Exhibit 10.6

IDENTIPHI, INC.

2007 EQUITY INCENTIVE PLAN

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TABLE OF CONTENTS

 

               Page 1.    Establishment, Purpose and Term of Plan    1    1.1   
Establishment    1    1.2    Purpose    1    1.3    Term of Plan    1 2.   
Definitions and Construction    1    2.1    Definitions    1    2.2   
Construction    5 3.    Administration    5    3.1    Administration by the
Committee    5    3.2    Authority of Officers    5    3.3    Powers of the
Committee    5    3.4    Administration with Respect to Insiders    6    3.5   
Committee Complying with Section 162(m)    6    3.6    Indemnification    7 4.
   Shares Subject to Plan    7    4.1    Maximum Number of Shares Issuable    7
   4.2    Adjustments for Changes in Capital Structure    7 5.    Eligibility
and Award Limitations    8    5.1    Persons Eligible for Incentive Stock
Options    8    5.2    Persons Eligible for Other Awards    8    5.3    Fair
Market Value Limitation on Incentive Stock Options    8    5.4    Section 162(m)
Award Limits    9 6.    Terms and Conditions of Options    9    6.1    Exercise
Price    9    6.2    Exercisability and Term of Options    9    6.3    Payment
of Exercise Price    10    6.4    Effect of Termination of Service    11    6.5
   Transferability of Options    13 7.    Terms and Conditions of Restricted
Stock Awards    13    7.1    Purchase Price    13    7.2    Purchase Period   
13    7.3    Payment of Purchase Price    14

 

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TABLE OF CONTENTS

(continued)

 

               Page    7.4    Vesting and Restrictions on Transfer    14    7.5
   Voting Rights; Dividends    14    7.6    Effect of Termination of Service   
15    7.7    Nontransferability of Restricted Stock Award Rights    15 8.   
Standard Forms of Award Agreement    15    8.1    Award Agreements    15    8.2
   Authority to Vary Terms    15 9.    Change in Control    16    9.1   
Definitions    16    9.2    Effect of Change in Control on Options    16    9.3
   Effect of Change in Control on Restricted Stock Awards    17 10.    Provision
of Information    17 11.    Compliance with Securities Law    18 12.    Tax
Withholding    18    12.1    Tax Withholding in General    18    12.2   
Withholding in Shares    18 13.    Termination or Amendment of Plan    18 14.   
Miscellaneous Provisions    19    14.1    Rights as Employee, Consultant or
Director    19    14.2    Rights as a Stockholder    19 15.    Stockholder
Approval    19

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IDENTIPHI, INC.

2007 EQUITY INCENTIVE PLAN

 

1. Establishment, Purpose and Term of Plan.

1.1 Establishment. IdentiPHI, Inc., a Delaware corporation formerly known as
Saflink Corporation (the “Company”), hereby establishes the IdentiPHI, Inc. 2007
Equity Incentive Plan (the “Plan”) effective as of the date on which it is
approved by the stockholders of the Company (the “Effective Date”).

1.2 Purpose. The purpose of the Plan is to advance the interests of the
Participating Company Group and its stockholders by providing an incentive to
attract, retain and reward persons performing services for the Participating
Company Group and by motivating such persons to contribute to the growth and
profitability of the Participating Company Group. The Plan seeks to achieve this
purpose by providing for Awards in the form of Options, Restricted Stock
Purchase Rights, and Restricted Stock Bonuses.

1.3 Term of Plan. The Plan shall continue in effect until the earlier of its
termination by the Board or the date on which all of the shares of Stock
available for issuance under the Plan have been issued and all restrictions on
such shares under the terms of the Plan and the agreements evidencing Awards
granted under the Plan have lapsed. However, all Awards shall be granted, if at
all, within ten (10) years from the Effective Date. The Company intends that the
Plan comply with Section 409A of the Code (including any amendments or
replacements of such section), and the Plan shall be so construed.

 

2. Definitions and Construction.

2.1 Definitions. Whenever used herein, the following terms shall have their
respective meanings set forth below:

(a) “Affiliate” means (i) an entity, other than a Parent Corporation, that
directly, or indirectly through one or more intermediary entities, controls the
Company or (ii) an entity, other than a Subsidiary Corporation, that is
controlled by the Company directly, or indirectly through one or more
intermediary entities. For this purpose, the term “control” (including the term
“controlled by”) means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of the relevant
entity, whether through the ownership of voting securities, by contract or
otherwise; or shall have such other meaning assigned such term for the purposes
of registration on Form S-8 under the Securities Act.

(b) “Award” means any Option, Restricted Stock Purchase Right and Restricted
Stock Bonus granted under the Plan.

(c) “Award Agreement” means a written agreement between the Company and a
Participant setting forth the terms, conditions and restrictions of the Award
granted to the Participant. An Award Agreement may be an “Option Agreement,” a
“Restricted Stock Purchase Agreement,” or a “Restricted Stock Bonus Agreement.”

 

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(d) “Board” means the Board of Directors of the Company. If one or more
Committees have been appointed by the Board to administer the Plan, “Board” also
means such Committees.

(e) “Code” means the Internal Revenue Code of 1986, as amended, and any
applicable regulations promulgated thereunder.

(f) “Committee” means the Compensation Committee or other committee of the Board
duly appointed to administer the Plan and having such powers as shall be
specified by the Board. If no committee of the Board has been appointed to
administer the Plan, the Board shall exercise all of the powers of the Committee
granted herein, and, in any event, the Board may in its discretion exercise any
or all of such powers. Unless the powers of the Committee have been specifically
limited, the Committee shall have all of the powers of the Board granted herein,
including, without limitation, the power to amend or terminate the Plan at any
time, subject to the terms of the Plan and any applicable limitations imposed by
law.

(g) “Company” means IdentiPHI, Inc., a Delaware corporation formerly known as
Saflink Corporation, or any successor corporation thereto.

(h) “Consultant” means a person engaged to provide consulting or advisory
services (other than as an Employee or a Director) to a Participating Company,
provided that the identity of such person, the nature of such services or the
entity to which such services are provided would not preclude the Company from
offering or selling securities to such person pursuant to the Plan in reliance
on either the exemption from registration on a Form S-8 Registration Statement
under the Securities Act.

(i) “Director” means a member of the Board or of the board of directors of any
other Participating Company.

(j) “Disability” means the inability of the Participant, in the opinion of a
qualified physician acceptable to the Company, to perform the major duties of
the Participant’s position with the Participating Company Group because of the
sickness or injury of the Participant.

(k) “Employee” means any person treated as an employee (including an Officer or
a Director who is also treated as an employee) in the records of a Participating
Company and, with respect to any Incentive Stock Option granted to such person,
who is an employee for purposes of Section 422 of the Code; provided, however,
that neither service as a Director nor payment of a director’s fee shall be
sufficient to constitute employment for purposes of the Plan. The Company shall
determine in good faith and in the exercise of its discretion whether an
individual has become or has ceased to be an Employee and the effective date of
such individual’s employment or termination of employment, as the case may be.
For purposes of an individual’s rights, if any, under the Plan as of the time of
the Company’s determination, all such determinations by the Company shall be
final, binding, and conclusive, notwithstanding that the Company or any court of
law or governmental agency subsequently makes a contrary determination.

 

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(l) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(m) “Fair Market Value” means, as of any date, the value of a share of Stock or
other property as determined by the Committee, in its discretion, or by the
Company, in its discretion, if such determination is expressly allocated to the
Company herein, subject to the following:

(i) If, on such date, the Stock is listed on a national or regional securities
exchange or market system, the Fair Market Value of a share of Stock shall be
the closing price of a share of Stock (or the mean of the closing bid and asked
prices of a share of Stock if the Stock is so quoted instead) as quoted on the
Nasdaq National Market, The Nasdaq SmallCap Market or such other national or
regional securities exchange or market system constituting the primary market
for the Stock, as reported in The Wall Street Journal or such other source as
the Company deems reliable. If the relevant date does not fall on a day on which
the Stock has traded on such securities exchange or market system, the date on
which the Fair Market Value shall be established shall be the last day on which
the Stock was so traded prior to the relevant date, or such other appropriate
day as shall be determined by the Committee, in its discretion.

(ii) If, on such date, the Stock is not listed on a national or regional
securities exchange or market system, the Fair Market Value of a share of Stock
shall be as determined by the Committee in good faith without regard to any
restriction other than a restriction which, by its terms, will never lapse, and
subject to compliance with Section 409A of the Code.

(n) “Incentive Stock Option” means an Option intended to be (as set forth in the
Option Agreement) and which qualifies as an incentive stock option within the
meaning of Section 422(b) of the Code.

(o) “Insider” means an Officer, a Director of the Company, or any other person
whose transactions in Stock are subject to Section 16 of the Exchange Act.

(p) “Nonstatutory Stock Option” means an Option not intended to be (as set forth
in the Option Agreement) or which does not qualify as an Incentive Stock Option.

(q) “Officer” means any person designated by the Board as an officer of the
Company.

(r) “Option” means a right to purchase Stock pursuant to the terms and
conditions of the Plan. An Option may be either an Incentive Stock Option or a
Nonstatutory Stock Option.

(s) “Option Agreement” means a written agreement between the Company and a
Participant setting forth the terms, conditions and restrictions of the Option
granted to the Participant and any shares acquired upon the exercise thereof. An
Option Agreement may consist of a form of “Notice of Grant of Stock Option” and
a form of “Stock Option Agreement” incorporated therein by reference, or such
other form or forms as the Board may approve from time to time.

 

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(t) “Parent Corporation” means any present or future “parent corporation” of the
Company, as defined in Section 424(e) of the Code.

(u) “Participant” means any eligible person who has been granted one or more
Awards.

(v) “Participating Company” means the Company or any Parent Corporation or
Subsidiary Corporation or Affiliate.

(w) “Participating Company Group” means, at any point in time, all corporations
collectively which are then Participating Companies.

(x) “Restricted Stock Award” means an Award of a Restricted Stock Bonus or a
Restricted Stock Purchase Right.

(y) “Restricted Stock Bonus” means Stock granted to a Participant pursuant to
the terms and conditions of Section 7.

(z) “Restricted Stock Purchase Right” means a right to purchase Stock granted to
a Participant pursuant to the terms and conditions of Section 7.

(aa) “Restriction Period” means the period established in accordance with
Section 7.4 during which shares subject to a Restricted Stock Award are subject
to Vesting Conditions.

(bb) “Rule 16b-3” means Rule 16b-3 under the Exchange Act, as amended from time
to time, or any successor rule or regulation.

(cc) “Section 162(m)” means Section 162(m) of the Code.

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

(ee) “Service” means a Participant’s employment or service with the
Participating Company Group, whether in the capacity of an Employee, a Director
or a Consultant. A Participant’s Service shall not be deemed to have terminated
merely because of a change in the capacity in which the Participant renders
Service to the Participating Company Group or a change in the Participating
Company for which the Participant renders such Service, provided that there is
no interruption or termination of the Participant’s Service. Furthermore, a
Participant’s Service shall not be deemed to have terminated if the Participant
takes any military leave, sick leave, or other bona fide leave of absence
approved by the Company; provided, however, that if any such leave exceeds
ninety (90) days, on the one hundred eighty-first (181st) day following the
commencement of such leave any Incentive Stock Option held by the Participant
shall cease to be treated as an Incentive Stock Option and instead shall be
treated thereafter as a Nonstatutory Stock Option unless the Participant’s right
to return to Service is guaranteed by statute or contract. Notwithstanding the
foregoing, unless otherwise designated by

 

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the Company or required by law, a leave of absence shall not be treated as
Service for purposes of determining vesting under the Participant’s Award
Agreement. A Participant’s Service shall be deemed to have terminated either
upon an actual termination of Service or upon the corporation for which the
Participant performs Service ceasing to be a Participating Company. Subject to
the foregoing, the Company, in its discretion, shall determine whether the
Participant’s Service has terminated and the effective date of such termination.

(ff) “Stock” means the common stock of the Company, as adjusted from time to
time in accordance with Section 4.2.

(gg) “Subsidiary Corporation” means any present or future “subsidiary
corporation” of the Company, as defined in Section 424(f) of the Code.

(hh) “Ten Percent Owner” means a Participant who, at the time an Option is
granted to the Participant, owns stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of a Participating
Company (other than an Affiliate) within the meaning of Section 422(b)(6) of the
Code.

(ii) “Vesting Conditions” mean those conditions established in accordance with
Section 7.4 prior to the satisfaction of which shares subject to a Restricted
Stock Award remain subject to forfeiture or a repurchase option in favor of the
Company.

2.2 Construction. Captions and titles contained herein are for convenience only
and shall not affect the meaning or interpretation of any provision of the Plan.
Except when otherwise indicated by the context, the singular shall include the
plural and the plural shall include the singular. Use of the term “or” is not
intended to be exclusive, unless the context clearly requires otherwise.

 

3. Administration.

3.1 Administration by the Committee. The Plan shall be administered by the
Committee. All questions of interpretation of the Plan or of any Award shall be
determined by the Committee, and such determinations shall be final and binding
upon all persons having an interest in the Plan or such Award.

3.2 Authority of Officers. Any Officer shall have the authority to act on behalf
of the Company with respect to any matter, right, obligation, determination or
election which is the responsibility of or which is allocated to the Company
herein, provided the Officer has apparent authority with respect to such matter,
right, obligation, determination or election.

3.3 Powers of the Committee. In addition to any other powers set forth in the
Plan and subject to the provisions of the Plan, the Committee shall have the
full and final power and authority, in its discretion:

(a) to determine the persons to whom, and the time or times at which, Awards
shall be granted and the number of shares of Stock to be subject to each Award;

 

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(b) to determine the type of Award granted and to designate Options as Incentive
Stock Options or Nonstatutory Stock Options;

(c) to determine the Fair Market Value of shares of Stock or other property;

(d) to determine the terms, conditions and restrictions applicable to each Award
(which need not be identical) and any shares acquired pursuant thereto,
including, without limitation, (i) the purchase price of any Stock, (ii) the
method of payment for shares purchased pursuant to any Award, (iii) the method
for satisfaction of any tax withholding obligation arising in connection with
Award, including by the withholding or delivery of shares of Stock, (iv) the
timing, terms and conditions of the exercisability or vesting of any Award or
any shares acquired pursuant thereto, (v) the time of the expiration of any
Award, (vi) the effect of the Participant’s termination of Service on any of the
foregoing, and (vii) all other terms, conditions and restrictions applicable to
any Award or shares acquired pursuant thereto not inconsistent with the terms of
the Plan;

(e) to approve one or more forms of Award Agreement;

(f) to amend, modify, extend, cancel or renew any Award or to waive any
restrictions or conditions applicable to any Award or any shares acquired
pursuant thereto;

(g) to accelerate, continue, extend or defer the exercisability or vesting of
any Award or any shares acquired pursuant thereto, including with respect to the
period following a Participant’s termination of Service;

(h) to prescribe, amend or rescind rules, guidelines and policies relating to
the Plan, or to adopt supplements to, or alternative versions of, the Plan,
including, without limitation, as the Committee deems necessary or desirable to
comply with the laws of, or to accommodate the tax policy or custom of, foreign
jurisdictions whose citizens may be granted Awards; and

(i) to correct any defect, supply any omission or reconcile any inconsistency in
the Plan or any Award Agreement and to make all other determinations and take
such other actions with respect to the Plan or any Award as the Committee may
deem advisable to the extent not inconsistent with the provisions of the Plan or
applicable law.

3.4 Administration with Respect to Insiders. With respect to participation by
Insiders in the Plan, at any time that any class of equity security of the
Company is registered pursuant to Section 12 of the Exchange Act, the Plan shall
be administered in compliance with the requirements, if any, of Rule 16b-3.

3.5 Committee Complying with Section 162(m). If the Company is a “publicly held
corporation” within the meaning of Section 162(m), the Board may establish a
Committee of “outside directors” within the meaning of Section 162(m) to approve
the grant of any Award which might reasonably be anticipated to result in the
payment of employee remuneration that would otherwise exceed the limit on
employee remuneration deductible for income tax purposes pursuant to
Section 162(m).

 

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3.6 Indemnification. In addition to such other rights of indemnification as they
may have as members of the Board or the Committee or as officers or employees of
the Participating Company Group, members of the Board or the Committee and any
officers or employees of the Participating Company Group to whom authority to
act for the Board, the Committee or the Company is delegated shall be
indemnified by the Company against all reasonable expenses, including attorneys’
fees, actually and necessarily incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal therein, to which
they or any of them may be a party by reason of any action taken or failure to
act under or in connection with the Plan, or any right granted hereunder, and
against all amounts paid by them in settlement thereof (provided such settlement
is approved by independent legal counsel selected by the Company) or paid by
them in satisfaction of a judgment in any such action, suit or proceeding,
except in relation to matters as to which it shall be adjudged in such action,
suit or proceeding that such person is liable for gross negligence, bad faith or
intentional misconduct in duties; provided, however, that within sixty (60) days
after the institution of such action, suit or proceeding, such person shall
offer to the Company, in writing, the opportunity at its own expense to handle
and defend the same.

 

4. Shares Subject to Plan.

4.1 Maximum Number of Shares Issuable. Subject to adjustment as provided in
Section 4.2, the maximum aggregate number of shares of Stock that may be issued
under the Plan shall be 164,660,700, and shall consist of authorized but
unissued or reacquired shares of Stock or any combination thereof. However,
except as adjusted pursuant to Section 4.2, in no event shall the number of
shares of Stock cumulatively available for issuance pursuant to the exercise of
Incentive Stock Options (the “ISO Share Limit”) exceed 164,660,700. If an
outstanding Award for any reason expires or is terminated or canceled or if
shares of Stock are acquired upon the exercise of an Award subject to a Company
repurchase option and are repurchased by the Company, the shares of Stock
allocable to the unexercised portion of such Award or such repurchased shares of
Stock shall again be available for issuance under the Plan. Notwithstanding the
foregoing, at any such time as the offer and sale of securities pursuant to the
Plan is subject to compliance with Section 260.140.45 of Title 10 of the
California Code of Regulations (“Section 260.140.45”), the total number of
shares of Stock issuable upon the exercise of all outstanding Options (together
with options outstanding under any other stock option plan of the Company) and
the total number of shares provided for under any stock bonus or similar plan of
the Company shall not exceed thirty percent (30%) (or such other higher
percentage limitation as may be approved by the stockholders of the Company
pursuant to Section 260.140.45) of the then outstanding shares of the Company as
calculated in accordance with the conditions and exclusions of
Section 260.140.45.

4.2 Adjustments for Changes in Capital Structure. Subject to any required action
by the stockholders of the Company, in the event of any change in the Stock
effected without receipt of consideration by the Company, whether through
merger, consolidation, reorganization, reincorporation, recapitalization,
reclassification, stock dividend, stock split, reverse stock split, split-up,
split-off, spin-off, combination of shares, exchange of shares, or similar
change in the capital structure of the Company, or in the event of payment of a
dividend or distribution to the stockholders of the Company in a form other than
Stock (excepting normal

 

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cash dividends) that has a material effect on the Fair Market Value of shares of
Stock, appropriate and proportionate adjustments shall be made in the number and
class of shares subject to the Plan and to any outstanding Awards, in the ISO
Share Issuance Limit set forth in Section 4.1, in the Section 162(m) Grant
Limited set forth in Section 5.4, and in the exercise price per share of any
outstanding Awards. If a majority of the shares which are of the same class as
the shares that are subject to outstanding Awards are exchanged for, converted
into, or otherwise become (whether or not pursuant to an Ownership Change Event,
as defined in Section 9.1) shares of another corporation (the “New Shares”), the
Committee may unilaterally amend the outstanding Awards to provide that such
Awards shall be for New Shares. In the event of any such amendment, the number
of shares subject to outstanding Awards and the exercise price per share of
outstanding Options and Restricted Stock Purchase Rights shall be adjusted in a
fair and equitable manner as determined by the Committee, in its discretion.
Notwithstanding the foregoing, any fractional share resulting from an adjustment
pursuant to this Section 4.2 shall be rounded down to the nearest whole number,
and in no event may the exercise price of any Option or Restricted Stock
Purchase Right be decreased to an amount less than the par value, if any, of the
stock subject to such Award. The adjustments determined by the Committee
pursuant to this Section 4.2 shall be final, binding and conclusive.

 

5. Eligibility and Award Limitations.

5.1 Persons Eligible for Incentive Stock Options. Incentive Stock Options may be
granted only to Employees. For purposes of the foregoing sentence, the term
“Employees” shall include prospective Employees to whom Incentive Stock Options
are granted in connection with written offers of employment with the
Participating Company Group, provided that any such Incentive Stock Option shall
be deemed granted effective on the date such person commences Service as an
Employee, with an exercise price determined as of such date in accordance with
Section 6.1. Eligible persons may be granted more than one (1) Incentive Stock
Option.

5.2 Persons Eligible for Other Awards. Awards other than Incentive Stock Options
may be granted only to Employees, Consultants and Directors. For purposes of the
foregoing sentence, “Employees,” “Consultants” and “Directors” shall include
prospective Employees, prospective Consultants and prospective Directors to whom
Awards are granted in connection with written offers of an employment or other
service relationship with the Participating Company Group. Eligible persons may
be granted more than one (1) Award.

5.3 Fair Market Value Limitation on Incentive Stock Options. To the extent that
options designated as Incentive Stock Options (granted under all stock option
plans of the Participating Company Group, including the Plan) become exercisable
by a Participant for the first time during any calendar year for stock having a
Fair Market Value greater than One Hundred Thousand Dollars ($100,000), the
portions of such options which exceed such amount shall be treated as
Nonstatutory Stock Options. For purposes of this Section 5.3, options designated
as Incentive Stock Options shall be taken into account in the order in which
they were granted, and the Fair Market Value of stock shall be determined as of
the time the option with respect to such stock is granted. If the Code is
amended to provide for a different limitation from that set forth in this
Section 5.3, such different limitation shall be deemed incorporated herein

 

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effective as of the date and with respect to such Options as required or
permitted by such amendment to the Code. If an Option is treated as an Incentive
Stock Option in part and as a Nonstatutory Stock Option in part by reason of the
limitation set forth in this Section 5.3, the Participant may designate which
portion of such Option the Participant is exercising. In the absence of such
designation, the Participant shall be deemed to have exercised the Incentive
Stock Option portion of the Option first. Separate certificates representing
each such portion shall be issued upon the exercise of the Option.

5.4 Section 162(m) Award Limits. Subject to adjustment as provided in
Section 4.2, at any such time as the Company is a publicly held corporation
within the meaning of Section 162(m), no Employee or prospective Employee shall
be granted one or more Awards within any fiscal year of the Company which in the
aggregate are for the purchase of more than One Million (1,000,000) shares (the
“Section 162(m) Grant Limit”). An Award that is canceled in the same fiscal year
of the Company in which it was granted shall continue to be counted against the
Section 162(m) Grant Limit for such period.

 

6. Terms and Conditions of Options.

Options shall be evidenced by Option Agreements specifying the number of shares
of Stock covered thereby, in such form as the Committee shall from time to time
establish. No Option or purported Option shall be a valid and binding obligation
of the Company unless evidenced by a fully executed Option Agreement. Option
Agreements may incorporate all or any of the terms of the Plan by reference and
shall comply with and be subject to the following terms and conditions:

6.1 Exercise Price. The exercise price for each Option shall be established in
the discretion of the Committee, subject to compliance with Section 409A of the
Code; provided, however, that (a) the exercise price per share for a Stock
Option shall be not less than the Fair Market Value of a share of Stock on the
effective date of grant of the Option, and (b) no Option granted to a Ten
Percent Owner shall have an exercise price per share less than one hundred ten
percent (110%) of the Fair Market Value of a share of Stock on the effective
date of grant of the Option. Notwithstanding the foregoing, an Option (whether
an Incentive Stock Option or a Nonstatutory Stock Option) may be granted with an
exercise price lower than the minimum exercise price set forth above if such
Option is granted pursuant to an assumption or substitution for another option
in a manner qualifying under the provisions of Section 424(a) of the Code.

6.2 Exercisability and Term of Options. Options shall be exercisable at such
time or times, or upon such event or events, and subject to such terms,
conditions, performance criteria and restrictions as shall be determined by the
Committee and set forth in the Option Agreement evidencing such Option;
provided, however, that (a) no Incentive Stock Option shall be exercisable after
the expiration of ten (10) years after the effective date of grant of such
Option, (b) no Option granted to a Ten Percent Owner shall be exercisable after
the expiration of five (5) years after the effective date of grant of such
Option, (c) no Option granted to a prospective Employee, prospective Consultant
or prospective Director may become exercisable prior to the date on which such
person commences Service, and (d) with the exception of an Option granted to an
Officer, a Director or a Consultant, no Option shall become exercisable at a
rate less than twenty percent (20%) per year over a period of five (5) years
from the effective

 

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date of grant of such Option, subject to the Optionee’s continued Service.
Subject to the foregoing, unless otherwise specified by the Committee in the
grant of an Option, any Option granted hereunder shall terminate ten (10) years
after the effective date of grant of the Option, unless earlier terminated in
accordance with its provisions.

6.3 Payment of Exercise Price.

(a) Forms of Consideration Authorized. Except as otherwise provided below,
payment of the exercise price for the number of shares of Stock being purchased
pursuant to any Option shall be made (i) in cash, by check or cash equivalent,
(ii) by tender to the Company, or attestation to the ownership, of shares of
Stock owned by the Participant having a Fair Market Value not less than the
exercise price, (iii) by delivery of a properly executed notice together with
irrevocable instructions to a broker providing for the assignment to the Company
of the proceeds of a sale or loan with respect to some or all of the shares
being acquired upon the exercise of the Option (including, without limitation,
through an exercise complying with the provisions of Regulation T as promulgated
from time to time by the Board of Governors of the Federal Reserve System) (a
“Cashless Exercise”), (iv) provided that the Participant is an Employee (unless
otherwise not prohibited by law, including, without limitation, any regulation
promulgated by the Board of Governors of the Federal Reserve System) and in the
Company’s sole discretion at the time the Option is exercised, by delivery of
the Participant’s promissory note in a form approved by the Company for the
aggregate exercise price, provided that, if the Company is incorporated in the
State of Delaware, the Participant shall pay in cash that portion of the
aggregate exercise price not less than the par value of the shares being
acquired, (v) by such other consideration as may be approved by the Committee
from time to time to the extent permitted by applicable law, or (vi) by any
combination thereof. The Committee may at any time or from time to time, by
approval of or amendment to the standard forms of Options Agreement described in
Section 8, or by other means, grant Options which do not permit all of the
foregoing forms of consideration to be used in payment of the exercise price or
which otherwise restrict one or more forms of consideration.

(b) Limitations on Forms of Consideration.

(i) Tender of Stock. Notwithstanding the foregoing, an Option may not be
exercised by tender to the Company, or attestation to the ownership, of shares
of Stock to the extent such tender or attestation would constitute a violation
of the provisions of any law, regulation or agreement restricting the redemption
of the Company’s stock. Unless otherwise provided by the Committee, an Option
may not be exercised by tender to the Company, or attestation to the ownership,
of shares of Stock unless such shares either have been owned by the Participant
for more than six (6) months (and not used for another Option exercise by
attestation during such period) or were not acquired, directly or indirectly,
from the Company.

(ii) Cashless Exercise. The Company reserves, at any and all times, the right,
in the Company’s sole and absolute discretion, to establish, decline to approve
or terminate any program or procedures for the exercise of Options by means of a
Cashless Exercise.

 

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(iii) Payment by Promissory Note. No promissory note shall be permitted if the
exercise of an Option using a promissory note would be a violation of any law.
Any permitted promissory note shall be on such terms as the Committee shall
determine in its sole discretion. The Committee shall have the authority to
permit or require the Participant to secure any promissory note used to exercise
an Option with the shares of Stock acquired upon the exercise of the Option or
with other collateral acceptable to the Company. Unless otherwise provided by
the Committee, if the Company at any time is subject to the regulations
promulgated by the Board of Governors of the Federal Reserve System or any other
governmental entity affecting the extension of credit in connection with the
Company’s securities, any promissory note shall comply with such applicable
regulations, and the Participant shall pay the unpaid principal and accrued
interest, if any, to the extent necessary to comply with such applicable
regulations.

6.4 Effect of Termination of Service.

(a) Option Exercisability. Subject to earlier termination of the Option as
otherwise provided herein and unless otherwise provided by the Committee in the
grant of the Option and set forth in the Option Agreement, an Option granted to
a Participant shall be exercisable after the Participant’s termination of
Service only during the applicable time period determined in accordance with
this Section 6.4 and thereafter shall terminate:

(i) Disability. If the Participant’s Service terminates because of the
Disability of the Participant, the Option, to the extent unexercised and
exercisable on the date on which the Participant’s Service terminated, may be
exercised by the Participant (or the Participant’s guardian or legal
representative) at any time prior to the expiration of twelve (12) months (or
such longer period of time as determined by the Committee, in its discretion)
after the date on which the Participant’s Service terminated, but in any event
no later than the date of expiration of the Option’s term as set forth in the
Option Agreement evidencing such Option (the “Option Expiration Date”).

(ii) Death. If the Participant’s Service terminates because of the death of the
Participant, the Option, to the extent unexercised and exercisable on the date
on which the Participant’s Service terminated, may be exercised by the
Participant’s legal representative or other person who acquired the right to
exercise the Option by reason of the Participant’s death at any time prior to
the expiration of twelve (12) months (or such longer period of time as
determined by the Committee, in its discretion) after the date on which the
Participant’s Service terminated, but in any event no later than the Option
Expiration Date. The Participant’s Service shall be deemed to have terminated on
account of death if the Participant dies within three (3) months (or such longer
period of time as determined by the Committee, in its discretion) after the
Participant’s termination of Service.

(iii) Termination After Change in Control. The Committee may, in its discretion,
provide in any Option Agreement that if the Participant’s Service ceases as a
result of “Termination After Change in Control” (as defined in such Option
Agreement), then (1) the Option, to the extent unexercised and exercisable on
the date on which the Participant’s Service terminated, may be exercised by the
Participant (or the Participant’s guardian or legal representative) at any time
prior to the expiration of six (6) months (or such longer period of time

 

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as determined by the Committee, in its discretion) after the date on which the
Participant’s Service terminated, but in any event no later than the Option
Expiration Date, and (2) the exercisability and vesting of the Option and any
shares acquired upon the exercise thereof shall be accelerated effective as of
the date on which the Participant’s Service terminated to such extent, if any,
as shall have been determined by the Committee, in its discretion, and set forth
in the Option Agreement.

(iv) Termination for Cause. Notwithstanding any other provision of the Plan to
the contrary, if the Participant’s Service is terminated for Cause, as defined
by the Participant’s Option Agreement or contract of employment or service (or,
if not defined in any of the foregoing, as defined below), the Option shall
terminate and cease to be exercisable immediately upon such termination of
Service. Unless otherwise defined by the Participant’s Option Agreement or
contract of employment or service, for purposes of this Section 6.4(a)(iv)
“Cause” shall mean any of the following: (1) the Participant’s theft,
dishonesty, willful misconduct, breach of fiduciary duty for personal profit, or
falsification of any Participating Company documents or records; (2) the
Participant’s material failure to abide by a Participating Company’s code of
conduct or other policies (including, without limitation, policies relating to
confidentiality and reasonable workplace conduct); (3) the Participant’s
unauthorized use, misappropriation, destruction or diversion of any tangible or
intangible asset or corporate opportunity of a Participating Company (including,
without limitation, the Participant’s improper use or disclosure of a
Participating Company’s confidential or proprietary information); (4) any
intentional act by the Participant which has a material detrimental effect on a
Participating Company’s reputation or business; (5) the Participant’s repeated
failure or inability to perform any reasonable assigned duties after written
notice from a Participating Company of, and a reasonable opportunity to cure,
such failure or inability; (6) any material breach by the Participant of any
employment or service agreement between the Participant and a Participating
Company, which breach is not cured pursuant to the terms of such agreement; or
(7) the Participant’s conviction (including any plea of guilty or nolo
contendere) of any criminal act involving fraud, dishonesty, misappropriation or
moral turpitude, or which impairs the Participant’s ability to perform his or
her duties with a Participating Company.

(v) Other Termination of Service. If the Participant’s Service terminates for
any reason, except Disability, death, Termination After Change in Control or
Cause, the Option, to the extent unexercised and exercisable by the Participant
on the date on which the Participant’s Service terminated, may be exercised by
the Participant at any time prior to the expiration of three (3) months (or such
longer period of time as determined by the Committee, in its discretion) after
the date on which the Participant’s Service terminated, but in any event no
later than the Option Expiration Date.

(b) Extension if Exercise Prevented by Law. Notwithstanding the foregoing (other
than termination of a Participant’s Service for Cause), if the exercise of an
Option within the applicable time periods set forth in Section 6.4(a) is
prevented by the provisions of Section 11 below, the Option shall remain
exercisable until three (3) months (or such longer period of time as determined
by the Committee, in its discretion) after the date the Participant is notified
by the Company that the Option is exercisable, but in any event no later than
the Option Expiration Date.

 

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(c) Extension if Participant Subject to Section 16(b). Notwithstanding the
foregoing (other than termination of a Participant’s Service for Cause), if a
sale within the applicable time periods set forth in Section 6.4(a) of shares
acquired upon the exercise of the Option would subject the Participant to suit
under Section 16(b) of the Exchange Act, the Option shall remain exercisable
until the earliest to occur of (i) the tenth (10th) day following the date on
which a sale of such shares by the Participant would no longer be subject to
such suit, (ii) the one hundred and ninetieth (190th) day after the
Participant’s termination of Service, or (iii) the Option Expiration Date.

6.5 Transferability of Options. During the lifetime of the Participant, an
Option shall be exercisable only by the Participant or the Participant’s
guardian or legal representative. No Option shall be assignable or transferable
by the Participant, except by will or by the laws of descent and distribution.
Notwithstanding the foregoing, to the extent permitted by the Committee, in its
discretion, and set forth in the Option Agreement evidencing such Option, a
Nonstatutory Stock Option shall be assignable or transferable subject to the
applicable limitations, if any, described in Section 260.140.41 of Title 10 of
the California Code of Regulations, the applicable limitations, if any, provided
in the General Instructions to Form S-8 Registration Statement under the
Securities Act.

 

7. Terms and Conditions of Restricted Stock Awards.

The Committee may from time to time grant Restricted Stock Awards upon such
conditions as the Committee shall determine. Restricted Stock Awards may be in
the form of either a Restricted Stock Bonus, which shall be evidenced by
Restricted Stock Bonus Agreement, or a Restricted Stock Purchase Right, which
shall be evidenced by Restricted Stock Purchase Agreement. Each such Award
Agreement shall specify the number of shares of Stock subject to and the other
terms, conditions and restrictions of the Award, and shall be in such form as
the Committee shall establish from time to time. No Restricted Stock Award or
purported Restricted Stock Award shall be a valid and binding obligation of the
Company unless evidenced by a fully executed Award Agreement. Restricted Stock
Award Agreements may incorporate all or any of the terms of the Plan by
reference and shall comply with and be subject to the following terms and
conditions:

7.1 Purchase Price. The purchase price under each Restricted Stock Purchase
Right shall be established by the Committee; provided, however, that no
Restricted Stock Purchase Right shall have a purchase price per share less than
one hundred percent (100%) of the Fair Market Value of a share of Stock on the
effective date of grant of the Restricted Stock Purchase Right or at the time
the purchase is consummated. No monetary payment (other than applicable tax
withholding) shall be required as a condition of receiving a Restricted Stock
Bonus, the consideration for which shall be services actually rendered to a
Participating Company or for its benefit.

7.2 Purchase Period. A Restricted Stock Purchase Right shall be exercisable
within a period established by the Committee, which shall in no event exceed
thirty (30) days from the effective date of the grant of the Restricted Stock
Purchase Right; provided, however, that no Restricted Stock Purchase Right
granted to a prospective Employee, prospective Director or prospective
Consultant may become exercisable prior to the date on which such person
commences Service.

 

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7.3 Payment of Purchase Price. Except as otherwise provided below, payment of
the purchase price for the number of shares of Stock being purchased pursuant to
any Restricted Stock Purchase Right shall be made (i) in cash, by check, or cash
equivalent, (ii) in the Committee’s discretion, in the form of a credit for past
services rendered having a value not less than the aggregate purchase price of
the shares being acquired; (iii) provided that the Participant is an Employee
(unless otherwise not prohibited by law, including, without limitation, any
regulation promulgated by the Board of Governors of the Federal Reserve System)
and in the Company’s sole discretion at the time the Restricted Stock Purchase
Right is exercised, by delivery of the Participant’s promissory note in a form
approved by the Company for the aggregate purchase price, provided that, if the
Company is incorporated in the State of Delaware, the Participant shall pay in
cash that portion of the aggregate purchase price not less than the par value of
the shares being acquired, (iv) by such other consideration as may be approved
by the Committee from time to time to the extent permitted by applicable law, or
(v) by any combination thereof. Payment by means of the Participant’s promissory
note shall be subject to the conditions described in Section 6.3(b)(iii). The
Committee may at any time or from time to time grant Restricted Stock Purchase
Rights which do not permit all of the foregoing forms of consideration to be
used in payment of the purchase price or which otherwise restrict one or more
forms of consideration. Restricted Stock Bonuses shall be issued in
consideration for services actually rendered to a Participating Company or for
its benefit.

7.4 Vesting and Restrictions on Transfer. Shares issued pursuant to any
Restricted Stock Award may be made subject to vesting conditioned upon the
satisfaction of such Service requirements, conditions, restrictions or
performance criteria (the “Vesting Conditions”), as shall be established by the
Committee and set forth in the Award Agreement evidencing such Award, subject to
compliance with any applicable provisions of applicable law. During any period
(the “Restriction Period”) in which shares acquired pursuant to a Restricted
Stock Award remain subject to Vesting Conditions, such shares may not be sold,
exchanged, transferred, pledged, assigned or otherwise disposed of other than
pursuant to an Ownership Change Event, as defined in Section 9.1, or as provided
in Section 7.7. Upon request by the Company, each Participant shall execute any
agreement evidencing such transfer restrictions prior to the receipt of shares
of Stock hereunder and shall promptly present to the Company any and all
certificates representing shares of Stock acquired hereunder for the placement
on such certificates of appropriate legends evidencing any such transfer
restrictions.

7.5 Voting Rights; Dividends. Except as provided in this Section and
Section 7.4, during the Restriction Period applicable to shares subject to a
Restricted Stock Award held by a Participant, the Participant shall have all of
the rights of a stockholder of the Company holding shares of Stock, including
the right to vote such shares and to receive all dividends and other
distributions paid with respect to such shares; provided, however, that if any
such dividends or distributions are paid in shares of Stock, such shares shall
be subject to the same Vesting Conditions as the shares subject to the
Restricted Stock Award with respect to which the dividends or distributions were
paid.

 

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7.6 Effect of Termination of Service. Unless otherwise provided in the grant of
a Restricted Stock Award and set forth in the Award Agreement, the effect of the
Participant’s termination of Service shall be as follows:

(a) Termination After Change in Control. The Committee may, in its discretion,
provide in any Restricted Stock Award Agreement that if the Participant’s
Service with the Participating Company Group ceases as a result of “Termination
After Change in Control” (as defined in such Award Agreement), then the Vesting
Conditions applicable to the shares subject to the Restricted Stock Award shall
terminate effective as of the date on which the Participant’s Service terminated
to the extent specified in such Award Agreement.

(b) Other Termination of Service. If a Participant’s Service with the
Participating Company Group terminates for any reason, except Termination After
Change in Control, whether voluntary or involuntary (including the Participant’s
death or disability), then (i) subject to compliance with applicable law, the
Company shall have the option to repurchase for the purchase price paid by the
Participant any shares acquired by the Participant pursuant to a Restricted
Stock Purchase Right which remain subject to Vesting Conditions as of the date
of the Participant’s termination of Service and (ii) the Participant shall
forfeit to the Company any shares acquired by the Participant pursuant to a
Restricted Stock Bonus which remain subject to Vesting Conditions as of the date
of the Participant’s termination of Service. The Company shall have the right to
assign at any time any repurchase right it may have, whether or not such right
is then exercisable, to one or more persons as may be selected by the Company.

7.7 Nontransferability of Restricted Stock Award Rights. Rights to acquire
shares of Stock pursuant to a Restricted Stock Award may not be assigned or
transferred in any manner except by will or the laws of descent and
distribution, and, during the lifetime of the Participant, shall be exercisable
only by the Participant.

 

8. Standard Forms of Award Agreement.

8.1 Award Agreements. Unless otherwise provided by the Board at the time the
Award is granted, each Award shall comply with and be subject to the terms and
conditions set forth in the appropriate form of Award Agreement as approved by
the Committee concurrently with the adoption of the Plan or as may be approved
by the Committee and as amended from time to time. Any Award Agreement may
consist of an appropriate form of Notice of Grant and a form of Agreement
incorporated therein by reference, or such other form or forms as the Committee
may approve from time to time.

8.2 Authority to Vary Terms. The Committee shall have the authority from time to
time to vary the terms of any standard form of Award Agreement either in
connection with the grant or amendment of an individual Award or in connection
with the authorization of a new standard form or forms; provided, however, that
the terms and conditions of any such new, revised or amended standard form or
forms of Award Agreement are not inconsistent with the terms of the Plan.

 

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9. Change in Control.

9.1 Definitions.

(a) An “Ownership Change Event” shall be deemed to have occurred if any of the
following occurs with respect to the Company: (i) the direct or indirect sale or
exchange in a single or series of related transactions by the stockholders of
the Company of more than fifty percent (50%) of the voting stock of the Company;
(ii) a merger or consolidation in which the Company is a party; (iii) the sale,
exchange, or transfer of all or substantially all of the assets of the Company;
or (iv) a liquidation or dissolution of the Company.

(b) A “Change in Control” shall mean an Ownership Change Event or a series of
related Ownership Change Events (collectively, a “Transaction”) wherein the
stockholders of the Company immediately before the Transaction do not retain
immediately after the Transaction, in substantially the same proportions as
their ownership of shares of the Company’s voting stock immediately before the
Transaction, direct or indirect beneficial ownership of more than fifty percent
(50%) of the total combined voting power of the outstanding voting securities of
the Company or, in the case of a Transaction described in Section 9.1(a)(iii),
the corporation or other business entity to which the assets of the Company were
transferred (the “Transferee”), as the case may be. For purposes of the
preceding sentence, indirect beneficial ownership shall include, without
limitation, an interest resulting from ownership of the voting securities of one
or more corporations or other business entities which own the Company or the
Transferee, as the case may be, either directly or through one or more
subsidiary corporations or other business entities. The Committee shall have the
right to determine whether multiple sales or exchanges of the voting securities
of the Company or multiple Ownership Change Events are related, and its
determination shall be final, binding and conclusive.

9.2 Effect of Change in Control on Options.

(a) Notwithstanding any other provision of the Plan to the contrary, the
Committee, in its sole discretion, may provide in any Option Agreement or, in
the event of a Change in Control, may take such actions as it deems appropriate
to provide for the acceleration of the exercisability and vesting in connection
with such Change in Control of any or all outstanding Options and shares
acquired upon the exercise of such Options, subject to compliance with
Section 409A of the Code.

(b) In the event of a Change in Control, the surviving, continuing, successor,
or purchasing corporation or other business entity or parent thereof, as the
case may be (the “Acquiring Corporation”), may, without the consent of the
Participant, either assume the Company’s rights and obligations under
outstanding Options or substitute for outstanding Options substantially
equivalent options for the Acquiring Corporation’s stock. The Committee may, in
its discretion, provide in any Option Agreement that, in the event of a Change
in Control, the exercisability and vesting of the outstanding Option and any
shares acquired upon the exercise thereof shall accelerate upon such
circumstances and to such extent as specified in such Option Agreement. The
exercise or vesting of any Option and any shares acquired upon the exercise
thereof that was permissible solely by reason of this Section 9.2 and the
provisions of

 

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such Option Agreement shall be conditioned upon the consummation of the Change
in Control. Any Options which are neither assumed or substituted for by the
Acquiring Corporation in connection with the Change in Control nor exercised as
of the date of the Change in Control shall terminate and cease to be outstanding
effective as of the date of the Change in Control. Notwithstanding the
foregoing, shares acquired upon exercise of an Option prior to the Change in
Control and any consideration received pursuant to the Change in Control with
respect to such shares shall continue to be subject to all applicable provisions
of the Option Agreement evidencing such Option except as otherwise provided in
such Option Agreement. Furthermore, notwithstanding the foregoing, if the
corporation the stock of which is subject to the outstanding Options immediately
prior to an Ownership Change Event described in Section 9.1(a)(i) constituting a
Change in Control is the surviving or continuing corporation and immediately
after such Ownership Change Event less than fifty percent (50%) of the total
combined voting power of its voting stock is held by another corporation or by
other corporations that are members of an affiliated group within the meaning of
Section 1504(a) of the Code without regard to the provisions of Section 1504(b)
of the Code, the outstanding Options shall not terminate unless the Committee
otherwise provides in its discretion.

(c) The Committee may, in its sole discretion and without the consent of any
Optionee, determine that, upon the occurrence of a Change in Control, each or
any Option outstanding immediately prior to the Change in Control shall be
cancelled in exchange for a payment with respect to each vested share of Stock
subject to such canceled Option in (i) cash, (ii) stock of the Company or of a
corporation or other business entity a party to the Change in Control, or
(iii) other property which, in any such case, shall be in an amount having a
Fair Market Value equal to the Fair Market Value of the consideration to be paid
per share of the Stock in the Change in Control over the exercise price per
share under such Option (the “Spread”). In the event such determination is made
by the Committee, the Spread (reduced by applicable withholding taxes, if any)
shall be paid to Optionees in respect of their canceled Options as soon as
practicable following the date of the Change in Control.

9.3 Effect of Change in Control on Restricted Stock Awards. The Committee may,
in its discretion, provide in any Restricted Stock Award Agreement that, in the
event of a Change in Control, the lapsing of the Vesting Conditions applicable
to the shares subject to the Restricted Stock Award held by a Participant whose
Service has not terminated prior to such date shall be accelerated effective as
of the date of the Change in Control to such extent as specified in such Award
Agreement. Any acceleration of the lapsing of Vesting Conditions that was
permissible solely by reason of this Section 9.3 and the provisions of such
Award Agreement shall be conditioned upon the consummation of the Change in
Control.

 

10. Provision of Information.

At least annually, copies of the Company’s balance sheet and income statement
for the just completed fiscal year shall be made available to each Optionee and
purchaser of shares of Stock upon the exercise of an Option. The Company shall
not be required to provide such information to key employees whose duties in
connection with the Company assure them access to equivalent information.
Furthermore, the Company shall deliver to each Optionee such disclosures as are
required under the Securities Act.

 

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11. Compliance with Securities Law.

The grant of Awards and the issuance of shares of Stock pursuant to any Award
shall be subject to compliance with all applicable requirements of federal,
state and foreign law with respect to such securities and the requirements of
any stock exchange or market system upon which the Stock may then be listed. In
addition, no Award may be exercised or shares issued pursuant to an Award unless
(a) a registration statement under the Securities Act shall at the time of such
exercise or issuance be in effect with respect to the shares issuable pursuant
to the Award, or (b) in the opinion of legal counsel to the Company, the shares
issuable pursuant to the Award may be issued in accordance with the terms of an
applicable exemption from the registration requirements of the Securities Act.
The inability of the Company to obtain from any regulatory body having
jurisdiction the authority, if any, deemed by the Company’s legal 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. As a
condition to issuance of any Stock, the Company may require the Participant to
satisfy any qualifications that may be necessary or appropriate, to evidence
compliance with any applicable law or regulation and to make any representation
or warranty with respect thereto as may be requested by the Company.

 

12. Tax Withholding.

12.1 Tax Withholding in General. The Company shall have the right to require the
Participant, through payroll withholding, cash payment or otherwise, including
by means of a Cashless Exercise of an Option, to make adequate provision for the
federal, state, local and foreign taxes, if any, required by law to be withheld
by the Participating Company Group with respect to an Award or the shares
acquired pursuant thereto. The Company shall have no obligation to deliver
shares of Stock, to release shares of Stock from an escrow established pursuant
to an Award Agreement, or to make any payment in cash under the Plan until the
Participating Company Group’s tax withholding obligations have been satisfied by
the Participant.

12.2 Withholding in Shares. The Company shall have the right, but not the
obligation, to deduct from the shares of Stock issuable to a Participant upon
the exercise or settlement of an Award, or to accept from the Participant the
tender of, a number of whole shares of Stock having a Fair Market Value, as
determined by the Company, equal to all or any part of the tax withholding
obligations of the Participating Company Group. The Fair Market Value of any
shares of Stock withheld or tendered to satisfy any such tax withholding
obligations shall not exceed the amount determined by the applicable minimum
statutory withholding rates.

 

13. Termination or Amendment of Plan.

The Committee may terminate or amend the Plan at any time. However, subject to
changes in applicable law, regulations or rules that would permit otherwise,
without the approval of the Company’s stockholders, there shall be (a) no
increase in the maximum aggregate number of shares of Stock that may be issued
under the Plan (except by operation of the provisions of Section 4.2), (b) no
change in the class of persons eligible to receive Incentive Stock Options, and
(c) no other amendment of the Plan that would require approval of the Company’s

 

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stockholders under any applicable law, regulation or rule. No termination or
amendment of the Plan shall affect any then outstanding Award unless expressly
provided by the Committee. In any event, no termination or amendment of the Plan
may adversely affect any then outstanding Award without the consent of the
Participant, unless such termination or amendment is required to enable an
Option designated as an Incentive Stock Option to qualify as an Incentive Stock
Option or is necessary to comply with any applicable law, regulation or rule.

 

14. Miscellaneous Provisions.

14.1 Rights as Employee, Consultant or Director. No person, even though eligible
pursuant to Section 5, shall have a right to be selected as a Participant, or,
having been so selected, to be selected again as a Participant. Nothing in the
Plan or any Award granted under the Plan shall confer on any Participant a right
to remain an Employee, Consultant or Director, or interfere with or limit in any
way the right of a Participating Company to terminate the Participant’s Service
at any time.

14.2 Rights as a Stockholder. A Participant shall have no rights as a
stockholder with respect to any shares covered by an Award until the date of the
issuance of a certificate for such shares (as evidenced by the appropriate entry
on the books of the Company or of a duly authorized transfer agent of the
Company). No adjustment shall be made for dividends, distributions or other
rights for which the record date is prior to the date such certificate is
issued, except as provided in Section 4.2 or another provision of the Plan.

 

15. Stockholder Approval.

The Plan or any increase in the maximum aggregate number of shares of Stock
issuable thereunder as provided in Section 4.1 (the “Authorized Shares”) shall
be approved by the stockholders of the Company within twelve (12) months of the
date of adoption thereof by the Board or it shall expire. Awards granted prior
to stockholder approval of the Plan or in excess of the Authorized Shares
previously approved by the stockholder shall become exercisable no earlier than
the date of stockholder approval of the Plan or such increase in the Authorized
Shares, as the case may be.

IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies that the
foregoing sets forth the IdentiPHI, Inc. 2007 Equity Incentive Plan as duly
adopted by the Board on August 30, 2007, and as duly adopted by the Company’s
stockholders on February 7, 2008.

 

   Secretary

 

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PLAN HISTORY

 

August 30, 2007    Board of Saflink Corporation, a Delaware corporation, adopts
Plan February 7, 2008    Stockholders of Saflink Corporation approve Plan
February 11, 2008    Saflink Corporation corporate name changed to “IdentiPHI,
Inc.”