Exhibit 10.2


 


NIC INC.
2006 AMENDED AND RESTATED


STOCK
OPTION AND INCENTIVE PLAN


 


As
Amended May 5, 2009


 


ARTICLE I. PURPOSE.


 


A.            The purpose of the Plan is to provide a means by which
selected Employees, Directors and Consultants of the Company, and its Affiliates,
if any, may be given an opportunity to benefit from increases in value of the
Common Stock of the Company through the grant of Options, Restricted Stock
Awards or both.


 


B.            The Company, by means of the Plan, seeks to retain the
services of persons who are now Employees or Directors of or Consultants to the
Company or its Affiliates, to secure and retain the services of new Employees,
Directors and Consultants, and to provide incentives for such persons to exert
maximum efforts for the success of the Company and its Affiliates.


 


C.            All Options granted under the Plan shall be separately
designated as Incentive Stock Options or Non-Qualified Stock Options at the
time of grant, and in such form as issued pursuant to Article VI, and a
separate certificate or certificates will be issued for shares purchased on
exercise of each type of Option or granted pursuant to a Restricted Stock
Award, which shall also be in such form as issued pursuant to Article VIII.


 


D.            The Plan is a 2006 amendment and restatement of the
National Information Consortium, Inc. 1998 Stock Option Plan, as adopted
effective May 5, 1998 and amended November 3, 1998 and May 4,
1999, revised as of August 31, 1999 and amended and restated as of May 4,
2004. Any option granted under the National Information Consortium, Inc.
1998 Stock Option Plan prior to the Plan’s effective date, as provided in Article XV,
shall be subject to the terms of the National Information Consortium, Inc.
1998 Stock Option Plan as they existed immediately prior to that effective
date.


 


ARTICLE II. DEFINITIONS.


 


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


 


“Affiliate” means any
parent corporation or subsidiary corporation of the Company, whether now or
hereafter existing, as those terms are defined in Sections 424(e) and (f) respectively,
of the Code.


 


“Award” means either an
Option or a Restricted Stock Award.


 


“Board” means the Board
of Directors of the Company.


 


“Code” means the Internal
Revenue Code of 1986, as amended, and any Internal Revenue Code adopted in the
future to replace the Internal Revenue Code of 1986.


 


“Committee” means the
Committee of Outside Directors appointed by the Board in accordance with
subsection C of Article III to administer the Plan. For any purposes under
this Plan, the Committee may be the Compensation Committee of the Company’s
Board.


 


“Common Stock” means
shares of the Company’s common stock, no par value.


 

















 


“Company” means NIC Inc.,
a Colorado corporation.


 


“Consultant” means any
person, including an advisor, engaged by the Company or an Affiliate to render
consulting services as an independent contractor and who is compensated for
such services, provided that the term “Consultant” shall not include Directors
who are paid only a director’s fee by the Company or who are not compensated by
the Company for their services as Directors.


 


“Continuous Status as an
Employee, Director or Consultant” means that the provision of services to the
Company or an Affiliate in any capacity of Employee, Director or Consultant, is
not interrupted or terminated. Continuous Status as an Employee, Director or
Consultant shall not be considered interrupted in the case of (i) any
approved leave of absence, (ii) transfers between locations of the Company
or among the Company, any Affiliate, or any successor, in any capacity of
Employee, Director or Consultant, or (iii) any change in status as long as
the person remains in the service of the Company, Affiliate or successor in any
capacity of Employee, Director or Consultant (except as otherwise provided in
the Option Agreement). An approved leave of absence shall include sick leave,
military leave, or any other authorized personal leave approved by the Company;
provided, however, that any such authorized leave of absence shall be treated
as Continuous Status as an Employee, Director or Consultant for the purposes of
vesting only to the extent as may be provided in the Company’s leave policy.
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. The Board, in its sole discretion, shall in all cases
determine whether Continuous Status as an Employee, Director or Consultant
shall be considered interrupted or terminated.


 


“Covered Employee” means
any person who, on the last day of the taxable year, is the chief executive
officer (or is acting in such capacity) or is among the four most highly
compensated officers (other than the chief executive officer) of the Company
for whom total compensation is required to be reported to stockholders under
the Exchange Act, as determined for purposes of Section 162(m) of the
Code.


 


“Director” means a member
of the Board or of the board of directors of an Affiliate.


 


“Employee” means any
person, including Officers and Directors, employed by the Company or any
Affiliate of the Company as determined under the rules contained in Code Section 3401.
Neither service as a Director nor payment of a director’s fee by the Company
shall be sufficient by itself to constitute “employment” by the Company.


 


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


 


“Fair Market Value”
means, as of any date, the value of the Common Stock of the Company determined
as follows:


 


(i)            If the Common Stock is readily tradable
on an established securities market, the fair market value of the Common Stock
on the date of grant means the value determined based upon the last sale before
or the first sale after the grant, the closing price on the trading day before
or the trading day of the grant of the Award, or any other reasonable basis
using actual transactions in the Common Stock as reported by such market and
consistently applied.


 


(ii)           If the Common Stock is not readily
tradable on an established securities market, the fair market value of the
Common Stock on the date of grant means the value determined by a valuation of
the Common Stock determined by an independent appraisal that meets the
requirements of Section 


 

















 


401(a)(28)(C) of the
Code and the regulations thereunder as of a date that is no more than 12 months
before the relevant Option grant date.


 


“Incentive Stock Option”
means an Option intended to qualify as an incentive stock option (as set forth
in the Option Agreement) and that qualifies as an Incentive Stock Option within
the meaning of Section 422 of the Code and the regulations promulgated
thereunder.


 


“Non-Qualified Stock
Option” means an Option not intended to qualify as an Incentive Stock Option
(as set forth in the Option Agreement) or that does not qualify as an Incentive
Stock Option.


 


“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.


 


“Option” means a stock
option granted pursuant to the Plan.


 


“Option Agreement” means
a written agreement between the Company and a Recipient evidencing the terms
and conditions of an individual Option grant. Each Option Agreement shall be
subject to the terms and conditions of the Plan.


 


“Outside Director” means
a Director who (i) is not a current employee of the Company or an “affiliated
corporation” (within the meaning of Treasury regulations promulgated under Section 162(m) of
the Code), (ii) is not a former employee of the Company or an “affiliated
corporation” receiving compensation for prior services (other than benefits
under a tax qualified pension plan) during the taxable year, (iii) has not
been an officer of the Company or an “affiliated corporation” at any time, (iv) is
not currently receiving direct or indirect remuneration (including any payment
in exchange for goods or services) from the Company or an “affiliated
corporation” in any capacity other than as a Director, (v) is otherwise
considered an “outside director” for purposes of Section 162(m) of
the Code, a “non-employee director” for purposes of Rule 16b-3 under the
Exchange Act and an “independent director” for purposes of Rule 4350 of
the National Association of Securities Dealers, Inc.


 


“Plan” means this NIC
Inc. 2006 Amended and Restated Stock Option and Incentive Plan.


 


“Purchase Price” is
defined in Subsection C of Article VI.


 


“Recipient” means an
Employee, Director or Consultant, or their transferees, who holds an
outstanding Option or Restricted Stock Award.


 


“Restricted Stock” means
Common Stock awarded to an Employee pursuant to Article VIII that is
subject to certain restrictions and a substantial risk of forfeiture.


 


“Restricted Stock
Agreement” means a written agreement between the Company and a Recipient
evidencing the terms, conditions and restrictions of an individual Restricted
Stock Award. Each Restricted Stock Agreement shall be subject to the terms and
conditions of the Plan.


 


“Rule 16b-3” means Rule 16b-3
of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion
is being exercised with respect to the Plan.


 


ARTICLE III.
ADMINISTRATION.


 


A.            The Plan shall be administered by the Board unless and
until the Board delegates administration to the Committee, as provided in
subsection C of this Article III.


 

















 


B.            The Board shall have the power, subject to, and within
the limitations of, the express provisions of the Plan:


 


(i)            To determine, in its sole
discretion, from time to time which of the persons eligible under the Plan
shall be granted an Award; when and how each Award shall be granted; whether an
Option granted will be an Incentive Stock Option or a Non-Qualified Stock
Option, or a combination of the foregoing; the provisions of each Award granted
(which need not be identical), including the time or times when a person shall
be permitted to receive stock pursuant to an Award; the number of shares with
respect to which an Award shall be granted to each such person; and all other
terms, conditions and restrictions applicable to each such Award or shares acquired
upon exercise of an Option not inconsistent with the terms of the Plan.


 


(ii)           To approve one or more forms of
Option Agreement and Restricted Stock Agreement.


 


(iii)          To construe and interpret, in its sole
discretion, the Plan and Awards granted under it, and to establish, amend and
revoke rules and regulations for its administration. The Board, in the
exercise of this power, may correct any defect, omission or inconsistency in
the Plan or in any Option Agreement, in a manner and to the extent it shall deem
necessary or expedient to make the Plan fully effective.


 


(iv)          To amend, modify or otherwise change
in any manner the Plan or an Award as provided in Article XIII and to
suspend or terminate the Plan as provided in Article XIV.


 


(v)           Generally, to exercise such powers
and to perform such acts as the Board deems necessary or expedient to promote
the best interests of the Company that are not in conflict with the provisions
of the Plan.


 


All decisions,
determinations and interpretations of the Board shall be final, binding and
conclusive on any Recipient and any other person with an interest in the Plan
or in an Award and on any Affiliate.


 


C.            The Board may delegate administration of the Plan to a
committee composed of not fewer than two (2) of its members, all of the
members of which Committee shall be Outside Directors. The Committee may be the
Board’s Compensation Committee. Furthermore, notwithstanding anything in this Article III
to the contrary, the Board shall delegate administration of the Plan to the
Committee for any grant of an Award to an eligible person who is a Covered
Employee or who is expected to be a Covered Employee at the time of recognition
of income resulting from such Award with respect to either of whom the Company
wishes to avoid the application of Section 162(m) of the Code.


 


Notwithstanding anything
in this Article III to the contrary, at any time the Board or the
Committee may delegate to a committee of one or more members of the Board the
authority to grant Awards to eligible persons who (i) are not then subject
to Section 16 of the Exchange Act and (ii) are either (A) not
then Covered Employees and are not expected to be Covered Employees at the time
of recognition of income resulting from such Award, or (B) not persons
with respect to whom the Company wishes to avoid the application of Section 162(m) of
the Code.


 


In the event that any
administration of the Plan is delegated to the Committee under this Article III,
the Committee shall have, during such delegation and in connection with the
administration of the Plan, the powers theretofore possessed by the Board (and
references in this Plan to the Board shall thereafter be to the committee),
subject, however, to such resolutions, not inconsistent with the provisions of
the Plan, as may be adopted from time to time by the Board. The Board may
abolish the Committee at 


 

















 


any time and, upon
abolition administration of the Plan shall revert automatically, without any
further action on the Board’s part, to the Board.


 


D.            Notwithstanding anything in this Article III to the
contrary, at any time the Board may also delegate to any proper Officer the
authority to grant Awards, without further approval of the Board, to eligible
persons who (i) are not then subject to Section 16 of the Exchange
Act and (ii) are either (A) not then Covered Employees and are not
expected to be Covered Employees at the time of recognition of income resulting
from such Award, or (B) not persons with respect to whom the Company
wishes to avoid the application of Section 162(m) of the Code;
provided, however, that (i) the exercise price per share of each Option
Award shall be equal to the Fair Market Value of such stock at the date of
grant, and (ii) each Option Award shall be subject to the terms and
conditions of the standard form of Option Agreement approved by the Board and
shall conform to the provisions of the Plan and such other guidelines as shall
be established from time to time by the Board.


 


E.             No member of the Board or of any committee constituted
under this Article III or any Officer acting pursuant to this Article shall
be personally liable for any action, determination or interpretation made in
good faith with respect to the Plan or any Award.


 


ARTICLE IV. SHARES
SUBJECT TO THE PLAN.


 


A.            Subject to the provisions of Article XII relating to
adjustments upon changes in stock, the amount of stock that may be issued
pursuant to Awards shall not exceed in the aggregate fourteen million two
hundred eighty-six thousand seven hundred fifty-four (14,286,754) shares of the
Common Stock. If any Award shall for any reason expire or otherwise terminate,
in whole or in part, without having been exercised in full, the shares not
acquired underlying such Award shall revert to and again become available for
issuance under the Plan.


 


B.            The Common Stock subject to the Plan may be unissued
shares or reacquired shares, bought on the market or otherwise.


 


ARTICLE V. ELIGIBILITY.


 


A.            Incentive Stock Options may be granted only to Employees.
Non-Qualified Stock Options and Restricted Stock may be granted only to
Employees, Directors or Consultants.


 


B.            No person shall be eligible for the grant of an Incentive
Stock Option if, at the time of grant, such person owns (or is deemed to own
pursuant to Section 424(d) of the Code) stock representing more than
ten percent (10%) of the total combined voting power of all classes of stock of
the Company, or of any of its Affiliates (a “Ten Percent Stockholder”), unless
the exercise price of such Option is at least one hundred ten percent (110%) of
the Fair Market Value of such stock at the date of grant and the Option is not
exercisable after the expiration of five (5) years from the date of grant.


 


C.            To the extent that the aggregate Fair Market Value
(determined at the time of grant) of stock with respect to which Incentive
Stock Options are exercisable for the first time by any Recipient during any
calendar year under all plans of the Company and its Affiliates exceeds one
hundred thousand dollars ($100,000), the Options or portions thereof which
exceed such limit (according to the order in which they were granted) shall be
treated as Non-Qualified Stock Options.


 


D.            Subject to the provisions of Article XII relating to
adjustments upon changes in stock, no person shall be eligible to be granted
Awards covering more than two hundred thousand (200,000) shares of the Common
Stock in any calendar year.


 
















 


ARTICLE VI. TERMS OF
OPTIONS.


 


Each Option shall be
evidenced by an Option Agreement in such form and shall contain such terms and
conditions as the Board shall deem appropriate. No Option or purported Option
shall be a valid and binding obligation of the Company unless evidenced by a
fully executed Option Agreement or by communicating with the Company in such
manner as the Company may authorize. The provisions of separate Options need
not be identical, but each Option shall include (through incorporation of
provisions hereof or as specifically set forth in the Option Agreement or
otherwise) the substance of each of the following provisions:


 


A.            Term. No Incentive Stock Option shall be exercisable
after the expiration of ten (10) years from the date it was granted.
However, in the case of an Incentive Stock Option granted to a Recipient who,
at the time the Option is granted, is a Ten Percent Stockholder (as described
in subsection B of Article V), the term of the Option shall be five (5) years
from the date of grant thereof or such shorter term as may be provided in the
Option Agreement.


 


B.            Price. The exercise price of each Option shall be not
less than one hundred percent (100%) of the Fair Market Value of the stock
subject to the Option on the date the Option is granted. Notwithstanding the
foregoing, an Option (whether an Incentive Stock Option or a Non-Qualified
Stock Option) may be granted with an exercise price lower than that set forth
in the preceding sentence if such Option is granted pursuant to an assumption
or substitution for another option in a manner satisfying the provisions of Section 424(a) of
the Code.


 


C.            Consideration. The purchase price of stock acquired
pursuant to an Option (the “Purchase Price”) shall be paid, to the extent
permitted by applicable statutes and regulations, either (i) in cash or
check at the time the Option is exercised, or (ii) as set forth in the
Option Agreement (or in the case of a Non-Qualified Stock Option, as
subsequently determined in the discretion of the Board or the Committee) (A) in
shares of Common Stock duly endorsed over to the Company (which shares shall
have been owned by the Option holder for at least six (6) months prior to
such exercise and, for purposes of this paragraph, be valued at their Fair Market
Value as of the business day immediately preceding the date of such exercise), (B) by
written direction to an authorized broker to sell the shares of Common Stock
purchased pursuant to such exercise immediately for the account of the Option
holder and pay an appropriate portion of the proceeds thereof to the Company, (C) according
to a deferred payment or other arrangement (which may include, without limiting
the generality of the foregoing, the use of other Common Stock of the Company)
with the Recipient in any other form of legal consideration that may be
acceptable to the Board, or (D) any combination of such methods of payment
which together amount to the full exercise price of the shares purchased
pursuant to the exercise of the Option. For purposes of this subsection C, the
Purchase Price shall include the amount of the full exercise price of the
Common Stock shares purchased pursuant to the exercise of the Option plus the
minimum amount, if any, of any applicable taxes which the Company is required to
withhold.


 


In the case of any
deferred payment arrangement, interest shall be payable at least annually and
shall be charged at the minimum rate of interest necessary to avoid the
treatment as interest, under any applicable provisions of the Code, of any
amounts other than amounts stated to be interest under the deferred payment
arrangement. No deferred payment arrangement shall be permitted if the exercise
of an Option for such a deferred payment would be a violation of any law or
cause the Plan to be deemed a “nonqualified deferred compensation plan”, as
defined in Section 409A of the Code.


 


D.            Transferability. An Incentive Stock Option shall not be
transferable except by will or by the laws of descent and distribution, and
shall be exercisable during the lifetime of the Recipient only by 


 

















 


such Recipient or by his
attorney-in-fact or conservator, unless such exercise by the attorney-in-fact
or the conservator of the Recipient would disqualify the Incentive Stock Option
as such. Unless the Board otherwise specifies, a Non-Qualified Stock Option
shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Recipient only
by such person or by his attorney-in-fact or conservator.


 


Notwithstanding the
foregoing, the Recipient may, by delivering written notice to the Company, in a
form satisfactory to the Company, designate a third party who, in the event of
the death of the Recipient, shall thereafter be entitled to exercise the Option.


 


E.             Vesting. The total number of shares of stock subject to
an Option may, but need not, be allotted in periodic installments (which may,
but need not, be equal). The Option Agreement may provide that from time to
time during each of such installment periods, the Option may become exercisable
(“vest”) with respect to some or all of the shares allotted to that period, and
may be exercised with respect to some or all of the shares allotted to such
period and/or any prior period as to which the Option became vested but was not
fully exercised. The Option may be subject to such other terms and conditions
on the time or times when it may be exercised (which may be based on
performance or other criteria) as the Board may deem appropriate. Unless
otherwise specified in an Option Agreement, the shares of stock underlying an
Option grant shall vest in four equal amounts: the first installment will be
first exercisable on the six (6)-month anniversary of the option grant date and
each succeeding installment will be first exercisable one (1) year from
the date that the immediately preceding installment became exercisable. Any
vesting schedule can be accelerated in the discretion of the Board, unless
otherwise specified in the Option Agreement.


 


F.             Termination of Employment or Relationship as a Director
or Consultant. In the event a Recipient’s Continuous Status as an Employee,
Director or Consultant terminates (other than upon the Recipient’s death or
disability), the Recipient may exercise his or her Option (to the extent that
the Recipient was entitled to exercise it at the date of termination) but only
within such period of time ending on the earlier of (i) the date three (3) months
after the termination of the Recipient’s Continuous Status as an Employee,
Director or Consultant (or, such longer or shorter period specified in the
Option Agreement), or (ii) the expiration of the term of the Option as set
forth in the Option Agreement. If, at the date of termination, the Recipient is
not entitled to exercise his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to and again become available
for issuance under the Plan. If, after termination, the Recipient does not
exercise his or her Option within the time specified in the Option Agreement or
in this Plan, the Option shall terminate, and the shares covered by such Option
shall revert to and again become available for issuance under the Plan. The
above terms shall apply only if the specific Option grant is silent on the above
issues; however, a specific Option grant may provide for different terms in the
event a Recipient’s Continuous Status as an Employee, Director or Consultant
terminates (other than upon the Recipient’s death or disability).


 


G.            Disability of Recipient. In the event a Recipient’s
Continuous Status as an Employee, Director or Consultant terminates as a result
of the Recipient’s disability, as defined in Section 22(e)(3) of the
Code, the Recipient may exercise his or her Option (to the extent that the
Recipient was entitled to exercise it at the date of termination), but only
within such period of time ending on the earlier of (i) the date twelve
(12) months following such termination (or, such longer or shorter period
specified in the Option Agreement), or (ii) the expiration of the term of
the Option as set forth in the Option Agreement. If, at the date of termination
of Continuous Status, the Recipient is not entitled to exercise his or her
entire Option, the shares covered by the unexercisable portion of the Option
shall revert to and again become available for issuance under the Plan. If,
after termination, the Recipient does not exercise his or her Option within the
time specified herein, the Option shall terminate, and the shares covered by
such Option shall revert to and again become available for issuance under the
Plan. The above terms shall apply only 


 

















 


if the specific Option
grant is silent on the above issues; however, a specific Option grant may
provide for different terms in the event a Recipient’s Continuous Status as an
Employee, Director or Consultant terminates as a result of the Recipient’s
disability.


 


H.            Death of Recipient. In the event of the death of a
Recipient during, or within a period specified in the Option after the
termination of, the Recipient’s Continuous Status as an Employee, Director or
Consultant, the Option may be exercised (to the extent the Recipient was
entitled to exercise the Option at the date of death) by the Recipient’s
estate, by a person who acquired the right to exercise the Option by bequest or
inheritance or by a person designated to exercise the option upon the Recipient’s
death pursuant to subsection D of Article VI, but only within the period
ending on the earlier of (i) the date twelve (12) months following the
date of death (or, such longer or shorter period specified in the Option
Agreement), or (ii) the expiration of the term of such Option as set forth
in the Option Agreement. If, at the time of death, the Recipient was not
entitled to exercise his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to and again become available
for issuance under the Plan. If, after death, the Option is not exercised
within the time specified herein, the Option shall terminate, and the shares
covered by such Option shall revert to and again become available for issuance
under the Plan. The above terms shall apply only if the specific Option grant
is silent on the above issues; however, a specific Option grant may provide for
different terms in the event a Recipient’s Continuous Status as an Employee,
Director or Consultant terminates as a result of the Recipient’s death.


 


I.              Responsibility for Option Exercise. A Recipient is
responsible for taking any and all actions as may be required to exercise any
Option in a timely manner, and for properly executing any documents as may be
required for the exercise of an Option in accordance with such rules and
procedures as may be established from time to time under the Plan. By signing
or accepting an Option Agreement a Recipient (and any person to whom the Option
under that Option Agreement is transferred) acknowledges that information
regarding the procedures and requirements for the exercise of that Option is
available upon such Recipient’s or person’s request to the Board. The Company
shall have no duty or obligation to notify any Recipient of the expiration of
any Option.


 


ARTICLE VII. REPRICING,
CANCELLATION AND RE-GRANT OF OPTIONS.


 


The Board or the
Committee shall not effect at any time directly or indirectly the repricing of
any outstanding Options, including without limitation a repricing by the
cancellation of any outstanding Options under the Plan and the grant in
substitution therefor of new Options under the Plan covering the same or
different amount of shares of stock. Notwithstanding the foregoing, an Option
(whether an Incentive Stock Option or a Non-Qualified Stock Option) may be
granted with an exercise price lower than that set forth in the preceding
sentence if such Option is granted pursuant to an assumption or substitution
for another option in a manner satisfying the provisions of Section 424(a) of
the Code.


 


ARTICLE VIII. RESTRICTED
STOCK AWARDS


 


A.            The Board is authorized to make Awards of Restricted
Stock to any Recipient selected by the Board in such amounts and subject to
such terms and conditions as determined by the Board. All Awards of Restricted
Stock shall be evidenced by a Restricted Stock Agreement.


 


B.            Restricted Stock shall be subject to such restrictions on
transferability and other restrictions as the Board may impose (including,
without limitation, limitations on the right to vote Restricted Stock or the
right to receive dividends on the Restricted Stock). These restrictions may
lapse separately or in combination at such times, pursuant to such
circumstances, in such installments, or otherwise, as the Board determines at
the time of the grant of the Award or thereafter.


 

















 


C.            All Awards of Restricted Stock shall be subject to a “substantial
risk of forfeiture” as defined by Section 409A-1(d) of the Code.
Except as otherwise determined by the Board at the time of the grant of the
Award or thereafter, upon termination of employment or service during the
applicable restriction period, Restricted Stock that is at that time subject to
restrictions shall be forfeited; provided, however, that, the Board may (a) provide
in any Restricted Stock Award Agreement that restrictions or forfeiture
conditions relating to Restricted Stock will be waived in whole or in part in
the event of terminations resulting from specified causes, and (b) in
other cases waive in whole or in part restrictions or forfeiture conditions
relating to Restricted Stock.


 


D.            Restricted Stock granted pursuant to the Plan may be
evidenced in such manner as the Board shall determine. If certificates
representing shares of Restricted Stock are registered in the name of the
Participant, certificates must bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such Restricted Stock, and
the Company may, at its discretion, retain physical possession of the
certificate until such time as all applicable restrictions lapse.


 


ARTICLE IX. COVENANTS OF
THE COMPANY.


 


During the terms of the
Awards, the Company shall keep available at all times the number of shares of
Common Stock required to satisfy such Awards.


 


ARTICLE X. USE OF
PROCEEDS FROM EXERCISE OF OPTIONS.


 


Proceeds from the
exercise of Options shall constitute general funds of the Company.


 


ARTICLE XI.
MISCELLANEOUS.


 


A.            Neither an Employee, Director or Consultant nor any
person to whom an Option may be transferred shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares
subject to such Award unless and until such person has satisfied all
requirements for exercise, which can include an early exercise, of the Option
pursuant to its terms, or until all restrictions on a Restricted Stock Award
have lapsed, and the Company has issued such shares.


 


B.            Nothing in the Plan or any instrument executed or Award
granted pursuant thereto shall confer upon any Employee, Director or Consultant
or other holder of Awards or Common Stock issued upon exercise of Options any
right to continue in the employ of the Company or any Affiliate (or to continue
acting as a Director or Consultant) or shall affect the right of the Company or
any Affiliate to terminate the employment of any Employee with or without
cause, the right of the Company’s Board of Directors and/or the Company’s
stockholders to remove any Director pursuant to the terms of the Company’s
Articles of Incorporation and By- Laws and the provisions of Colorado Law, or
the right to terminate the relationship of any Consultant with the Company or
its Affiliates.


 


C.            If the Company or its Affiliates is required to withhold
any amounts by reason of federal, state or local tax laws, rules or
regulations, in respect of the issuance of Awards or shares of stock pursuant
to the Plan, the Company or such Affiliates shall be entitled to deduct and withhold
such amounts from any cash payments to be made to the Recipient. In any event,
such person shall promptly make available to the Company or such Affiliate,
when requested by the Company or such Affiliate, sufficient funds to meet the
requirements of such withholding, and the Company or such Affiliate may take
and authorize such steps as it may deem advisable in order to have such funds
made available to the Company or such Affiliate from any funds or property due
or to become due to such person.


 

















 


D.            To the extent provided by the terms of an Option
Agreement, the person to whom an Option is granted may satisfy any federal,
state or local tax withholding obligation relating to the exercise or
acquisition of stock under an Option by any of the following means or by a
combination of such means: (i) tendering a cash payment; (ii) authorizing
the Company to withhold shares from the shares of the stock otherwise issuable
to the Recipient as a result of the exercise or acquisition of stock underlying
the Option; or (iii) delivering to the Company unencumbered shares of the
Company’s stock owned by the person acquiring the stock. The Fair Market Value
of any shares of Common Stock withheld or tendered to satisfy any such tax
withholding obligations shall not exceed the amount determined by the
applicable minimum statutory withholding rules.


 


E.             The Company shall not be required to issue fractional
shares pursuant to this Plan and, accordingly, a Recipient may be awarded or
required to purchase only whole shares.


 


F.             The Plan and all determinations made and actions taken
hereunder, to the extent not otherwise governed by the Code or laws of the
United States, shall be governed by the laws of the State of Colorado and
construed accordingly, without reference to the conflict of laws principles.


 


G.            The receipt, transfer and exercise of any Award is
subject to taxation under Section 83 of the Code.


 


ARTICLE XII. ADJUSTMENTS
UPON CHANGES IN STOCK.


 


If any change is made in
the stock subject to the Plan, or subject to any Award, without the receipt of
consideration by the Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange
of shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan will be appropriately
adjusted in the class(es) and maximum number of shares subject to the Plan, and
the outstanding Awards will be appropriately adjusted in the class(es) and
number of shares and price per share of stock subject to such outstanding
Awards. Such adjustments shall be made by the Board or the Committee, the
determination of which shall be final, binding and conclusive. (The conversion
of any convertible securities of the Company shall not be treated as a
transaction not involving the receipt of consideration by the Company.)


 


ARTICLE XIII. AMENDMENT
OF THE PLAN AND AWARDS.


 


A.            The Board at any time, and from time to time, may amend
the Plan. However, except as provided in Article XII relating to
adjustments upon changes in stock, no amendment shall be effective unless
approved by the stockholders of the Company within twelve (12) months before or
after the adoption of the amendment, where the amendment will:


 


(i)            Increase the number of shares
reserved for Awards under the Plan;


 


(ii)           Modify the requirements as to
eligibility for participation in the Plan (to the extent such modification
requires stockholder approval in order for the Plan to satisfy the requirements
of Section 422 of the Code); or


 


(iii)          Modify the Plan in any other way if
such modification requires stockholder approval in order for the Plan to
satisfy the requirements of Section 422 of the Code.


 


B.            The Board may in its sole discretion submit any other
amendment to the Plan for stockholder approval, including, but not limited to,
amendments to the Plan intended to satisfy the 


 

















 


requirements of Section 162(m) of
the Code and the regulations promulgated thereunder regarding the exclusion of
performance-based compensation from the limit on corporate deductibility of
compensation paid to certain executive officers.


 


C.            It is expressly contemplated that the Board may amend the
Plan in any respect the Board deems necessary or advisable to provide eligible
Employees, Directors or Consultants with the maximum benefits provided or to be
provided under the provisions of the Code and the regulations promulgated
thereunder relating to Incentive Stock Options and/or to bring the Plan and/or
Incentive Stock Options granted under it into compliance therewith.


 


D.            Rights and obligations of the Recipient under any Award
granted before amendment of the Plan shall not be materially impaired by any
amendment of the Plan except with the written consent of the Recipient, unless
such amendment is necessary to comply with any applicable law, regulation or rule as
determined in the sole discretion of the Board.


 


E.             The Board at any time, and from time to time, may amend,
modify, extend, cancel or renew any Award or waive any restrictions or
conditions applicable to any Award or any shares acquired upon the exercise
thereof and accelerate, continue, extend or defer the exercise time for any
Award or the vesting of any shares acquired upon the exercise thereof,
including with respect to the period following a Recipient’s termination of
Continuous Status as an Employee, Director or Consultant; provided, however,
that the rights and obligations under any Award shall not be materially
impaired by any such amendment except with the written consent of the
Recipient, unless such amendment is necessary to comply with any applicable
law, regulation or rule as determined in the sole discretion of the Board.


 


The Board may accelerate
the time at which an Option may first be exercised or the time during which an
Option or any part thereof will vest notwithstanding the provisions in the
Option Agreement stating the time at which it may first be exercised or the
time during which it will vest.


 


F.             The Board may amend the Plan to take into account
changes in law and tax and accounting rules, as well as other developments, and
to grant Awards that qualify for beneficial treatment under such rules without
stockholder approval.


 


ARTICLE XIV. TERMINATION
OR SUSPENSION OF THE PLAN.


 


A.            The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on December 31, 2015,
which shall be within ten (10) years from the date the Plan is adopted by
the Board or approved by the stockholders of the Company, whichever is earlier.
No Awards may be granted under the Plan while the Plan is suspended or after it
is terminated.


 


B.            Rights and obligations under any Award granted while the
Plan is in effect shall not be impaired by suspension or termination of the
Plan, except with the written consent of the Recipient, unless such impairment
is necessary to qualify the Award as an Incentive Stock Option or to comply
with any applicable law, regulation or rule all as determined in the sole
discretion of the Board.


 


ARTICLE XV. EFFECTIVE
DATE OF PLAN.


 


The Plan shall become
effective as determined by the Board, but no Awards granted under the Plan
shall be exercised unless and until the Plan has been approved by the stockholders
of the Company, which approval shall be obtained within twelve (12) months
before or after the date when the Plan is adopted by the Board.


 

















 


ARTICLE XVI. COMPLIANCE
WITH SECURITIES LAWS.


 


The grant of Awards and
the issuance of shares of Common Stock upon the exercise of Options shall be
subject to compliance with all applicable requirements of federal and state law
with respect to such securities. Options may not be exercised if the issuance
of shares of Common Stock upon exercise would constitute a violation of any
applicable federal or state securities laws or other laws or regulations or the
requirements of any stock exchange or market system upon which the Common Stock
may then be listed. In addition, no Option may be exercised unless (A) a
registration statement under the Act shall at the time of exercise of the
Option be in effect with respect to the Common Stock shares to be issued upon
the exercise of that Option or (B) in the opinion of counsel to the
Company, the Common Stock 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 Act. The inability of the Company to obtain
from any regulatory body having jurisdiction the authority, if any, deemed by
the Company’s counsel to be necessary to the lawful issuance and sale of any
Common Stock shares under the Plan 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 of the
exercise of any Option, the Company may require the Recipient to satisfy any
qualifications that may be necessary or appropriate, to evidence compliance
with any applicable law or regulation and to make any representation or
warranty with respect thereto as may be requested by the Company. The Company
may, upon the advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of the Common Stock.


 


ARTICLE XVII. COMPLIANCE
WITH SECTION 409A.


 


To the extent that the
Board determines that any Award granted under the Plan is subject to Section 409A
of the Code, the Option Agreement or other agreement evidencing the Award will
incorporate the terms and conditions required by Section 409A of the Code.
To the extent applicable, the Plan and Award agreements will be interpreted in
accordance with Section 409A of the Code and Department of Treasury
regulations and other interpretive guidance issued thereunder, including
without limitation any such regulations or other guidance that may be issued
after the Plan’s effective date. Notwithstanding any provision of the Plan to
the contrary, in the event that following the Plan’s effective date the Board
determines that any Award may be subject to Section 409A of the Code and
related Department of Treasury guidance (including such Department of Treasury
guidance as may be issued after the Plan’s effective date), the Board may adopt
such amendment to the Plan and applicable Award agreements or adopt other
policies and procedures (including amendments, policies and procedures with retroactive
effect), or take any other actions, that the Board determines are necessary or
appropriate to (a) exempt the Award from Section 409A of the Code
and/or preserve the intended tax treatment of the benefits provided with
respect to the Award, or (b) comply with the requirements of Section 409A
of the Code and related Department of Treasury guidance.


 


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