The Twofold Photos, Inc. 2003 Stock Incentive Plan



 EXHIBIT 10.5 
  
 TWOFOLD PHOTOS, INC. 
  
 2003 COMMON STOCK INCENTIVE PLAN 
  
 1. Purposes of the Plan. The purposes of this Common Stock Incentive Plan are to attract and retain the best available personnel for positions of
substantial responsibility, to provide additional incentive to Employees, Directors and Consultants of the Company and its Subsidiaries and to promote the success of the Company’s business. 
  
 2. Definitions. As used herein, the following definitions shall apply:

  
 (a) “Administrator” means the Board or any of the
Committees appointed to administer the Plan. 
  
 (b)
“Applicable Laws” means the legal requirements relating to the administration of stock incentive plans, if any, under applicable provisions of federal securities laws, California corporate and securities laws, the Code, the rules of any
applicable stock exchange or national market system, and the rules of any foreign jurisdiction applicable to Awards granted to residents therein. 
  
 (c) “Award” means the grant of an Option, Restricted Stock or other right or benefit under the Plan. 
  
 (d) “Award Agreement” means the written agreement evidencing the
grant of an Award executed by the Company and the Grantee, including any amendments thereto. 
  
 (e) “Board” means the Board of Directors of the Company. 
  
 (f) “Cause” means, with respect to termination of Grantee’s Continuous Status as an Employee, Director or Consultant, termination by reason
of (i) Grantee’s commission of a felony, misdemeanor or other illegal conduct involving dishonesty, fraud or other matters of moral turpitude, (ii) Grantee’s dishonesty towards, fraud upon, or deliberate injury or attempted injury to the
Company or any of its affiliates, or (iii) Grantee’s willfully engaging in misconduct which is materially and demonstrably injurious to the Company or any of its affiliates. 
  
 (g) “Code” means the Internal Revenue Code of 1986, as amended. 
  
 (h) “Committee” means any committee appointed by the Board to
administer the Plan. 
  
 (i) “Common Stock” means the
common stock of the Company. 
  
 (j) “Company” means
Twofold Photos, Inc. 
  
 (k) “Consultant” means any
person who is engaged by the Company or any Parent or Subsidiary to render consulting or advisory services as an independent contractor and is compensated for such services. 
  
 (l) “Continuous Status as an Employee, Director or Consultant” means that the employment, director or consulting
relationship with the Company, any Parent, or Subsidiary, is not 
  


			
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 interrupted or terminated. Continuous Status as an Employee, Director or Consultant shall not be considered interrupted
in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor. A leave of absence approved by the Company shall include sick
leave, military leave, or any other personal leave approved by an authorized representative of the Company. For purposes of Incentive Stock Options, no such leave may exceed ninety (90) days, unless reemployment upon expiration of such leave is
guaranteed by statute or contract. 
  
 (m) “Corporate
Transaction” means any of the following transactions to which the Company is a party: 
  
 (i) a merger or consolidation in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the state in which the Company is incorporated; 
  
 (ii) the sale, transfer or other disposition of all or substantially all of
the assets of the Company (including the capital stock of the Company’s subsidiary corporations) in connection with the complete liquidation or dissolution of the Company; or 
  
 (iii) any reverse merger in which the Company is the surviving entity but in which securities possessing more than fifty
percent (50%) of the total combined voting power of the Company’s outstanding securities are transferred to a person or persons different from those who held such securities immediately prior to such merger. 
  
 (n) “Director” means a member of the Board. 
  
 (o) “Employee” means any person, including an Officer or Director,
who is an employee of the Company or any Parent or Subsidiary of the Company for purposes of Section 422 of the Code. The payment of a director’s fee by the Company shall not be sufficient to constitute “employment” by the Company.

  
 (p) “Exchange Act” means the Securities Exchange Act
of 1934, as amended. 
  
 (q) “Fair Market Value” means,
as of any date, the value of Common Stock determined as follows: 
  
 (i) Where there exists a public market for the Common Stock, the Fair Market Value shall be (A) the closing price for a Share for the last market trading day prior to the time of the determination (or, if no closing price was reported on
that date, on the last trading date on which a closing price was reported) on the stock exchange determined by the Administrator to be the primary market for the Common Stock or the Nasdaq National Market, whichever is applicable or (B) if the
Common Stock is not traded on any such exchange or national market system, the average of the closing bid and asked prices of a Share on the Nasdaq Small Cap Market for the day prior to the time of the determination (or, if no such prices were
reported on that date, on the last date on which such prices were reported), in each case, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or 
  
 (ii) In the absence of an established market of the type described in (i)
above for the Common Stock, the Fair Market Value thereof shall be determined by the Administrator in good faith after taking into account such factors as the Administrator in its absolute discretion deems appropriate. 
  


			
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 (r) “Grantee” means an Employee, Director or Consultant who receives an Award under the Plan.

  
 (s) “Incentive Stock Option” means an Option
intended to qualify as an incentive stock option within the meaning of Section 422 of the Code. 
  
 (t) “Non-Qualified Stock Option” means an Option not intended to qualify as an Incentive Stock Option. 
  
 (u) “Officer” means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder. 
  
 (v) “Option” means a stock option granted pursuant to the Plan. 
  
 (w) “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section
424(e) of the Code. 
  
 (x) “Plan” means this Twofold
Photos, Inc. 2003 Common Stock Incentive Plan. 
  
 (y)
“Registration Date” means the closing of the first sale of Common Stock to the general public pursuant to a registration statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act of
1933, as amended. 
  
 (z) “Restricted Stock” means
Shares issued under the Plan to the Grantee for such consideration, if any, and subject to such restrictions on transfer, rights of first refusal, repurchase provisions, forfeiture provisions, and other terms and conditions as established by the
Administrator. 
  
 (aa) “Share” means a share of the
Common Stock. 
  
 (bb) “Subsidiary” means a
“subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code. 
  
 3. Stock Subject to the Plan. 
  
 (a) Subject to the provisions of Section 12(a), below, the maximum aggregate number of Shares which may be issued pursuant to all Awards (including
Incentive Stock Options) is Two Million (2,000,000) Shares. The Shares may be authorized, but unissued, or reacquired Common Stock. Notwithstanding the above, at no time shall the total number of Shares issuable upon exercise of all outstanding
Awards and the total number of Shares provided for under any stock bonus or similar plan or agreement of the Company exceed 30% of the then outstanding Shares, as calculated in accordance with the conditions and exclusions of §260.140.45 of
Title 10, California Code of Regulations. 
  
 (b) If an Award
expires or becomes unexercisable without having been exercised in full, or is surrendered pursuant to an Award exchange program, or if any unissued Shares are retained by the Company upon exercise of an Award in order to satisfy the exercise price
for such Award or any withholding taxes due with respect to such Award, such unissued or retained Shares shall become available for future grant or sale under the Plan (unless the Plan has terminated). Shares that actually have been issued under the
Plan pursuant to an Award shall not be returned to the Plan and shall not become available for future distribution under the Plan, except that if unvested Shares are forfeited, or repurchased by the Company at their original purchase price, such
Shares shall become available for future grant under the Plan. 
  


			
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 4. Administration of the Plan. 
  
 (a) Plan Administrator. With respect to grants of Awards to Employees, Directors, Officers or Consultants, the Plan
shall be administered by (i) the Board or (ii) a Committee (or a subcommittee of the Committee) designated by the Board, which Committee shall be constituted in such a manner as to satisfy Applicable Laws. Once appointed, such Committee shall
continue to serve in its designated capacity until otherwise directed by the Board. 
  
 (b) Multiple Administrative Bodies. The Plan may be administered by different bodies with respect to Directors, Officers, Consultants, and Employees who are neither Directors nor Officers. 
  
 (c) Powers of the Administrator. Subject to Applicable Laws and the
provisions of the Plan (including any other powers given to the Administrator hereunder), and except as otherwise provided by the Board, the Administrator shall have the authority, in its absolute discretion: 
  
 (i) to select the Employees, Directors and Consultants to whom Awards may
be granted from time to time hereunder; 
  
 (ii) to determine
whether and to what extent Awards are granted hereunder; 
  
 (iii) to determine the number of Shares or the amount of other consideration to be covered by each Award granted hereunder; 
  
 (iv) to approve forms of Award Agreement for use under the Plan; 
  

(v) to determine the terms and conditions of any Award granted hereunder; 
  
 (vi) to establish additional terms, conditions, rules or procedures to accommodate the rules or laws of applicable foreign
jurisdictions and to afford Grantees favorable treatment under such laws; provided, however, that no Award shall be granted under any such additional terms, conditions, rules or procedures with terms or conditions which are inconsistent with the
provisions of the Plan; 
  
 (vii) to amend the terms of any
outstanding Award granted under the Plan, including the acceleration of vesting or a reduction in the exercise price (or base amount on which appreciation is measured) of any Award to reflect a reduction in the Fair Market Value of the Common Stock
since the grant date of the Award, provided that any amendment that would adversely affect the Grantee’s rights under an outstanding Award shall not be made without the Grantee’s written consent; 
  
 (viii) to construe and interpret the terms of the Plan and Awards granted
pursuant to the Plan; and 
  
 (ix) to take such other action, not
inconsistent with the terms of the Plan, as the Administrator deems appropriate. 
  
 (d) Effect of Administrator’s Decision. All decisions, determinations and interpretations of the Administrator shall be conclusive and binding on all persons. 
  


			
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 5. Eligibility. Awards other than Incentive Stock Options may be granted to Employees, Directors
and Consultants. Incentive Stock Options may be granted only to Employees. An Employee, Director or Consultant who has been granted an Award may, if otherwise eligible, be granted additional Awards. Awards may be granted to such Employees of the
Company and its subsidiaries who are residing in foreign jurisdictions as the Administrator may determine from time to time. 
  
 6. General Terms and Conditions of Awards. 
  
 (a) Type of Awards. The Administrator is authorized under the Plan to award any type of arrangement to an Employee, Director or Consultant that is
not inconsistent with the provisions of the Plan and that by its terms involves or might involve the issuance of (i) Shares, (ii) an Option or (iii) any other security with the value derived from the value of the Common Stock. Such awards include,
without limitation, Options, or sales or bonuses of Restricted Stock, and an Award may consist of one such security or benefit, or two or more of them in any combination or alternative. 
  
 (b) Designation of Award. Each Award shall be designated in the Award Agreement. In the case of an Option, the Option
shall be designated as either an Incentive Stock Option or a Non-Qualified Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of Shares with respect to which Options designated as Incentive
Stock Options are exercisable for the first time by a Grantee during any calendar year (under all plans of the Company or any Parent or Subsidiary) exceeds $100,000, such excess Options, to the extent of the Shares covered thereby in excess of the
foregoing limitation, shall be treated as Non-Qualified Stock Options. For this purpose, Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the Shares shall be determined as of
the date the Option with respect to such Shares is granted. 
  
 (c) Conditions of Award. Subject to the terms of the Plan, the Administrator shall determine the provisions, terms, and conditions of each Award including, but not limited to, the Award vesting schedule, repurchase provisions, rights
of first refusal, forfeiture provisions, form of payment (cash, Shares, or other consideration) upon settlement of the Award, payment contingencies, and satisfaction of any performance criteria. The performance criteria established by the
Administrator may be based on any one of, or combination of, increase in share price, earnings per share, total shareholder return, return on equity, return on assets, return on investment, net operating income, cash flow, revenue, economic value
added, personal management objectives, or other measure of performance selected by the Administrator. Partial achievement of the specified criteria may result in a payment or vesting corresponding to the degree of achievement as specified in the
Award Agreement. 
  
 (d) Term of Award. The term of each
Award shall be the term stated in the Award Agreement, provided, however, that the terms shall be no more than ten (10) years from the date of grant thereof. However, in the case of an Incentive Stock Option granted to a Grantee who, at the time the
Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option shall be five (5) years from the date of grant
thereof or such shorter term as may be provided in the Award Agreement. 
  
 (e) Non-Transferability of Awards. Options or other rights to purchase or receive securities hereunder may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of
descent and distribution and may be exercised, during the lifetime of Grantee, only by the Grantee. The terms of this Plan and any applicable Award Agreement shall be binding upon the executors, administrators, heirs and successors of the Grantee.
Any purported transfer in violation of this subsection shall be void. 
  


			
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 (f) Time of Granting Awards. The date of grant of an Award shall for all purposes be the date on
which the Administrator makes the determination to grant such Award, or such other date as is determined by the Administrator. Notice of the grant determination shall be given to each Employee, Director or Consultant to whom an Award is so granted
within a reasonable time after the date of such grant. 
  
 7.
Award Exercise or Purchase Price, Consideration and Taxes. 
  
 (a) Exercise or Purchase Price. The exercise or purchase price, if any, for an Award shall be as follows: 
  
 (i) In the case of an Incentive Stock Option: 
  
 (A) granted to an Employee who, at the time of the grant of such Incentive Stock Option owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be not less than one hundred ten percent (110%) of the Fair Market Value per Share on the date of grant. 
  
 (B) granted to any Employee other than an Employee described in the
preceding paragraph, the per Share exercise price shall be not less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant. 
  
 (ii) In the case of a Non-Qualified Stock Option: 
  
 (A) granted to a person who, at the time of the grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be not less than one hundred ten percent (110%) of the Fair Market Value per Share on the date of grant. 
  
 (B) granted to any person other than a person described in the preceding
paragraph, the per Share exercise price shall be not less than eighty-five percent (85%) of the Fair Market Value per Share on the date of grant. 
  
 (iii) In the case of the sale of Shares: 
  
 (A) granted to a person who, at the time of the grant of such Award, or at the time the purchase is consummated, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share purchase price shall be not less than one hundred percent (100%) of the Fair Market Value per share on the date of grant. 

 
 (B) granted to any person other than a person described in the preceding
paragraph, the per Share purchase price shall be not less than eighty-five percent (85%) of the Fair Market Value per Share on the date of grant. 
  
 (iv) In the case of other Awards, such price as is determined by the Administrator. 
  
 (b) Consideration. Subject to Applicable Laws, the consideration to be paid for the Shares to be issued upon exercise
or purchase of an Award, including the method of payment, shall be 
  


			
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 determined by the Administrator (and, in the case of an Incentive Stock Option, shall be determined at the time of
grant). In addition to any other types of consideration the Administrator may determine acceptable, the Administrator is authorized to accept as consideration for Shares issued under the Plan the following: 
  
 (i) cash; 
  
 (ii) check; 
  
 (iii) delivery of the Grantee’s promissory note for all or part of the Award price, payable on such terms and bearing such interest rate as
determined by the Administrator (but in no event less than the minimum interest rate specified under the Code at which no additional interest would be imputed and in no event more than the maximum interest rate allowed under applicable usury laws),
with such recourse, security and redemption provisions as the Administrator may determine; 
  
 (iv) surrender of Shares (including withholding of Shares otherwise deliverable upon exercise of the Award) which have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares
as to which said Award is exercised (but only to the extent that such exercise of the Award would not result in an accounting compensation charge with respect to the Shares used to pay the exercise price unless otherwise determined by the
Administrator); 
  
 (v) if the exercise occurs on or after the
Registration Date, delivery of a properly exercise notice together with such other documentation as the Administrator and the broker, if applicable, shall require to effect an exercise of the Award and delivery to the Company of the sale or loan
proceeds required to pay the exercise price; or 
  
 (vi) any
combination of the foregoing methods of payment. 
  
 (c)
Taxes. No Shares shall be delivered under the Plan to any Grantee or other person until such Grantee or other person has made arrangements acceptable to the Administrator for the satisfaction of any foreign, federal, state, or local income
and employment tax withholding obligations, including, without limitation, obligations incident to the receipt of Shares or the disqualifying disposition of Shares received on exercise of an Incentive Stock Option. Upon exercise of an Award the
Company shall withhold or collect from Grantee an amount sufficient to satisfy such tax obligations. 
  
 8. Exercise of Award. 
  
 (a) Procedure for Exercise; Rights as a Shareholder. 
  
 (i) Any Award granted hereunder shall be exercisable at such times and under such conditions as determined by the Administrator under the terms of the
Plan and specified in the Award Agreement, but in the case of an Option, in no case at a rate of less than 20% per year over five (5) years from the date the Option is granted. 
  
 (ii) An Award shall be deemed to be exercised when written notice of such exercise has been given to the Company in
accordance with the terms of the Award by the person entitled to exercise the Award and full payment for the Shares with respect to which the Award is exercised has been received by the Company. Until the issuance (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the Company) of the stock certificate evidencing such Shares, no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to Shares
subject to an Award, notwithstanding the exercise of an Option or other Award. The 
  


			
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 Company shall issue (or cause to be issued) such stock certificate promptly upon exercise of the Award. No adjustment
will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in the Award Agreement or Section 12(a) below. 
  
 9. Termination of Relationship with the Company. 
  
 (a) Termination of Employment, Consultancy, or Directorship. In the
event of termination of a Grantee’s Continuous Status as an Employee, Director or Consultant for any reason other than disability, death or Cause (but not in the event of a Grantee’s change of status from Employee to Consultant or from
Consultant to Employee), such Grantee may, but only within three (3) months after the date of such termination (but in no event later than the expiration date of the term of such Award as set forth in the Award Agreement), exercise his or her Award
to the extent that the Grantee was entitled to exercise it at the date of such termination or to such other extent as may be determined by the Administrator. If the Grantee should die within three (3) months after the date of such termination, the
Grantee’s estate or the person who acquired the right to exercise the Award by bequest or inheritance may exercise the Award to the extent that the Grantee was entitled to exercise it at the date of such termination within twelve (12) months of
the Grantee’s date of death, but in no event later than the expiration date of the term of such Award as set forth in the Award Agreement. In the event of a Grantee’s change of status from Employee to Consultant, an Employee’s
Incentive Stock Option shall convert automatically to a Non-Qualified Stock Option on ninety-first (91st) day following such change of status. To the extent the Grantee is not entitled to exercise the Award at the date of termination, or does not
exercise the Award within the time specified herein, the Award shall terminate. 
  
 (b) Disability of Grantee. In the event of termination of a Grantee’s Continuous Status as an Employee, Director or Consultant as a result of his or her disability, Grantee may, but only within twelve (12)
months from the date of such termination (and in no event later than the expiration date of the term of such Award as set forth in the Award Agreement), exercise his or her Award to the extent otherwise entitled to exercise it at the date of such
termination; provided, however, that if such disability is not a “disability” as such term is defined in Section 22(e)(3) of the Code, in the case of an Incentive Stock Option such Incentive Stock Option shall automatically convert to a
Non-Qualified Stock Option on the day three (3) months and one day following such termination. To the extent the Grantee is not entitled to exercise the Award at the date of termination, or does not exercise the Award within the time specified
herein, the Award shall terminate. 
  
 (c) Death of
Grantee. In the event of the death of a Grantee, his or her Award may be exercised at any time within twelve (12) months following the date of death (but in no event later than the expiration of the term of such Award as set forth in the Award
Agreement), by the Grantee’s estate or by a person who acquired the right to exercise the Award by bequest or inheritance, but only to the extent that the Grantee was entitled to exercise the Award at the date of death. If, at the time of
death, the Grantee was not entitled to exercise his or her entire Award, the Shares covered by the unexercisable portion of the Award shall immediately terminate. To the extent the Grantee’s estate or a person who acquired the right to exercise
the Award by bequest or inheritance does not exercise the Award within the time specified herein, the Award shall terminate. 
  
 (d) For Cause Termination of Employment, Consultancy, or Directorship. Upon the termination of a Grantee’s Continuous Status as an Employee,
Director or Consultant for Cause, all Awards then held by such Grantee shall terminate and no longer be exercisable as of the date of termination. 
  


			
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 10. Conditions On Issuance of Shares. 
  
 (a) Shares shall not be issued pursuant to the exercise of an Award unless
the exercise of such Award and the issuance and delivery of such Shares pursuant thereto shall comply with all Applicable Laws, and shall be further subject to the approval of counsel for the Company with respect to such compliance. 
  
 (b) As a condition to the exercise of an Award, the Company may require the
person exercising such Award to make such representations and warranties at the time of any such exercise as required by any Applicable Laws in the opinion of counsel for the Company. 
  
 11. Repurchase Rights. If the provisions of an Award Agreement grant to the Company the right to repurchase Shares
upon termination of the Grantee’s Continuing Status as an Employee, Director or Consultant, the Award Agreement shall provide that the repurchase price will be either: 
  
 (a) Not less than the Fair Market Value on the date of termination of the Grantee’s Continuous Status as an Employee,
Director or Consultant, and the right to repurchase must be exercised for cash or cancellation of purchase money indebtedness for the Shares within ninety (90) days after the termination of the Grantee’s Continuous Status as an Employee,
Director or Consultant (or in the case of Shares issued upon exercise of an Award after the date of termination, within ninety (90) days after such exercise), and the right terminates when the Company’s securities become publicly traded; or

  
 (b) The original purchase price, provided (i) the right to
repurchase at the original purchase price lapses at the rate of at least twenty percent (20%) per year over five (5) years from the date the Award is granted (without respect to the date the Award was exercised or became exercisable), and the right
to repurchase must be exercised for cash or cancellation of purchase money indebtedness for the Shares within ninety (90) days of termination of the Grantee’s Continuous Status as an Employee, Director or Consultant (or in the case of Shares
issued upon exercise of an Award after the date of termination, within ninety (90) days after such exercise), and (ii) if the repurchase right is assignable, the assignee must pay the Company upon assignment of the right, (unless the assignee is a
one hundred percent (100%) owned subsidiary of the Company or is the parent of the Company owning one hundred percent (100%) of the stock of the Company) cash equal to the difference between the original purchase price and Fair Market Value if the
original purchase price is less than Fair Market Value. 
  
 (c) In
addition to the restrictions set forth in subsections 11(a) and (b) above, the Shares held by an Officer, Director, manager or Consultant of the Company or an affiliate of the Company may be subject to additional or greater restrictions. 

 
 12. Adjustments Upon Changes in Capitalization or Corporate
Transaction. 
  
 (a) Adjustments upon Changes in
Capitalization. Subject to any required action by the shareholders of the Company, the number of Shares covered by each outstanding Award, and the number of Shares which have been authorized for issuance upon the Plan but as to which no Awards
have yet been granted or which have been returned to the Plan, as well as the price per share of Common Stock covered by each such outstanding Award, shall be proportionately adjusted for any increase or decrease in the number of issued shares of
Common Stock resulting from a stock split, reverse stock split, stock dividend, recapitalization, combination, reclassification or other distribution without the receipt of consideration by the Company, of or on the Common Stock. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason hereof shall be made with respect to, the number or price of Shares
subject to an Award. 
  


			
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 (b) Corporate Transaction. In the event of a Corporate Transaction: 
  
 (i) the Administrator shall notify each Grantee at least fifteen (15) days
prior to such Corporate Transaction; 
  
 (ii) unless such Award
is assumed or an equivalent award is substituted by the successor corporation or a Parent or Subsidiary of such successor corporation: 
  
 (A) immediately prior to the effectiveness of the Corporate Transaction, any Shares issued or issuable under a vested and exercisable Award shall be
released from any restrictions on transfer, rights of first refusal, repurchase provisions, forfeiture provisions or similar provisions imposed by the terms and conditions of this Plan and the applicable Award Agreement; 
  
 (B) the Administrator shall have the authority, exercisable either in
advance of the Corporate Transaction or at the time of the Corporate Transaction and either at the time of the grant of an Award or at any time while an Award remains outstanding, to provide for the automatic full vesting and exercisability of the
Award; and 
  
 (C) to the extent it has not been previously
exercised, each Award will terminate immediately prior to the effectiveness of the Corporate Transaction; and 
  
 (iii) for the purposes of this subsection, an Award shall be considered assumed if, following the Corporate Transaction, the Award confers, for each
Share subject to the Award immediately prior to the Corporate Transaction, (A) the consideration (whether stock, cash, or other securities or property) received in the Corporate Transaction by holders of Common Stock for each Share subject to the
Award held on the effective date of the Corporate Transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares), or (B) the right to purchase such
consideration in the case of an Option or similar Award; provided, however, that if such consideration received in the Corporate Transaction was not solely common stock of the successor corporation or its Parent, the Administrator may, with the
consent of the successor corporation, provide for the consideration to be received upon the exercise or exchange of the Award for each Share subject to the Award to be solely common stock of the successor corporation or its Parent equal in fair
market value to the per share consideration received by holders of Common Stock in the Corporate Transaction. 
  
 13. Term of Plan. The Plan shall become effective upon the earlier to occur of its adoption by the Board or its approval by the shareholders of the
Company. It shall continue in effect for a term of ten (10) years unless sooner terminated. 
  
 14. Amendment, Suspension or Termination of the Plan. 
  
 (a) The Board may at any time amend, suspend or terminate the Plan. To the extent necessary to comply with Applicable Laws, the Company shall obtain shareholder approval of any Plan amendment in such a manner and to
such a degree as required. 
  
 (b) No Award may be granted during
any suspension of the Plan or after termination of the Plan. 
  


			
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 (c) Any amendment, suspension or termination of the Plan shall not affect Awards already granted, and
such Awards shall remain in full force and effect as if the Plan had not been amended, suspended or terminated, unless mutually agreed otherwise between the Grantee and the Administrator, which agreement must be in writing and signed by the Grantee
and the Company. 
  
 15. Reservation of Shares. 

 
 (a) The Company, during the term of the Plan, will at all times reserve
and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan. 
  
 (b) The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s 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. 

 
 16. NO EFFECT ON TERMS OF EMPLOYMENT. THE PLAN SHALL NOT CONFER
UPON ANY GRANTEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP WITH THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH HIS OR HER RIGHT OR THE COMPANY’S RIGHT TO TERMINATE HIS OR HER EMPLOYMENT OR CONSULTING
RELATIONSHIP AT ANY TIME, WITH OR WITHOUT CAUSE. 
  
 17.
Shareholder Approval. Continuance of the Plan shall be subject to approval by the shareholders of the Company within twelve (12) months before or after the date the Plan is adopted. Such shareholder approval shall be obtained in the degree
and manner required under Applicable Laws. Any Award exercised before shareholder approval is obtained shall be rescinded if shareholder approval is not obtained within the time prescribed, and Shares issued on the exercise of any such Award shall
not be counted in determining whether shareholder approval is obtained. 
  
 18. Information to Grantees. The Company shall provide to each Grantee, during the period for which such Grantee has one or more Awards outstanding, copies of financial statements at least annually and all annual reports and other
information which is provided to all shareholders of the Company. 
  


			
	Twofold Photos 2003 Common Stock Incentive Plan	 	11