SYNACOR, INC.
INDUCEMENT GRANT
NOTICE OF STOCK OPTION GRANT
(EARLY EXERCISE)

The Optionee whose name is set forth below has been granted the following option
to purchase shares of the common stock of Synacor, Inc. (the “Company”):
 
Name of Optionee:
 
Himesh Bhise
 
Total Number of Shares:
 
2,001,338
 
Type of Option:
 
Nonstatutory Stock Option
 
Exercise Price per Share:
 
$2.38
 
Date of Grant:
 
August 4, 2014
 
Vesting Commencement Date:
 
August 4, 2014
 
Date Exercisable:
 
This option may be exercised at any time after the Date of Grant for all or any
part of the Shares subject to this option.
 
Vesting Schedule:
 
This option vests with respect to the first 25% of the shares subject to this
option when the Optionee completes 12 months of continuous Service (as defined
in the attached Stock Option Agreement) from the Vesting Commencement Date.
Thereafter, this option vests with respect to an additional 2.083% of the shares
subject to this option when the Optionee completes each additional month of
continuous Service. This option may vest on an accelerated basis as set forth in
Section 4 of the Stock Option Agreement.
 
Expiration Date:
 
August 3, 2024. This option expires earlier if the Optionee’s Service terminates
earlier, as described in the Stock Option Agreement, and may terminate earlier
in connection with certain corporate transactions as described in the attached
Stock Option Agreement.

The Optionee and the Company agree that this option is granted under this Notice
of Stock Option Grant and the Stock Option Agreement, which is attached to, and
made a part of, this document.
The Optionee further agrees to accept by email all documents relating to the
Stock Option Agreement or this option (including, without limitation,
prospectuses required by the Securities and Exchange Commission) and all other
documents that the Company is required to deliver to its security holders
(including, without limitation, annual reports and proxy statements). The
Optionee also agrees that the Company may deliver these documents by posting
them on a website maintained by the Company or by a third party under contract
with the Company. If the Company posts these documents on a website, it will
notify the Optionee by email.
The Optionee further agrees to comply with the Company’s Insider Trading Policy
when selling shares of the Company’s common stock.
OPTIONEE
 
 
SYNACOR, INC.
 
 
 
 
 
 
 
/s/ Himesh Bhise
 
 
By:
/s/ Jordan Levy
 
 
 
 
 
Title:
Chairman

    

--------------------------------------------------------------------------------

SYNACOR, INC.
INDUCEMENT GRANT
STOCK OPTION AGREEMENT
WHEREAS, the Optionee is a new Employee who either (i) has not previously served
as an Employee or director of the Company, or (ii) has entered into a new
employment relationship with the Company following a bona fide period of
non-employment; and
WHEREAS, the Compensation Committee of the Board or a majority of the Company’s
Independent Directors has determined that the Optionee shall be granted an
option under this Agreement as an inducement material to the Optionee’s entering
into employment with the Company.
The parties hereby agree to the following:
1.Purpose of Option. The purpose of this option is to provide an inducement
material to the Optionee entering into employment with the Company. This option
is intended to encourage ownership in the Company by an individual whose
long-term employment or other service relationship with the Company is
considered essential to the Company’s continued progress and, thereby, encourage
the Optionee to act in the shareholders’ interest and share in the Company’s
success. This option is intended to be exempt from the shareholder approval
requirements pursuant to the “inducement grant exception” provided by Rule
5635(c)(4) of the Nasdaq Listing Rules.
2.Grant of Option. Subject to all of the terms and conditions set forth in the
Notice of Stock Option Grant, this Agreement, the Company has granted the
Optionee an option to purchase up to the total number of shares specified in the
Notice of Stock Option Grant at the exercise price indicated in the Notice of
Stock Option Grant.
3.Administration of Option.
3.1    Procedures; Administrative Bodies. This Agreement shall be administered
by the Board, the Committee and/or their delegates. To the extent desirable to
qualify transactions hereunder as exempt under Rule 16b-3 promulgated under the
Exchange Act (“Rule 16b-3”), this option shall be granted by the entire Board or
a Committee of two or more “non-employee directors” within the meaning of Rule
16b-3. In order to comply with any applicable Nasdaq or other stock exchange
listing requirements, this option is granted by the Compensation Committee of
the Board or a majority of the Company’s Independent Directors and will be
administered in a manner that complies with such requirements. Except to the
extent prohibited by applicable law, the Administrator may delegate to one or
more individuals the day-to-day administration of this option. Such delegation
may be revoked at any time.
3.2    Powers of the Administrator. Subject to the provisions of this option
and, in the case of a Committee or delegates acting as the Administrator,
subject to the specific duties delegated to such Committee or delegates, the
Administrator shall have the authority, in its discretion to (i) determine the
terms and conditions of this option, including but are not limited to, any
vesting and/or exercisability acceleration or waiver of forfeiture restrictions,
the acceptable forms of consideration, and any restriction or limitation
regarding any Shares relating hereto, (ii) determine whether and to what extent
any performance goals have been attained, (iii) interpret the option, (iv) make,
amend and rescind rules relating to the option, (v) impose such restrictions,
conditions or limitations as it determines appropriate as to the timing and
manner of any resales by the Optionee of any Shares issued pursuant to the
option, including restrictions under an insider trading policy and restrictions
as to the use of a specified brokerage firm for such resales, and (vi) make all
other decisions relating to the operation of the option.
3.3    Effect of Administrator’s Decision. The Administrator’s decisions,
determinations and interpretations shall be final and binding on the Optionee.
4.Exercisability and Vesting.

    

--------------------------------------------------------------------------------

4.1    This option is immediately exercisable with respect to all or any part of
the option (however, this option may not be exercised for fractional shares), as
set forth in the Notice of Stock Option Grant.
4.2    This option vests in accordance with the vesting schedule set forth in
the Notice of Stock Option Grant. In no event will this option vest for
additional shares after the Optionee’s Service has terminated for any reason. In
addition, (a) if the Company undergoes a Change of Control before the Optionee’s
Service terminates and, within twelve months after such Change of Control the
Company (or the surviving corporation) terminates the Optionee’s Service for any
reason other than Cause or Permanent Disability or the Optionee terminates his
Service for Good Reason and a Separation occurs, then (1) if such Change of
Control occurs within the first 12 months of the Optionee’s Service, the vested
portion of this option shall be determined by adding 36 months to the Optionee’s
actual Service, and (2) if such Change of Control occurs after 12 months of the
Optionee’s Service, then 100% of this option will immediately vest and (b) if
the Company terminates the Optionee’s Service for any reason other than Cause or
Permanent Disability or the Optionee terminates his Service for Good Reason, in
each case, prior to a Change of Control, and a Separation occurs, then the
vested portion of this option shall be determined by adding 12 months to the
Optionee’s actual Service.
5.Method of Exercise.

    

--------------------------------------------------------------------------------

5.1    When the Optionee wishes to exercise this option, the Optionee must
notify the Company by filing the proper “Notice of Exercise” form at the address
given on the form or, if the Company has designated a brokerage firm to
administer this option, the Optionee must notify such brokerage firm in the
manner such brokerage firm requires. The Optionee’s notice must specify how many
shares the Optionee wishes to purchase. The notice will be effective when the
Company receives it. However, if the Optionee wishes to exercise this option by
executing a same-day sale (as described below), the Optionee must follow the
instructions of the Company and the broker who will execute the sale. Except in
the case of the Optionee’s death, this option can only be exercised by the
Optionee. If someone else wants to exercise this option after the Optionee’s
death or Permanent Disability, that person must prove to the Company’s
satisfaction that he or she is entitled to do so.
5.2    The entire Exercise Price of Shares issued upon exercise of the option
shall be payable in cash or cash equivalents at the time when such Shares are
purchased. In addition, the Administrator may, in its sole discretion and to the
extent permitted by applicable law, accept payment of all or a portion of the
Exercise Price through any one or a combination of the following forms or
methods:
(a)    By delivering to the Company a personal check, a cashier’s check or a
money order, or arranging for a wire transfer.
(b)    By delivering to the Company certificates for shares of Company stock
that the Optionee owns, along with any forms needed to effect a transfer of
those shares to the Company. The value of the shares, determined as of the
effective date of the option exercise, will be applied to the option exercise
price. Instead of surrendering shares of Company stock, the Optionee may attest
to the ownership of those shares on a form provided by the Company and have the
same number of shares subtracted from the option shares issued to the Optionee;
(c)    By giving to a securities broker approved by the Company irrevocable
directions to sell all or part of the Optionee’s option shares and to deliver to
the Company, from the sale proceeds, an amount sufficient to pay the option
exercise price and any withholding taxes. (The balance of the sale proceeds, if
any, will be delivered to the Optionee.) The directions must be given in
accordance with the instructions of the Company and the broker. This exercise
method is sometimes called a “same-day sale”;
(d)    Subject to such conditions and requirements as the Administrator may
impose from time to time, through a net exercise procedure;
(e)    Through any other form or method consistent with applicable laws,
regulations and rules.
5.3    This option may be exercised only for whole Shares.
5.4    The Company will not permit the Optionee to exercise this option if the
issuance of shares at that time would violate any law or regulation.
5.5    Regardless of any marital property settlement agreement, the Company is
not obligated to honor a notice of exercise from the Optionee’s former spouse,
nor is the Company obligated to recognize the Optionee’s former spouse’s
interest in the Optionee’s option in any other way.
6.Right of Repurchase.
6.1    Until they vest in accordance with the Notice of Stock Option Grant, the
Shares acquired under this Agreement shall be “Restricted Shares”. Except as
permitted by the following sentence, the Optionee may not sell, transfer, pledge
or otherwise dispose of any Restricted Shares without the written consent of the
Company. The Optionee may transfer Restricted Shares to the Optionee’s spouse,
children or grandchildren, or to a trust established by the Optionee for the
benefit of the Optionee, the Optionee’s spouse, children and/or grandchildren. A
transferee of Restricted Shares must agree in writing on a form prescribed by
the Company to be bound by all provisions of this

    

--------------------------------------------------------------------------------

Agreement. If Restricted Shares are subject to a stock split, stock dividend or
similar transaction, then the additional shares the Optionee receive as a result
will also be Restricted Shares.
6.2    If the Optionee’s Service terminates for any reason, the Company may
repurchase any Restricted Shares then held by the Optionee for a purchase price
equal to the lower of (i) the exercise price of each Restricted Share being
repurchased or (ii) the Fair Market Value of such Restricted Share at the time
the right of repurchase is exercised. If the Company wishes to exercise its
right to repurchase the Restricted Shares, it must do so within 120 days of the
termination of the Optionee’s Service. The Company may exercise its right to
repurchase by providing notice to the Optionee, however, the Company will be
deemed to automatically exercise its right of repurchase if it does not notify
the Optionee within 120 days of the termination of the Optionee’s Service that
it is declining to do so.
6.3    If the Company exercises its right to repurchase the Optionee’s
Restricted Shares, the Company will send the Optionee a check or otherwise remit
payment to the Optionee in an amount equal to the repurchase price described in
the preceding paragraph. Upon the Optionee’s receipt of such payment, the
Optionee will no longer have any rights with respect to the Restricted Shares
(including the right to vote or transfer the shares) and the Restricted Shares
will be deemed to have been repurchased by the Company.
6.4    Restricted Shares will bear a legend referring to the Company’s right of
repurchase and any certificates issued representing Restricted Shares may be
held in escrow by the Company. As the Optionee’s vested percentage increases,
the Optionee may request (at reasonable intervals) that the Company release to
the Optionee a non-legended certificate for the Optionee’s vested shares.
7.Termination of Service.
7.1    This option expires in any event at the close of business at Company
headquarters on the day before the 10th anniversary of the Date of Grant, as
shown in the Notice of Stock Option Grant. (This option will expire earlier if
the Optionee’s Service terminates, as described below, and this option may be
terminated earlier as provided below.)
7.2    If the Optionee’s Service terminates for any reason, this option will
expire immediately to the extent the option is unvested as of the Optionee’s
termination date and does not vest as a result of the Optionee’s termination of
Service. The Company determines when the Optionee’s Service terminates for this
purpose.
7.3    If the Optionee’s Service terminates for any reason except death or
Permanent Disability, then this option, to the extent vested as of the
Optionee’s termination date, will expire at the close of business at Company
headquarters on the date three months after the Optionee’s termination date.
7.4    If the Optionee dies before the Optionee’s Service terminates, then this
option will expire at the close of business at Company headquarters on the date
12 months after the date of death.
7.5    If the Optionee’s Service terminates because of the Optionee’s Permanent
Disability, then this option will expire at the close of business at Company
headquarters on the date 12 months after the Optionee’s termination date.
8.Adjustments; Dissolutions and Liquidations; Corporate Transactions.

    

--------------------------------------------------------------------------------

8.1    Adjustments. In the event of a subdivision of the outstanding Shares, a
declaration of a dividend payable in Shares or a combination or consolidation of
the outstanding Shares (by reclassification or otherwise) into a lesser number
of Shares, corresponding proportionate adjustments shall automatically be made
in (i) the number and kind of shares covered by this option, and (ii) the
Exercise Price of this option and the repurchase price applicable to Restricted
Shares.
In the event of a declaration of an extraordinary dividend payable in a form
other than Shares in an amount that has a material effect on the price of
Shares, a recapitalization, a spin-off or a similar occurrence, the
Administrator shall make such adjustments as it, in its sole discretion, deems
appropriate in one or more of the foregoing. Any adjustment in the number of and
kind of shares subject to this option under this Section 8.1 shall be rounded
down to the nearest whole share, although the Administrator in its sole
discretion may make a cash payment in lieu of a fractional share. Except as
provided in this Section 8, the Optionee shall have no rights by reason of any
issuance by the Company of stock of any class or securities convertible into
stock of any class, any subdivision or consolidation of shares of stock of any
class, the payment of any stock dividend or any other increase or decrease in
the number of shares of stock of any class.
8.2    Dissolution or Liquidation. To the extent not previously exercised or
settled this option shall terminate immediately prior to the dissolution or
liquidation of the Company.
8.3    Corporate Transactions. In the event that the Company is a party to a
merger, consolidation or Change of Control (other than one described in Section
18.6(c)), this option, to the extent outstanding on the date of such transaction
shall be treated in the manner described in the definitive transaction agreement
(or, in the event the transaction does not entail a definitive agreement to
which the Company is party, in the manner determined by the Administrator, with
such determination having final and binding effect on all parties), which
agreement or determination need not treat all portions of this option in an
identical manner. The treatment specified in the transaction agreement or by the
Administrator shall include one or more of the following:
1.
The continuation of this option by the Company (if the Company is the surviving
entity);

2.
The assumption of this option by the surviving entity or its parent, provided
that such assumption shall comply with applicable tax requirements;

3.
The substitution by the surviving entity or its parent of an equivalent award
(including, but not limited to, an award to acquire the same consideration paid
to the holders of Shares in the transaction), provided that such substitution
shall comply with applicable tax requirements; and

4.
The cancellation of this option and a payment to the Optionee with respect to
each Share subject to this option (whether or not then vested) equal to the
excess of (i) the value, as determined by the Administrator in its absolute
discretion, of the property (including cash) received by the holder of a Share
as a result of the transaction, over (ii) the per-share Exercise Price of this
option (such excess, the “Spread”). Such payment shall be made in the form of
cash, cash equivalents, or securities of the surviving entity or its parent
having a value equal to the Spread. In addition, any escrow, holdback, earn-out
or similar provisions in the transaction agreement may apply to such payment to
the same extent and in the same manner as such provisions apply to the holders
of Shares, but only to the extent the application of such provisions does not
adversely affect the status of this option as exempt from Code Section 409A. If
the Spread is zero or a negative number, then this option may be cancelled
without making a payment to the Optionee.

Any action taken under this Section 8.3 shall either preserve this option’s
status as exempt from Code Section 409A or comply with Code Section 409A.
9.Tax Treatment.

    

--------------------------------------------------------------------------------

9.1    This option is intended to be a nonstatutory stock option, as provided in
the Notice of Stock Option Grant.
9.2    The Optionee will not be allowed to exercise this option unless the
Optionee makes arrangements acceptable to the Company to pay any withholding
taxes that may be due as a result of the option exercise. These arrangements
include payment in cash. With the Company’s consent, these arrangements may also
include (a) payment from the proceeds of the sale of shares through a
Company-approved broker, (b) withholding shares of Company stock that otherwise
would be issued to the Optionee when the Optionee exercises this option with a
fair market value no greater than the minimum amount required to be withheld by
law, (c) surrendering shares that the Optionee previously acquired with a fair
market value no greater than the minimum amount required to be withheld by law,
or (d) withholding cash from other compensation. The fair market value of
withheld or surrendered shares, determined as of the date when taxes otherwise
would have been withheld in cash, will be applied to the withholding taxes.
10.Transferability. Prior to the Optionee’s death, only the Optionee may
exercise this option. The Optionee cannot transfer or assign this option. For
instance, the Optionee may not sell this option or use it as security for a
loan. If the Optionee attempts to do any of these things, this option will
immediately become invalid. The Optionee may, however, dispose of this option in
the Optionee’s will or by means of a written beneficiary designation; provided
that the Optionee’s beneficiary or a representative of the Optionee’s estate
acknowledges and agrees in writing in a form reasonably acceptable to the
Company, to be bound by the provisions of this Agreement as if such beneficiary
or the estate were the Optionee.
11.Restrictions on Resale. The Optionee will not sell any option shares at a
time when applicable laws, Company policies or an agreement between the Company
and its underwriters prohibit a sale. This restriction will apply as long as the
Optionee’s Service continues and for such period of time after the termination
of the Optionee’s Service as the Company may specify.
12.Leaves of Absence and Part-Time Work. For purposes of this option, the
Optionee’s Service does not terminate when the Optionee goes on a military
leave, a sick leave or another bona fide leave of absence, if the leave was
approved by the Company in writing and if continued crediting of Service is
required by applicable law, the Company’s leave of absence policy, or the terms
of the Optionee’s leave. However, the Optionee’s Service terminates when the
approved leave ends, unless the Optionee immediately returns to active work. If
the Optionee goes on a leave of absence, then the vesting schedule specified in
the Notice of Stock Option Grant may be adjusted in accordance with the
Company’s leave of absence policy or the terms of the Optionee’s leave. If the
Optionee commences working on a part-time basis, the Company may adjust the
vesting schedule so that the rate of vesting is commensurate with the Optionee’s
reduced work schedule.
13.Modification or Assumption of Option. Within the limitations of this
Agreement, the Administrator may modify, reprice or extend this options. The
foregoing notwithstanding, no modification of this option shall, without the
consent of the Optionee, impair his or her rights or obligations under this
option.
14.Option not a Service Contract. Nothing in this option or this Agreement gives
the Optionee the right to be retained by the Company, a Parent, Subsidiary, or
an Affiliate in any capacity. The Company and its Parents, Subsidiaries, and
Affiliates reserve the right to terminate the Optionee’s Service at any time,
with or without cause.
15.Stockholder Rights. The Optionee, or the Optionee’s estate or heirs, has no
rights as a stockholder of the Company until the Optionee has exercised this
option by giving the required notice to the Company, paying the exercise price,
and satisfying any applicable withholding taxes. No adjustments are made for
dividends or other rights if the applicable record date occurs before the
Optionee exercises this option, except as described herein.
16.Applicable Law. This Agreement will be interpreted and enforced under the
laws of the State of Delaware (without regard to its choice-of-law provisions).

    

--------------------------------------------------------------------------------

17.Other Agreements. This Agreement and the Notice of Stock Option Grant
constitute the entire understanding between the Optionee and the Company
regarding this option. Any prior agreements, commitments or negotiations
concerning this option are superseded. This Agreement may be amended only by
another written agreement between the parties.
18.Definitions.
18.1    “Affiliate” means any entity other than a Subsidiary, if the Company
and/or one or more Subsidiaries own not less than 50% of such entity, or any
entity that does not qualify as a Subsidiary but does qualify as a “subsidiary”
under Rule 405 of the Securities Act of 1933, as amended.
18.2    “Administrator” means the Board or any Committees as will be
administering the option in accordance with Section 3.
18.3    “Agreement” means this Stock Option Agreement, including the Notice of
Stock Option Grant to which this Stock Option Agreement is attached.
18.4    “Board” means the Board of Directors of the Company.
18.5    “Cause” means (a) the Optionee’s unauthorized use or disclosure of the
Company’s confidential information or trade secrets, which use or disclosure
causes material harm to the Company, (b) the Optionee’s material breach of his
employment offer letter or Proprietary Information and Inventions Agreement, in
each case, between the Optionee and the Company, (c) the Optionee’s material
failure to comply with the Company’s material written policies or rules, (d) the
Optionee’s conviction of, or the Optionee’s plea of “guilty” or “no contest” to,
a felony under the laws of the United States or any State, (e) the Optionee’s
gross negligence or willful misconduct in the performance of the Optionee’s
duties, provided that,in the case of clauses (c) or (e), (A) the Company has
given the Optionee written notice of the facts and circumstances as the basis
for a termination for Cause within 30 days following the Company’s knowledge of
such facts and circumstances, (B) the Optionee does not remedy the circumstances
constituting Cause within 10 business days after receipt of such notice to cure,
and (C) the Company terminates the Optionee within 120 days following its
knowledge of such facts and circumstances.
18.6    “Change of Control” means:
(a)    the consummation of any merger or consolidation of the Company with or
into another corporation other than a merger or consolidation in which the
holders of more than 50% of the shares of capital stock of the Company
outstanding immediately prior to such transaction continue to hold (either by
the voting securities remaining outstanding or by their being converted into
voting securities of the surviving entity) more than 50% of the total voting
power represented by the voting securities of the Company, or such surviving
entity, outstanding immediately after such transaction;
(b)    the sale, transfer or other disposition of all or substantially all of
the Company’s assets;
(c)    a change in the composition of the Board, as a result of which fewer than
50% of the incumbent directors are directors who either:
(i)    had been directors of the Company on the date 24 months prior to the date
of such change in the composition of the Board (the “Original Directors”); or
(ii)    were appointed to the Board, or nominated for election to the Board,
with the affirmative votes of at least a majority of the aggregate of (A) the
Original Directors who were in office at the time of their appointment or
nomination and (B) the directors whose appointment or nomination was previously
approved in a manner consistent with this Paragraph (ii); or

    

--------------------------------------------------------------------------------

(d)    Any transaction or series of related transactions as a result of which
any person becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended), directly or indirectly, of
securities of the Company representing at least 50% of the total voting power
represented by the Company’s then outstanding voting securities. For purposes of
this Subsection (d), the term “person” shall have the same meaning as when used
in sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended,
but shall exclude (i) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company and (ii) a corporation owned directly or
indirectly by the stockholders of the Company in substantially the same
proportions as their ownership of the common stock of the Company.
A transaction shall not constitute a Change of Control if its sole purpose is to
change the state of the Company’s incorporation or to create a holding company
that will be owned in substantially the same proportions by the persons who held
the Company’s securities immediately before such transaction. In addition, a
transaction will not constitute a Change of Control unless such transaction also
constitutes a “change in control event” as defined in Treasury Regulation
§1.409A-3(i)(5).
18.7    “Code” means the Internal Revenue Code of 1986, as amended.
18.8    “Committee” means a Committee of one or more members of the Board or of
other individuals satisfying applicable laws appointed by the Board to
administer this option.
18.9    “Company” means Synacor, Inc., a Delaware corporation.
18.10    “Employee” means a common‑law employee of the Company, a Parent, a
Subsidiary or an Affiliate.
18.11    “Exercise Price” means the amount for which one Share may be purchased
upon exercise of this option, as set forth in the Notice of Stock Option Grant.
18.12    “Fair Market Value” means the closing price of a Share on any
established stock exchange or a national market system on the applicable date
or, if the applicable date is not a trading day, on the last trading day prior
to the applicable date, as reported in a source that the Administrator deems
reliable. If Shares are no longer traded on an established stock exchange or a
national market system, the Fair Market Value shall be determined by the
Administrator in good faith on such basis as it deems appropriate. The
Administrator’s determination shall be conclusive and binding on all persons.
18.13    “Good Reason” means the occurrence of any of the following, without the
Optionee’s consent (i) a material diminution in the Optionee’s duties,
authority, responsibilities or title (which shall include for the avoidance of
doubt, serving as a member of the Board or reporting directly to the Board),
(ii) a reduction in the Optionee’s then current salary or bonus target
percentage, (iii) the Company’s material breach of the employment offer letter
between the Optionee and the Company, (iv) the requirement that the Optionee
relocate the Optionee’s family or primary residence or (v) the Company provides
a notice of non-renewal of the then-current term of the employment offer letter
between the Optionee and the Company; provided that (A) the Optionee has given
written notice to the Company of the facts and circumstances as the basis for a
resignation for Good Reason within 30 days following the Optionee’s knowledge of
such facts and circumstances, (B) the Company does not remedy the circumstances
constituting Good Reason within 30 business days after receipt of such notice to
cure, which cure in the event that it relates to subsection (ii) shall include a
retroactive adjustment in compensation, and (C) the Optionee resigns within 120
days following the Optionee’s knowledge of such facts and circumstances.
18.14    “Independent Director” means a member of the Board who is an
“independent director” within the meaning of Nasdaq Listing Rule 5605.
18.15    “Optionee” means the individual named in the Notice of Stock Option
Grant.
18.16    “Parent” means any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company, if each of the corporations other
than the Company owns stock possessing

    

--------------------------------------------------------------------------------

50% or more of the total combined voting power of all classes of stock in one of
the other corporations in such chain. A corporation that attains the status of a
Parent on a date after the date hereof shall be considered a Parent commencing
as of such date.
18.17    “Permanent Disability” means that the Optionee is unable to perform the
essential functions of the Optionee’s position, with or without reasonable
accommodation, for a period of at least 120 consecutive days because of a
physical or mental impairment.
18.18    “Restricted Shares” shall have the meaning set forth in Section 6.1.
18.19    “Rule 16b-3” shall have the meaning set forth in Section 3.1.
18.20    “Separation” means a “separation from service,” as defined in the
regulations under Section 409A of the Code.
18.21    “Service” means service as an Employee.
18.22    “Share” means one share of the common stock of the Company.
18.23    “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
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain. A corporation that attains
the status of a Subsidiary on a date after the date hereof shall be considered a
Subsidiary commencing as of such date.

BY SIGNING THE COVER SHEET OF THIS AGREEMENT, THE OPTIONEE AGREES TO ALL OF THE
TERMS AND CONDITIONS DESCRIBED ABOVE.