Exhibit 10.12

 

BORLAND SOFTWARE CORPORATION

 

1998 NONSTATUTORY STOCK OPTION PLAN

 

  1.   ESTABLISHMENT, PURPOSE AND TERM OF PLAN.

 

1.1    Establishment.  The Borland Software Corporation 1998 Nonstatutory Stock
Option Plan (the “Plan”) is hereby established effective as of January 28, 1998
(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.

 

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 Options
granted under the Plan have lapsed.

 

  2.   DEFINITIONS AND CONSTRUCTION.

 

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

 

(a)    “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 Committee(s).

 

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

 

(c)    “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. 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.

 

(d)    “Company” means Borland Software Corporation, a Delaware corporation, or
any successor corporation thereto.

 

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(e)    “Consultant” means any person, including an advisor, engaged by a
Participating Company to render services other than as an Employee or a
Director.

 

(f)    “Director” means a member of the Board.

 

(g)    “Disability” means the permanent and total disability of the Optionee
within the meaning of Section 22(e)(3) of the Code.

 

(h)    “Employee” means any person treated as an employee in the records of a
Participating Company. 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 governmental agency subsequently makes a
contrary determination.

 

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

 

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

 

(i)    If, on such date, there is a public market for the Stock, 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 Small-Cap
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 Board, in its
sole discretion.

 

(ii)    If, on such date, there is no public market for the Stock, the Fair
Market Value of a share of Stock shall be as determined by the Board without
regard to any restriction other than a restriction which, by its terms, will
never lapse.

 

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

 

(l)    “Nonstatutory Stock Option” means an Option not intended to be an
incentive stock option within the meaning of Section 422(b) of the Code.

 

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(m)    “Option” means a right to purchase Stock (subject to adjustment as
provided in Section 4.2) pursuant to the terms and conditions of the Plan. All
Options shall be Nonstatutory Stock Options.

 

(n)    “Option Agreement” means a written agreement between the Company and an
Optionee setting forth the terms, conditions and restrictions of the Option
granted to the Optionee and any shares acquired upon the exercise thereof.

 

(o)    “Optionee” means a person who has been granted one or more Options.

 

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

 

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

 

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

 

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

 

(t)    “Service” means an Optionee’s employment or service with the
Participating Company Group, whether in the capacity of an Employee, a Director
or a Consultant. An Optionee’s Service shall not be deemed to have terminated
merely because of a change in the capacity in which the Optionee renders Service
to the Participating Company Group or a change in the Participating Company for
which the Optionee renders such Service, provided that there is no interruption
or termination of the Optionee’s Service. An Optionee’s Service with the
Participating Company Group shall not be deemed to have terminated if the
Optionee takes any military leave, sick leave, or other bona fide leave of
absence approved by the Company; provided, however, that, unless otherwise
designated by the Company or required by law, a leave of absence shall not be
treated as Service for purposes of determining vesting under the Optionee’s
Option Agreement. An Optionee’s Service shall be deemed to have terminated
either upon an actual termination of Service or upon the corporation for which
the Optionee performs Service ceasing to be a Participating Company. Subject to
the foregoing, the Company, in its sole discretion, shall determine whether an
Optionee’s Service has terminated and the effective date of such termination.

 

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

 

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

 

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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 Board.  The Plan shall be administered by the
Board. All questions of interpretation of the Plan or of any Option shall be
determined by the Board, and such determinations shall be final and binding upon
all persons having an interest in the Plan or such Option. Any officer of a
Participating Company 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.

 

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

 

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

 

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

 

(c)    to determine the terms, conditions and restrictions applicable to each
Option (which need not be identical) and any shares acquired upon the exercise
thereof, including, without limitation, (i) the exercise price of the Option,
(ii) the method of payment for shares purchased upon the exercise of the Option,
(iii) the method for satisfaction of any tax withholding obligation arising in
connection with the Option or such shares, including by the withholding or
delivery of shares of stock, (iv) the timing, terms and conditions of the
exercisability of the Option or the vesting of any shares acquired upon the
exercise thereof, (v) the time of the expiration of the Option, (vi) the effect
of the Optionee’s termination of Service with the Participating Company Group on
any of the foregoing, and (vii) all other terms, conditions and restrictions
applicable to the Option or such shares not inconsistent with the terms of the
Plan;

 

(d)    to approve one or more forms of Option Agreement;

 

(e)    to amend, modify, extend, cancel, renew, or grant a new Option in
substitution for, any Option or to waive any restrictions or conditions
applicable to any Option or any shares acquired upon the exercise thereof;

 

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(f)    to accelerate, continue, extend or defer the exercisability of any Option
or the vesting of any shares acquired upon the exercise thereof, including with
respect to the period following an Optionee’s termination of Service with the
Participating Company Group;

 

(g)    to delegate to any proper officer of the Company the authority to grant
one or more Options, without further approval of the Board, to any person
eligible pursuant to Section 5, other than a person who, at the time of such
grant, is an Insider; provided, however, that (i) such Options shall not be
granted to any one person within any fiscal year of the Company for more than
250,000 shares in the aggregate, (ii) the exercise price per share of each such
Option shall be equal to the Fair Market Value per share of the Stock on the
effective date of grant (or, if the Stock has not traded on such date, on the
last day preceding the effective date of grant on which the Stock was traded),
and (iii) each such Option shall be subject to the terms and conditions of the
appropriate standard form of Option Agreement approved by the Board and shall
conform to the provisions of the Plan and such other guidelines as shall be
established from time to time by the Board;

 

(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 Board 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 Options; and

 

(i)    to correct any defect, supply any omission or reconcile any inconsistency
in the Plan or any Option Agreement and to make all other determinations and
take such other actions with respect to the Plan or any Option as the Board may
deem advisable to the extent consistent with the Plan and applicable law.

 

  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 two hundred thousand (200,000) and shall consist of
authorized but unissued or reacquired shares of Stock or any combination
thereof. If an outstanding Option for any reason expires or is terminated or
canceled, or if shares of Stock acquired, subject to repurchase, upon the
exercise of an Option are repurchased by the Company, the shares of Stock
allocable to the unexercised portion of such Option or such repurchased shares
of Stock shall again be available for issuance under the Plan.

 

4.2    Adjustments for Changes in Capital Structure.  In the event of any stock
dividend, stock split, reverse stock split, recapitalization, combination,
reclassification or similar change in the capital structure of the Company,
appropriate adjustments shall be made in the number and class of shares subject
to the Plan and to any outstanding Options and in the exercise price per share
of any outstanding Options. If a majority of the shares which are of the same
class as the shares that are subject to outstanding Options are exchanged for,
converted

 

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into, or otherwise become (whether or not pursuant to an Ownership Change Event,
as defined in Section 8.1) shares of another corporation (the “New Shares”), the
Board may unilaterally amend the outstanding Options to provide that such
Options are exercisable for New Shares. In the event of any such amendment, the
number of shares subject to, and the exercise price per share of, the
outstanding Options shall be adjusted in a fair and equitable manner as
determined by the Board, in its sole discretion. Notwithstanding the foregoing,
any fractional share resulting from an adjustment pursuant to this Section 4.2
shall be rounded up or down to the nearest whole number, as determined by the
Board, and in no event may the exercise price of any Option be decreased to an
amount less than the par value, if any, of the stock subject to the Option. The
adjustments determined by the Board pursuant to this Section 4.2 shall be final,
binding and conclusive.

 

  5.   ELIGIBILITY AND OPTION LIMITATIONS.

 

5.1    Persons Eligible for Options.  Options may be granted only to Employees
and Consultants. For purposes of the foregoing sentence, “Employees” and
“Consultants” shall include prospective Employees and prospective Consultants to
whom Options are granted in connection with written offers of employment or
other service relationship with the Participating Company Group. However,
notwithstanding any other provision herein to the contrary, no person shall be
eligible to be granted an Option under the Plan whose eligibility would require
approval of the Plan by the stockholders of the Company under any law or
regulation or the rules of any stock exchange or market system upon which the
Stock may then be listed. If not inconsistent with any such law, regulation or
rule, an Option may be granted to a person, not previously employed by the
Company, as an inducement essential to entering into an employment contract with
the Company. Eligible persons may be granted more than one (1) Option.

 

5.2    Options Authorized.  Options granted under the Plan may only be
Nonstatutory Stock Options.

 

  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 Board 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 sole discretion of the Board; provided, however, that the exercise price
per share shall be not less than eighty-five percent (85%) of the Fair Market
Value of a share of Stock on the effective date of grant of the Option.
Notwithstanding the foregoing, an Option may be granted with an exercise price
lower than the minimum exercise price set forth above if such Option is granted

 

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pursuant to an assumption or substitution for another option in the manner
described in Section 424(a) of the Code.

 

6.2    Exercise Period.  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 Board and set forth in
the Option Agreement evidencing such Option; provided, however, that no Option
granted to a prospective Employee or prospective Consultant may become
exercisable prior to the date on which such person commences Service with a
Participating Company. Subject to the foregoing, unless otherwise specified by
the Board in the grant of an Option, any Option granted hereunder shall have a
term of ten (10) years from the effective date of the grant of the Option.

 

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 of shares of Stock owned by the Optionee having a
Fair Market Value (as determined by the Company without regard to any
restrictions on transferability applicable to such stock by reason of federal or
state securities laws or agreements with an underwriter for the Company) not
less than the exercise price, (iii) by the assignment 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 Optionee is an Employee, by cash for a
portion of the aggregate exercise price not less than the par value of the
shares being acquired and the Optionee’s promissory note in a form approved by
the Company for the balance of the aggregate exercise price, (v) by such other
consideration as may be approved by the Board from time to time to the extent
permitted by applicable law, or (vi) by any combination thereof. The Board may
at any time or from time to time, by adoption of or by amendment to the standard
forms of Option Agreement described in Section 7, 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)    Tender of Stock.  Notwithstanding the foregoing, an Option may not be
exercised by tender to the Company of shares of Stock to the extent such tender
of Stock 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 Board, an Option may not be exercised by tender to the Company
of shares of Stock unless such shares either have been owned by the Optionee for
more than six (6) months or were not acquired, directly or indirectly, from the
Company.

 

(c)    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

 

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terminate any program or procedures for the exercise of Options by means of a
Cashless Exercise.

 

(d)    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 Board shall
determine at the time the Option is granted. The Board shall have the authority
to permit or require the Optionee 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 Board, 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 Optionee shall pay the unpaid principal and accrued
interest, if any, to the extent necessary to comply with such applicable
regulations.

 

6.4    Tax Withholding.  The Company shall have the right, but not the
obligation, to deduct from the shares of Stock issuable upon the exercise of an
Option, or to accept from the Optionee 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 federal, state, local and foreign taxes, if any, required by
law to be withheld by the Participating Company Group with respect to such
Option or the shares acquired upon the exercise thereof. Alternatively or in
addition, in its sole discretion, the Company shall have the right to require
the Optionee, through payroll withholding, cash payment or otherwise, including
by means of a Cashless Exercise, to make adequate provision for any such tax
withholding obligations of the Participating Company Group arising in connection
with the Option or the shares acquired upon the exercise thereof. The Company
shall have no obligation to deliver shares of Stock until the Participating
Company Group’s tax withholding obligations have been satisfied by the Optionee.

 

6.5    Effect of Termination of Service.

 

(a)    Option Exercisability.  Subject to earlier termination of the Option as
otherwise provided herein, an Option shall be exercisable after an Optionee’s
termination of Service as follows:

 

(i)    Disability.  If the Optionee’s Service with the Participating Company
Group is terminated because of the Disability of the Optionee, the Option, to
the extent unexercised and exercisable on the date on which the Optionee’s
Service terminated, may be exercised by the Optionee (or the Optionee’s guardian
or legal representative) at any time prior to the expiration of twelve (12)
months (or such longer or shorter period of time as determined by the Board, in
its sole discretion) after the date on which the Optionee’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 Optionee’s Service with the Participating Company Group
is terminated because of the death of the Optionee, the Option, to the extent

 

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

 

(iii)    Other Termination of Service.  If the Optionee’s Service with the
Participating Company Group terminates for any reason, except Disability, death
or Cause, as provided in Section 6.5(d) below, the Option, to the extent
unexercised and exercisable by the Optionee on the date on which the Optionee’s
Service terminated, may be exercised by the Optionee within three (3) months (or
such longer or shorter period of time as determined by the Board, in its sole
discretion) after the date on which the Optionee’s Service terminated, but in
any event no later than the Option Expiration Date.

 

(b)    Extension if Exercise Prevented by Law.  Notwithstanding the foregoing,
if the exercise of an Option within the applicable time periods set forth in
Section 6.5(a) is prevented by the provisions of Section 11 below, the Option
shall remain exercisable until three (3) months after the date the Optionee is
notified by the Company that the Option is exercisable, but in any event no
later than the Option Expiration Date.

 

(c)    Extension if Optionee Subject to Section16(b).  Notwithstanding the
foregoing, if a sale within the applicable time periods set forth in Section
6.5(a) of shares acquired upon the exercise of the Option would subject the
Optionee 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 Optionee would no
longer be subject to such suit, (ii) the one hundred and ninetieth (190th) day
after the Optionee’s termination of Service, or (iii) the Option Expiration
Date.

 

(d)    Termination for Cause.  Except as otherwise provided in a contract of
employment or service between a Participating Company and an Optionee, and
notwithstanding any other provision of the Plan to the contrary, if the
Optionee’s Service with the Participating Company Group is terminated for Cause
as defined below, the Option shall terminate and cease to be exercisable
immediately upon such termination of Service. For purposes of this Section
6.5(d), “Cause” shall mean any of the following: (1) the Optionee’s theft,
dishonesty, or falsification of any Participating Company documents or records;
(2) the Optionee’s improper use or disclosure of a Participating Company’s
confidential or proprietary information; (3) any action by the Optionee which
has a detrimental effect on a Participating Company’s reputation or business;
(4) the Optionee’s failure or inability to perform any reasonable assigned
duties after written notice from the Participating Company Group of, and a
reasonable opportunity to cure, such failure or inability; (5) any material
breach by the Optionee of any agreement of employment or service between the
Optionee and the Participating Company Group, which breach is not cured pursuant
to the terms of such agreement; or (6) the Optionee’s

 

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conviction (including any plea of guilty or nolo contendere) of any criminal act
which impairs the Optionee’s ability to perform his or her duties with the
Participating Company Group. A determination by the Board that the Optionee was
terminated for Cause shall be final and binding upon the Optionee for all
purposes and shall not be subject to review by any governmental agency or court
of law.

 

  7.   STANDARD FORMS OF OPTION AGREEMENT.

 

7.1    Nonstatutory Stock Option Agreement.  Unless otherwise provided by the
Board at the time the Option is granted, each Option shall comply with and be
subject to the terms and conditions set forth in the appropriate form of
Nonstatutory Stock Option Agreement adopted by the Board concurrently with its
adoption of the Plan and as amended from time to time.

 

7.2    Authority to Vary Terms.  The Board shall have the authority from time to
time to vary the terms of any of the standard forms of Option Agreement
described in this Section 7 either in connection with the grant or amendment of
an individual Option 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 Option Agreement are not
inconsistent with the terms of the Plan.

 

  8.   CHANGE IN CONTROL.

 

8.1    Definitions.  Except as otherwise determined by the Board and set forth
in an Option Agreement, the following terms shall have their respective meanings
set forth below:

 

(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, the “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

 

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ownership of more than fifty percent (50%) of the total combined voting power of
the outstanding voting stock of the Company or the corporation or corporations
to which the assets of the Company were transferred (the “Transferee
Corporation(s)”), 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 stock of one or more corporations which,
as a result of the Transaction, own the Company or the Transferee
Corporation(s), as the case may be, either directly or through one or more
subsidiary corporations. The Board shall have the right to determine whether
multiple sales or exchanges of the voting stock of the Company or multiple
Ownership Change Events are related, and its determination shall be final,
binding and conclusive.

 

8.2    Effect of Change in Control on Options.  In the event of a Change in
Control, the surviving, continuing, successor, or purchasing corporation or
parent corporation thereof, as the case may be (the “Acquiring Corporation”),
may 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. For purposes of this Section 8.2, an Option shall
be deemed assumed if, following the Change in Control, the Option confers the
right to purchase in accordance with its terms and conditions, for each share of
Stock subject to the Option immediately prior to the Change in Control, the
consideration (whether stock, cash or other securities or property) to which a
holder of a share of Stock on the effective date of the Change in Control was
entitled. The Board may, in its sole discretion, provide in any Option Agreement
that, in the event of a Change in Control, the exercisability and vesting of the
outstanding Option shall accelerate upon such circumstances and to such extent
as specified in such Option Agreement. The exercise or vesting of any Option
that was permissible solely by reason of such provision 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, if the corporation the stock of which is
subject to the outstanding Options immediately prior to an Ownership Change
Event described in Section 8.1(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 Board otherwise provides in its sole
discretion.

 

  9.   PROVISION OF INFORMATION.

 

Each Optionee shall be given access to information concerning the Company
equivalent to that information generally made available to the Company’s common
stockholders.

 

  10.   TRANSFERABILITY OF OPTIONS.

 

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During the lifetime of the Optionee, an Option shall be exercisable only by the
Optionee or the Optionee’s guardian or legal representative. No Option shall be
assignable or transferable by the Optionee, except by will or by the laws of
descent and distribution. Notwithstanding the foregoing, an Option shall be
assignable or transferable to the extent permitted by the Board and set forth in
the Option Agreement evidencing such Option.

 

  11.   COMPLIANCE WITH SECURITIES LAW.

 

The grant of Options and the issuance of shares of Stock upon exercise of
Options shall be subject to compliance with all applicable requirements of
federal, state or foreign law with respect to such securities. Options may not
be exercised if the issuance of shares of Stock upon exercise would constitute a
violation of any applicable federal, state or foreign securities laws or other
law or regulations or the requirements of any stock exchange or market system
upon which the Stock may then be listed. In addition, no Option may be exercised
unless (a) a registration statement under the Securities Act shall at the time
of exercise of the Option be in effect with respect to the shares issuable upon
exercise of the Option or (b) in the opinion of legal counsel to the Company,
the shares issuable upon exercise of the Option 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 the exercise of any Option, the Company may require the
Optionee 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.   INDEMNIFICATION.

 

In addition to such other rights of indemnification as they may have as members
of the Board or officers or employees of the Participating Company Group,
members of the Board and any officers or employees of the Participating Company
Group to whom authority to act for the Board 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.

 

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  13.   TERMINATION OR AMENDMENT OF PLAN.

 

The Board may terminate or amend the Plan at any time. However, no termination
or amendment of the Plan may adversely affect any then outstanding Option or any
unexercised portion thereof, without the consent of the Optionee, unless such
termination or amendment is necessary to comply with any applicable law,
regulation or rule.

 

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PLAN HISTORY

 

   

January 28, 1998

  

Board adopts Plan, with an initial share reserve of 200,000 shares.

   

April 21, 1998

  

Board ratifies the approval of the final form of the Plan.