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EXHIBIT 10.6
 

STUDIO ONE MEDIA, INC.
 
2009 Long-Term Incentive Plan
 
 
 
1.             Purposes of the Plan.  The Company, by means of the Plan, seeks
to attract and retain the best available qualified personnel for positions of
substantial responsibility, such as Employees, Directors and Consultants, and to
provide additional incentives to such personnel to exert maximum efforts for the
success of the Company.
 
The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock
Options, and Restricted Stock Awards.
 
2.             Definitions.  As used herein, the following definitions shall
apply:
 
“Administrator” means the Board or any of its Committees as shall be
administering the Plan in accordance with Section 4 hereof.
 
“Applicable Laws” means the requirements relating to the administration of stock
option plans under U.S. state laws, U.S. federal laws, the Code, the rules and
regulations of any stock exchange or quotation system on which the Common Stock
is listed or quoted and the applicable laws of any other country or jurisdiction
where Options or Stock Awards are granted under the Plan.
 
“Awardholder” means the holder of an outstanding Option or Stock Award granted
under the Plan.
 
“Board” means the Board of Directors of the Company.
 
“Cause” shall, with respect to any Participant, have the meaning specified in
the Award Agreement.  In the absence of any definition in the Award Agreement,
“Cause” shall have the equivalent meaning or the same meaning as “cause” or “for
cause” set forth in any employment, consulting, change in control or other
agreement for the performance of services between the Participant and the
Company or a Related Entity or, in the absence of any such definition in such
agreement, such term shall mean (i) the failure by the Participant to perform
his or her duties as assigned by the Company (or a Related Entity) in a
reasonable manner, (ii) any violation or breach by the Participant of his or her
employment, consulting or other similar agreement with the Company (or a Related
Entity), if any, (iii) any violation or breach by the Participant of his or her
confidential information and invention assignment, non-competition,
non-solicitation, non-disclosure and/or other similar agreement with the Company
or a Related Entity, if any, (iv) any act by the Participant of dishonesty or
bad faith with respect to the Company (or a Related Entity), (v) any material
violation or breach by the Participant of the Company’s or a Related Entity’s
policy for employee conduct, if any, (vi) use of alcohol, drugs or other similar
substances in a manner that adversely affects the Participant’s work
performance, or (vii) the commission by the Participant of any act, misdemeanor,
or crime reflecting unfavorably upon the Participant or the Company or any
Related Entity.  The good faith determination by the Plan Administrator of
whether the Participant’s continuous service was terminated by the Company for
“Cause” shall be final and binding for all purposes hereunder.
 
 
 
 
 
 
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“Change in Control” means the occurrence, in a single transaction or in a series
of related transactions, of any one or more of the following events:
 
(i)           any “person” (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act) (an “Exchange Act Person”) becomes the “beneficial owner” (as
defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of
securities of the Company representing more than fifty percent (50%) of the
combined voting power of the Company’s then outstanding securities other than by
virtue of a merger, consolidation or similar transaction.  Notwithstanding the
foregoing, a Change in Control shall not be deemed to occur (A) on account of
the acquisition of securities of the Company by any institutional investor, any
affiliate thereof or any other Exchange Act Person that acquires the Company’s
securities in a transaction or series of related transactions that are primarily
a private financing transaction for the Company or (B) solely because the level
of ownership held by any Exchange Act Person (the “Subject Person”) exceeds the
designated percentage threshold of the outstanding voting securities as a result
of a repurchase or other acquisition of voting securities by the Company
reducing the number of voting securities outstanding, provided that if a Change
in Control would occur (but for the operation of this sentence) as a result of
the acquisition of voting securities by the Company, and after such acquisition,
the Subject Person becomes the owner of any additional voting securities that,
assuming the repurchase or other acquisition had not occurred, increases the
percentage of the then outstanding voting securities owned by the Subject Person
over the designated percentage threshold, then a Change in Control shall be
deemed to occur;
 
(ii)           there is consummated a merger, consolidation or similar
transaction involving (directly or indirectly) the Company if, immediately after
the consummation of such merger, consolidation or similar transaction, the
stockholders of the Company immediately prior thereto do not own, directly or
indirectly, either (A) outstanding voting securities representing more than
fifty percent (50%) of the combined outstanding voting power of the surviving
entity in such merger, consolidation or similar transaction or (B) more than
fifty percent (50%) of the combined outstanding voting power of the parent of
the surviving entity in such merger, consolidation or similar transaction; or
 
(iii)           there is consummated a sale, lease, exclusive license or other
disposition of all or substantially all of the consolidated assets of the
Company and its Subsidiaries, other than a sale, lease, exclusive license or
other disposition of all or substantially all of the consolidated assets of the
Company and its Subsidiaries to an entity, more than fifty percent (50%) of the
combined voting power of the voting securities of which are owned by
stockholders of the Company in substantially the same proportion as their
ownership of the Company immediately prior to such sale, lease, license or other
disposition.
 
The term Change in Control shall not include a sale of assets, merger or other
transaction effected exclusively for the purpose of changing the domicile of the
Company.
 

 
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Notwithstanding the foregoing or any other provision of this Plan, the
definition of Change in Control (or any analogous term) in an individual written
agreement between the Company or any affiliate and the Awardholder shall
supersede the foregoing definition with respect to Stock Awards or Options
subject to such agreement (it being understood, however, that if no definition
of Change in Control or any analogous term is set forth in such an individual
written agreement, the foregoing definition shall apply).
 
 
“Code” means the Internal Revenue Code of 1986, as amended.
 
“Committee” means a committee of Directors or other individuals satisfying
Applicable Laws appointed by the Board in accordance with Section 4 hereof.
 
“Common Stock” means the common stock of the Company, par value $0.001 per
share.
 
“Company” means Studio One Media, Inc., a Delaware corporation.
 
“Consultant” means any person who is engaged by the Company or any Parent or
Subsidiary to render consulting or advisory services to such entity.
 
“Corporate Transaction” means the occurrence, in a single transaction or in a
series of related transactions, of any one or more of the following events:
 
(i)           a sale, lease or license, or other disposition of all or
substantially all, as determined by the Board, of the consolidated assets of the
Company and its Subsidiaries;
 
(ii)           a sale or other disposition of at least thirty percent (30%) of
the outstanding securities of the Company; or
 
(iii)           a merger, consolidation or similar transaction whether or not
the Company is the surviving Company.
 
“Director” means a member of the Board.
 
“Disability” means total and permanent disability as defined in Section 22(e)(3)
of the Code.
 
“Employee” means any person, including officers and Directors, employed by the
Company or any Parent or Subsidiary of the Company.  Neither service as a
Director nor payment of a director’s fee by the Company shall be sufficient to
constitute “employment” by the Company.
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
 
“Fair Market Value” means, as of any date, the value of Common Stock determined
as follows:
 
 

 
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(i)           If the Common Stock is listed on any established stock exchange or
a national market system, including without limitation the Nasdaq National
Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market
Value shall be the closing sales price for such stock (or the closing bid, if no
sales were reported) as quoted on such exchange or system on the day of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;
 
(ii)           If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high bid and low asked prices for the Common Stock
on the day of determination; or
 
(iii)           In the absence of an established market for the Common Stock,
the Fair Market Value thereof shall be determined in good faith by the
Administrator.
 
“Good Reason” shall, with respect to any Participant, have the meaning specified
in the Award Agreement.  In the absence of any definition in the Award
Agreement, “Good Reason” shall have the equivalent meaning (or the same meaning
as “good reason” or “for good reason”) set forth in any employment, consulting,
change in control or other agreement for the performance of services between the
Participant and the Company or a Related Entity or, in the absence of any such
definition in such agreement(s), such term shall mean (i) the assignment to the
Participant of any duties inconsistent in any material respect with the
Participant’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as assigned by the Company
(or a Related Entity) or any other action by the Company (or a Related Entity)
which results in a material diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the Company
(or a Related Entity) promptly after receipt of notice thereof given by the
Participant; (ii) any failure by the Company (or a Related Entity) to comply
with its obligations to the Participant as agreed upon, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company (or a Related Entity) promptly after receipt of notice
thereof given by the Participant; (iii) the Company’s (or Related Entity’s)
requiring the Participant to be based at any office or location more than fifty
(50) miles from the location of employment as of the date of Award, except for
travel reasonably required in the performance of the Participant’s
responsibilities; (iv) any purported termination by the Company (or a Related
Entity) of the Participant’s continuous service otherwise than for Cause, as
defined Section 2(e), death, or by reason of the Participant’s Disability as
defined in Section 2(o); or (v) any reduction in the Participant’s base salary
(unless such reduction is part of Company-wide reduction that affects a majority
of the persons of comparable level to the Participant).  The Participant must
give the Company written notice of any event the Participant believes
constitutes Good Reason.  Such notice must be delivered to the Company within 90
days of the first occurrence of such event and the Company shall have 30 days to
cure, if possible.
 
“Incentive Stock Option” means an Option intended to qualify as an “incentive
stock option” within the meaning of Section 422 of the Code.
 
“Nonstatutory Stock Option” means an Option not intended to qualify as an
Incentive Stock Option.
 
 
 

 
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“Option” means a stock option granted pursuant to the Plan.
 
“Option Agreement” means a written or electronic agreement between the Company
and an Awardholder evidencing the terms and conditions of an individual
Option.  The Option Agreement is subject to the terms and conditions of the
Plan.
 
“Optioned Stock” means the Common Stock subject to an Option or a Stock Award.
 
“Parent” means a “parent corporation,” whether now or hereafter existing, as
defined in Section 424(e) of the Code.
 
“Plan” means this 2008 Long-Term Incentive Plan.
 
“Restricted Stock” means Shares issued pursuant to a Stock Award or Shares of
restricted stock issued pursuant to an Option that are subject to a repurchase
option by the Company.
 
“Restricted Stock Agreement”  means a written or electronic agreement between
the Company and the Awardholder evidencing the terms and conditions of the
individual Stock Award.  The Restricted Stock Agreement is subject to the terms
and conditions of the Plan.
 
“Securities Act” means the Securities Act of 1933, as amended.
 
“Service Provider” means an Employee, Director or Consultant.
 
“Share” means a share of the Common Stock, as adjusted in accordance with
Section 13 below.
 
“Stock Award” means a right to receive or purchase Common Stock pursuant to
Section 11 below.
 
“Subsidiary” means a “subsidiary corporation,” whether now or hereafter
existing, as defined in Section 424(f) of the Code.
 
3.             Stock Subject to the Plan.
 
General.  Subject to the provisions of Section 13 of the Plan, the maximum
aggregate number of Shares that may be issued under the Plan is One Million Five
Hundred Thousand (1,500,000) Shares.  The Shares may be authorized but unissued,
or reacquired Common Stock.
 
Availability of Shares Not Delivered under Awards.
 
(i)           If any Shares subject to an Option or Stock Award, are forfeited,
expire or otherwise terminate without issuance of such Shares, or any Option or
Stock Award, is settled for cash or otherwise does not result in the issuance of
all or a portion of the Shares subject to such Option or Stock Award, the Shares
shall, to the extent of such forfeiture, expiration, termination, cash
settlement or non-issuance, again be available for Award under the Plan, subject
to Section 3(b)(iv) below.
 
 
 
 
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(ii)           If any Shares issued pursuant to an Option or Stock Award are
forfeited back to or repurchased by the Company, including, but not limited to,
any repurchase or forfeiture caused by the failure to meet a contingency or
condition required for the vesting of such shares, then the Shares not acquired
under such Option or Stock Award shall revert to and again become available for
issuance under the Plan.
 
(iii)           In the event that any Option or Stock Award granted hereunder is
exercised through the tendering of  Shares (either actually or by attestation)
or by the withholding of Shares by the Company, or withholding tax liabilities
arising from such Option or Stock Award are satisfied by the tendering of Shares
(either actually or by attestation) or by the withholding of Shares by the
Company, then only the number of Shares issued net of the Shares tendered or
withheld shall be counted for purposes of determining the maximum number of
Shares available for grant under the Plan.
 
(iv)           Notwithstanding anything in this Section 3(b) to the contrary and
solely for purposes of determining whether Shares are available for the grant of
Incentive Stock Options, the maximum aggregate number of shares that may be
granted under this Plan shall be determined without regard to any Shares
restored pursuant to this Section 3(b) that, if taken into account, would cause
the Plan to fail the requirement under Code Section 422 that the Plan designate
a maximum aggregate number of shares that may be issued.
 
4.             Administration of the Plan.
 
Administrator. The Plan shall be administered by the Board or a Committee
appointed by the Board, which Committee shall be constituted to comply with
Applicable Laws.
 
Powers of the Administrator.  Subject to the provisions of the Plan and, in the
case of a Committee, the specific duties delegated by the Board to such
Committee, and subject to the approval of any relevant authorities, the
Administrator shall have the authority in its discretion:
 
(i)           to determine the Fair Market Value;
 
(ii)           to select the Service Providers to whom Options and Stock
Awards  may from time to time be granted hereunder;
 
(iii)           to approve forms of agreement for use under the Plan;
 
(iv)           to determine the terms and conditions of any Option or Stock
Award granted hereunder.  Such terms and conditions include, but are not limited
to, the exercise price, the number of Shares subject to the award, the time or
times when Options or Stock Awards may be exercised (which may be based on
performance criteria), any vesting acceleration or waiver of forfeiture
restrictions, and any restriction or limitation regarding any Option or Stock
Award or the Common Stock relating thereto, based in each case on such factors
as the Administrator, in its sole discretion, shall determine;
 
 

 
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(v)           to prescribe, amend and rescind rules and regulations relating to
the Plan, including rules and regulations relating to sub-plans established for
the purpose of satisfying applicable foreign laws;
 
(vi)           to allow or require Awardholders to satisfy withholding tax
obligations by electing to have the Company withhold from the Shares to be
issued upon exercise of an Option or Stock Award that number of Shares having a
Fair Market Value equal to the minimum amount required to be withheld.  The Fair
Market Value of the Shares to be withheld shall be determined on the date that
the amount of tax to be withheld is to be determined.  All elections by
Awardholders to have Shares withheld for this purpose shall be made in such form
and under such conditions as the Administrator may deem necessary or advisable;
and
 
(vii)           to construe and interpret the terms of the Plan and Options
granted pursuant to the Plan.
 
Effect of Administrator’s Decision.  All decisions, determinations and
interpretations of the Administrator shall be final and binding on all
Awardholders.
 
5.             Eligibility.  Nonstatutory Stock Options and Stock Awards may be
granted to Service Providers.  Incentive Stock Options may be granted only to
Employees.
 
6.             Limitations.
 
Incentive Stock Option Limit.  Each Option shall be designated in the Option
Agreement as either an Incentive Stock Option or a Nonstatutory Stock
Option.  However, notwithstanding such designation, to the extent that the
aggregate Fair Market Value of the Shares with respect to which Incentive Stock
Options are exercisable for the first time by the Awardholder during any
calendar year (under all plans of the Company and any Parent or Subsidiary)
exceeds $100,000, such Options shall be treated as Nonstatutory Stock
Options.  For purposes of this Section 6(a), Incentive Stock Options shall be
taken into account in the order in which they were granted.  The Fair Market
Value of the Shares shall be determined as of the time the Option with respect
to such Shares is granted.
 
At-Will Employment.  Neither the Plan nor any Option or Stock Awards shall
confer upon any Awardholder any right with respect to continuing the
Awardholder’s relationship as a Service Provider with the Company, nor shall it
interfere in any way with his or her right or the Company’s right to terminate
such relationship at any time, with or without cause, and with or without
notice.
 
7.             Term of Plan.  Subject to stockholder approval in accordance with
Section 19, the Plan shall become effective upon its adoption by the
Board.  Unless sooner terminated under Section 16, it shall continue in effect
for a term of ten (10) years from the later of (i) the effective date of the
Plan, or (ii) the most recent Board approval of an increase in the number of
Shares reserved for issuance under the Plan (contingent on stockholder approval
of such increase).
 
8.             Term of Option.  The maximum term of each Option shall be stated
in the Option Agreement; provided, however, that the maximum term shall be no
more than ten (10) years from the date of grant thereof.  In the case of an
Incentive Stock Option granted to an Awardholder who, at the time the Option is
granted, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary, the maximum
term of the Option shall be five (5) years from the date of grant or such
shorter term as may be provided in the Option Agreement.
 
 
 
 
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9.             Option Exercise Price and Consideration.
 
Exercise Price.  The per Share exercise price for the Shares to be issued upon
exercise of an Option shall be such price as is determined by the Administrator,
but shall be subject to the following:
 
(i)             In the case of an Incentive Stock Option
 
(A)           granted to an Employee who, at the time of grant of such Option,
owns stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the exercise price
shall be no less than 110% of the Fair Market Value per Share on the date of
grant.
 
(B)           granted to any other Employee, the per Share exercise price shall
be no less than 100% of the Fair Market Value per Share on the date of grant.
 
(ii)            If an Option is granted with a per Share exercise price below
the per Share Fair Market Value of the Common Stock on the grant date, then the
Option shall contain such additional terms as necessary to comply with Section
409A of the Code.
 
(iii)           Notwithstanding the foregoing, Options may be granted with a per
Share exercise price other than as required above pursuant to a merger or other
corporate transaction.
 
Forms of Consideration.  The consideration to be paid for the Shares to be
issued upon exercise of an Option, including the method of payment, shall be
determined by the Administrator (and, in the case of an Incentive Stock Option,
shall be determined at the time of grant).  Such consideration may consist of,
without limitation, (i) cash, (ii) check, (iii) according to a deferred payment
or other similar arrangement with the Awardholder, (iv) other Shares,
(v) consideration received by the Company under a cashless exercise program
implemented by the Company in connection with the Plan, (vi) any other form of
legal consideration as determined by the Administrator or (vii) any combination
of the foregoing methods of payment. In making its determination as to the type
of consideration to accept, the Administrator shall consider if acceptance of
such consideration may be reasonably expected to benefit the Company.  Unless
otherwise specifically provided in the Option, the purchase price of Common
Stock acquired pursuant to an Option that is paid by delivery to the Company of
other Common Stock acquired, directly or indirectly from the Company (or from
the Option itself at or before the time of exercise), shall be paid only by
Shares that have been held for such period of time required to avoid a charge to
earnings for financial accounting purposes.
 
 
 

 
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10.           Exercise of Option.
 
Procedure for Exercise; Rights as a Stockholder.  Any Option granted hereunder
shall be exercisable according to the terms of the Plan at such times and under
such conditions as determined by the Administrator and set forth in the Option
Agreement.  An Option may not be exercised for a fraction of a Share.
 
An Option shall be deemed exercised when the Company receives: (i) written or
electronic notice of exercise (in accordance with the Option Agreement) from the
person entitled to exercise the Option, (ii) full payment for the Shares with
respect to which the Option is exercised and (iii) any additional documentation
required by the Company.  Full payment may consist of any consideration and
method of payment authorized by the Administrator and permitted by the Option
Agreement and the Plan.  Shares issued upon exercise of an Option shall be
issued in the name of the Awardholder or, if requested by the Awardholder, in
the name of the Awardholder and his or her spouse.  Until the Shares are issued
(as evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), no right to vote or receive
allocations of profits or losses or any other rights as a stockholder shall
exist with respect to the Shares, notwithstanding the exercise of the
Option.  The Company shall issue (or cause to be issued) such Shares promptly
after the Option is exercised.  No adjustment will be made for an allocation of
profit or loss or other right for which the record date is prior to the date the
Shares are issued, except as provided in Section 13 of the Plan.   An
Awardholder shall only be entitled to prospective allocations of profit or loss
upon issuance of Shares pursuant to an Option exercise.
 
Exercise of an Option in any manner shall result in a decrease in the number of
Shares thereafter available, both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is exercised.
 
Termination of Relationship as a Service Provider.  If an Awardholder ceases to
be a Service Provider other than due to death or Disability, such Awardholder
may exercise his or her Option within thirty (30) days after the Awardholder
ceases to be a Service Provider or such other period of time as specified in the
Option Agreement (but  in no event later than the expiration of the maximum term
of the Option as set forth in the Plan or, if less, in the Option Agreement),
and only to the extent that the Option is vested and exercisable on the date of
termination.   If an Awardholder ceases to be a Service Provider as a result of
the Awardholder’s death or Disability, the Awardholder (or in the case of the
Awardholder’s death, the Awardholder’s estate, designated beneficiary or by the
person(s) to whom the Option is transferred pursuant to the Awardholder’s will
or in accordance with the laws of descent and distribution) may exercise the
Awardholder’s Option within six (6) months of termination, or such longer period
of time as specified in the Option Agreement, to the extent the Option is vested
and exercisable on the date of termination (but in no event later than the
expiration of the term of such Option as set forth in the Option Agreement).  On
the date of termination, any Shares subject to the Option that are not vested or
subject to vesting acceleration may not be exercised by the Awardholder and
shall revert to the Plan.  If, after termination, the Awardholder does not
exercise his or her Option within the time specified by the Administrator, the
Option shall terminate, and the Shares covered by such Option shall revert to
the Plan.
 
 
 
 

 
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Leaves of Absence.
 
(i)           Unless the Administrator provides otherwise, vesting of Options
granted hereunder to Service Providers shall be suspended during any unpaid
leave of absence in excess of ninety (90) days.
 
(ii)           A Service Provider shall not cease to be an Employee in the case
of (A) any leave of absence approved by the Company or (B) transfers between
locations of the Company or between the Company, its Parent, any Subsidiary, or
any successor.
 
(iii)           For purposes of Incentive Stock Options, no such leave may
exceed ninety (90) days, unless reemployment upon expiration of such leave is
guaranteed by statute or contract.  If reemployment upon expiration of a leave
of absence approved by the Company is not so guaranteed, then three (3) months
following the 91st day of such leave, any Incentive Stock Option held by the
Awardholder shall cease to be treated as an Incentive Stock Option and shall be
treated for tax purposes as a Nonstatutory Stock Option.
 
11.           Stock Awards.
 
Rights to Purchase.  Stock Awards may be issued either alone, in addition to, or
in tandem with other awards granted under the Plan and/or cash awards made
outside of the Plan.  After the Administrator determines that it will offer
Stock Awards under the Plan, it shall advise the offeree in writing or
electronically of the terms, conditions and restrictions related to the offer,
including the number of Shares that such person shall be entitled to purchase,
the price to be paid, and the time within which such person must accept such
offer.  The offer shall be accepted by execution of a Restricted Stock Agreement
in the form determined by the Administrator.
 
Forfeiture or Repurchase Option.  Unless the Administrator determines otherwise,
the Restricted Stock Agreement shall grant the Company a forfeiture right or
repurchase option (depending upon whether the Awardholder paid for such Stock
Award) exercisable upon termination of the purchaser’s service with the Company
for any reason (including death or disability).  The forfeiture right or
repurchase option shall lapse at such rate as the Administrator may determine.
 
Other Provisions.  The Restricted Stock Agreement shall contain such other
terms, provisions and conditions not inconsistent with the Plan as may be
determined by the Administrator in its sole discretion.
 
Rights as a Stockholder.  Once the Stock Award is exercised, the purchaser shall
have rights equivalent to those of a stockholder and shall be a stockholder when
his or her purchase is entered upon the records of the duly authorized transfer
agent of the Company.  No adjustment shall be made for a dividend or other right
for which the record date is prior to the date the Stock Award is exercised,
except as provided in Section 13 of the Plan.
 
12.           Transfer Restrictions for Options, Stock Awards and Shares Issued
Under the Plan.
 
(a)           Transfer Restrictions.
 
 

 
 
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(i)            Limited Transferability of Options and Stock Awards.  Unless
determined otherwise by the Administrator, Options may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or the laws of descent and distribution, and may be exercised during the
lifetime of the Awardholder, only by the Awardholder.  Stock Awards shall be
transferable to the extent provided for by the Administrator in the Restricted
Stock Agreement.
 
(ii)           Restrictions on Transfer of Shares.  Shares received upon the
exercise of an Option or through a Stock Award may not be sold, transferred,
assigned, pledged, encumbered or otherwise disposed of, except in accordance
with the Plan.  Except as otherwise provided in the Option Agreement or
Restricted Stock Agreement, such restrictions on transfer, however, will not
apply to (i) a gratuitous transfer of the Shares, provided, and only if,
Awardholder obtains the Company’s prior written consent to such transfer, (ii) a
transfer of title to the Shares effected pursuant to Awardholder’s will or the
laws of intestate succession, or (c) a transfer to the Company in pledge as
security for any purchase-money indebtedness incurred by Awardholder in
connection with the acquisition of the Shares.
 
(iii)           Transferee Obligations.  Each person (other than the Company) to
whom the Shares are transferred by means of one of the permitted transfers
specified in Section 12(a)(ii) must, as a condition precedent to the validity of
such transfer, acknowledge in writing to the Company that such person is bound
by the provisions of this Agreement, to the same extent the Shares would be so
subject if retained by Awardholder.
 
(b)           Company’s Right of First Refusal.
 
(i)           Before any Shares held by Awardholder may be sold or otherwise
transferred (including any assignment, pledge, encumbrance or other disposition
of the Shares, but not including a permitted transfer under Section 12(a)(ii)),
the Company or its assignee will have an assignable right of first refusal to
purchase the Shares on the terms and conditions set forth in this Section 12(b)
(the “Right of First Refusal”).  Such Right of First Refusal shall terminate
after the earlier of a Change in Control where the successor corporation or its
parent has shares that are publicly traded.
 
(ii)           In the event Awardholder desires to accept a bona fide
third-party offer for the sale or transfer of any or all of the Shares,
Awardholder will promptly deliver to the Company a written notice (the “Notice”)
stating the terms and conditions of any proposed sale or transfer, including
(a) Awardholder’s bona fide intention to sell or otherwise transfer such Shares,
(b) the name of each proposed purchaser or other transferee (the “Proposed
Transferee”), (c) the number of Shares to be transferred to each Proposed
Transferee, and (d) the bona fide cash price or other consideration for which
Awardholder proposes to transfer the Shares (the “Offered Price”).  Awardholder
will provide satisfactory proof that the disposition of such shares to such
Proposed Transferee would not be in contravention of the provisions of
Section 12(a) and Awardholder will offer to sell the Shares at the Offered Price
to the Company.
 
(iii)           At any time within thirty (30) days after receipt of the Notice,
the Company or its assignee may, by giving written notice to Awardholder, elect
to purchase all or any portion of the Shares proposed to be transferred to any
one or more of the Proposed Transferees, at the purchase price determined in
accordance with Section 12(b)(iv).
 
 
 
 
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(iv)           The purchase price for the Shares purchased under this
Section 12(b) will be the Offered Price.  If the Offered Price includes
consideration other than cash, the cash equivalent value of the noncash
consideration will be determined by the Board in good faith.
 
(v)           Payment of the purchase price will be made, in the discretion of
the Administrator, either (a) in cash (by check), by cancellation of all or a
portion of any outstanding indebtedness of Awardholder to the Company or such
assignee, or by any combination thereof, within thirty (30) days after receipt
of the Notice or (b) in the manner and at the time(s) set forth in the Notice.
 
(vi)           If any of the Shares proposed in the Notice to be transferred to
a given Proposed Transferee are not purchased by the Company and/or its assignee
as provided in this Section, then Awardholder may sell or otherwise transfer
such Shares to that Proposed Transferee at the Offered Price or at a higher
price; provided that such sale or other transfer is consummated within 60 days
after the date of the Notice; and provided, further, that any such sale or other
transfer is effected in accordance with any applicable securities laws and the
Proposed Transferee agrees in writing that the provisions of this Section will
continue to apply to the Shares in the hands of such Proposed Transferee.  If
the Shares described in the Notice are not transferred to the Proposed
Transferee within such period, or if Awardholder proposes to change the price or
other terms to make them more favorable to the Proposed Transferee, a new Notice
will be given to the Company, and the Company or its assignee will again be
offered the Right of First Refusal before any Shares held by Awardholder may be
sold or otherwise transferred.
 
(vii)           Notwithstanding any other provision of this Agreement,
Awardholder may not deliver a Notice and the Company may not exercise the Right
of First Refusal earlier than six months and one day following the date of this
Agreement (or any shorter period sufficient to avoid a charge to the Company’s
earnings for financial reporting purposes).
 
(c)           Vested Share Repurchase Right.
 
(i)           The Company or its assignee will have the right to repurchase the
Shares (the “Vested Share Repurchase Right”) in the event Awardholder terminates
as a Service Provider for any reason whatsoever, including, without limitation,
termination with or without Disability, death or cause.  Such Vested Share
Repurchase Right shall terminate immediately after a Change in Control where the
successor corporation or its parent has shares that are publicly traded.
 
(ii)           The Company may exercise the Vested Share Repurchase Right by
giving Awardholder written notice within sixty (60) days after the date of
Awardholder’s termination as a Service Provider (or exercise of the Option, if
later).  Such notice will indicate the Company’s election to exercise the Vested
Share Repurchase Right, the number of Shares to be repurchased by the Company
and the per-share repurchase price.  If the Company fails to give notice within
such sixty (60) day period, the Vested Share Repurchase Right will terminate
unless, to the extent permitted by applicable law, Awardholder and the Company
have extended the time for the exercise of the Vested Share Repurchase Right.
 
 
 
 
 
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(iii)           Payment of the repurchase price will be made, at the option of
the Company, either in cash (by check), by cancellation of all or a portion of
any outstanding indebtedness of Awardholder to the Company, or by any
combination thereof, within thirty (30) days after the Company mails written
notice of exercise of the Vested Share Repurchase Right.  No interest will be
paid on such amount.
 
(iv)           The repurchase price for the Shares subject to the Vested Share
Repurchase Right will be equal to the aggregate Fair Market Value of such Shares
on the date the Company mails written notice of exercise of the Vested Share
Repurchase Right, as determined by the Board.  Awardholder will deliver the
certificate(s) representing the Shares subject to the Vested Share Repurchase
Right, duly endorsed for transfer to the Company, at the same time the Company
delivers payment to Awardholder.
 
(v)           Notwithstanding any other provision of this Agreement, the Company
may not exercise the Vested Share Repurchase Right earlier than six months and
one day following the date of this Agreement (or any shorter period sufficient
to avoid a charge to the Company’s earnings for financial reporting purposes)
(the “Holding Period”).  To the extent a Holding Period is necessary to avoid
such an accounting charge and to the extent permitted by applicable law, the
sixty (60) day period specified in Section 12(c)(ii) will begin to run on the
last day of such Holding Period.
 
(d)           Legends.  All certificates evidencing Shares subject to the
Transfer provisions set forth in this Section shall bear the following legend,
in addition to any legend(s) required for reasons not related to this Agreement:
 
"The shares represented hereby may not be sold, assigned, transferred,
encumbered or in any manner disposed of, except in compliance with the terms of
a written stock repurchase agreement between the Company and the registered
holder of the shares (or the predecessor in interest to the shares).  Such
Agreement grants to the Company certain repurchase rights upon the occurrence of
certain events.  The Secretary of the Company will upon written request furnish
a copy of such Agreement to the holder hereof without charge."
 
13.           Adjustments; Dissolution or Liquidation; Merger or Corporate
Transaction.
 
Adjustments.  In the event that any dividend or other distribution (whether in
the form of cash, Shares, other securities, or other property),
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, or exchange of
Shares or other securities of the Company, or other change in the corporate
structure of the Company affecting the Shares occurs, the Administrator, in
order to prevent diminution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, shall adjust the number, kind,
type and class of Shares that may be delivered under the Plan and/or the number,
kind, type, class, and exercise price of Shares covered by each outstanding
Option or Stock Award.
 
 
 
 

 
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Dissolution or Liquidation.  In the event of the proposed dissolution or
liquidation of the Company, the Administrator shall notify each Awardholder as
soon as practicable prior to the effective date of such proposed
transaction.  To the extent it has not been previously exercised, an Option will
terminate immediately prior to the consummation of such proposed action.
 
Corporate Transaction.  In the event of a Corporate Transaction, each
outstanding Option shall be assumed, continued or an equivalent option
substituted by the successor corporation or a Parent of the successor
corporation (together, the “Successor Corporation”).  In the event that the
Successor Corporation in a Corporate Transaction refuses to assume, continue or
substitute for the Option, then the Option shall terminate immediately prior to
the close of the Corporate Transaction.  The Administrator, in its sole
discretion, shall determine whether each Option is assumed, continued,
substituted or terminated.  To the extent that the agreement relating to the
Corporate Transaction provides for the treatment of each Option, the treatment
in such agreement shall be determinative for the treatment of each Option for
purposes of this Plan.  If such Option shall terminated immediately prior to and
contingent upon a Corporate Transaction, the Administrator shall provide the
Awardholder notice of such termination and a period of at least one business day
to exercise such Option prior to is termination in accordance with its terms.
 
In the event that the Successor Corporation in a Corporate Transaction refuses
to assume, continue or substitute for an Option, then the Awardholder shall
fully vest in and have the right to exercise such Option as to all of the Shares
subject to such Option, including Shares as to which such Option would not
otherwise be vested or exercisable.  If an Option becomes fully vested and
exercisable in lieu of assumption, continuation or substitution in the event of
a Corporate Transaction, the Administrator shall notify the Awardholder in
writing or electronically that the Option shall be fully exercisable immediately
prior to the close of the Corporate Transaction.  For the purposes of this
Section, the Option shall be considered assumed, continued or substituted if,
following the Corporate Transaction, the assumed, continued or substituted
option or right confers the right to purchase or receive, for each Share subject
to the Option immediately prior to the Corporate Transaction, the consideration
(whether stock, cash, or other securities or property) received in the Corporate
Transaction by holders of Common Stock for each Share held on the effective date
of the transaction (and if holders were offered a choice of consideration, the
type of consideration chosen by the holders of a majority of the outstanding
Shares); provided, however, that if such consideration received in the Corporate
Transaction is not solely common stock of the Successor Corporation, the
Administrator may, with the consent of the Successor Corporation, provide for
the consideration to be received upon the exercise of the Option, for each Share
subject to the Option, to be solely common stock of the Successor Corporation
equal in fair market value to the per share consideration received by holders of
common stock in the Corporate Transaction.
 
In the event of a Corporate Transaction, any reacquisition or repurchase rights
held by the Company in respect of Common Stock issued pursuant to a Stock Award
(the “Repurchase Rights”) may continue or be assigned by the Company to the
Successor Corporation, in connection with such Corporate Transaction.  In the
event any Repurchase Rights are not continued or assigned to the Successor
Corporation, then such Repurchase Rights shall lapse and the Stock Award shall
be fully vested as of the effective date of the Corporate Transaction.
 
 
 

 
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The Administrator, in its discretion, may (but is obligated to) either (x)
accelerate the vesting of any Options and Stock Awards (including permitting the
lapse of any repurchase rights held by the Company) and, if applicable, the time
at which any Option may be exercised, in full or as to some percentage of the
Option or Stock Award to a date prior to the effective time of a Corporate
Transaction contingent upon the effectiveness of such Corporate Transaction or
(y) provide for a cash payment in exchange for the termination of any Option or
Stock Award or any portion thereof contingent upon the effectiveness of such
Corporate Transaction.
 
Change of Control.  The Administrator may, in its discretion, provide for the
acceleration of vesting of Options or Stock Awards in the individual Option or
Restricted Stock Agreements.
 
14.           Code Section 409A.  If and to the extent that the Administrator
believes that any Options or Stock Awards may constitute a “nonqualified
deferred compensation plan” under Section 409A of the Code, the terms and
conditions set forth in the respective Option or Restricted Stock Agreement for
such  Options or Stock Award shall be drafted in a manner that is intended to
comply with, and shall be interpreted in a manner consistent with, the
applicable requirements of Section 409A of the Code, unless otherwise agreed to
in writing by the Awardholder and the Company.
 
15.           Time of Granting Options and Stock Awards.  The date of grant of
an Option or Stock Award shall, for all purposes, be the date on which the
Administrator makes the determination granting such Option or Stock Award, or
such later date as is determined by the Administrator.  Notice of the
determination shall be given to each Service Provider to whom an Option or Stock
Award is so granted within a reasonable time after the date of such grant.
 
16.           Amendment and Termination of the Plan.
 
Amendment and Termination.  The Administrator may at any time amend, alter,
suspend or terminate the Plan.
 
Stockholder Approval.  The Administrator shall obtain stockholder approval of
any Plan amendment to the extent the Administrator deems necessary and desirable
to comply with Applicable Laws.
 
Effect of Amendment or Termination.  No amendment, alteration, suspension or
termination of the Plan shall impair the rights of any Awardholder, unless
mutually agreed otherwise between the Awardholder and the Administrator, which
agreement must be in writing and signed by the Awardholder and the
Company.  Termination of the Plan shall not affect the Administrator’s ability
to exercise the powers granted to it hereunder with respect to Options granted
under the Plan prior to the date of such termination.
 
Amendment of Options and Stock Awards.  The Administrator may at any time, and
from time to time, amend the terms of any one or more Options or Stock Awards;
provided, however, that the rights under any Option or Stock Award shall not be
impaired by any such amendment unless the Awardholder consents in writing.
 

 
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17.           Conditions Upon Issuance of Shares.
 
Legal Compliance.  Shares shall not be issued pursuant to the exercise of an
Option or Stock Award unless the exercise of such Option or Stock Award and the
issuance and delivery of such Shares shall comply with Applicable Laws and shall
be further subject to the approval of counsel for the Company with respect to
such compliance.
 
Investment Representations.  As a condition to the exercise of an Option or
Stock Purchase Right, the Administrator may require the person exercising such
Option or Stock Award to represent and warrant at the time of any such exercise
that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for
the Company, such a representation is required.
 
18.           Inability to Obtain Authority.  The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company’s counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
 
19.           Stockholder Approval.  At the discretion of the Board, in order to
comply with the requirements for the grant of Incentive Stock Options or any
Applicable Laws, the Plan shall be subject to approval by the stockholders of
the Company within twelve (12) months after the date the Plan is adopted.  Such
stockholder approval shall be obtained in the degree and manner required under
Applicable Laws.
 
 

 
 
 
 
 
 
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