Exhibit 10.11

 

TRULI MEDIA GROUP, INC.

2017 EQUITY INCENTIVE PLAN

  

1. Scope of Plan; Definitions.

 

(a) This 2017 Equity Incentive Plan (the “Plan”) is intended to advance the
interests of Truli Media Group, Inc. (the “Company”) and its Related
Corporations by enhancing the ability of the Company to attract and retain
qualified employees, consultants, Officers, and directors, by creating
incentives and rewards for their contributions to the success of the Company and
its Related Corporations. This Plan will provide to (a) Officers and other
employees of the Company and its Related Corporations opportunities to purchase
common stock (“Common Stock”) of the Company pursuant to Options granted
hereunder which qualify as incentive stock options (“ISOs”) under Section 422(b)
of the Internal Revenue Code of 1986 (the “Code”), (b) directors, Officers,
employees, and consultants of the Company and Related Corporations opportunities
to purchase Common Stock in the Company pursuant to options granted hereunder
which do not qualify as ISOs (“Non-Qualified Options”); (c) directors, Officers,
employees, and consultants of the Company and Related Corporations opportunities
to receive shares of Common Stock of the Company which normally are subject to
restrictions on sale (“Restricted Stock”); (d) directors, Officers, employees,
and consultants of the Company and Related Corporations opportunities to receive
grants of stock appreciation rights (“SARs”); and (e) directors, Officers,
employees, and consultants of the Company and Related Corporations opportunities
to receive grants of restricted stock units (“RSUs”). ISOs and Non-Qualified
Options are referred to hereafter as (“Options”). Options, Restricted Stock and
RSUs are sometimes referred to hereafter collectively as (“Stock Rights”). Any
of the Options and/or Stock Rights may in the Compensation Committee’s
discretion be issued in tandem to one or more other Options and/or Stock Rights
to the extent permitted by law.

 

(b) For purposes of the Plan, capitalized words and terms shall have the
following meaning:

 

“Board” means the board of directors of the Company.

 

“Change of Control” means the occurrence of any of the following events: (i) the
consummation of the sale or disposition by the Company of all or substantially
all of the Company’s assets in a transaction which requires shareholder approval
under applicable state law; or (ii) the consummation of a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity or its parent) at least 50% of the total voting power
represented by the voting securities of the Company or such surviving entity or
its parent outstanding immediately after such merger or consolidation.

 

“Code” has the meaning given to it in Section 1(a).

 

“Common Stock” has the meaning given to it in Section 1(a).

  

 

 

 

“Company” has the meaning given to it in Section 1(a).

 

“Compensation Committee” means the compensation committee of the Board, if any,
which shall consist of two or more members of the Board, each of whom shall be
both an “outside director” within the meaning of Section 162(m) of the Code and
a “non-employee director” within the meaning of Rule 16b-3. All references in
this Plan to the Compensation Committee shall mean the Board when (i) there is
no Compensation Committee or (ii) the Board has retained the power to administer
this Plan.

 

“Disability” means “permanent and total disability” as defined in Section
22(e)(3) of the Code or successor statute.

 

“Disqualifying Disposition” means any disposition (including any sale) of Common
Stock underlying an ISO before the later of (i) two years after the date of
employee was granted the ISO or (ii) one year after the date the employee
acquired Common Stock by exercising the ISO.

 

“Exchange Act” means the Securities Exchange Act of 1934.

 

“Fair Market Value” shall be determined as of the last Trading Day before the
date a Stock Right is granted and shall mean:

 

(1) the closing price on the principal market if the Common Stock is listed on a
national securities exchange or the OTCQB or OTCQX.

 

(2) if the Company’s shares are not listed on a national securities exchange or
the OTCQB or OTCQX, then the closing price if reported or the average bid and
asked price for the Company’s shares as quoted by OTC Pink;

 

(3) if there are no prices available under clauses (1) or (2), then Fair Market
Value shall be based upon the average closing bid and asked price as determined
following a polling of all dealers making a market in the Company’s Common
Stock; or

 

(4) if there is no regularly established trading market for the Company’s Common
Stock or if the Company’s Common Stock is listed, quoted, or reported under
clauses (1) or (2) but it trades sporadically rather than every day, the Fair
Market Value shall be established by the Board or the Compensation Committee
taking into consideration all relevant factors including the most recent price
at which the Company’s Common Stock was sold.

 

“ISO” has the meaning given to it in Section 1(a).

 

“Non-Qualified Options” has the meaning given to it in Section 1(a).

  

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“Officer” means a person who is an executive officer of the Company and is
required to file ownership reports under Section 16(a) of the Exchange Act.

 

“Option” has the meaning given to it in Section 1(a).

 

“Plan” has the meaning given to it in Section 1(a).

 

“Related Corporation” means a corporation which is a subsidiary corporation with
respect to the Company within the meaning of Section 425(f) of the Code.

 

“Restricted Stock” has the meaning given to it in Section 1(a).

 

“RSU” has the meaning given to it in Section 1(a).

 

“SAR” has the meaning given to it in Section 1(a).

 

“Securities Act” means the Securities Act of 1933.

 

“Stock Rights” has the meaning given to it in Section 1(a).

 

“Trading Day” means a day on which the New York Stock Exchange is open for
business.

 

This Plan is intended to comply in all respects with Rule 16b-3 (“Rule 16b-3”)
and its successor rules as promulgated under Section 16(b) of the Exchange Act
for participants who are subject to Section 16 of the Exchange Act. To the
extent any provision of the Plan or action by the Plan administrators fails to
so comply, it shall be deemed null and void to the extent permitted by law and
deemed advisable by the Plan administrators. Provided, however, such exercise of
discretion by the Plan administrators shall not interfere with the contract
rights of any grantee. In the event that any interpretation or construction of
the Plan is required, it shall be interpreted and construed in order to ensure,
to the maximum extent permissible by law, that such grantee does not violate the
short-swing profit provisions of Section 16(b) of the Exchange Act and that any
exemption available under Rule 16b-3 or other rule is available.

 

2. Administration of the Plan.

 

(a) The Plan may be administered by the entire Board or by the Compensation
Committee. Once appointed, the Compensation Committee shall continue to serve
until otherwise directed by the Board. A majority of the members of the
Compensation Committee shall constitute a quorum, and all determinations of the
Compensation Committee shall be made by the majority of its members present at a
meeting. Any determination of the Compensation Committee under the Plan may be
made without notice or meeting of the Compensation Committee by a writing signed
by all of the Compensation Committee members. Subject to ratification of the
grant of each Stock Right by the Board (but only if so required by applicable
state law), and subject to the terms of the Plan, the Compensation Committee
shall have the authority to (i) determine the employees of the Company and
Related Corporations (from among the class of employees eligible under Section 3
to receive ISOs) to whom ISOs may be granted, and to determine (from among the
class of individuals and entities eligible under Section 3 to receive
Non-Qualified Options, Restricted Stock, RSUs and SARs) to whom Non-Qualified
Options, Restricted Stock, RSUs and SARs may be granted; (ii) determine when
Stock Rights may be granted; (iii) determine the exercise prices of Stock Rights
other than Restricted Stock and RSUs, which shall not be less than the Fair
Market Value; (iv) determine whether each Option granted shall be an ISO or a
Non-Qualified Option; (v) determine when Stock Rights shall become exercisable,
the duration of the exercise period, and when each Stock Right shall vest; (vi)
determine whether restrictions such as repurchase options are to be imposed on
shares subject to or issued in connection with Stock Rights, and the nature of
such restrictions, if any, and (vii) interpret the Plan and promulgate and
rescind rules and regulations relating to it. The interpretation and
construction by the Compensation Committee of any provisions of the Plan or of
any Stock Right granted under it shall be final, binding, and conclusive unless
otherwise determined by the Board. The Compensation Committee may from time to
time adopt such rules and regulations for carrying out the Plan as it may deem
best.

  

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No members of the Compensation Committee or the Board shall be liable for any
action or determination made in good faith with respect to the Plan or any Stock
Right granted under it. No member of the Compensation Committee or the Board
shall be liable for any act or omission of any other member of the Compensation
Committee or the Board or for any act or omission on his own part, including but
not limited to the exercise of any power and discretion given to him under the
Plan, except those resulting from his own gross negligence or willful
misconduct.

 

(b) The Compensation Committee may select one of its members as its chairman and
shall hold meetings at such time and places as it may determine. All references
in this Plan to the Compensation Committee shall mean the Board if no
Compensation Committee has been appointed. From time to time the Board may
increase the size of the Compensation Committee and appoint additional members
thereof, remove members (with or without cause), and appoint new members in
substitution therefor, fill vacancies however caused, or remove all members of
the Compensation Committee and thereafter directly administer the Plan.

 

(c) Stock Rights may be granted to members of the Board, whether such grants are
in their capacity as directors, Officers, or consultants. All grants of Stock
Rights to members of the Board shall in all other respects be made in accordance
with the provisions of this Plan applicable to other eligible persons. Members
of the Board who are either (i) eligible for Stock Rights pursuant to the Plan
or (ii) have been granted Stock Rights may vote on any matters affecting the
administration of the Plan or the grant of any Stock Rights pursuant to the
Plan.

 

(d) In addition to such other rights of indemnification as he may have as a
member of the Board, and with respect to administration of the Plan and the
granting of Stock Rights under it, each member of the Board and of the
Compensation Committee shall be entitled without further act on his part to
indemnification from the Company for all expenses (including advances of
litigation expenses, the amount of judgment, and the amount of approved
settlements made with a view to the curtailment of costs of litigation)
reasonably incurred by him in connection with or arising out of any action,
suit, or proceeding, including any appeal thereof, with respect to the
administration of the Plan or the granting of Stock Rights under it in which he
may be involved by reason of his being or having been a member of the Board or
the Compensation Committee, whether or not he continues to be such member of the
Board or the Compensation Committee at the time of the incurring of such
expenses; provided, however, that such indemnity shall be subject to the
limitations contained in any indemnification agreement between the Company and
the Board member or Officer. The foregoing right of indemnification shall inure
to the benefit of the heirs, executors, or administrators of each such member of
the Board or the Compensation Committee and shall be in addition to all other
rights to which such member of the Board or the Compensation Committee would be
entitled to as a matter of law, contract, or otherwise.

  

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(e) The Board may delegate the powers to grant Stock Rights to Officers to the
extent permitted by the laws of the Company’s state of incorporation.

 

3. Eligible Employees and Others. ISOs may be granted to any employee of the
Company or any Related Corporation. Those Officers and directors of the Company
who are not employees may not be granted ISOs under the Plan. Subject to
compliance with Rule 16b-3 and other applicable securities laws, Non-Qualified
Options, Restricted Stock, RSUs, and SARs may be granted to any director
(whether or not an employee), Officers, employees, or consultants of the Company
or any Related Corporation. The Compensation Committee may take into
consideration a recipient’s individual circumstances in determining whether to
grant an ISO, a Non-Qualified Option, Restricted Stock, RSUs, or a SAR. Granting
of any Stock Right to any individual or entity shall neither entitle that
individual or entity to, nor disqualify him from participation in, any other
grant of Stock Rights.

 

4. Common Stock. The Common Stock subject to Stock Rights shall be authorized
but unissued shares of Common Stock, par value $0.0001, or shares of Common
Stock reacquired by the Company in any manner, including purchase, forfeiture,
or otherwise. The aggregate number of shares of Common Stock which may be issued
pursuant to the Plan is 38,000,000 less any Stock Rights previously granted or
exercised subject to adjustment as provided in Section 14. Provided, however,
500,000 of such shares shall be reserved for future grants to the Company’s
Chief Executive Officer and 300,000 of such shares shall be reserved for future
grants to the Company’s Chief Financial Officer. Any such shares may be issued
under ISOs, Non-Qualified Options, Restricted Stock, RSUs, or SARs, so long as
the number of shares so issued does not exceed the limitations in this Section.
If any Stock Rights granted under the Plan shall expire or terminate for any
reason without having been exercised in full or shall cease for any reason to be
exercisable in whole or in part, or if the Company shall reacquire any unvested
shares, the unpurchased shares subject to such Stock Rights and any unvested
shares so reacquired by the Company shall again be available for grants under
the Plan.

 

5. Granting of Stock Rights.

 

(a) The date of grant of a Stock Right under the Plan will be the date specified
by the Board or Compensation Committee at the time it grants the Stock Right;
provided, however, that such date shall not be prior to the date on which the
Board or Compensation Committee acts to approve the grant. The Board or
Compensation Committee shall have the right, with the consent of the optionee,
to convert an ISO granted under the Plan to a Non-Qualified Option pursuant to
Section 17.

  

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(b) The Board or Compensation Committee shall grant Stock Rights to participants
that it, in its sole discretion, selects. Stock Rights shall be granted on such
terms as the Board or Compensation Committee shall determine, except that ISOs
shall be granted on terms that comply with the Code and regulations thereunder.

 

(c) A SAR entitles the holder to receive, as designated by the Board or
Compensation Committee, cash or shares of Common Stock, value equal to (or
otherwise based on) the excess of: (a) the Fair Market Value of a specified
number of shares of Common Stock at the time of exercise over (b) an exercise
price established by the Board or Compensation Committee. The exercise price of
each SAR granted under this Plan shall be established by the Compensation
Committee or shall be determined by a method established by the Board or
Compensation Committee at the time the SAR is granted, provided the exercise
price shall not be less than $0.02 per share, subject to equitable adjustment,
or such higher price as is established by the Board or Compensation Committee. A
SAR shall be exercisable in accordance with such terms and conditions and during
such periods as may be established by the Board or Compensation Committee.
Shares of Common Stock delivered pursuant to the exercise of a SAR shall be
subject to such conditions, restrictions, and contingencies as the Board or
Compensation Committee may establish in the applicable SAR agreement or
document, if any. The Board or Compensation Committee, in its discretion, may
impose such conditions, restrictions, and contingencies with respect to shares
of Common Stock acquired pursuant to the exercise of each SAR as the Board or
Compensation Committee determines to be desirable. A SAR under the Plan shall be
subject to such terms and conditions, not inconsistent with the Plan, as the
Board or Compensation Committee shall, in its discretion, prescribe. The terms
and conditions of any SAR to any grantee shall be reflected in such form of
agreement as is determined by the Board or Compensation Committee. A copy of
such document, if any, shall be provided to the grantee, and the Board or
Compensation Committee may condition the granting of the SAR on the grantee
executing such agreement.

 

(d) An RSU gives the grantee the right to receive a number of shares of the
Company’s Common Stock on applicable vesting or other dates. Delivery of the
RSUs may be deferred beyond vesting as determined by the Board or Compensation
Committee. RSUs shall be evidenced by an RSU agreement in the form determined by
the Board or Compensation Committee. With respect to an RSU that becomes
non-forfeitable due to the lapse of time, the Compensation Committee shall
prescribe in the RSU agreement the vesting period. With respect to the granting
of an RSU that becomes non-forfeitable due to the satisfaction of certain
pre-established performance-based objectives imposed by the Board or
Compensation Committee, the measurement date of whether such performance-based
objectives have been satisfied shall be a date no earlier than the first
anniversary of the date of the RSU. A recipient who is granted an RSU shall
possess no incidents of ownership with respect to such underlying Common Stock,
although the RSU agreement may provide for payments in lieu of dividends to such
grantee.

 

(e) Notwithstanding any provision of this Plan, the Board or Compensation
Committee may impose conditions and restrictions on any grant of Stock Rights
including forfeiture of vested Options, cancellation of Common Stock acquired in
connection with any Stock Right, and forfeiture of profits.

 

(f) The Options and SARs shall not be exercisable for a period of more than 10
years from the date of grant.

  

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6. Sale of Shares. The shares underlying Stock Rights granted to any Officer,
director, or a beneficial owner of 10% or more of the Company’s securities
registered under Section 12 of the Exchange Act shall not be sold, assigned, or
transferred by the grantee until at least six months elapse from the date of the
grant thereof.

 

7. ISO Minimum Option Price and Other Limitations.

 

(a) The exercise price per share relating to all Options granted under the Plan
shall not be less than $0.02 per share, subject to equitable adjustment. For
purposes of determining the exercise price, the date of the grant shall be the
later of (i) the date of approval by the Board or Compensation Committee or the
Board, or (ii) for ISOs, the date the recipient becomes an employee of the
Company. In the case of an ISO to be granted to an employee owning Common Stock
which represents more than 10% of the total combined voting power of all classes
of stock of the Company or any Related Corporation, the price per share shall
not be less than 110% of the Fair Market Value per share of Common Stock on the
date of grant and such ISO shall not be exercisable after the expiration of five
years from the date of grant.

 

(b) In no event shall the aggregate Fair Market Value (determined at the time an
ISO is granted) of Common Stock for which ISOs granted to any employee are
exercisable for the first time by such employee during any calendar year (under
all stock option plans of the Company and any Related Corporation) exceed
$100,000.

 

8. Duration of Stock Rights. Subject to earlier termination as provided in
Sections 3, 5, 9, 10 and 11, each Option and SAR shall expire on the date
specified in the original instrument granting such Stock Right (except with
respect to any part of an ISO that is converted into a Non-Qualified Option
pursuant to Section 17), provided, however, that such instrument must comply
with Section 422 of the Code with regard to ISOs and Rule 16b-3 with regard to
all Stock Rights granted pursuant to the Plan to Officers, directors, and 10%
shareholders of the Company.

 

9. Exercise of Options and SARs; Vesting of Stock Rights. Subject to the
provisions of Sections 3 and 9 through 13, each Option and SAR granted under the
Plan shall be exercisable as follows:

 

(a) The Options and SARs shall either be fully vested and exercisable from the
date of grant or shall vest and become exercisable in such installments as the
Board or Compensation Committee may specify.

 

(b) Once an installment becomes exercisable it shall remain exercisable until
expiration or termination of the Option and SAR, unless otherwise specified by
the Board or Compensation Committee.

  

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(c) Each Option and SAR or installment, once it becomes exercisable, may be
exercised at any time or from time to time, in whole or in part, for up to the
total number of shares with respect to which it is then exercisable.

 

(d) The Board or Compensation Committee shall have the right to accelerate the
vesting date of any installment of any Stock Right; provided that the Board or
Compensation Committee shall not accelerate the exercise date of any installment
of any Option granted to any employee as an ISO (and not previously converted
into a Non-Qualified Option pursuant to Section 17) if such acceleration would
violate the annual exercisability limitation contained in Section 422(d) of the
Code as described in Section 7(b).

 

10. Termination of Employment. Subject to any greater restrictions or
limitations as may be imposed by the Board or Compensation Committee or by a
written agreement, if an optionee ceases to be employed by the Company and all
Related Corporations other than by reason of death or Disability, no further
installments of his Options shall vest or become exercisable, and his Options
shall terminate as provided for in the grant or on the day 12 months after the
day of the termination of his employment (except three months for ISOs),
whichever is earlier, but in no event later than on their specified expiration
dates. Employment shall be considered as continuing uninterrupted during any
bona fide leave of absence (such as those attributable to illness, military
obligations, or governmental service) provided that the period of such leave
does not exceed 90 days or, if longer, any period during which such optionee’s
right to re-employment is guaranteed by statute. A leave of absence with the
written approval of the Board shall not be considered an interruption of
employment under the Plan, provided that such written approval contractually
obligates the Company or any Related Corporation to continue the employment of
the optionee after the approved period of absence. ISOs granted under the Plan
shall not be affected by any change of employment within or among the Company
and any Related Corporations so long as the optionee continues to be an employee
of the Company or any Related Corporation.

 

11. Death; Disability. Unless otherwise determined by the Board or Compensation
Committee or by a written agreement:

 

(a) If the holder of an Option or SAR ceases to be employed by the Company and
all Related Corporations by reason of his death, any Options or SARs held by the
optionee may be exercised to the extent he could have exercised it on the date
of his death, by his estate, personal representative or beneficiary who has
acquired the Options or SARs by will or by the laws of descent and distribution,
at any time prior to the earlier of: (i) the Options’ or SARs specified
expiration date or (ii) one year (except three months for an ISO) from the date
of death.

 

(b) If the holder of an Option or SAR ceases to be employed by the Company and
all Related Corporations, or a director or Officer can no longer perform his
duties, by reason of his Disability, any Options or SARs held by the optionee
may be exercised to the extent he could have exercised it on the date of
termination due to Disability until the earlier of (i) the Options’ or SARs’
specified expiration date or (ii) one year from the date of the termination.

  

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12. Assignment, Transfer or Sale.

 

(a) No ISO granted under this Plan shall be assignable or transferable by the
grantee except by will or by the laws of descent and distribution, and during
the lifetime of the grantee, each ISO shall be exercisable only by him or his
guardian or legal representative.

 

(b) Except for ISOs, all Stock Rights are transferable subject to compliance
with applicable securities laws and Section 6 of this Plan.

 

13. Terms and Conditions of Stock Rights. Stock Rights shall be evidenced by
instruments (which need not be identical) in such forms as the Board or
Compensation Committee may from time to time approve. Such instruments shall
conform to the terms and conditions set forth in Sections 5 through 12 hereof
and may contain such other provisions as the Board or Compensation Committee
deems advisable which are not inconsistent with the Plan. In granting any Stock
Rights, the Board or Compensation Committee may specify that Stock Rights shall
be subject to the restrictions set forth herein with respect to ISOs, or to such
other termination and cancellation provisions as the Board or Compensation
Committee may determine. The Board or Compensation Committee may from time to
time confer authority and responsibility on one or more of its own members
and/or one or more Officers of the Company to execute and deliver such
instruments. The proper Officers of the Company are authorized and directed to
take any and all action necessary or advisable from time to time to carry out
the terms of such instruments.

 

14. Adjustments Upon Certain Events.

 

(a) Subject to any required action by the shareholders of the Company, the
number of shares of Common Stock covered by each outstanding Stock Right, and
the number of shares of Common Stock which have been authorized for issuance
under the Plan but as to which no Stock Rights have yet been granted or which
have been returned to the Plan upon cancellation or expiration of a Stock Right,
as well as the price per share of Common Stock (or cash, as applicable) covered
by each such outstanding Option or SAR, shall be proportionately adjusted for
any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split, reverse stock split, stock dividend, combination,
or reclassification of Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company or the voluntary cancellation, whether by
virtue of a cashless exercise of a derivative security of the Company or
otherwise, shall not be deemed to have been “effected without receipt of
consideration.” Such adjustment shall be made by the Board or Compensation
Committee, whose determination in that respect shall be final, binding, and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to a Stock
Right. No adjustments shall be made for dividends or other distributions paid in
cash or in property other than securities of the Company.

   

(b) In the event of the proposed dissolution or liquidation of the Company, the
Board or Compensation Committee shall notify each participant as soon as
practicable prior to the effective date of such proposed transaction. To the
extent it has not been previously exercised, a Stock Right will terminate
immediately prior to the consummation of such proposed action.

  

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(c) In the event of a merger of the Company with or into another corporation, or
a Change of Control, each outstanding Stock Right shall be assumed (as defined
below) or an equivalent option or right substituted by the successor corporation
or a parent or subsidiary of the successor corporation. In the event that the
successor corporation refuses to assume or substitute for the Stock Rights, the
participants shall fully vest in and have the right to exercise their Stock
Rights as to which it would not otherwise be vested or exercisable. If a Stock
Right becomes fully vested and exercisable in lieu of assumption or substitution
in the event of a merger or sale of assets, the Board or Compensation Committee
shall notify the participant in writing or electronically that the Stock Right
shall be fully vested and exercisable for a period of at least 15 days from the
date of such notice, and any Options or SARs shall terminate one minute prior to
the closing of the merger or sale of assets.

 

For the purposes of this Section 14(c), the Stock Right shall be considered
“assumed” if, following the merger or Change of Control, the option or right
confers the right to purchase or receive, for each share of Common Stock subject
to the Stock Right immediately prior to the merger or Change of Control, the
consideration (whether stock, cash, or other securities or property) received in
the merger or Change of Control by holders of Common Stock for each share held
on the effective date of the transaction (and if holders were offered a choice
of consideration, the type of consideration chosen by the holders of a majority
of the outstanding shares); provided, however, that if such consideration
received in the merger or Change of Control is not solely common stock of the
successor corporation or its parent, the Board or Compensation Committee may,
with the consent of the successor corporation, provide for the consideration to
be received upon the exercise of the Stock Right, for each share of Common Stock
subject to the Stock Right, to be solely common stock of the successor
corporation or its parent equal in Fair Market Value to the per share
consideration received by holders of Common Stock in the merger or Change of
Control.

 

(d) Notwithstanding the foregoing, any adjustments made pursuant to Section
14(a), (b) or (c) with respect to ISOs shall be made only after the Board or
Compensation Committee, after consulting with counsel for the Company,
determines whether such adjustments would constitute a “modification” of such
ISOs (as that term is defined in Section 425(h) of the Code) or would cause any
adverse tax consequences for the holders of such ISOs. If the Board or
Compensation Committee determines that such adjustments made with respect to
ISOs would constitute a modification of such ISOs, it may refrain from making
such adjustments.

 

(e) No fractional shares shall be issued under the Plan and the optionee shall
receive from the Company cash in lieu of such fractional shares.

  

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15. Means of Exercising Stock Rights.

 

(a) An Option or SAR (or any part or installment thereof) shall be exercised by
giving written notice to the Company at its principal office address. Such
notice shall identify the Stock Right being exercised and specify the number of
shares as to which such Stock Right is being exercised, accompanied by full
payment of the exercise price therefor (to the extent it is exercisable in cash)
either (i) in United States dollars by check or wire transfer; or (ii) at the
discretion of the Board or Compensation Committee, through delivery of shares of
Common Stock having a Fair Market Value equal as of the date of the exercise to
the cash exercise price of the Stock Right; or (iii) at the discretion of the
Board or Compensation Committee, by any combination of (i) and (ii) above. If
the Board or Compensation Committee exercises its discretion to permit payment
of the exercise price of an ISO by means of the methods set forth in clauses
(ii) or (iii) of the preceding sentence, such discretion need not be exercised
in writing at the time of the grant of the Stock Right in question. The holder
of a Stock Right shall not have the rights of a shareholder with respect to the
shares covered by his Stock Right until the date of issuance of a stock
certificate to him for such shares. Except as expressly provided above in
Section 14 with respect to changes in capitalization and stock dividends, no
adjustment shall be made for dividends or similar rights for which the record
date is before the date such stock certificate is issued.

 

(b) Each notice of exercise shall, unless the shares of Common Stock are covered
by a then current registration statement under the Securities Act, contain the
holder’s acknowledgment in form and substance satisfactory to the Company that
(i) such shares are being purchased for investment and not for distribution or
resale (other than a distribution or resale which, in the opinion of counsel
satisfactory to the Company, may be made without violating the registration
provisions of the Securities Act), (ii) the holder has been advised and
understands that (1) the shares have not been registered under the Securities
Act and are “restricted securities” within the meaning of Rule 144 under the
Securities Act and are subject to restrictions on transfer and (2) the Company
is under no obligation to register the shares under the Securities Act or to
take any action which would make available to the holder any exemption from such
registration, and (iii) such shares may not be transferred without compliance
with all applicable federal and state securities laws. Notwithstanding the
above, should the Company be advised by counsel that issuance of shares should
be delayed pending registration under federal or state securities laws or the
receipt of an opinion that an appropriate exemption therefrom is available, the
Company may defer exercise of any Stock Right granted hereunder until either
such event has occurred.

 

16. Term, Termination, and Amendment.

 

(a) This Plan was adopted by the Board. This Plan may be approved by the
Company’s shareholders, which approval is required for ISOs.

 

(b) The Board may terminate the Plan at any time. Unless sooner terminated, the
Plan shall terminate on October 24, 2027. No Stock Rights may be granted under
the Plan once the Plan is terminated. Termination of the Plan shall not impair
rights and obligations under any Stock Right granted while the Plan is in
effect, except with the written consent of the grantee.

 

(c) The Board at any time, and from time to time, may amend the Plan. Provided,
however, except as provided in Section 14 relating to adjustments in Common
Stock, no amendment shall be effective unless approved by the shareholders of
the Company to the extent (i) shareholder approval is necessary to satisfy the
requirements of Section 422 of the Code or (ii) required by the rules of the
principal national securities exchange or trading market upon which the
Company’s Common Stock trades. Rights under any Stock Rights granted before
amendment of the Plan shall not be impaired by any amendment of the Plan, except
with the written consent of the grantee.

  

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(d) The Board at any time, and from time to time, may amend the terms of any one
or more Stock Rights; provided, however, that the rights under the Stock Right
shall not be impaired by any such amendment, except with the written consent of
the grantee.

 

17. Conversion of ISOs into Non-Qualified Options; Termination of ISOs. The
Board or Compensation Committee, at the written request of any optionee, may in
its discretion take such actions as may be necessary to convert such optionee’s
ISOs (or any installments or portions of installments thereof) that have not
been exercised on the date of conversion into Non-Qualified Options at any time
prior to the expiration of such ISOs, regardless of whether the optionee is an
employee of the Company or a Related Corporation at the time of such conversion.
Provided, however, the Board or Compensation Committee shall not reprice the
Options or extend the exercise period or reduce the exercise price of the
appropriate installments of such Options without the approval of the Company’s
shareholders. At the time of such conversion, the Board or Compensation
Committee (with the consent of the optionee) may impose such conditions on the
exercise of the resulting Non-Qualified Options as the Board or Compensation
Committee in its discretion may determine, provided that such conditions shall
not be inconsistent with this Plan. Nothing in the Plan shall be deemed to give
any optionee the right to have such optionee’s ISOs converted into Non-Qualified
Options, and no such conversion shall occur until and unless the Board or
Compensation Committee takes appropriate action. The Compensation Committee,
with the consent of the optionee, may also terminate any portion of any ISO that
has not been exercised at the time of such termination.

 

18. Application of Funds. The proceeds received by the Company from the sale of
shares pursuant to Options or SARS (if cash settled) granted under the Plan
shall be used for general corporate purposes.

 

19. Governmental Regulations. The Company’s obligation to sell and deliver
shares of the Common Stock under this Plan is subject to the approval of any
governmental authority required in connection with the authorization, issuance,
or sale of such shares.

 

20. Withholding of Additional Income Taxes. In connection with the granting,
exercise, or vesting of a Stock Right or the making of a Disqualifying
Disposition, the Company, in accordance with Section 3402(a) of the Code, may
require the optionee to pay additional withholding taxes in respect of the
amount that is considered compensation includable in such person’s gross income.

 

To the extent that the Company is required to withhold taxes for federal income
tax purposes as provided above, any optionee may elect to satisfy such
withholding requirement by (i) paying the amount of the required withholding tax
to the Company; (ii) delivering to the Company shares of its Common Stock
(including shares of Restricted Stock) previously owned by the optionee; or
(iii) having the Company retain a portion of the shares covered by an Option
exercise. The number of shares to be delivered to or withheld by the Company
times the Fair Market Value of such shares shall equal the cash required to be
withheld.

  

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21. Notice to Company of Disqualifying Disposition. Each employee who receives
an ISO must agree to notify the Company in writing immediately after the
employee makes a Disqualifying Disposition of any Common Stock acquired pursuant
to the exercise of an ISO. If the employee has died before such stock is sold,
the holding periods requirements of the Disqualifying Disposition do not apply
and no Disqualifying Disposition can occur thereafter.

 

22. Continued Employment. The grant of a Stock Right pursuant to the Plan shall
not be construed to imply or to constitute evidence of any agreement, express or
implied, on the part of the Company or any Related Corporation to retain the
grantee in the employ of the Company or a Related Corporation, as a member of
the Company’s Board, or in any other capacity, whichever the case may be.

 

23. Governing Law; Construction. The validity and construction of the Plan and
the instruments evidencing Stock Rights shall be governed by the laws of the
Company’s state of incorporation. In construing this Plan, the singular shall
include the plural and the masculine gender shall include the feminine and
neuter, unless the context otherwise requires.

 

24. (a) Forfeiture of Stock Rights Granted to Employees or Consultants.
Notwithstanding any other provision of this Plan, and unless otherwise provided
for in a Stock Rights Agreement, all vested or unvested Stock Rights granted to
employees or consultants shall be immediately forfeited at the discretion of the
Board if any of the following events occur:

 

(1) Termination of the relationship with the grantee for cause including, but
not limited to, fraud, theft, dishonesty, and violation of Company policy;

 

(2) Purchasing or selling securities of the Company in violation of the
Company’s insider trading guidelines then in effect;

 

(3) Breaching any duty of confidentiality including that required by the
Company’s insider trading guidelines then in effect;

 

(4) Competing with the Company;

 

(5) Being unavailable for consultation after leaving the Company’s employment if
such availability is a condition of any agreement between the Company and the
grantee;

 

(6) Recruitment of Company personnel after termination of employment, whether
such termination is voluntary or for cause;

 

(7) Failure to assign any invention or technology to the Company if such
assignment is a condition of employment or any other agreements between the
Company and the grantee; or

 

(8) A finding by the Board that the grantee has acted disloyally and/or against
the interests of the Company.

 

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(b) Forfeiture of Stock Rights Granted to Directors. Notwithstanding any other
provision of this Plan, and unless otherwise provided for in a Stock Rights
Agreement, all vested or unvested Stock Rights granted to directors shall be
immediately forfeited at the discretion of the Board if any of the following
events occur:

 

(1) Purchasing or selling securities of the Company in violation of the
Company’s insider trading guidelines then in effect;

 

(2) Breaching any duty of confidentiality including that required by the
Company’s insider trading guidelines then in effect;

 

(3) Competing with the Company;

 

(4) Recruitment of Company personnel after ceasing to be a director; or

 

(5) A finding by the Board that the grantee has acted disloyally and/or against
the interests of the Company.

 

The Company may impose other forfeiture restrictions which are more or less
restrictive and require a return of profits from the sale of Common Stock as
part of said forfeiture provisions if such forfeiture provisions and/or return
of provisions are contained in a Stock Rights Agreement.

 

(c) Profits on the Sale of Certain Shares; Redemption. If any of the events
specified in Section 24(a) or (b) of the Plan occur within one year from the
date the grantee last performed services for the Company in the capacity for
which the Stock Rights were granted (the “Termination Date”) (or such longer
period required by any written agreement), all profits earned from the sale of
the Company’s securities, including the sale of shares of Common Stock
underlying the Stock Rights, during the two-year period commencing one year
prior to the Termination Date shall be forfeited and immediately paid by the
grantee to the Company. Further, in such event, the Company may at its option
redeem shares of Common Stock acquired upon exercise of the Stock Right by
payment of the exercise price to the grantee. To the extent that another written
agreement with the Company extends the events in Section 24(a) or (b) beyond one
year following the Termination Date, the two-year period shall be extended by an
equal number of days. The Company’s rights under this Section 24(c) do not lapse
one year from the Termination Date but are contract rights subject to any
appropriate statutory limitation period.

  

 

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