  	
  13,021

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Tu, Wan-I

  220

  No.181-3, Siwei Rd., Mingcui Zone #20,
  Banqiao City, Taipei County 220

  	
   

  	
  6,510

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Tu, Yi-Ling

  220 

  5F., No.157, Hansheng W. Rd., Wende Zone
  #11, Banqiao City, Taipei County 220

  	
   

  	
  6,510

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Yang, Ming-Hsiang

  300

  No.14, Ln. 29, Youle St., Dazhuang Zone
  #12, Xiangshan Dist., Hsinchu City 300

  	
   

  	
  13,021

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Chou, Chen-Ho

  310 

  No.10, Ln. 16, Fugui St., Touchong Zone #6,
  Zhudong Township, Hsinchu County 310

  	
   

  	
  7,812

  	
   

  

 

 

	
  Name and
  Address

  	
   

  	
  Number of

  Shares

  	
   

  
	
  Chen,Mei-Hsin

  404 

  6F-6, No.62, Taiping Rd., Jinping Zone #1,
  North Dist., Taichung City 404

  	
   

  	
  1,302

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Fan,Chiang-Shen

  111 

  2F., No.11, Aly. 23, Ln. 290, Sec. 6,
  Zhongshan N. Rd., Lanya Zone #14, Shilin Dist., Taipei City 111

  	
   

  	
  6,510

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Wang, Hui-Chen

  701

  No.15, Yuxin 6th St., Yuesheng Zone #9,
  East Dist., Tainan City 701

  	
   

  	
  110,678

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Chu, Li-Chuan

  300

  No.5, Aly. 5, Ln. 6, Fuqun St., Dongxiang
  Zone #13, Xiangshan Dist., Hsinchu City 300

  	
   

  	
  260,420

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Yen, Hsiu-Rong

  103 

  3F., No.16, Gangu St., Yongle Zone #4,
  Datong Dist., Taipei City 103

  	
   

  	
  39,063

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Huang,Chiao-Chiang

  112 

  2F-1, No.298, Daye Rd., Zhongyang Zone #24,
  Beitou Dist., Taipei City 112

  	
   

  	
  91,147

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Chien, Chih-Ta

  228 

  No.56, Ren’ai Rd., Renli Village #14,
  Gongliao Township, Taipei County 228

  	
   

  	
  1,302

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Chou, Shu-Fang

  302 

  8F., No.118, Shengli 2nd Rd., Shixing Zone
  #11, Zhubei City, Hsinchu County 302

  	
   

  	
  6,510

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Lai, Yu-Pen

  300 

  5F., No.67, Changchun St., Xinzhuang Zone
  #18, East Dist., Hsinchu City 300

  	
   

  	
  1,302

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Chien, Shih

  228 

  No.56, Ren’ai Rd., Renli Village #14,
  Gongliao Township, Taipei County 228

  	
   

  	
  5,208

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Chang, Bii-Cheng

  300 

  No.6, Ln. 79, Xinzhuang St., Xinzhuang Zone
  #26, East Dist., Hsinchu City 300

  	
   

  	
  26,042

  	
   

  

 

 

	
  Name and
  Address

  	
   

  	
  Number of

  Shares

  	
   

  
	
  Tong Seng Applied Materials Inc.

  303 

  No.16, Guangfu S. Rd., Shengli Village,
  Hukou Township, Hsinchu County 303

  	
   

  	
  130,210

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Yang, Cheng-Chung

  503 

  No.26, Ln. 47, Fude St., Wende Village
  District 3, Huatan Township, Changhua County 503

  	
   

  	
  2,083

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
  23,794,887Exhibit
10.1

 

SEMILEDS CORPORATION

ACTION BY WRITTEN CONSENT OF THE STOCKHOLDERS

 

The
undersigned, being holders of outstanding voting shares of SemiLEDs
Corporation, a Delaware corporation (the “Company”), do by this written Action
consent to and adopt the following resolutions in lieu of a meeting, pursuant
to Section 228 of the Delaware General Corporation Law:

 

2005 EQUITY INCENTIVE PLAN

 

WHEREAS,
the Board of Directors of the Company (the “Board”), subject to the approval of
the Company’s shareholders, adopted the SemiLEDs Corporation 2005 Equity
Incentive Plan (the “Plan”), under which employees (including officers),
non-employee members of the Board and consultants of the Company may be offered
the opportunity to acquire shares of the Company’s Class B Common Stock;
and

 

WHEREAS,
the Board, subject to the approval of the stockholders, reserved additional
200,000 shares and 15,883,335 shares in totality of the Class B Common
Stock for issuance over the term of the Plan.

 

RESOLVED,
that the adoption of the Plan, in substantially the form approved by the
Board and attached hereto as Exhibit A, be, and it hereby is, approved in
its entirety; and

 

RESOLVED Further,
that the reservation of additional 200,000 shares and of 15,883,335 shares
in totality of Class B Common Stock for issuance under the Plan be, and it
is herby, approved.

 

This
action may be signed in one or more counterparts, each of which shall be deemed
an original and all of which shall constitute one instrument.  A facsimile signature page shall be
deemed an original.

 

IN
WITNESS WHEREOF, the undersigned has executed this written Action as of the
date written below.

 

	
  Simplot
  Taiwan Inc.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Bill Whitacre

  	
   

  	
  By:

  	
  /s/
  Trung T. Doan

  	
   

  	
  By:

  	
  /s/
  Chuong A. Tran

  
	
  Name:
  Bill Whitacre

  	
   

  	
  Name:
  Trung T. Doan

  	
   

  	
  Name:
  Chuong A. Tran

  
	
  Title:
  President

  	
   

  	
  Date:
  3/01/2010

  	
   

  	
  Date:
  3/01/2010

  
	
  Date:
  3/1/2010

  	
   

  	
   

  	
   

  	
   

  
								

 

 

Exhibit A

 

2005 EQUITY INCENTIVE PLAN

 

2

 

SEMILEDS CORPORATION

 

2005 EQUITY INCENTIVE PLAN

 

As Adopted on June 21, 2005 (and Amended on November 29,
2005 , November 4, 2009 and March 1, 2010)

 

1.                                      PURPOSE.  The purpose of this Plan is
to provide incentives to attract, retain and motivate eligible persons whose
present and potential contributions are important to the success of the
Company, its Parent and Subsidiaries, by offering them an opportunity to
participate in the Company’s future performance through awards of Options and
Restricted Stock.  Capitalized terms not
defined in the text are defined in Section 22 hereof.  Although this Plan is intended to be a
written compensatory benefit plan within the meaning of Rule 701
promulgated under the Securities Act, grants may be made pursuant to this Plan
that do not qualify for exemption under Rule 701 or certain state
securities regulations (for example, Section 25102(o) of the
California Corporations Code, to the extent that such Section is intended
to be applied) (together, the “Regulations”). 
Any requirement of this Plan which is required in law only because of
such Regulations need not apply if the Committee so provides.

 

2.                                      SHARES
SUBJECT TO THE PLAN.

 

2.1                               Number of Shares Available.  Subject to Sections 2.2 and 17 hereof,
the total number of Shares reserved and available for grant and issuance
pursuant to this Plan will be 15,883,335 Shares or such lesser number of Shares
as permitted by applicable law.  Subject
to Sections 2.2, 5.10 and 17 hereof, Shares subject to Awards previously
granted will again be available for grant and issuance in connection with
future Awards under this Plan to the extent such Shares:  (i) cease to be subject to issuance upon
exercise of an Option, other than due to exercise of such Option; (ii) are
subject to an Award granted hereunder but the Shares subject to such Award are
forfeited or repurchased by the Company at the original issue price; or
(iii) are subject to an Award that otherwise terminates without Shares
being issued.  At all times the Company
will reserve and keep available a sufficient number of Shares as will be
required to satisfy the requirements of all Awards granted and outstanding
under this Plan.

 

2.2                               Adjustment of Shares.  In the event that the number of outstanding
shares of the Company’s Common Stock is changed by a stock dividend,
recapitalization, stock split, reverse stock split, subdivision, combination,
reclassification or similar change in the capital structure of the Company
without consideration, then (i) the number of Shares reserved for issuance
under this Plan, (ii) the Exercise Prices of and number of Shares subject
to outstanding Options and (iii) the Purchase Prices of and number of
Shares subject to other outstanding Awards will be proportionately adjusted,
subject to any required action by the Board or the stockholders of the Company
and compliance with applicable securities laws; provided, however, that
fractions of a Share will not be issued but will either be paid in cash at the
Fair Market Value of such fraction of a Share or will be rounded down to the
nearest whole Share, as determined by the Committee, and provided, further,
that the Exercise Price of any Option may not be decreased to below the par
value of the Shares.

 

3

 

3.                                      ELIGIBILITY.  ISOs (as defined in
Section 5 hereof) may be granted only to employees (including officers and
directors who are also employees) of the Company or of a Parent or Subsidiary
of the Company.  NSOs (as defined in
Section 5 hereof) and Restricted Stock Awards may be granted to employees,
officers, directors and consultants of the Company or any Parent or Subsidiary
of the Company; provided such consultants render bona fide services not in
connection with the offer and sale of securities in a capital-raising
transaction.  A person may be granted more
than one Award under this Plan.

 

4.                                      ADMINISTRATION.

 

4.1                               Committee Authority.  This Plan will be administered by the
Committee or the Board if no Committee is created by the Board.  Subject to the general purposes, terms and
conditions of this Plan, and to the direction of the Board, the Committee will
have full power to implement and carry out this Plan.  Without limitation, the Committee will have
the authority to:

 

(a)                                  construe and
interpret this Plan, any Award Agreement and any other agreement or document
executed pursuant to this Plan;

 

(b)                                 prescribe,
amend and rescind rules and regulations relating to this Plan;

 

(c)                                  approve persons
to receive Awards;

 

(d)                                 determine the
form and terms of Awards;

 

(e)                                  determine the
number of Shares or other consideration subject to Awards;

 

(f)                                    determine
whether Awards will be granted singly, in combination with, in tandem with, in
replacement of, or as alternatives to, other Awards under this Plan or awards
under any other incentive or compensation plan of the Company or any Parent or
Subsidiary of the Company;

 

(g)                                 grant waivers
of any conditions of this Plan or any Award;

 

(h)                                 determine the
terms of vesting, exercisability and payment of Awards;

 

(i)                                     correct any
defect, supply any omission, or reconcile any inconsistency in this Plan, any
Award, any Award Agreement, any Exercise Agreement or any Restricted Stock
Purchase Agreement;

 

(j)                                     determine
whether an Award has been earned;

 

(k)                                  make all other
determinations necessary or advisable for the administration of this Plan; and

 

(l)                                     extend the
vesting period beyond a Participant’s Termination Date.

 

4

 

4.2                               Committee Discretion.  Unless in contravention of any express terms
of this Plan or Award, any determination made by the Committee with respect to
any Award will be made in its sole discretion either (i) at the time of
grant of the Award, or (ii) subject to Section 5.9 hereof, at any
later time.  Any such determination will
be final and binding on the Company and on all persons having an interest in
any Award under this Plan.  The Committee
may delegate to one or more officers of the Company the authority to grant an
Award under this Plan, provided such officer or officers are members of the
Board.

 

5.                                      OPTIONS.  The Committee may grant
Options to eligible persons described in Section 3 hereof and will
determine whether such Options will be Incentive Stock Options within the
meaning of the Code (“ISOs”)
or Nonstatutory Stock Options (“NSOs”), the number of Shares subject to the Option, the
Exercise Price of the Option, the period during which the Option may be
exercised, and all other terms and conditions of the Option, subject to the
following:

 

5.1                               Form of Option Grant.  Each Option granted under this Plan will be
evidenced by an Award Agreement which will expressly identify the Option as an
ISO or an NSO (“Stock
Option Agreement”), and will be in such form and contain such
provisions (which need not be the same for each Participant) as the Committee
may from time to time approve, and which will comply with and be subject to the
terms and conditions of this Plan.

 

5.2                               Date of Grant.  The
date of grant of an Option will be the date on which the Committee makes the
determination to grant such Option, unless a later date is otherwise specified
by the Committee.  The Stock Option
Agreement and a copy of this Plan will be delivered to the Participant within a
reasonable time after the granting of the Option.

 

5.3                               Exercise Period. 
Options may be exercisable immediately but subject to repurchase
pursuant to Section 11 hereof or may be exercisable within the times or
upon the events determined by the Committee as set forth in the Stock Option
Agreement governing such Option; provided, however, that no Option will be
exercisable after the expiration of ten (10) years from the date the
Option is granted; and provided further that no ISO granted to a person who
directly or by attribution owns more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or of any Parent
or Subsidiary of the Company (“Ten Percent Shareholder”) will be exercisable after the
expiration of five (5) years from the date the ISO is granted.  The Committee also may provide for Options to
become exercisable at one time or from time to time, periodically or otherwise,
in such number of Shares or percentage of Shares as the Committee
determines.  Subject to earlier
termination of the Option as provided herein, to the extent certain Regulations
is intended to apply, each Participant who is not an officer, director or
consultant of the Company or of a Parent or Subsidiary of the Company shall
have the right to exercise an Option granted hereunder at the rate of no less
than twenty percent (20%) per year over five (5) years from the date such
Option is granted.

 

5.4                               Exercise Price.  The
Exercise Price of an Option will be determined by the Committee when the Option
is granted and may not be less than eighty-five percent (85%) of the Fair
Market Value of the Shares on the date of grant; provided that (i) the
Exercise Price of an ISO will not be less than one hundred percent (100%) of
the Fair Market Value of the Shares on the date of grant and (ii) the
Exercise Price of any Option granted to a Ten Percent 

 

5

 

Shareholder will not be less than one hundred ten
percent (110%) of the Fair Market Value of the Shares on the date of
grant.  Payment for the Shares purchased
must be made in accordance with Section 7 hereof.

 

5.5                               Method of Exercise.  Options may be exercised only by delivery to
the Company of a written stock option exercise agreement (the “Exercise Agreement”)
in a form approved by the Committee (which need not be the same for each
Participant).  The Exercise Agreement
will state (i) the number of Shares being purchased, (ii) the
restrictions imposed on the Shares purchased under such Exercise Agreement, if
any, and (iii) such representations and agreements regarding Participant’s
investment intent and access to information and other matters, if any, as may
be required or desirable by the Company to comply with applicable securities
laws.  Participant shall execute and
deliver to the Company the Exercise Agreement together with payment in full of
the Exercise Price, and any applicable taxes, for the number of Shares being
purchased.

 

5.6                               Termination. 
Subject to earlier termination pursuant to Sections 17 and 18
hereof and notwithstanding the exercise periods set forth in the Stock Option
Agreement, exercise of an Option will always be subject to the following:

 

(a)                                  If the
Participant is Terminated for any reason other than death, Disability or for
Cause, then the Participant may exercise such Participant’s Options only to the
extent that such Options are exercisable as to Vested Shares upon the
Termination Date or as otherwise determined by the Committee.  Such Options must be exercised by the
Participant, if at all, as to all or some of the Vested Shares calculated as of
the Termination Date or such other date determined by the Committee, within
three (3) months after the Termination Date (or within such shorter time
period, not less than thirty (30) days, or within such longer time period, not
exceeding five (5) years, after the Termination Date as may be determined
by the Committee, with any exercise beyond three (3) months after the
Termination Date deemed to be an NSO) but in any event, no later than the
expiration date of the Options.

 

(b)                                 If the
Participant is Terminated because of Participant’s death or Disability (or the
Participant dies within three (3) months after a Termination other than
for Cause), then Participant’s Options may be exercised only to the extent that
such Options are exercisable as to Vested Shares by Participant on the
Termination Date or as otherwise determined by the Committee.  Such options must be exercised by Participant
(or Participant’s legal representative or authorized assignee), if at all, as
to all or some of the Vested Shares calculated as of the Termination Date or
such other date determined by the Committee, within twelve (12) months after
the Termination Date (or within such shorter time period, not less than six (6) months,
or within such longer time period, not exceeding five (5) years, after the
Termination Date as may be determined by the Committee, with any exercise
beyond (i) three (3) months after the Termination Date when the
Termination is for any reason other than the Participant’s death or disability,
within the meaning of Section 22(e)(3) of the Code, or
(ii) twelve (12) months after the Termination Date when the Termination is
for Participant’s disability, within the meaning of Section 22(e)(3) of
the Code, deemed to be an NSO) but in any event no later than the expiration
date of the Options.

 

6

 

(c)                                  If the
Participant is terminated for Cause, the Participant may exercise such
Participant’s Options, but not to an extent greater than such Options are
exercisable as to Vested Shares upon the Termination Date and Participant’s
Options shall expire on such Participant’s Termination Date, or at such later
time and on such conditions as are determined by the Committee.

 

5.7                               Limitations on Exercise.  The Committee may specify a reasonable
minimum number of Shares that may be purchased on any exercise of an Option,
provided that such minimum number will not prevent Participant from exercising
the Option for the full number of Shares for which it is then exercisable.

 

5.8                               Limitations on ISOs.  The aggregate Fair Market Value (determined
as of the date of grant) of Shares with respect to which ISOs are exercisable
for the first time by a Participant during any calendar year (under this Plan
or under any other incentive stock option plan of the Company or any Parent or
Subsidiary of the Company) will not exceed One Hundred Thousand Dollars
($100,000).  If the Fair Market Value of
Shares on the date of grant with respect to which ISOs are exercisable for the
first time by a Participant during any calendar year exceeds One Hundred
Thousand Dollars ($100,000), then the Options for the first One Hundred
Thousand Dollars ($100,000) worth of Shares to become exercisable in such
calendar year will be ISOs and the Options for the amount in excess of One
Hundred Thousand Dollars ($100,000) that become exercisable in that calendar
year will be NSOs.  In the event that the
Code or the regulations promulgated thereunder are amended after the Effective
Date (as defined in Section 18 hereof) to provide for a different limit on
the Fair Market Value of Shares permitted to be subject to ISOs, then such
different limit will be automatically incorporated herein and will apply to any
Options granted after the effective date of such amendment.

 

5.9                               Modification, Extension or Renewal.  The Committee may modify, extend or renew
outstanding Options and authorize the grant of new Options in substitution
therefor, provided that any such action may not, without the written consent of
a Participant, impair any of such Participant’s rights under any Option
previously granted.  Any outstanding ISO
that is modified, extended, renewed or otherwise altered will be treated in
accordance with Section 424(h) of the Code.  Subject to Section 5.10 hereof, the
Committee may reduce the Exercise Price of outstanding Options without the
consent of Participants by a written notice to them; provided, however, that
the Exercise Price may not be reduced below the minimum Exercise Price that
would be permitted under Section 5.4 hereof for Options granted on the
date the action is taken to reduce the Exercise Price; provided, further, that
the Exercise Price will not be reduced below the par value of the Shares, if
any.

 

5.10                        No Disqualification.  Notwithstanding any other provision in this
Plan, no term of this Plan relating to ISOs will be interpreted, amended or
altered, nor will any discretion or authority granted under this Plan be
exercised, so as to disqualify this Plan under Section 422 of the Code or,
without the consent of the Participant, to disqualify any Participant’s ISO
under Section 422 of the Code.  In
no event shall the total number of Shares issued (counting each reissuance of a
Share that was previously issued and then forfeited or repurchased by the
Company as a separate issuance) under the Plan upon exercise of ISOs exceed the
number of shares specified in Section 2.1 (subject to any amendment
thereof, and adjusted in proportion to any adjustments under Section 2.2
hereof) over the term of the Plan.

 

7

 

6.                                      RESTRICTED STOCK.  A Restricted Stock Award is
an offer by the Company to sell to an eligible person Shares that are subject
to certain specified restrictions.  The
Committee will determine to whom an offer will be made, the number of Shares
the person may purchase, the Purchase Price, the restrictions to which the
Shares will be subject, and all other terms and conditions of the Restricted
Stock Award, subject to the following:

 

6.1                               Form of Restricted Stock Award.  All purchases under a Restricted Stock Award
made pursuant to this Plan will be evidenced by an Award Agreement (“Restricted Stock Purchase Agreement”)
that will be in such form (which need not be the same for each Participant) as
the Committee will from time to time approve, and will comply with and be
subject to the terms and conditions of this Plan.  The Restricted Stock Award will be accepted
by the Participant’s execution and delivery of the Restricted Stock Purchase
Agreement and full payment for the Shares to the Company within thirty (30)
days from the date the Restricted Stock Purchase Agreement is delivered to the
person.  If such person does not execute
and deliver the Restricted Stock Purchase Agreement along with full payment for
the Shares to the Company within such thirty (30) days, then the offer will
terminate, unless otherwise determined by the Committee.

 

6.2                               Purchase Price.  The
Purchase Price of Shares sold pursuant to a Restricted Stock Award will be
determined by the Committee and will be at least eighty-five percent (85%) of
the Fair Market Value of the Shares on the date the Restricted Stock Award is
granted or at the time the purchase is consummated, except in the case of a
sale to a Ten Percent Shareholder, in which case the Purchase Price will be one
hundred percent (100%) of the Fair Market Value on the date the Restricted
Stock Award is granted or at the time the purchase is consummated.  Payment of the Purchase Price must be made in
accordance with Section 7 hereof.

 

6.3                               Restrictions. 
Restricted Stock Awards may be subject to the restrictions set forth in
Section 11 hereof or such other restrictions not inconsistent with certain
Regulations.

 

7.                                      PAYMENT
FOR SHARE PURCHASES.

 

7.1                               Payment.  Payment for
Shares purchased pursuant to this Plan may be made in cash (by check) or, where
approved for the Participant by the Committee and where permitted by law:

 

(a)                                  by cancellation
of indebtedness of the Company owed to the Participant;

 

(b)                                 by surrender of
shares that:  (i) either (A) have
been owned by Participant for more than six (6) months and have been paid for
within the meaning of SEC Rule 144 (and, if such shares were
purchased from the Company by use of a promissory note, such note has been
fully paid with respect to such shares) or (B) were obtained by
Participant in the public market and (ii) are clear of all liens, claims,
encumbrances or security interests;

 

8

 

(c)                                  by tender of a
full recourse promissory note having such terms as may be approved by the
Committee and bearing interest at a rate sufficient to avoid
(i) imputation of income under Sections 483 and 1274 of the Code and (ii) variable
accounting treatment under Financial Accounting Standards Board Interpretation
No. 44 to APB No. 25; provided, however, that Participants who are
not employees or directors of the Company will not be entitled to purchase
Shares with a promissory note unless the note is adequately secured by
collateral other than the Shares; provided, further, that the portion of the
Exercise Price or Purchase Price, as the case may be, equal to the par value of
the Shares must be paid in cash or other legal consideration permitted by
Delaware General Corporation Law;

 

(d)                                 by waiver of
compensation due or accrued to the Participant from the Company for services
rendered;

 

(e)                                  with respect
only to purchases upon exercise of an Option, and provided that a public market
for the Company’s stock exists:

 

(i)                                     through a “same
day sale” commitment from the Participant and a broker-dealer that is a member
of the National Association of Securities Dealers (an “NASD Dealer”) whereby
the Participant irrevocably elects to exercise the Option and to sell a portion
of the Shares so purchased sufficient to pay the total Exercise Price, and
whereby the NASD Dealer irrevocably commits upon receipt of such Shares to
forward the total Exercise Price directly to the Company; or

 

(ii)                                  through a “margin”
commitment from the Participant and an NASD Dealer whereby the Participant
irrevocably elects to exercise the Option and to pledge the Shares so purchased
to the NASD Dealer in a margin account as security for a loan from the NASD
Dealer in the amount of the total Exercise Price, and whereby the NASD Dealer
irrevocably commits upon receipt of such Shares to forward the total Exercise
Price directly to the Company; or

 

(f)                                    by any
combination of the foregoing, or any consideration approved by the Company.

 

7.2                               Loan Guarantees.  The
Committee may, in its sole discretion, elect to assist the Participant in
paying for Shares purchased under this Plan by authorizing a guarantee by the
Company of a third-party loan to the Participant.

 

8.                                      WITHHOLDING
TAXES.

 

8.1                               Withholding Generally.  Whenever Shares are to be issued in
satisfaction of Awards granted under this Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. 
Whenever, under this Plan, payments in satisfaction of Awards are to be
made in cash by the Company, such payment will be net of an amount sufficient
to satisfy federal, state, and local withholding tax requirements.

 

9

 

8.2                               Stock Withholding.  When, under applicable tax laws, a
Participant incurs tax liability in connection with the exercise or vesting of
any Award that is subject to tax withholding and the Participant is obligated
to pay the Company the amount required to be withheld, the Committee may in its
sole discretion allow the Participant to satisfy the minimum withholding tax
obligation by electing to have the Company withhold from the Shares to be
issued that minimum number of Shares having a Fair Market Value equal to the
minimum amount required to be withheld, determined on the date that the amount
of tax to be withheld is to be determined; but in no event will the Company
withhold Shares if such withholding would result in adverse accounting
consequences to the Company.  All
elections by a Participant to have Shares withheld for this purpose will be
made in accordance with the requirements established by the Committee for such
elections and be in writing in a form acceptable to the Committee.

 

9.                                      PRIVILEGES
OF STOCK OWNERSHIP.

 

9.1                               Dividends and Other Rights.  No Participant will have any of the rights of
a stockholder with respect to any Shares until the Shares are issued to the
Participant.  After Shares are issued to
the Participant, the Participant will be a stockholder and have all the rights
of a stockholder with respect to such Shares, including the right to receive
all dividends or other distributions made or paid with respect to such Shares;
provided, that if such Shares are Restricted Stock, then any new, additional or
different securities the Participant may become entitled to receive with
respect to such Shares by virtue of a stock dividend, stock split or any other
change in the corporate or capital structure of the Company will be subject to
the same restrictions as the Restricted Stock. 
The Participant will have no right to retain such stock dividends or
stock distributions with respect to Unvested Shares that are repurchased
pursuant to Section 11 hereof.

 

9.2                               Financial Statements.  Only to the extent California Code of
Regulations are intended to be applied, the Company will provide financial
statements to each Participant annually during the period such Participant has
Awards outstanding, or as otherwise required under Section 260.140.46 of
Title 10 of the California Code of Regulations. 
Notwithstanding the foregoing, the Company will not be required to
provide such financial statements to Participants when issuance of Awards is
limited to key employees whose services in connection with the Company assure
them access to equivalent information.

 

10.                               TRANSFERABILITY.  Except as permitted by the
Committee, Awards granted under this Plan, and any interest therein, will not
be transferable or assignable by Participant, other than by will or by the laws
of descent and distribution, and, with respect to NSOs, by instrument to an
inter vivos or testamentary trust in which the options are to be passed to
beneficiaries upon the death of the trustor (settlor), or by gift to “immediate
family” as that term is defined in 17 C.F.R. 240.16a-1(e), and may not be made
subject to execution, attachment or similar process.  During the lifetime of the Participant an
Award will be exercisable only by the Participant or Participant’s legal
representative and any elections with respect to an Award may be made only by
the Participant or Participant’s legal representative.

 

10

 

11.          RESTRICTIONS ON SHARES.

 

11.1        Right of
First Refusal.  At the
discretion of the Committee, the Company may reserve to itself and/or its
assignee(s) in the Award Agreement a right of first refusal to purchase
all Shares that a Participant (or a subsequent transferee) may propose to
transfer to a third party, unless otherwise not permitted by the Regulations,
provided that such right of first refusal terminates upon the Company’s initial
public offering of Common Stock pursuant to an effective registration statement
filed under the Securities Act.

 

11.2        Right of
Repurchase.  At the
discretion of the Committee, the Company may reserve to itself and/or its
assignee(s) in the Award Agreement a right to repurchase Unvested Shares
held by a Participant for cash and/or cancellation of purchase money
indebtedness owed to the Company by the Participant following such Participant’s
Termination at any time within the later of ninety (90) days after the
Participant’s Termination Date and the date the Participant purchases Shares
under the Plan at the Participant’s Exercise Price or Purchase Price, as the
case may be, provided that to the extent certain Regulations is intended to
apply, unless the Participant is an officer, director or consultant of the
Company or of a Parent or Subsidiary of the Company, such right of repurchase
lapses at the rate of no less than twenty percent (20%) per year over five (5) years
from:  (a) the date of grant of the
Option or (b) in the case of Restricted Stock, the date the Participant purchases
the Shares.

 

12.          CERTIFICATES.  All certificates for Shares
or other securities delivered under this Plan will be subject to such stock
transfer orders, legends and other restrictions as the Committee may deem
necessary or advisable, including restrictions under any applicable federal,
state or foreign securities law, or any rules, regulations and other
requirements of the SEC or any stock exchange or automated quotation system
upon which the Shares may be listed or quoted.

 

13.          ESCROW;
PLEDGE OF SHARES.  To enforce any restrictions
on a Participant’s Shares set forth in Section 11 hereof, the Committee
may require the Participant to deposit all certificates representing Shares,
together with stock powers or other instruments of transfer approved by the
Committee, appropriately endorsed in blank, with the Company or an agent
designated by the Company to hold in escrow until such restrictions have lapsed
or terminated.  The Committee may cause a
legend or legends referencing such restrictions to be placed on the
certificates.  Any Participant who is
permitted to execute a promissory note as partial or full consideration for the
purchase of Shares under this Plan will be required to pledge and deposit with
the Company all or part of the Shares so purchased as collateral to secure the
payment of Participant’s obligation to the Company under the promissory note;
provided, however, that the Committee may require or accept other or additional
forms of collateral to secure the payment of such obligation and, in any event,
the Company will have full recourse against the Participant under the
promissory note notwithstanding any pledge of the Participant’s Shares or other
collateral.  In connection with any
pledge of the Shares, Participant will be required to execute and deliver a
written pledge agreement in such form as the Committee will from time to time
approve.  The Shares purchased with the
promissory note may be released from the pledge on a pro rata basis as the promissory
note is paid.

 

14.          EXCHANGE
AND BUYOUT OF AWARDS.  The Committee may, at any
time or from time to time, authorize the Company, with the consent of the
respective Participants, to 

 

11

 

issue new Awards in exchange for the
surrender and cancellation of any or all outstanding Awards.  The Committee may at any time buy from a
Participant an Award previously granted with payment in cash, shares of Common
Stock of the Company (including Restricted Stock) or other consideration, based
on such terms and conditions as the Committee and the Participant may agree.

 

15.          SECURITIES
LAW AND OTHER REGULATORY COMPLIANCE.  Although this Plan is
intended to be a written compensatory benefit plan within the meaning of Rule 701
promulgated under the Securities Act, grants may be made pursuant to this plan
which do not qualify for exemption under Rule 701 or the Regulations.  Any requirement of this Plan which is
required in law only because of the Regulations need not apply if the Committee
so provides.  An Award will not be
effective unless such Award is in compliance with all applicable federal and
state securities laws, rules and regulations of any governmental body, and
the requirements of any stock exchange or automated quotation system upon which
the Shares may then be listed or quoted, as they are in effect on the date of
grant of the Award and also on the date of exercise or other issuance.  Notwithstanding any other provision in this
Plan, the Company will have no obligation to issue or deliver certificates for
Shares under this Plan prior to (i) obtaining any approvals from
governmental agencies that the Company determines are necessary or advisable,
and/or (ii) compliance with any exemption, completion of any registration
or other qualification of such Shares under any state or federal law or ruling
of any governmental body that the Company determines to be necessary or
advisable.  The Company will be under no
obligation to register the Shares with the SEC or to effect compliance with the
exemption, registration, qualification or listing requirements of any state
securities laws, stock exchange or automated quotation system, and the Company
will have no liability for any inability or failure to do so.

 

16.          NO
OBLIGATION TO EMPLOY.  Nothing in this Plan or any
Award granted under this Plan will confer or be deemed to confer on any
Participant any right to continue in the employ of, or to continue any other
relationship with, the Company or any Parent or Subsidiary of the Company or
limit in any way the right of the Company or any Parent or Subsidiary of the
Company to terminate Participant’s employment or other relationship at any
time, with or without Cause.

 

17.          CORPORATE TRANSACTIONS.

 

17.1        Assumption
or Replacement of Awards by Successor or Acquiring Company.  In the event of (i) a dissolution or
liquidation of the Company, (ii) any reorganization, consolidation, merger
or similar transaction or series of related transactions (each, a “combination transaction”))
in which the Company is a constituent corporation or is a party if, as a result
of such combination transaction, the voting securities of the Company that are
outstanding immediately prior to the consummation of such combination
transaction (other  than any such securities that are held by an “Acquiring
Stockholder”, as defined below) do not represent, or are not converted into,
securities of the surviving corporation of such combination transaction (or
such surviving corporation’s parent corporation if the surviving corporation is
owned by the parent corporation) that, immediately after the consummation of
such combination transaction, together possess at least a majority of the total
voting power of all securities of such surviving corporation (or its parent
corporation, if applicable) that are outstanding immediately 

 

12

 

after the consummation of such combination
transaction, including securities of such surviving corporation (or its parent
corporation, if applicable) that are held by the Acquiring Stockholder; or (b) a
sale of all or substantially all of the assets of the Company, that is followed
by the distribution of the proceeds to the Company’s stockholders, any or all
outstanding Awards may be assumed, converted or replaced by the successor or
acquiring corporation (if any), which assumption, conversion or replacement
will be binding on all Participants.  In
the alternative, the successor or acquiring corporation may substitute
equivalent Awards or provide substantially similar consideration to
Participants as was provided to stockholders of the Company (after taking into
account the existing provisions of the Awards). 
The successor or acquiring corporation may also substitute by issuing,
in place of outstanding Shares of the Company held by the Participant,
substantially similar shares or other property subject to repurchase
restrictions and other provisions no less favorable to the Participant than
those which applied to such outstanding Shares immediately prior to such
transaction described in this Section 17.1.  For purposes of this Section 17.1, an “Acquiring Stockholder”
means a stockholder or stockholders of the Company that (i) merges or
combines with the Company in such combination transaction or (ii) owns or
controls a majority of another corporation that merges or combines with the
Corporation in such combination transaction. 
In the event such successor or acquiring corporation (if any) refuses to
assume, convert, replace or substitute Awards, as provided above, pursuant to a
transaction described in this Section 17.1, then notwithstanding any other
provision in this Plan to the contrary, such Awards will expire on such
transaction at such time and on such conditions as the Board will determine.

 

17.2        Other
Treatment of Awards.  Subject
to any greater rights granted to Participants under the foregoing provisions of
this Section 17, in the event of the occurrence of any transaction
described in Section 17.1 hereof, any outstanding Awards will be treated
as provided in the applicable agreement or plan of reorganization, merger,
consolidation, dissolution, liquidation or sale of assets.

 

17.3        Assumption
of Awards by the Company.  The Company, from time to time, also may
substitute or assume outstanding awards granted by another company, whether in
connection with an acquisition of such other company or otherwise, by either (i) granting
an Award under this Plan in substitution of such other company’s award or (ii) assuming
such award as if it had been granted under this Plan if the terms of such
assumed award could be applied to an Award granted under this Plan.  Such substitution or assumption will be
permissible if the holder of the substituted or assumed award would have been
eligible to be granted an Award under this Plan if the other company had
applied the rules of this Plan to such grant.  In the event the Company assumes an award
granted by another company, the terms and conditions of such award will remain
unchanged (except that the exercise price and the number and nature of shares issuable
upon exercise of any such option will be adjusted appropriately pursuant to
Section 424(a) of the Code). 
In the event the Company elects to grant a new Option rather than
assuming an existing option, such new Option may be granted with a similarly
adjusted Exercise Price.

 

18.          ADOPTION
AND STOCKHOLDER APPROVAL.  This Plan will become
effective on the date that it is adopted by the Board (the “Effective Date”).  This Plan will be approved by the
stockholders of the Company (excluding Shares issued pursuant to this Plan),
consistent with applicable laws, within twelve (12) months before or after the
Effective Date.  

 

13

 

Upon the Effective Date, the Board may grant
Awards pursuant to this Plan; provided, however, that:  (i) no Option may be exercised prior to
initial stockholder approval of this Plan; (ii) no Option granted pursuant
to an increase in the number of Shares approved by the Board shall be exercised
prior to the time such increase has been approved by the stockholders of the
Company; (iii) in the event that initial stockholder approval is not
obtained within the time period provided herein, all Awards granted hereunder
shall be canceled, any Shares issued pursuant to any Award shall be canceled
and any purchase of Shares issued hereunder shall be rescinded; and
(iv) Awards granted pursuant to an increase in the number of Shares
approved by the Board which increase is not timely approved by stockholders
shall be canceled, any Shares issued pursuant to any such Awards shall be
canceled, and any purchase of Shares subject to any such Award shall be
rescinded.

 

19.          TERM OF
PLAN/GOVERNING LAW.  Unless earlier terminated as
provided herein, this Plan will terminate ten (10) years from the
Effective Date or, if earlier, the date of stockholder approval.  This Plan and all agreements hereunder shall
be governed by and construed in accordance with the laws of the State of
Delaware.

 

20.          AMENDMENT
OR TERMINATION OF PLAN.  Subject to Section 5.9
hereof, the Board may at any time terminate or amend this Plan in any respect,
including without limitation amendment of any form of Award Agreement or
instrument to be executed pursuant to this Plan; provided, however, that the
Board will not, without the approval of the stockholders of the Company, amend
this Plan in any manner that requires such stockholder approval pursuant to the
Regulations or the Code or the regulations promulgated thereunder as such
provisions apply to ISO plans.

 

21.          NONEXCLUSIVITY
OF THE PLAN.  Neither the adoption of this
Plan by the Board, the submission of this Plan to the stockholders of the
Company for approval, nor any provision of this Plan will be construed as
creating any limitations on the power of the Board to adopt such additional
compensation arrangements as it may deem desirable, including, without
limitation, the granting of stock options and other equity awards otherwise
than under this Plan, and such arrangements may be either generally applicable
or applicable only in specific cases.

 

22.          DEFINITIONS.  As used in this Plan, the
following terms will have the following meanings:

 

“Award” means any
award under this Plan, including any Option or Restricted Stock Award.

 

“Award Agreement”
means, with respect to each Award, the signed written agreement between the
Company and the Participant setting forth the terms and conditions of the
Award, including the Stock Option Agreement and Restricted Stock Agreement.

 

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

 

“Cause” means Termination
because of (i) any willful, material violation by the Participant of any
law or regulation applicable to the business of the Company or a Parent or
Subsidiary of the Company, the Participant’s conviction for, or guilty plea to,
a felony or a crime 

 

14

 

involving moral turpitude, or any willful
perpetration by the Participant of a common law fraud, (ii) the
Participant’s commission of an act of personal dishonesty which involves
personal profit in connection with the Company or any other entity having a
business relationship with the Company, (iii) any material breach by the
Participant of any provision of any agreement or understanding between the
Company or any Parent or Subsidiary of the Company and the Participant
regarding the terms of the Participant’s service as an employee, officer,
director or consultant to the Company or a Parent or Subsidiary of the Company,
including without limitation, the willful and continued failure or refusal of
the Participant to perform the material duties required of such Participant as
an employee, officer, director or consultant of the Company or a Parent or
Subsidiary of the Company, other than as a result of having a Disability, or a
breach of any applicable invention assignment and confidentiality agreement or
similar agreement between the Company or a Parent or Subsidiary of the Company
and the Participant, (iv) Participant’s disregard of the policies of the
Company or any Parent or Subsidiary of the Company so as to cause loss, damage
or injury to the property, reputation or employees of the Company or a Parent
or Subsidiary of the Company, or (v) any other misconduct by the
Participant which is materially injurious to the financial condition or
business reputation of, or is otherwise materially injurious to, the Company or
a Parent or Subsidiary of the Company.

 

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

 

“Committee” means the
committee created and appointed by the Board to administer this Plan, or if no
committee is created and appointed, the Board.

 

“Company” means
SEMILEDS CORPORATIOAN, or any successor corporation.

 

“Disability” means a
disability, whether temporary or permanent, partial or total, as determined by
the Committee.

 

“Exercise Price” means
the price at which a holder of an Option may purchase the Shares issuable upon
exercise of the Option.

 

“Fair Market Value”
means, as of any date, the value of a share of the Company’s Common Stock
determined as follows:

 

(a)           if such Common Stock is then
quoted on the Nasdaq National Market, its closing price on the Nasdaq National
Market on the date of determination as reported in The Wall Street Journal;

 

(b)           if such Common Stock is
publicly traded and is then listed on a national securities exchange, its
closing price on the date of determination on the principal national securities
exchange on which the Common Stock is listed or admitted to trading as reported
in The Wall Street Journal;

 

(c)           if such Common Stock is
publicly traded but is not quoted on the Nasdaq National Market nor listed or
admitted to trading on a national securities exchange, the average of the
closing bid and asked prices on the date of determination as reported by The
Wall  

 

15

 

Street Journal (or, if not so reported, as
otherwise reported by any newspaper or other source as the Board may
determine); or

 

(d)           if none of the foregoing is
applicable, by the Committee in good faith.

 

“Option” means an
award of an option to purchase Shares pursuant to Section 5 hereof.

 

“Parent” means any
corporation (other than the Company) in an unbroken chain of corporations
ending with the Company if each of such corporations other than the Company
owns stock representing 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.

 

“Participant” means a
person who receives an Award under this Plan.

 

“Plan” means this
SEMILEDS CORPORATION 2005 Equity Incentive Plan, as amended from time to time.

 

“Purchase Price” means
the price at which a Participant may purchase Restricted Stock.

 

“Restricted Stock”
means Shares purchased pursuant to a Restricted Stock Award.

 

“Restricted Stock Award”
means an award of Shares pursuant to Section 6 hereof.

 

“SEC” means the
Securities and Exchange Commission.

 

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

 

“Shares” means shares
of the Company’s Class B Common Stock, reserved for issuance under this
Plan, as adjusted pursuant to Sections 2 and 17 hereof, and any successor
security.  Class B Common Stock and Class A
Common Stock have identical rights, except that Class B Common Stock has
no voting right.

 

“Subsidiary” means any
corporation (other than the Company) in an unbroken chain of corporations
beginning with the Company if each of the corporations other than the last
corporation in the unbroken chain owns stock representing 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.

 

“Termination” or “Terminated” means,
for purposes of this Plan with respect to a Participant, that the Participant
has for any reason ceased to provide services as an employee, officer, director
or consultant to the Company or a Parent or Subsidiary of the Company.  A Participant will not be deemed to have
ceased to provide services in the case of (i) sick leave,
(ii) military leave, or (iii) any other leave of absence approved by
the Committee, provided that such leave is for a period of not more than ninety
(90) days (a) unless reinstatement (or, in the case of an employee with an
ISO, reemployment) upon the expiration of such leave is guaranteed 

 

16

 

by contract or statute, or (b) unless
provided otherwise pursuant to formal policy adopted from time to time by the
Company’s Board and issued and promulgated in writing.  In the case of any Participant on (i) sick
leave, (ii) military leave or (iii) an approved leave of absence, the
Committee may make such provisions respecting suspension of vesting of the
Award while on leave from the Company or a Parent or Subsidiary of the Company
as it may deem appropriate, except that in no event may an Option be exercised
after the expiration of the term set forth in the Stock Option Agreement.  The Committee will have sole discretion to
determine whether a Participant has ceased to provide services and the
effective date on which the Participant ceased to provide services (the “Termination Date”).

 

“Unvested Shares”
means “Unvested Shares”
as defined in the Award Agreement.

 

“Vested Shares” means “Vested Shares” as
defined in the Award Agreement.

 

17

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