**EXHIBIT 10.45**

 

**JNI CORPORATION**

 

**AMENDED AND RESTATED**

 

**1999 STOCK OPTION PLAN**

 

**1. ESTABLISHMENT, PURPOSE AND TERM OF PLAN.**

 

1.1 Establishment. This JNI Corporation 1999 Stock Option Plan (the “PLAN”) is hereby established effective as of April 24, 1999, andamended and restated effective October 1999. 

 

1.2Purpose. The purpose of the Plan is to advance the interests of the Participating Company Group and its shareholders by providing an incentive to attract, retain and reward persons performing services for the Participating Company Group andby 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 ofStock 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. However, all Options shall be granted, if at all,within ten (10) years from the earlier of the date the Plan is adopted by the Board or the date the Plan is duly approved by the shareholders of the Company. 

 

**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 ormore 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 othercommittee 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 Boardgranted 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 JNI Corporation, a Delaware corporation, or any successor corporation thereto. 

 

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

(f) “Director” means a member of the Board or of the board of directors of any otherParticipating Company. 

 

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

 

(h) “Employee” means any person treated as anemployee (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 theCode; 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. 

 

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

 

(j) “Fair Market Value” means, as of any date, the value of ashare of Stock or other property as determined by the Board, 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 regionalsecurities 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 theNasdaq 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 Companydeems 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 sotraded prior to the relevant date, or such other appropriate day as shall be determined by the Board, in its 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 in goodfaith without regard to any restriction other than a restriction which, by its terms, will never lapse. 

 

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

 

(l)“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. 

 

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

(n) “Option” means a right to purchase Stock (subject to adjustment as provided in Section4.2) pursuant to the terms and conditions of the Plan. An Option may be either an Incentive Stock Option or a Nonstatutory Stock Option. 

 

(o) “Option Agreement” means a written agreement, including any related form of stock option grant agreement, between the Company and anOptionee setting forth the terms, conditions and restrictions of the Option granted to the Optionee and any shares acquired upon the exercise thereof. 

 

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

 

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

 

(r) “ParticipatingCompany” means the Company or any Parent Corporation or Subsidiary Corporation. 

 

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

 

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

 

(u) “Securities Act” means theSecurities Act of 1933, as amended. 

 

(v) “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. The Optionee’s Service shall not be deemed to have terminated merely because of a change inthe 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’sService. Furthermore, 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 if any such leave exceeds ninety (90) days, on the ninety-first (91st) day of such leave the Optionee’s Service shall be deemed to have terminated unless the Optionee’s right to return to Service with the ParticipatingCompany Group is guaranteed by statute or contract. Notwithstanding the foregoing, 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 theOptionee’s Option Agreement. The 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 discretion, shall determine whether the Optionee’s Service has terminated and the effective date of such termination. 

 

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

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

 

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

 

(z)“Termination of Employment” shall mean the time when the employee-employer relationship between an Optionee and the Participating Company is terminated for any reason, with or without cause, including, but not by way of limitation, atermination by resignation, discharge, death, Disability or retirement; but excluding (i) terminations where there is a simultaneous reemployment or continuing employment of an Optionee by any Participating Company, (ii) at the discretion of theBoard, terminations which result in a temporary severance of the employee-employer relationship, and (iii) at the discretion of the Board, terminations which are followed by the simultaneous establishment of a consulting relationship by aParticipating Company with the former employee. The Board, in its absolute discretion, shall determine the effect of all matters and questions relating to Termination of Employment, including, but not by way of limitation, the question of whether aTermination of Employment resulted from a discharge for good cause, and all questions of whether particular leaves of absence constitute Terminations of Employment; provided, however, that, unless otherwise determined by the Board in its discretion,a leave of absence, change in status from an employee to an independent contractor or other change in the employee-employer relationship shall constitute a Termination of Employment if, and to the extent that, such leave of absence, change in statusor other change interrupts employment for the purposes of Section 422(a)(2) of the Code and the then applicable regulations and revenue rulings under said Section. Notwithstanding any other provision of this Plan, each Participating Company has anabsolute and unrestricted right to terminate an Employee’s employment at any time for any reason whatsoever, with or without cause, except to the extent expressly provided otherwise in writing. 

 

(aa) “Termination without Cause” shall mean the time when theemployee-employer relationship between an Optionee and the Company or any other Participating Company is terminated without cause, as termination without cause is defined in the Optionee’s employment agreement; provided however, that iftermination without cause is not therein defined, it shall have such meaning, in conformance with applicable law, as the Board shall determine is appropriate. 

 

2.2 Construction. Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of anyprovision 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 clearlyrequires otherwise. 

 

**3. ADMINISTRATION.**

 

3.1 Administration by the Board. The Plan shall be administered bythe 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.

 

3.2 Authority of Officers. Any officer of aParticipating 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 officerhas apparent authority with respect to such matter, right, obligation, determination or election. 

 

3.3 Administration with Respect to Insiders. With respect to participation by Insiders in the Plan, at any time that any class of equity securityof 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. 

 

3.4 Powers of the Board. In addition to any other powers set forth in the Plan and subject to the provisions of thePlan, the Board 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, Options shall be granted and the number of shares of Stock to be subject to each Option; 

 

(b) to designate Options as Incentive Stock Options or Nonstatutory StockOptions; 

 

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

 

(d) 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 sharespurchased 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, termsand 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 ParticipatingCompany 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; 

 

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

 

(f) to amend, modify, extend, cancel, renew, reprice or otherwise adjust the exercise price of, or grant a new Option insubstitution for, any Option or to waive any restrictions or conditions applicable to any Option or any shares acquired upon the exercise thereof; 

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

 

(h) to prescribe, amend or rescind rules, guidelines and policies relating to the Plan, or to adopt supplements to, oralternative 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 reconcileany 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 asprovided in Section 4.2, the maximum aggregate number of shares of Stock that may be issued under the Plan shall be Two Million, Three Hundred Twelve Thousand, Eight Hundred (2,312,800) and shall consist of authorized but unissued or reacquiredshares of Stock or any combination thereof. If an outstanding Option for any reason expires or is terminated or canceled or if shares of Stock are acquired upon the exercise of an Option subject to a Company repurchase option and are 5 6 repurchasedby the Company at the Optionee’s exercise price, 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. Notwithstanding the foregoing, atany 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 issuableupon 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 exceedthirty percent (30%) (or such other higher percentage limitation as may be approved by the shareholders of the Company pursuant to Section 260.140.45) of the then outstanding shares of the Company as calculated in accordance with the conditions andexclusions of Section 260.140.45. 

 

4.2 Adjustments forChanges 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 madein 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 tooutstanding Options are exchanged for, converted 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 amendthe 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 andequitable manner as determined by the Board, 

in its discretion. Notwithstanding the foregoing, any fractional share resulting from an adjustment pursuant to thisSection 4.2 shall be rounded down to the nearest whole number, 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 theBoard 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, Consultants, and Directors. For purposes of the foregoing sentence, “Employees,” “Consultants” and“Directors” shall include prospective Employees, prospective Consultants and prospective Directors to whom Options are granted in connection with written offers of an employment or other service relationships with the Participating CompanyGroup. Eligible persons may be granted more than one (1) Option. 

 

5.2 Option Grant Restrictions. Any person who is not an Employee on the effective date of the grant of an Option to such person may be granted only a Nonstatutory Stock Option. An Incentive Stock Option granted to a prospectiveEmployee upon the condition that such person become an Employee shall be deemed granted effective on the date such person commences Service with a Participating Company, with an exercise price determined as of such date in accordance with Section6.1. 

 

5.3 Fair Market Value Limitation. To the extentthat options designated as Incentive Stock Options (granted under all stock option plans of the Participating Company Group, including the Plan) become exercisable by an Optionee for the first time during any calendar year for stock having a FairMarket 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 Optionsshall 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 limitationfrom that set forth in this Section 5.3, such different limitation shall be deemed incorporated herein 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 anIncentive 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 Optionee may designate which portion of such Option the Optionee is exercising. In the absence of suchdesignation, the Optionee 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. 

 

**6. TERMS AND CONDITIONS OF OPTIONS.**

 

Options shall be evidenced by Option Agreements specifying the number ofshares 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. OptionAgreements 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 Optionshall be established in the discretion of the Board; provided, however, that (a) the exercise price per share for an Incentive Stock Option shall be not less than the Fair Market Value of a share of Stock on the effective date of grant of theOption, (b) the exercise price per share for a Nonstatutory Stock Option 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, and (c) no Option granted to a TenPercent Owner Optionee 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 anIncentive 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 mannerqualifying under the provisions of 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 inthe Option Agreement evidencing such Option; provided, however, that (a) no Option shall be exercisable after the expiration of ten (10) years after the effective date of grant of such Option, (b) no Incentive Stock Option granted to a Ten PercentOwner Optionee 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 priorto the date on which such person commences Service with a Participating Company, and (d) with the exception of an Option granted to an officer, Director or Consultant, no Option shall become exercisable at a rate less than twenty percent (20%) peryear over a period of five (5) years from the effective date of grant of such Option, subject to the Optionee’s continued Service. Subject to the foregoing, unless otherwise specified by the Board in the grant of an Option, any Option grantedhereunder shall have a term of ten (10) years from the effective date of 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, or attestation to the ownership, 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 byreason 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 uponthe 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) by the Optionee’s promissory note in a form approved by the Company, (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 OptionAgreement 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) *Limitations on Forms ofConsideration*. 

 

(i) Tender of Stock. Notwithstanding theforegoing, 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 agreementrestricting the redemption of the Company’s stock. Unless otherwise provided by the Board, 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 bythe Optionee for more than six (6) months 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, declineto approve or terminate any program or procedures for the exercise of Options by means of a Cashless Exercise. 

 

(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 anylaw. 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 Optionwith 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 ofGovernors 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 shallpay 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 anOption, 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 bewithheld by the Participating Company Group with respect to such Option or the shares acquired upon the exercise thereof. Alternatively or in addition, in its discretion, the Company shall have the right to require the Optionee, through payrollwithholding, 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 acquiredupon the exercise thereof. The Company shall have no obligation to deliver shares of Stock or to release shares of Stock from an escrow established pursuant to the Option Agreement until the Participating Company Group’s tax withholdingobligations have been satisfied by the Optionee. 

6.5 Repurchase Rights. Shares issued under the Plan may be subject to a right of first refusal,one or more repurchase options, or other conditions and restrictions as determined by the Board in its discretion at the time the Option is granted. The Company shall have the right to assign at any time any repurchase right it may have, whether ornot such right is then exercisable, to one or more persons as may be selected by the Company. Upon request by the Company, each Optionee shall execute any agreement evidencing such transfer restrictions prior to the receipt of shares of Stockhereunder 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. 

 

6.6 Effect of Termination of Service. 

 

(a) *Option Exercisability*. Subject to earlier termination of theOption 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 period of time as determined by the Board, in its 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 theOption 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 unexercised and exercisable on the date on which theOptionee’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 period of time as determined by the Board, in its 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 bedeemed to have terminated on account of death if the Optionee dies within thirty (30) days (or such longer period of time as determined by the Board, in its discretion) after the Optionee’s termination of Service. 

 

(iii) Other Termination of Service. If the Optionee’s Service with theParticipating Company Group terminates for any reason, except Disability or death, 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 Optioneewithin three (3) months (or such longer period of time as determined by the Board, in its 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 theforegoing, if the exercise of an Option within the applicable time periods set forth in Section 6.6(a) is prevented by the provisions of Section 11 below, the Option shall remain exercisable until thirty (30) days (or such longer period of time asdetermined by the Board, in its discretion) 

after the date the Optionee is notified by the Company that the Option is exercisable, but in any event no later than theOption Expiration Date. 

 

(c) *Extension if Optionee Subjectto Section 16(b).* Notwithstanding the foregoing, if a sale within the applicable time periods set forth in Section 6.6(a) of shares acquired upon the exercise of the Option would subject the Optionee to suit under Section 16(b) of the ExchangeAct, 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. 

 

**7. STANDARD FORMS OF OPTION AGREEMENT.**

 

7.1 General. Unless otherwise provided by the Board at the time the Option is granted, an Option shall comply with and be subject to the terms and conditions set forth in the standard form of Option Agreementadopted 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 form of Option Agreementdescribed 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, revisedor amended standard form or forms of Option Agreement are not inconsistent with the terms of the Plan. 

 

**8. CHANGE IN CONTROL.**

 

8.1 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 orindirect sale or exchange in a single or series of related transactions by the shareholders 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) thesale, 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 shareholders 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 votingstock 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 stock of the Company or the corporation or corporations to which theassets 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 ofthe 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 OwnershipChange 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 purposesof 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 theChange 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. Any Options which are neither assumed or substituted for bythe 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 Agreementevidencing such Option except as otherwise provided in such Option Agreement. 

 

8.3 Acceleration of Vesting Upon Certain Events Following Change of Control. In the event of a Change in Control wherein the Acquiring Corporation does assume such Options or substitutes for outstanding Optionssubstantially equivalent options for the Acquiring Corporation’s stock, then, with respect to each Option held by persons then performing services as Employees, the vesting of each Option (and, if applicable, the time during which such Optionmay be exercised) shall be accelerated and such Option shall become vested and exercisable with respect to fifty percent (50%) of the unvested portion of such Option, if, within one (1) year from the date of such Change in Control, either of thefollowing events occurs: (1) a Termination without Cause of an Optionee by the Participating Company or the Acquiring Corporation or (2) the Employee holding such Option effects a Termination of Employment due to the fact that there is a materialreduction in such Employee’s salary (excluding bonuses (whether or not payable in cash), employee benefits or other non-cash compensation) without the Employee’s express consent. 

 

**9. PROVISION OF INFORMATION.**

 

At least annually, copies of the Company’s balance sheet and incomestatement 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 inconnection with the Company assure them access to equivalent information. 

**10. NONTRANSFERABILITY OF OPTIONS.**

 

During the lifetime of the Optionee, an Option shall be exercisable only by the Optionee or the Optionee’s guardian orlegal representative. No Option shall be assignable or transferable by the Optionee, except by will or by the laws of descent and distribution. 

 

**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 offederal, state and 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 orregulations 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 theOption 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 applicableexemption 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 lawfulissuance 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 anyOption, 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 berequested by the Company. 

 

**12. INDEMNIFICATION.**

 

In addition to such other rights of indemnification asthey 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 isdelegated 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 appealtherein, 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 suchsettlement 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 orproceeding 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 theCompany, in writing, the opportunity at its own expense to handle and defend the same. 

 

**13. TERMINATION OR AMENDMENT OF PLAN.**

 

The Board 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 shareholders, there shall be (a) no increase in the maximum aggregate number of shares of Stockthat 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 theCompany’s shareholders under any applicable law, regulation or rule. 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 suchtermination 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. SHAREHOLDER APPROVAL.**

 

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

**JNI CORPORATION**

 

**TERMS OF STOCK OPTION AGREEMENT**

 

The Company has granted to the Optionee, pursuant to a Stock Option Grant Agreement (the “Grant Agreement”) andthe Company’s Amended and Restated 1999 Stock Option Plan (the “Plan”), an Option to purchase certain shares of Stock, upon the terms and conditions set forth in this Agreement. The Option shall in all respects be subject to the termsand conditions of the Grant Agreement and the Plan, the provisions of which are incorporated herein by reference. 

 

**1. DEFINITIONS AND CONSTRUCTION.**

 

1.1 Definitions. Unless otherwise defined herein, capitalized terms shall have the meanings assigned to such terms in the Grant Agreement or thePlan. 

 

1.2 Construction. Captions and titles containedherein are for convenience only and shall not affect the meaning or interpretation of any provision of this Agreement. 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. 

 

**2. TAX CONSEQUENCES.**

 

2.1 Tax Status of Option. As indicated in the Grant Agreement, this Option is intended to be either an Incentive Stock Option within the meaning ofSection 422(b) of the Code or a Nonstatutory Stock Option, which is not intended to qualify as an Incentive Stock Option. The Optionee should consult with the Optionee’s own tax advisor regarding the tax effects of this Option (and anyrequirements necessary to obtain favorable income tax treatment under Section 422 of the Code, including, but not limited to, holding period requirements). 

 

2.2 Fair Market Value Limitation. If this Option is designated an Incentive Stock Option in the Grant Agreement, to the extent that the Option(together with all Incentive Stock Options granted to the Optionee under all stock option plans of the Participating Company Group, including the Plan) becomes exercisable for the first time during any calendar year for shares having a Fair MarketValue greater than One Hundred Thousand Dollars ($100,000), the portion of such options which exceeds such amount will be treated as Nonstatutory Stock Options. For purposes of this Section 2.2, options designated as Incentive Stock Options aretaken into account in the order in which they were granted, and the Fair Market Value of stock is 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 setforth in this Section 2.2, such different limitation shall be deemed incorporated herein effective as of the date required or permitted by such amendment to the Code. If the Option is treated as an Incentive Stock Option in part and as aNonstatutory Stock Option in part by reason of the limitation set forth in this Section 2.2, the Optionee may designate which portion of such Option the Optionee is exercising. In the absence of such designation, the Optionee shall be deemed to haveexercised the Incentive Stock Option portion of the Option first. Separate certificates representing each such portion shall be issued upon the exercise of the Option. (Note to Optionee: If the aggregate Exercise Price of the Option

(that is, the Exercise Price multiplied by the Number of Option Shares) plus the aggregate exercise price of any otherIncentive Stock Options you hold (whether granted pursuant to the Plan or any other stock option plan of the Participating Company Group) is greater than $100,000, you should contact the Chief Financial Officer of the Company to ascertain whetherthe entire Option qualifies as an Incentive Stock Option. 

 

**3. EXERCISE OF THE OPTION.**

 

3.1 Right toExercise. Except as otherwise provided herein, the Option shall be exercisable on and after the first anniversary of the Date of Option Grant and prior to the termination of the Option (as provided in Section 5) in an amount not to exceed theNumber of Option Shares multiplied by the Vested Ratio less the number of shares previously acquired upon exercise of the Option, subject to the Optionee’s agreement that any shares purchased upon exercise are subject to the Company’sRight of First Refusal and Vested Share Repurchase (as such terms are defined herein). 

 

3.2 Method of Exercise. Exercise of the Option shall be by written notice to the Company which must state the election to exercise the Option, the number of whole shares of Stock for which the Option is beingexercised and such other representations and agreements as to the Optionee’s investment intent with respect to such shares as may be required pursuant to the provisions of this Agreement. The written notice must be signed by the Optionee andmust be delivered in person, by certified or registered mail, return receipt requested, by confirmed facsimile transmission, or by such other means as the Company may permit, to the Chief Financial Officer of the Company, or other authorizedrepresentative of the Participating Company Group, prior to the termination of the Option as set forth in Section 5, accompanied by full payment of the aggregate Exercise Price for the number of shares of Stock being purchased and an executed copyif required herein, of the then current form of escrow agreement referenced below. The Option shall be deemed to be exercised upon receipt by the Company of such written notice and the aggregate Exercise Price. 

 

3.3 Payment of Exercise Price. 

 

(a) *Forms of Consideration Authorized*. Except as otherwise providedbelow, payment of the aggregate Exercise Price for the number of shares of Stock for which the Option is being exercised shall be made (i) in cash, by check, or cash equivalent, (ii) by tender to the Company, or attestation to the ownership, ofwhole 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 anunderwriter for the Company) not less than the aggregate Exercise Price, (iii) by means of a Cashless Exercise, as defined in Section 3.3(b), or (iv) by any combination of the foregoing. 

 

(b) *Limitations on Forms of Consideration*. 

 

(i) Tender Of Stock. Notwithstanding the foregoing, the Option may not be exercised by tender to the Company, orattestation to the ownership, of shares of Stock to the extent such tender, or attestation to the ownership, of Stock would constitute a violation of the provisions of any law, regulation or agreement restricting the redemption of the 

Company’s stock. The Option may not be exercised by tender to the Company, or attestation to the ownership, ofshares 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. 

 

(ii) Cashless Exercise. A “Cashless Exercise” means the assignment in a form acceptable to the Company of theproceeds of a sale or loan with respect to some or all of the shares of Stock acquired upon the exercise of the Option pursuant to a program or procedure approved by the Company (including, without limitation, through an exercise complying with theprovisions of Regulation T as promulgated from time to time by the Board of Governors of the Federal Reserve System). The Company reserves, at any and all times, the right, in the Company’s sole and absolute discretion, to decline to approve orterminate any such program or procedure. Generally, and without limiting the Company’s absolute discretion, a “cashless exercise” will only be permitted at such times in which the shares underlying this Option are publicly traded.

 

3.4 Tax Withholding. At the time the Option isexercised, in whole or in part, or at any time thereafter as requested by the Company, the Optionee hereby authorizes withholding from payroll and any other amounts payable to the Optionee, and otherwise agrees to make adequate provision for(including by means of a Cashless Exercise to the extent permitted by the Company), any sums required to satisfy the federal, state, local and foreign tax withholding obligations of the Participating Company Group, if any, which arise in connectionwith the Option, including, without limitation, obligations arising upon (i) the exercise, in whole or in part, of the Option, (ii) the transfer, in whole or in part, of any shares acquired upon exercise of the Option, (iii) the operation of any lawor regulation providing for the imputation of interest, or (iv) the lapsing of any restriction with respect to any shares acquired upon exercise of the Option. The Optionee is cautioned that the Option is not exercisable unless the tax withholdingobligations of the Participating Company Group are satisfied. Accordingly, the Optionee may not be able to exercise the Option when desired even though the Option is vested, and the Company shall have no obligation to issue a certificate for suchshares. 

 

3.5 Certificate Registration. Except in theevent the Exercise Price is paid by means of a Cashless Exercise, the certificate for the shares as to which the Option is exercised shall be registered in the name of the Optionee, or, if applicable, the Optionee’s heirs. 

 

3.6 Restrictions on Grant of the Option and Issuance of Shares. Thegrant of the Option and the issuance of shares of Stock upon exercise of the Option shall be subject to compliance with all applicable requirements of federal, state or foreign law with respect to such securities. The Option may not be exercised ifthe 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 maythen be listed. In addition, the Option may not be exercised unless (i) 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(ii) 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 OPTIONEE ISCAUTIONED THAT THE OPTION MAY NOT BE EXERCISED UNLESS THE FOREGOING CONDITIONS ARE SATISFIED. ACCORDINGLY, THE 

OPTIONEE MAY NOT BE ABLE TO EXERCISE THE OPTION WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED. The inability of theCompany 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 subject to the Option shall relieve the Company of anyliability 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 the Option, the Company may require the Optionee to satisfy any qualifications thatmay 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. 

 

3.7 Fractional Shares. The Company shall not be required to issuefractional shares upon the exercise of the Option. 

 

**4.NONTRANSFERABILITY OF THE OPTION.**

 

The Option may beexercised during the lifetime of the Optionee only by the Optionee or the Optionee’s guardian or legal representative and may not be assigned or transferred in any manner except by will or by the laws of descent and distribution. Following thedeath of the Optionee, the Option, to the extent provided in Section 6, may be exercised by the Optionee’s legal representative or by any person empowered to do so under the deceased Optionee’s will or under the then applicable laws ofdescent and distribution. 

 

**5. TERMINATION OF THE OPTION.**

 

The Option shall terminate and may no longer be exercisedon the first to occur of (a) the Option Expiration Date, (b) the last date for exercising the Option following termination of the Optionee’s Service as described in Section 6, or (c) pursuant to a Change in Control, to the extent provided inthe Plan. 

 

**6. EFFECT OF TERMINATION OF SERVICE.**

 

6.1 Option Exercisability. 

 

(a) *Disability*. If the Optionee’s Service with the ParticipatingCompany 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’sguardian or legal representative) at any time prior to the expiration of twelve (12) months after the date on which the Optionee’s Service terminated, but in any event no later than the Option Expiration Date. (NOTE: If an Incentive StockOption is exercised more than three (3) months after the date on which the Optionee’s Service as an Employee terminated as a result of a Disability other than a permanent and total disability as defined in Section 22(e)(3) of the Code, theOption will be treated as a Nonstatutory Stock Option and not as an Incentive Stock Option to the extent required by Section 422 of the Code.) 

 

(b) *Death*. If the Optionee’s Service with the Participating Company Group is terminated because of the death of the Optionee, the Option, tothe extent 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 theOptionee’s death at any time prior to the expiration of twelve (12) months 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 tohave terminated on account of death if the Optionee dies within thirty (30) days after the Optionee’s termination of Service. 

 

(c) *Other Termination of Service*. If the Optionee’s Service with the Participating Company Group terminates for any reason, exceptDisability, or death, 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 other longer period of time asdetermined 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. 

 

6.2 Extension if Exercise Prevented by Law. Notwithstanding the foregoing, if the exercise of the Option within theapplicable time periods set forth in Section 6.1 is prevented by the provisions of Section 3.6, the Option shall remain exercisable until thirty (30) days after the date the Optionee is notified by the Company that the Option is exercisable, but inany event no later than the Option Expiration Date. The Company makes no representation as to the tax consequences of any such delayed exercise. The Optionee should consult with the Optionee’s own tax advisor as to the tax consequences of anysuch delayed exercise. 

 

6.3 Extension if Optionee Subject toSection 16(b). Notwithstanding the foregoing, if a sale within the applicable time periods set forth in Section 6.1 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) dayafter the Optionee’s termination of Service, or (iii) the Option Expiration Date. The Company makes no representation as to the tax consequences of any such delayed exercise. The Optionee should consult with the Optionee’s own tax advisoras to the tax consequences of any such delayed exercise. 

 

**7.RIGHTS AS A SHAREHOLDER, EMPLOYEE OR CONSULTANT.**

 

TheOptionee shall have no rights as a shareholder with respect to any shares covered by the Option until the date of the issuance of a certificate for the shares for which the Option has been exercised (as evidenced by the appropriate entry on thebooks 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 inSection 4.2 of the Plan. If the Optionee is an Employee, the Optionee understands and acknowledges that, except as otherwise provided in a separate, written employment agreement between a Participating Company and the Optionee, the Optionee’semployment is “at will” and is for no specified term. Nothing in this Agreement shall confer upon the Optionee any right to continue in the Service of a Participating Company or interfere in any way with any right of the ParticipatingCompany Group to terminate the Optionee’s Service as an Employee or Consultant, as the case may be, at any time. 

**8. RIGHT OF FIRST REFUSAL.**

 

8.1 Grant of Right of First Refusal. Except as provided in Section 8.7 below, in the event the Optionee, theOptionee’s legal representative, or other holder of shares acquired upon exercise of the Option proposes to sell, exchange, transfer, pledge, or otherwise dispose of any shares acquired upon exercise of the Option (the “TransferShares”) to any person or entity, including, without limitation, any shareholder of a Participating Company, the Company shall have the right to repurchase the Transfer Shares under the terms and subject to the conditions set forth in thisSection 8 (the “Right of First Refusal”). This Right of First Refusal terminates in accordance with Section 8.9. 

 

8.2 Notice of Proposed Transfer. Prior to any proposed transfer of the Transfer Shares, the Optionee shall deliver written notice (the“Transfer Notice”) to the Company describing fully the proposed transfer, including the number of Transfer Shares, the name and address of the proposed transferee (the “Proposed Transferee”) and, if the transfer is voluntary, theproposed transfer price, and containing such information necessary to show the bona fide nature of the proposed transfer. In the event of a bona fide gift or involuntary transfer, the proposed transfer price shall be deemed to be the Fair MarketValue of the Transfer Shares, as determined by the Board in good faith. If the Optionee proposes to transfer any Transfer Shares to more than one Proposed Transferee, the Optionee shall provide a separate Transfer Notice for the proposed transfer toeach Proposed Transferee. The Transfer Notice shall be signed by both the Optionee and the Proposed Transferee and must constitute a binding commitment of the Optionee and the Proposed Transferee for the transfer of the Transfer Shares to theProposed Transferee subject only to the Right of First Refusal. 

 

8.3 Bona Fide Transfer. If the Company determines that the information provided by the Optionee in the Transfer Notice is insufficient to establish the bona fide nature of a proposed voluntary transfer, the Company shall give theOptionee written notice of the Optionee’s failure to comply with the procedure described in this Section 8, and the Optionee shall have no right to transfer the Transfer Shares without first complying with the procedure described in thisSection 8. The Optionee shall not be permitted to transfer the Transfer Shares if the proposed transfer is not bona fide. 

 

8.4 Exercise of Right of First Refusal. If the Company determines the proposed transfer to be bona fide, the Company shall have the right topurchase all, but not less than all, of the Transfer Shares (except as the Company and the Optionee otherwise agree) at the purchase price and on the terms set forth in the Transfer Notice by delivery to the Optionee of a notice of exercise of theRight of First Refusal within thirty (30) days after the date the Transfer Notice is delivered to the Company. The Company’s exercise or failure to exercise the Right of First Refusal with respect to any proposed transfer described in aTransfer Notice shall not affect the Company’s right to exercise the Right of First Refusal with respect to any proposed transfer described in any other Transfer Notice, whether or not such other Transfer Notice is issued by the Optionee orissued by a person other than the Optionee with respect to a proposed transfer to the same Proposed Transferee. If the Company exercises the Right of First Refusal, the Company and the Optionee shall thereupon consummate the sale of the TransferShares to the Company on the terms set forth in the Transfer Notice within sixty (60) days after the date the Transfer Notice is delivered to the Company (unless a longer period is offered by the Proposed Transferee); 

provided, however, that in the event the Transfer Notice provides for the payment for the Transfer Shares other than incash, the Company shall have the option of paying for the Transfer Shares by the present value cash equivalent of the consideration described in the Transfer Notice as reasonably determined by the Company. For purposes of the foregoing, cancellationof any indebtedness of the Optionee to any Participating Company shall be treated as payment to the Optionee in cash to the extent of the unpaid principal and any accrued interest canceled. 

 

8.5 Failure to Exercise Right of First Refusal. If the Company failsto exercise the Right of First Refusal in full (or to such lesser extent as the Company and the Optionee otherwise agree) within the period specified in Section 8.4 above, the Optionee may conclude a transfer to the Proposed Transferee of theTransfer Shares on the terms and conditions described in the Transfer Notice, provided such transfer occurs not later than ninety (90) days following delivery to the Company of the Transfer Notice. The Company shall have the right to demand furtherassurances from the Optionee and the Proposed Transferee (in a form satisfactory to the Company) that the transfer of the Transfer Shares was actually carried out on the terms and conditions described in the Transfer Notice. No Transfer Shares shallbe transferred on the books of the Company until the Company has received such assurances, if so demanded, and has approved the proposed transfer as bona fide. Any proposed transfer on terms and conditions different from those described in theTransfer Notice, as well as any subsequent proposed transfer by the Optionee, shall again be subject to the Right of First Refusal and shall require compliance by the Optionee with the procedure described in this Section 8. 

 

8.6 Transferees of Transfer Shares. All transferees of the TransferShares or any interest therein, other than the Company, shall be required as a condition of such transfer to agree in writing (in a form satisfactory to the Company) that such transferee shall receive and hold such Transfer Shares or interesttherein subject to all of the terms and conditions of this Option Agreement, including this Section 8 providing for the Right of First Refusal with respect to any subsequent transfer. Any sale or transfer of any shares acquired upon exercise of theOption shall be void unless the provisions of this Section 8 are met. 

 

8.7 Transfers Not Subject to Right of First Refusal. The Right of First Refusal shall not apply to any transfer or exchange of the shares acquired upon exercise of the Option if such transfer or exchange is in connection with anOwnership Change Event. If the consideration received pursuant to such transfer or exchange consists of stock of a Participating Company, such consideration shall remain subject to the Right of First Refusal unless the provisions of Section 8.9below result in a termination of the Right of First Refusal. 

 

8.8 Assignment of Right of First Refusal. The Company shall have the right to assign the Right of First Refusal at any time, whether or not there has been an attempted transfer, to one or more persons as may be selected by theCompany. 

 

8.9 Early Termination of Right of FirstRefusal. The other provisions of this Option Agreement notwithstanding, the Right of First Refusal shall terminate and be of no further force and effect upon (a) the occurrence of a Change in Control, unless the Acquiring Corporation assumes theCompany’s rights and obligations under the Option or substitutes a substantially equivalent option for the Acquiring Corporation’s stock for the Option, or (b) the existence of a public market for the class of shares subject to the Rightof First Refusal. A 

“PUBLIC MARKET” shall be deemed to exist if (i) such stock is listed on a national securities exchange (as thatterm is used in the Exchange Act) or (ii) such stock is traded on the over-the-counter market and prices therefor are published daily on business days in a recognized financial journal. 

 

**9. VESTED SHARE REPURCHASE OPTION.**

 

9.1 Grant of Vested Share Repurchase Option. Except as otherwise provided herein, in the event of the occurrence ofany Repurchase Event, as defined below, the Company shall have the right to repurchase the Vested Shares acquired by the Optionee pursuant to the Option (the “Repurchase Shares”) under the terms and subject to the conditions set forth inthis Section 9 (the “Vested Share Repurchase Option”). Each of the following events shall constitute a “Repurchase Event”: 

 

(a) Termination of the Optionee’s Service with the Participating Company Group for any reason or no reason, with or without cause, including deathor Disability. The Repurchase Period, as defined below, shall commence on the date of termination of the Optionee’s Service. 

 

(b) The Optionee, the Optionee’s legal representative, or other holder of shares acquired upon exercise of the Option attempts to sell, exchange,transfer, pledge, or otherwise dispose of any Repurchase Shares without complying with the provisions of Section 8. The Repurchase Period, as defined below, shall commence on the date the Company receives actual notice of such attempted sale,exchange, transfer, pledge or other disposition. 

 

(c) Thereceivership, bankruptcy or other creditor’s proceeding regarding the Optionee or the taking of any of the Optionee’s shares of Stock by legal process, such as a levy of execution. The Repurchase Period, as defined below, shall commence onthe date the Company receives actual notice of the commencement of pendency of the receivership, bankruptcy or other creditor’s proceeding or the date of such taking, as the case may be. The Fair Market Value of the Repurchase Shares shall bedetermined as of the last day of the month preceding the month in which the proceeding involved commenced or the taking occurred. 

 

9.2 Exercise of Vested Share Repurchase Option. The Company may exercise the Vested Share Repurchase Option by written notice to the Optionee, theOptionee’s legal representative, or other holder of the Repurchase Shares, as the case may be, during the Repurchase Period. The “Repurchase Period” shall be the period commencing at the time set forth in Section 9.1 above and endingon the later of (a) the date ninety (90) days after the commencement of the Repurchase Period or (b) the date ninety (90) days after the Option is last exercised. If the Company fails to give notice during the Repurchase Period, the Vested ShareRepurchase Option shall terminate (unless the Company and the Optionee have extended the time for the exercise of the Vested Share Repurchase Option) unless and until there is a subsequent Repurchase Event. Notwithstanding a termination of theVested Share Repurchase Option, the remaining provisions of this Option Agreement shall remain in full force and effect, including, without limitation, the Right of First Refusal. If there is a subsequent Repurchase Event, the Vested ShareRepurchase Option shall again become exercisable as provided in this 

Section 9. The Vested Share Repurchase Option must be exercised, if at all, for all of the Repurchase Shares, except asthe Company and the Optionee otherwise agree. 

 

9.3 Paymentfor Repurchase Shares. The repurchase price per share being repurchased by the Company pursuant to the Vested Share Repurchase Option shall be an amount equal to the Fair Market Value of the shares determined as of the date of the RepurchaseEvent (except as otherwise provided in Section 9.1(c) above) by the Board in good faith. Payment by the Company to the Optionee shall be made in cash on or before the last day of the Repurchase Period. For purposes of this Section 9.3, cancellationof any indebtedness of the Optionee to the Company shall be treated as payment to the Optionee in cash to the extent of the unpaid principal and any accrued interest canceled. 

 

9.4 Transfers Not Subject to Vested Share Repurchase Option. The Vested Share Repurchase Option shall not apply toany transfer or exchange of shares acquired upon exercise of the Option if such transfer or exchange is in connection with an Ownership Change Event as described in the Plan. If the consideration received pursuant to such transfer or exchangeconsists of stock of a Participating Company, such consideration will remain subject to the Vested Share Repurchase Option unless the provisions of Section 9.6 below result in a termination of the Vested Share Repurchase Option. 

 

9.5 Assignment of Vested Share Repurchase Option. The Company shallhave the right to assign the Vested Share Repurchase Option at any time, whether or not such option is then exercisable, to one or more persons as may be selected by the Company. 

 

9.6 Early Termination of Vested Share Repurchase Option. The other provisions of this Option Agreementnotwithstanding, the Vested Share Repurchase Option shall terminate and be of no further force and effect upon (a) the occurrence of a Change in Control as described in the Plan, unless the Acquiring Corporation assumes the Company’s rights andobligations under the Option or substitutes a substantially equivalent option for the Acquiring Corporation’s stock for the Option, or (b) the existence of a public market, as defined in Section 8.9, for the class of shares subject to theVested Share Repurchase Option. 

 

**10. ESCROW.**

 

10.1 Establishment of Escrow. To ensure that shares subject to theVested Share Repurchase Option Provisions will be available for repurchase, the Company may require the Optionee to deposit the certificate evidencing the shares which the Optionee purchases upon exercise of the Option with an agent designated bythe Company under the terms and conditions of an escrow agreement approved by the Company. If the Company does not require such deposit as a condition of exercise of the Option, the Company reserves the right at any time to require the Optionee toso deposit the certificate in escrow. Upon the occurrence of an Ownership Change Event or a change in the character or amount of any of the outstanding stock of the corporation the stock of which is subject to the provisions of this OptionAgreement, any and all new, substituted or additional securities or other property to which the Optionee is entitled by reason of the Optionee’s ownership of shares of Stock acquired upon exercise of the Option that remain, following suchOwnership Change Event or other change, subject to the Vested Share Repurchase Option Provisions, shall be immediately subject to the escrow to the 

same extent as such shares of Stock immediately before such event. The Company shall bear the expenses of the escrow.

 

10.2 Delivery of Shares to Optionee. As soon aspracticable after the expiration of the restrictions described in Section 10.1, but not more frequently than twice each calendar year, the escrow agent shall deliver to the Optionee the shares and any other property no longer subject to suchrestrictions. 

 

10.3 Notices and Payments. In the eventthe shares and any other property held in escrow are subject to the Company’s exercise of the Right of First Refusal or the Vested Share Repurchase Option Provisions, the notices required to be given to the Optionee shall be given to the escrowagent, and any payment required to be given to the Optionee shall be given to the escrow agent. Within thirty (30) days after payment by the Company, the escrow agent shall deliver the shares and any other property which the Company has purchased tothe Company and shall deliver the payment received from the Company to the Optionee. 

 

**11. STOCK DISTRIBUTIONS SUBJECT TO THIS AGREEMENT.**

 

If, from time to time, there is any stock dividend, stock split or other change, as described in Section 4.2 of the Plan, in the character or amount of any of the outstanding stock of the corporation the stock ofwhich is subject to the provisions of this Agreement, then in such event any and all new, substituted or additional securities to which the Optionee is entitled by reason of the Optionee’s ownership of the shares acquired upon exercise of theOption shall be immediately subject to the Right of First Refusal and Vested Share Repurchase Option with the same force and effect as the shares subject to such restrictions immediately before such event. 

 

**12. NOTICE OF SALES UPON DISQUALIFYING DISPOSITION.**

 

If the Option is designated as an Incentive Stock Option in the GrantAgreement, the Optionee shall comply with the provisions of this Section. The Optionee shall promptly notify the Chief Financial Officer of the Company if the Optionee disposes of any of the shares acquired pursuant to the Option within one (1) yearafter the date of the Optionee exercises all or part of the Option or within two (2) years after the Date of Grant. Until such time as the Optionee disposes of such shares in a manner consistent with the provisions of this Agreement, unlessotherwise expressly authorized by the Company, the Optionee shall hold all shares acquired pursuant to the Option in the Optionee’s name (and not in the name of any nominee) for the one-year period immediately after the exercise of the Optionand the two-year period immediately after Date of Grant. At any time during the one-year or two-year periods set forth above, the Company may place a legend on any certificate representing shares acquired pursuant to the Option requesting thetransfer agent for the Company’s stock to notify the Company of any such transfers. The obligation of the Optionee to notify the Company of any such transfer shall continue notwithstanding that a legend has been placed on the certificatepursuant to the preceding sentence. 

 

**13. LEGENDS.**

 

The Company may at any time place legends referencing theRight of First Refusal, the Vested Share Repurchase Option and any applicable federal, state or foreign 

securities law restrictions on all certificates representing shares of stock subject to the provisions of this Agreement.The Optionee shall, at the request of the Company, promptly present to the Company any and all certificates representing shares acquired pursuant to the Option in the possession of the Optionee in order to carry out the provisions of this Section.Unless otherwise specified by the Company, legends placed on such certificates may include, but shall not be limited to, the following: 

 

13.1 “THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 OR RULE 701 UNDER THE ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSELFOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.” 

 

13.2 “THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHTOF FIRST REFUSAL OPTION IN FAVOR OF THE CORPORATION OR ITS ASSIGNEE SET FORTH IN AN AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED HOLDER, OR SUCH HOLDER’S PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OFTHIS CORPORATION.” 

 

13.3 “THE SHARES REPRESENTED BYTHIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER, INCLUDING A VESTED SHARE REPURCHASE OPTION IN FAVOR OF THE CORPORATION OR ITS ASSIGNEE SET FORTH IN AN AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED HOLDER, OR SUCHHOLDER’S PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THIS CORPORATION.” 

 

13.4 If this Option is designated as an Incentive Stock Option in the Grant Agreement: “THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY THECORPORATION TO THE REGISTERED HOLDER UPON EXERCISE OF AN INCENTIVE STOCK OPTION AS DEFINED IN SECTION 422 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (“ISO”). IN ORDER TO OBTAIN THE PREFERENTIAL TAX TREATMENT AFFORDED TO ISOs, THESHARES SHOULD NOT BE TRANSFERRED PRIOR TO [INSERT LATER OF TWO YEARS AFTER THE DATE OF OPTION GRANT OR ONE YEAR AFTER THE DATE OF EXERCISE]. SHOULD THE REGISTERED HOLDER ELECT TO TRANSFER ANY OF THE SHARES PRIOR TO THIS DATE AND FOREGO ISO TAXTREATMENT, THE TRANSFER AGENT FOR THE SHARES SHALL NOTIFY THE CORPORATION IMMEDIATELY. THE REGISTERED HOLDER SHALL HOLD ALL SHARES PURCHASED UNDER THE INCENTIVE STOCK OPTION IN THE REGISTERED HOLDER’S NAME (AND NOT IN THE NAME OF ANY NOMINEE)PRIOR TO THIS DATE OR UNTIL TRANSFERRED AS DESCRIBED ABOVE.” 

**14. PUBLIC OFFERING.**

 

The Optionee hereby agrees that in the event of any underwritten public offering of stock, including an initial publicoffering of stock, made by the Company pursuant to an effective registration statement filed under the Securities Act, the Optionee shall not offer, sell, contract to sell, pledge, hypothecate, grant any option to purchase or make any short sale of,or otherwise dispose of any shares of stock of the Company or any rights to acquire stock of the Company for such period of time from and after the effective date of such registration statement as may be established by the underwriter for suchpublic offering; provided, however, that such period of time shall not exceed one hundred eighty (180) days from the effective date of the registration statement to be filed in connection with such public offering. The foregoing limitation shall notapply to shares registered in the public offering under the Securities Act. The Optionee shall be subject to this Section provided and only if the officers and directors of the Company are also subject to similar arrangements. 

 

**15. RESTRICTIONS ON TRANSFER OF SHARES.**

 

No shares acquired upon exercise of the Option may be sold, exchanged,transferred (including, without limitation, any transfer to a nominee or agent of the Optionee), assigned, pledged, hypothecated or otherwise disposed of, including by operation of law, in any manner which violates any of the provisions of thisAgreement, and any such attempted disposition shall be void. The Company shall not be required (a) to transfer on its books any shares which will have been transferred in violation of any of the provisions set forth in this Option Agreement or (b)to treat as owner of such shares or to accord the right to vote as such owner or to pay dividends to any transferee to whom such shares will have been so transferred. 

 

**16. BINDING EFFECT.**

 

Subject to the restrictions on transfer set forth herein, this Agreement shall inure to the benefit of and be binding upon the parties hereto and theirrespective heirs, executors, administrators, successors and assigns. 

 

**17. TERMINATION OR AMENDMENT.**

 

The Board mayterminate or amend the Plan or the Option at any time; provided, however, that except in connection with a Change in Control, no such termination or amendment may adversely affect the Option or any unexercised portion hereof without the consent ofthe Optionee unless such termination or amendment is necessary to comply with any applicable law or government regulation or is required to enable an Option designated as an Incentive Stock Option in the Grant Agreement to qualify as an IncentiveStock Option. No amendment or addition to this Agreement shall be effective unless in writing. 

 

**18. NOTICES.**

 

Anynotice required or permitted hereunder shall be given in writing and shall be deemed effectively given (except to the extent that this Option Agreement provides for effectiveness only upon actual receipt of such notice) upon personal delivery orupon deposit in the United States Post Office, by registered or certified mail, with postage and fees prepaid, 

addressed to the other party at the address shown on the Grant Agreement or at such other address as such party maydesignate in writing from time to time to the other party. 

 

**19. INTEGRATED AGREEMENT.**

 

The GrantAgreement, this Agreement and the Plan constitute the entire understanding and agreement of the Optionee and the Participating Company Group with respect to the subject matter contained herein and therein and there are no agreements, understandings,restrictions, representations, or warranties among the Optionee and the Participating Company Group with respect to such subject matter other than those as set forth or provided for herein or therein. To the extent contemplated herein or therein,the provisions of the Grant Agreement and this Agreement shall survive any exercise of the Option and shall remain in full force and effect. 

 

**20. APPLICABLE LAW.**

 

This Agreement shall be governed by the laws of the State of California as such laws are applied to agreements between California residents entered intoand to be performed entirely within the State of California.