exv10w1





Exhibit
10.1




FALLBROOK TECHNOLOGIES INC.




2004 STOCK PLAN



     1. Purposes of the Plan. The purposes of this 2004 Stock Plan are to attract and
retain the best available personnel for positions of substantial responsibility, to provide
additional incentive to Employees and Consultants and to promote the success of the Company’s
business. Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock
Options, as determined by the Administrator at the time of grant of an option and subject to the
applicable provisions of Section 422 of the Code and the regulations and interpretations
promulgated thereunder. Stock purchase rights may also be granted under the Plan.



     2. Definitions. As used herein, the following definitions shall apply:



          (a) “Administrator” means the Board or its Committee appointed pursuant to Section 4
of the Plan.




          (b) “Affiliate” means an entity other than a Subsidiary (as defined below) which,
together with the Company, is under common control of a third person or entity.




          (c) “Applicable Laws” means the legal requirements relating to the administration of
stock option and restricted stock purchase plans, including under applicable U.S. state corporate
laws, U.S. federal and applicable state securities laws, other U.S. federal and state laws, the
Code, any Stock Exchange rules or regulations and the applicable laws, rules and regulations of any
other country or jurisdiction where Options or Stock Purchase Rights are granted under the Plan, as
such laws, rules, regulations and requirements shall be in place from time to time.




          (d) “Board” means the Board of Directors of the Company.




          (e) “Cause” for termination of a Participant’s Continuous Service Status will exist if
the Participant is terminated by the Company for any of the following reasons: (i) Participant’s
willful failure substantially to perform his or her duties and responsibilities to the Company or
deliberate violation of a Company policy; (ii) Participant’s commission of any act of fraud,
embezzlement, dishonesty or any other willful misconduct that has caused or is reasonably expected
to result in material injury to the Company; (iii) unauthorized use or disclosure by Participant of
any proprietary information or trade secrets of the Company or any other party to whom the
Participant owes an obligation of nondisclosure as a result of his or her relationship with the
Company; or (iv) Participant’s willful breach of any of his or her obligations under any written
agreement or covenant with the Company. The determination as to whether a Participant is being
terminated for Cause shall be made in good faith by the Company and shall be final and binding on
the Participant. The foregoing definition does not in any way limit the Company’s ability to
terminate a Participant’s employment or consulting relationship at any time as provided in Section
5(d) below, and the term “Company” will be interpreted to include any Subsidiary, Parent or
Affiliate, as appropriate.




			
	 	 	 
	
	 	Page 1






 









 






          (f) “Change of Control” means (1) a sale of all or substantially all of the
Company’s
assets, or (2) any merger, consolidation or other business combination transaction of the Company
with or into another corporation, entity or person, other than a transaction in which the holders
of at least a majority of the shares of voting capital stock of the Company outstanding immediately
prior to such transaction continue to hold (either by such shares remaining outstanding or by their
being converted into shares of voting capital stock of the surviving entity) a majority of the
total voting power represented by the shares of voting capital stock of the Company (or the
surviving entity) outstanding immediately after such transaction, (3) the direct or indirect
acquisition (including by way of a tender or exchange offer) by any person, or persons acting as a
group, of beneficial ownership or a right to acquire beneficial ownership of shares representing a
majority of the voting power of the then outstanding shares of capital stock of the Company or (4)
a contested election of Directors, as a result of which or in connection with which the persons who
were Directors before such election or their nominees (the “Incumbent Directors”) cease to
constitute a majority of the Board; provided however that if the election or nomination for
election by the Company’s stockholders, of any new Director was approved by a vote of at least 50%
of the Incumbent Directors, such new Director shall be considered as an Incumbent Director.




          (g) “Code” means the Internal Revenue Code of 1986, as amended.




          (h) “Committee” means one or more committees or subcommittees of the Board appointed
by the Board to administer the Plan in accordance with Section 4 below.




          (i) “Common Stock” means the Common Stock of the Company.




          (j) “Company” means Fallbrook Technologies Inc., a Delaware corporation.




          (k) “Consultant” means any person, including an advisor, who is engaged by the Company
or any Parent, Subsidiary or Affiliate to render services and is compensated for such services, and
any director of the Company whether compensated for such services or not.




          (l) “Continuous Service Status” means the absence of any interruption or termination
of service as an Employee or Consultant. Continuous Service Status as an Employee or Consultant
shall not be considered interrupted in the case of: (i) sick leave; (ii) military leave; (iii) any
other leave of absence approved by the Administrator, provided that such leave is for a period of
not more than ninety (90) days, unless reemployment upon the expiration of such leave is guaranteed
by contract or statute, or unless provided otherwise pursuant to Company policy adopted from time
to time; or (iv) in the case of transfers between locations of the Company or between the Company,
its Parents, Subsidiaries, Affiliates or their respective successors. A change in status from an
Employee to a Consultant or from a Consultant to an Employee will not constitute an interruption of
Continuous Service Status.




          (m) “Corporate Transaction” means a sale of all or substantially all of the Company’s
assets, or a merger, consolidation or other capital reorganization or business combination
transaction of the Company with or into another corporation, entity or person, or the direct or
indirect acquisition (including by way of a tender or exchange offer) by any person, or persons
acting as a group, of beneficial ownership or a right to acquire beneficial ownership of




			
	 	 	 
	
	 	Page 2






 









 





shares representing a majority of the voting power of the then outstanding shares of capital
stock of the Company.




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




          (o) “Employee” means any person employed by the Company or any Parent, Subsidiary or
Affiliate, with the status of employment determined based upon such factors as are deemed
appropriate by the Administrator in its discretion, subject to any requirements of the Code or the
Applicable Laws. The payment by the Company of a director’s fee to a Director shall not be
sufficient to constitute “employment” of such Director 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 fair market value of the Common
Stock, as determined by the Administrator in good faith on such basis as it deems appropriate and
applied consistently with respect to Participants. Whenever possible, the determination of Fair
Market Value shall be based upon the closing price for the Shares as reported in the Wall
Street Journal for the applicable date.




          (r) “Incentive Stock Option” means an Option intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code, as designated in the applicable Option
Agreement.




          (s) “Involuntary Termination” means termination of a Participant’s Continuous Service
Status under the following circumstances: (i) termination without Cause by the Company or a
Subsidiary, Parent or Affiliate, as appropriate; or (ii) voluntary termination by the Participant
within 30 days following (A) a material reduction in the Participant’s job responsibilities,
provided that neither a mere change in title alone nor reassignment following a Change of Control
to a position that is substantially similar to the position held prior to the Change of Control
shall constitute a material reduction in job responsibilities; (B) relocation by the Company or a
Subsidiary, Parent or Affiliate, as appropriate, of the Participant’s work site to a facility or
location more than 50 miles from the Participant’s principal work site for the Company at the time
of the Change of Control; or (C) a reduction in Participant’s then-current base salary provided
that an across-the-board reduction in the salary level of all other employees or consultants in
positions similar to the Participant’s by the same percentage amount as part of a general salary
level reduction shall not constitute such a salary reduction.




          (t) “Listed Security” means any security of the Company that is listed or approved for
listing on a national securities exchange or designated or approved for designation as a national
market system security on an interdealer quotation system by the National Association of Securities
Dealers, Inc.




          (u) “Named Executive” means any individual who, on the last day of the Company’s
fiscal year, is the chief executive officer of the Company (or is acting in such capacity) or among
the four most highly compensated officers of the Company (other than the




			
	 	 	 
	
	 	Page 3






 









 





chief executive officer). Such officer status shall be determined pursuant to the executive
compensation disclosure rules under the Exchange Act.




          (v) “Nonstatutory Stock Option” means an Option not intended to qualify as an
Incentive Stock Option, as designated in the applicable Option Agreement.




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




          (x) “Option Agreement” means a written document, the form(s) of which shall be
approved from time to time by the Administrator, reflecting the terms of an Option granted under
the Plan and includes any documents attached to or incorporated into such Option Agreement,
including, but not limited to, a notice of stock option grant and a form of exercise notice.




          (y) “Option Exchange Program” means a program approved by the Administrator whereby
outstanding Options are exchanged for Options with a lower exercise price or are amended to
decrease the exercise price as a result of a decline in the Fair Market Value of the Common Stock.




          (z) “Optioned Stock” means the Common Stock subject to an Option.




          (aa) “Optionee” means an Employee or Consultant who receives an Option.




          (bb) “Parent” means a “parent corporation,” whether now or hereafter existing, as
defined in Section 424(e) of the Code, or any successor provision.




          (cc) “Participant” means any holder of one or more Options or Stock Purchase Rights,
or the Shares issuable or issued upon exercise of such awards, under the Plan.




          (dd) “Plan” means this 2004 Stock Plan.




          (ee) “Reporting Person” means an officer, Director, or greater than ten percent
stockholder of the Company within the meaning of Rule 16a-2 under the Exchange Act, who is required
to file reports pursuant to Rule 16a-3 under the Exchange Act.




          (ff) “Restricted Stock” means Shares of Common Stock acquired pursuant to a grant of a
Stock Purchase Right under Section 11 below.




          (gg) “Restricted Stock Purchase Agreement” means a written document, the form(s) of
which shall be approved from time to time by the Administrator, reflecting the terms of a Stock
Purchase Right granted under the Plan and includes any documents attached to such agreement.




          (hh) “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act, as amended
from
time to time, or any successor provision.




          (ii) “Share” means a share of the Common Stock, as adjusted in accordance with Section
14 of the Plan.




			
	 	 	 
	
	 	Page 4






 









 






          (jj) “Stock Exchange” means any stock exchange or consolidated stock price reporting
system on which prices for the Common Stock are quoted at any given time.




          (kk) “Stock Purchase Right” means the right to purchase Common Stock pursuant to
Section 11 below.




          (ll) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter
existing,
as defined in Section 424(f) of the Code, or any successor provision.




          (mm) “Ten Percent Holder” means a person who 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.




     3. Stock Subject to the Plan. Subject to the provisions of Section 14 of the Plan,
the maximum aggregate number of Shares that may be sold under the Plan is 3,014,329 Shares of
Common Stock. The Shares may be authorized, but unissued, or reacquired Common Stock. If an award
should expire or become unexercisable for any reason without having been exercised in full, or is
surrendered pursuant to an Option Exchange Program, the unpurchased Shares that were subject
thereto shall, unless the Plan shall have been terminated, become available for future grant under
the Plan. In addition, any Shares of Common Stock which are retained by the Company upon exercise
of an award in order to satisfy the exercise or purchase price for such award or any withholding
taxes due with respect to such exercise or purchase shall be treated as not issued and shall
continue to be available under the Plan. Shares issued under the Plan and later repurchased by the
Company pursuant to any repurchase right which the Company may have, shall be available for future
grant under the Plan.



     4. Administration of the Plan.



          (a) General. The Plan shall be administered by the Board or a Committee, or a
combination thereof, as determined by the Board. The Plan may be administered by different
administrative bodies with respect to different classes of Participants and, if permitted by the
Applicable Laws, the Board may authorize one or more officers to make awards under the Plan.




          (b) Committee Composition. If a Committee has been appointed pursuant to this Section
4, such Committee shall continue to serve in its designated capacity until otherwise directed by
the Board. From time to time the Board may increase the size of any Committee and appoint
additional members thereof, remove members (with or without cause) and appoint new members in
substitution therefor, fill vacancies (however caused) and remove all members of a Committee and
thereafter directly administer the Plan, all to the extent permitted by the Applicable Laws and, in
the case of a Committee administering the Plan in accordance with the requirements of Rule 16b-3 or
Section 162(m) of the Code, to the extent permitted or required by such provisions. The Committee
shall in all events conform to any requirements of the Applicable Laws.




          (c) Powers of the Administrator. Subject to the provisions of the Plan and in the
case of a Committee, the specific duties delegated by the Board to such Committee, the
Administrator shall have the authority, in its discretion:




			
	 	 	 
	
	 	Page 5






 









 






               (i) to determine the Fair Market Value of the Common Stock, in accordance with Section 2(q) of
the Plan, provided that such determination shall be applied consistently with respect to
Participants under the Plan;



               (ii) to select the Employees and Consultants to whom Plan awards may from time to time be
granted;



               (iii) to determine whether and to what extent Plan awards are granted;



               (iv) to determine the number of Shares of Common Stock to be covered by each award granted;



               (v) to approve the form(s) of agreement(s) used under the Plan;



               (vi) to determine the terms and conditions, not inconsistent with the terms of the Plan, of
any award granted hereunder, which terms and conditions include but are not limited to the exercise
or purchase price, the time or times when awards may be exercised (which may be based on
performance criteria), any vesting acceleration or waiver of forfeiture restrictions, any pro rata
adjustment to vesting as a result of a Participant’s transitioning from full- to part-time service
(or vice versa), and any restriction or limitation regarding any Option, Optioned Stock, Stock
Purchase Right or Restricted Stock, based in each case on such factors as the Administrator, in its
sole discretion, shall determine;



               (vii) to determine whether and under what circumstances an Option may be settled in cash under
Section 10(c) instead of Common Stock;



               (viii) to implement an Option Exchange Program on such terms and conditions as the
Administrator in its discretion deems appropriate, provided that no amendment or adjustment to an
Option that would materially and adversely affect the rights of any Optionee shall be made without
the prior written consent of the Optionee;



               (ix) to adjust the vesting of an Option held by an Employee or Consultant as a result of a
change in the terms or conditions under which such person is providing services to the Company;



               (x) to construe and interpret the terms of the Plan and awards granted under the Plan, which
constructions, interpretations and decisions shall be final and binding on all Participants; and



               (xi) in order to fulfill the purposes of the Plan and without amending the Plan, to modify
grants of Options or Stock Purchase Rights to Participants who are foreign nationals or employed
outside of the United States in order to recognize differences in local law, tax policies or
customs.



     5. Eligibility.



          (a) Recipients of Grants. Nonstatutory Stock Options and Stock Purchase Rights may be
granted to Employees and Consultants. Incentive Stock Options may be granted




			
	 	 	 
	
	 	Page 6






 









 





only to Employees, provided that Employees of Affiliates shall not be eligible to receive
Incentive Stock Options.




          (b) Type of Option. Each Option shall be designated in the Option Agreement as either
an Incentive Stock Option or a Nonstatutory Stock Option.




          (c) ISO $100,000 Limitation. Notwithstanding any designation under Section 5(b), 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 any Optionee during any calendar
year (under all plans of the Company or any Parent or Subsidiary) exceeds $100,000, such excess
Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 5(c),
Incentive Stock Options shall be taken into account in the order in which they were granted, and
the Fair Market Value of the Shares subject to an Incentive Stock Option shall be determined as of
the date of the grant of such Option.




          (d) No Employment Rights. The Plan shall not confer upon any Participant any right
with respect to continuation of an employment or consulting relationship with the Company, nor
shall it interfere in any way with such Participant’s right or the Company’s right to terminate the
employment or consulting relationship at any time for any reason.




     6. Term of Plan. The Plan shall become effective upon its adoption by the Board of
Directors. It shall continue in effect for a term of ten (10) years unless sooner terminated under
Section 16 of the Plan.



     7. Term of Option. The term of each Option shall be the term stated in the Option
Agreement; provided that the term shall be no more than ten years from the date of grant thereof or
such shorter term as may be provided in the Option Agreement and provided further that, in the case
of an Incentive Stock Option granted to a person who at the time of such grant is a Ten Percent
Holder, the term of the Option shall be five years from the date of grant thereof or such shorter
term as may be provided in the Option Agreement.



     8. [Reserved]



     9. Option Exercise Price and Consideration.



          (a) Exercise Price. The per Share exercise price for the Shares to be issued pursuant
to exercise of an Option shall be such price as is determined by the Administrator and set forth in
the Option Agreement, but shall be subject to the following:




               (i) In the case of an Incentive Stock Option



                    (A) granted to an Employee who at the time of grant is a Ten
Percent Holder, the per Share
exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant;
or



                    (B) granted to any other Employee, the per Share exercise price
shall be no less than 100% of
the Fair Market Value per Share on the date of grant.



			
	 	 	 
	
	 	Page 7






 









 






               (ii) In the case of a Nonstatutory Stock Option



                    (A) granted on any date on which the Common Stock is not a Listed
Security to a person who is
at the time of grant is a Ten Percent Holder, the per Share exercise price shall be no less than
110% of the Fair Market Value per Share on the date of grant if required by the Applicable Laws
and, if not so required, shall be such price as is determined by the Administrator;



                    (B) granted on any date on which the Common Stock is not a Listed
Security to any other
eligible person, the per Share exercise price shall be no less than 85% of the Fair Market Value
per Share on the date of grant if required by the Applicable Laws and, if not so required, shall be
such price as is determined by the Administrator; or



                    (C) granted on any date on which the Common Stock is a Listed
Security to any eligible person,
the per share Exercise Price shall be such price as determined by the Administrator provided that
if such eligible person is, at the time of the grant of such Option, a Named Executive of the
Company, the per share Exercise Price shall be no less than 100% of the Fair Market Value on the
date of grant if such Option is intended to qualify as performance-based compensation under Section
162(m) of the Code.



               (iii) Notwithstanding the foregoing, Options may be granted with a per Share exercise price
other than as required above pursuant to a merger or other corporate transaction.



          (b) Permissible Consideration. The consideration to be paid for the Shares to be
issued upon exercise of an Option, including the method of payment, shall be determined by the
Administrator (and, in the case of an Incentive Stock Option, shall be determined at the time of
grant) and may consist entirely of (1) cash; (2) check; (3) subject to any requirements of the
Applicable Laws (including without limitation, Section 153 of the Delaware General Corporation
Law), delivery of Optionee’s promissory note having such recourse, interest, security and
redemption provisions as the Administrator determines to be appropriate after taking into account
the potential accounting consequences of permitting an Optionee to deliver a promissory note;
(4) cancellation of indebtedness; (5) other Shares that have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which the Option is exercised,
provided that in the case of Shares acquired, directly or indirectly, from the Company, such Shares
must have been owned by the Optionee for such period, if any, as may be required to avoid the
Company’s incurring an adverse accounting charge; (6) if, as of the date of exercise of an Option
the Company then is permitting employees to engage in a “same-day sale” cashless brokered exercise
program involving one or more brokers, through such a program that complies with the Applicable
Laws (including without limitation the requirements of Regulation T and other applicable
regulations promulgated by the Federal Reserve Board) and that ensures prompt delivery to the
Company of the amount required to pay the exercise price and any applicable withholding taxes; (7)
any combination of the foregoing methods of payment; or (8) such other consideration and method of
payment as determined by the Administrator and to the extent permitted by Applicable Laws. In
making its determination as to the type of consideration to accept, the Administrator shall
consider if acceptance of such consideration may be




			
	 	 	 
	
	 	Page 8






 









 





reasonably expected to benefit the Company and the Administrator may, in its sole discretion,
refuse to accept a particular form of consideration at the time of any Option exercise.




     10. Exercise of Option.



          (a) General.




               (i) Exercisability. Any Option granted hereunder shall be exercisable at
such times
and under such conditions as determined by the Administrator, consistent with the term of the Plan
and reflected in the Option Agreement, including vesting requirements and/or performance criteria
with respect to the Company and/or the Optionee; provided however that, if required under
Applicable Laws, the Option (or Shares issued upon exercise of the Option) shall comply with the
requirements of Section 260.140.41(f) and (k) of the Rules of the California Corporations
Commissioner.



               (ii) Leave of Absence. The Administrator shall have the discretion to
determine
whether and to what extent the vesting of Options shall be tolled during any unpaid leave of
absence; provided, however, that in the absence of such determination, vesting of Options shall be
tolled during any such unpaid leave (unless otherwise required by the Applicable Laws). In the
event of military leave, vesting shall toll during any unpaid portion of such leave, provided that,
upon a Participant’s returning from military leave (under conditions that would entitle him or her
to protection upon such return under the Uniform Services Employment and Reemployment Rights Act),
he or she shall be given vesting credit with respect to Options to the same extent as would have
applied had the Participant continued to provide services to the Company throughout the leave on
the same terms as he or she was providing services immediately prior to such leave.



               (iii) Minimum Exercise Requirements. An Option may not be exercised for a
fraction of
a Share. The Administrator may require that an Option be exercised as to a minimum number of
Shares, provided that such requirement shall not prevent an Optionee from exercising the full
number of Shares as to which the Option is then exercisable.



               (iv) Procedures for and Results of Exercise. An Option shall be deemed
exercised when
written notice of such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and the Company has received full payment for
the Shares with respect to which the Option is exercised. Full payment may, as authorized by the
Administrator, consist of any consideration and method of payment allowable under Section 9(b) of
the Plan, provided that the Administrator may, in its sole discretion, refuse to accept any form of
consideration at the time of any Option exercise.



          Exercise of an Option in any manner shall result in a decrease in the number of Shares that
thereafter may be available, both for purposes of the Plan and for sale under the Option, by the
number of Shares as to which the Option is exercised.



               (v) Rights as Stockholder. Until the issuance of the Shares (as evidenced
by the
appropriate entry on the books of the Company or of a duly authorized transfer agent of the
Company), no right to vote or receive dividends or any other rights as a stockholder



			
	 	 	 
	
	 	Page 9






 









 





shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option.
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 Section 14 of the Plan.




          (b) Termination of Employment or Consulting Relationship. Except as otherwise set
forth in this Section 10(b), the Administrator shall establish and set forth in the applicable
Option Agreement the terms and conditions upon which an Option shall remain exercisable, if at all,
following termination of an Optionee’s Continuous Service Status, which provisions may be waived or
modified by the Administrator at any time. Unless the Administrator otherwise provides in the
Option Agreement, to the extent that the Optionee is not vested in Optioned Stock at the date of
termination of his or her Continuous Service Status, or if the Optionee (or other person entitled
to exercise the Option) does not exercise the Option to the extent so entitled within the time
specified in the Option Agreement or below (as applicable), the Option shall terminate and the
Optioned Stock underlying the unexercised portion of the Option shall revert to the Plan. In no
event may any Option be exercised after the expiration of the Option term as set forth in the
Option Agreement (and subject to Section 7).




          The following provisions (1) shall apply to the extent an Option Agreement does not specify
the terms and conditions upon which an Option shall terminate upon termination of an Optionee’s
Continuous Service Status, and (2) establish the minimum post-termination exercise periods that may
be set forth in an Option Agreement:




               (i) Termination other than Upon Disability or Death or for Cause. In the
event of
termination of Optionee’s Continuous Service Status other than under the circumstances set forth in
subsections (ii) through (iv) below, such Optionee may exercise an Option for 90 days following
such termination to the extent the Optionee was vested in the Optioned Stock as of the date of such
termination. No termination shall be deemed to occur and this Section 10(b)(i) shall not apply if
(i) the Optionee is a Consultant who becomes an Employee, or (ii) the Optionee is an Employee who
becomes a Consultant.



               (ii) Disability of Optionee. In the event of termination of an
Optionee’s Continuous
Service Status as a result of his or her disability (including a disability within the meaning of
Section 22(e)(3) of the Code), such Optionee may exercise an Option at any time within twelve
months following such termination to the extent the Optionee was vested in the Optioned Stock as of
the date of such termination.



               (iii) Death of Optionee. In the event of the death of an Optionee during
the period
of Continuous Service Status since the date of grant of the Option, or within thirty days following
termination of Optionee’s Continuous Service Status, the Option may be exercised by Optionee’s
estate or by a person who acquired the right to exercise the Option by bequest or inheritance at
any time within twelve months following the date of death, but only to the extent the Optionee was
vested in the Optioned Stock as of the date of death or, if earlier, the date the Optionee’s
Continuous Service Status terminated.



               (iv) Termination for Cause. In the event of termination of an
Optionee’s Continuous
Service Status for Cause, any Option (including any exercisable portion thereof) held by such
Optionee shall immediately terminate in its entirety upon first notification



			
	 	 	 
	
	 	Page 10






 









 





to the Optionee of termination of the Optionee’s Continuous Service Status. If an Optionee’s
employment or consulting relationship with the Company is suspended pending an investigation of
whether the Optionee shall be terminated for Cause, all the Optionee’s rights under any Option
likewise shall be suspended during the investigation period and the Optionee shall have no right to
exercise any Option. This Section 10(b)(iv) shall apply with equal effect to vested Shares
acquired upon exercise of an Option granted on any date on which the Common Stock is not a Listed
Security to a person other than an officer, Director or Consultant, in that the Company shall have
the right to repurchase such Shares from the Participant upon the following terms: (A) the
repurchase is made within 90 days of termination of the Participant’s Continuous Service Status for
Cause at the Fair Market Value of the Shares as of the date of termination, (B) consideration for
the repurchase consists of cash or cancellation of purchase money indebtedness, and (C) the
repurchase right terminates upon the effective date of the Company’s initial public offering of its
Common Stock. With respect to vested Shares issued upon exercise of an Option granted to any
officer, Director or Consultant, the Company’s right to repurchase such Shares upon termination of
the Participant’s Continuous Service Status for Cause shall be made at the Participant’s original
cost for the Shares and shall be effected pursuant to such terms and conditions, and at such time,
as the Administrator shall determine. Nothing in this Section 10(b)(iv) shall in any way limit the
Company’s right to purchase unvested Shares issued upon exercise of an Option as set forth in the
applicable Option Agreement.




          (c) Buyout Provisions. The Administrator may at any time offer to buy out for a
payment in cash or Shares an Option previously granted under the Plan based on such terms and
conditions as the Administrator shall establish and communicate to the Optionee at the time that
such offer is made.




     11. Stock Purchase Rights.



          (a) Rights to Purchase. When the Administrator determines that it will offer Stock
Purchase Rights under the Plan, it shall advise the offeree in writing of the terms, conditions and
restrictions related to the offer, including the number of Shares that such person shall be
entitled to purchase, the price to be paid, and the time within which such person must accept such
offer. In the case of a Stock Purchase Right granted prior to the date, if any, on which the
Common Stock becomes a Listed Security and if required by the Applicable Laws at that time, the
purchase price of Shares subject to such Stock Purchase Rights shall not be less than 85% of the
Fair Market Value of the Shares as of the date of the offer, or, in the case of a Ten Percent
Holder, the price shall not be less than 100% of the Fair Market Value of the Shares as of the date
of the offer. If the Applicable Laws do not impose the requirements set forth in the preceding
sentence and with respect to any Stock Purchase Rights granted after the date, if any, on which the
Common Stock becomes a Listed Security, the purchase price of Shares subject to Stock Purchase
Rights shall be as determined by the Administrator. The offer to purchase Shares subject to Stock
Purchase Rights shall be accepted by execution of a Restricted Stock Purchase Agreement in the form
determined by the Administrator.




          (b) Repurchase Option.




			
	 	 	 
	
	 	Page 11






 









 






               (i) General. Unless the Administrator determines otherwise, the Restricted
Stock
Purchase Agreement shall grant the Company a repurchase option exercisable upon the voluntary or
involuntary termination of the purchaser’s employment with the Company for any reason (including
death or disability). Subject to any requirements of the Applicable Laws (including without
limitation Section 260.140.42(h) of the Rules of the California Corporations Commissioner), the
terms of the Company’s repurchase option (including without limitation the price at which, and the
consideration for which, it may be exercised, and the events upon which it shall lapse) shall be as
determined by the Administrator in its sole discretion and reflected in the Restricted Stock
Purchase Agreement.



               (ii) Leave of Absence. The Administrator shall have the discretion to
determine
whether and to what extent the lapsing of Company repurchase rights shall be tolled during any
unpaid leave of absence; provided, however, that in the absence of such determination, such lapsing
shall be tolled during any such unpaid leave (unless otherwise required by the Applicable Laws).
In the event of military leave, the lapsing of Company repurchase rights shall toll during any
unpaid portion of such leave, provided that, upon a Participant’s returning from military leave
(under conditions that would entitle him or her to protection upon such return under the Uniform
Services Employment and Reemployment Rights Act), he or she shall be given “vesting” credit with
respect to Shares purchased pursuant to the Restricted Stock Purchase Agreement to the same extent
as would have applied had the Participant continued to provide services to the Company throughout
the leave on the same terms as he or she was providing services immediately prior to such leave.



               (iii) Termination for Cause. In the event of termination of a
Participant’s
Continuous Service Status for Cause, the Company shall have the right to repurchase from the
Participant vested Shares issued upon exercise of a Stock Purchase Right granted to any person
other than an officer, Director or Consultant prior to the date, if any, upon which the Common
Stock becomes a Listed Security upon the following terms: (A) the repurchase must be made within
90 days of termination of the Participant’s Continuous Service Status for Cause at the Fair Market
Value of the Shares as of the date of termination, (B) consideration for the repurchase consists of
cash or cancellation of purchase money indebtedness, and (C) the repurchase right terminates upon
the effective date of the Company’s initial public offering of its Common Stock. With respect to
vested Shares issued upon exercise of a Stock Purchase Right granted to any officer, Director or
Consultant, the Company’s right to repurchase such Shares upon termination of such Participant’s
Continuous Service Status for Cause shall be made at the Participant’s original cost for the Shares
and shall be effected pursuant to such terms and conditions, and at such time, as the Administrator
shall determine. Nothing in this Section 11(b)(ii) shall in any way limit the Company’s right to
purchase unvested Shares as set forth in the applicable Restricted Stock Purchase Agreement.



          (c) Other Provisions. The Restricted Stock Purchase Agreement shall contain such
other terms, provisions and conditions not inconsistent with the Plan as may be determined by the
Administrator in its sole discretion. In addition, the provisions of Restricted Stock Purchase
Agreements need not be the same with respect to each purchaser.




			
	 	 	 
	
	 	Page 12






 









 






          (d) Rights as a Stockholder. Once the Stock Purchase Right is exercised, the
purchaser shall have the rights equivalent to those of a stockholder, and shall be a stockholder
when his or her purchase is entered upon the records of the duly authorized transfer agent of the
Company. No adjustment will be made for a dividend or other right for which the record date is
prior to the date the Stock Purchase Right is exercised, except as provided in Section 14 of the
Plan.




     12. Taxes.



          (a) As a condition of the grant, vesting or exercise of an Option or Stock Purchase Right
granted under the Plan, the Participant (or in the case of the Participant’s death, the person
exercising the Option or Stock Purchase Right) shall make such arrangements as the Administrator
may require for the satisfaction of any applicable federal, state, local or foreign withholding tax
obligations that may arise in connection with such grant, vesting or exercise of the Option or
Stock Purchase Right or the issuance of Shares. The Company shall not be required to issue any
Shares under the Plan until such obligations are satisfied. If the Administrator allows the
withholding or surrender of Shares to satisfy a Participant’s tax withholding obligations under
this Section 12 (whether pursuant to Section 12(c), (d) or (e), or otherwise), the Administrator
shall not allow Shares to be withheld in an amount that exceeds the minimum statutory withholding
rates for federal and state tax purposes, including payroll taxes.




          (b) In the case of an Employee and in the absence of any other arrangement, the Employee shall
be deemed to have directed the Company to withhold or collect from his or her compensation an
amount sufficient to satisfy such tax obligations from the next payroll payment otherwise payable
after the date of an exercise of the Option or Stock Purchase Right.




          (c) This Section 12(c) shall apply only after the date, if any, upon which the Common Stock
becomes a Listed Security. In the case of Participant other than an Employee (or in the case of an
Employee where the next payroll payment is not sufficient to satisfy such tax obligations, with
respect to any remaining tax obligations), in the absence of any other arrangement and to the
extent permitted under the Applicable Laws, the Participant shall be deemed to have elected to have
the Company withhold from the Shares to be issued upon exercise of the Option or Stock Purchase
Right that number of Shares having a Fair Market Value determined as of the applicable Tax Date (as
defined below) equal to the amount required to be withheld. For purposes of this Section 12, the
Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of
tax to be withheld is to be determined under the Applicable Laws (the “Tax Date”).




          (d) If permitted by the Administrator, in its discretion, a Participant may satisfy his or her
tax withholding obligations upon exercise of an Option or Stock Purchase Right by surrendering to
the Company Shares that have a Fair Market Value determined as of the applicable Tax Date equal to
the amount required to be withheld. In the case of shares previously acquired from the Company
that are surrendered under this Section 12(d), such Shares must have been owned by the Participant
for more than six (6) months on the date of surrender (or such other period of time as is required
for the Company to avoid adverse accounting charges).




			
	 	 	 
	
	 	Page 13






 









 






          (e) Any election or deemed election by a Participant to have Shares withheld to satisfy tax
withholding obligations under Section 12(c) or (d) above shall be irrevocable as to the particular
Shares as to which the election is made and shall be subject to the consent or disapproval of the
Administrator. Any election by a Participant under Section 12(d) above must be made on or prior to
the applicable Tax Date.




          (f) In the event an election to have Shares withheld is made by a Participant and the Tax Date
is deferred under Section 83 of the Code because no election is filed under Section 83(b) of the
Code, the Participant shall receive the full number of Shares with respect to which the Option or
Stock Purchase Right is exercised but such Participant shall be unconditionally obligated to tender
back to the Company the proper number of Shares on the Tax Date.




     13. Non-Transferability of Options and Stock Purchase Rights.



          (a) General. Except as set forth in this Section 13, Options and Stock Purchase
Rights may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner
other than by will or by the laws of descent or distribution. The designation of a beneficiary by
an Optionee will not constitute a transfer. An Option or Stock Purchase Right may be exercised,
during the lifetime of the holder of an Option or Stock Purchase Right, only by such holder or a
transferee permitted by this Section 13.




          (b) Limited Transferability Rights. Notwithstanding anything else in this Section 13,
the Administrator may in its discretion grant Nonstatutory Stock Options that may be transferred by
instrument to an inter vivos or testamentary trust in which the Options are to be passed to
beneficiaries upon the death of the trustor (settlor) or by gift or pursuant to domestic relations
orders to “Immediate Family Members” (as defined below) of the Optionee. “Immediate Family”
means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse,
sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law,
or sister-in-law (including adoptive relationships), a trust in which these persons have more than
fifty percent of the beneficial interest, a foundation in which these persons (or the Optionee)
control the management of assets, and any other entity in which these persons (or the Optionee) own
more than fifty percent of the voting interests.




     14. Adjustments Upon Changes in Capitalization, Merger or Certain Other Transactions.



          (a) Changes in Capitalization. Subject to any action required under Applicable Laws
by the stockholders of the Company, the number of Shares of Common Stock covered by each
outstanding award, the numbers of Shares set forth in Section 3(a) above, and the number of Shares
of Common Stock that have been authorized for issuance under the Plan but as to which no awards
have yet been granted or that have been returned to the Plan upon cancellation or expiration of an
award, 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, combination,
recapitalization or reclassification of the Common Stock, or any other increase or decrease in the
number of issued Shares of Common Stock effected without




			
	 	 	 
	
	 	Page 14






 









 





receipt of consideration by the Company; provided, however, that conversion of any convertible
securities of the Company shall not be deemed to have been “effected without receipt of
consideration.” Such adjustment shall be made by the Administrator, whose determination in that
respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance
by the Company of shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of Shares of Common Stock subject to an award.




          (b) Dissolution or Liquidation. In the event of the dissolution or liquidation of the
Company, each Option and Stock Purchase Right will terminate immediately prior to the consummation
of such action, unless otherwise determined by the Administrator.




          (c) Corporate Transaction. In the event of a Corporate Transaction (including without
limitation a Change of Control), each outstanding Option or Stock Purchase Right shall be assumed
or an equivalent option or right shall be substituted by such successor corporation or a parent or
subsidiary of such successor corporation (the “Successor Corporation”), unless the
Successor Corporation does not agree to assume the award or to substitute an equivalent option or
right, in which case such Option or Stock Purchase Right shall terminate upon the consummation of
the transaction.




          Notwithstanding the above, in the event (i) of a Change of Control, and (ii) a Participant
holding an Option or Stock Purchase Right assumed or substituted by the Successor Corporation in
the Change of Control, or holding Restricted Stock issued upon exercise of an Option or Stock
Purchase Right with respect to which the Successor Corporation has succeeded to a repurchase right
as a result of the Change of Control, is Involuntarily Terminated by the Successor Corporation
without Cause at the time of, or within eighteen (18) months following the consummation of, the
transaction, then any assumed or substituted Option or Stock Purchase Right held by the terminated
Participant at the time of termination shall accelerate and become exercisable as to the number of
Shares then unvested, and any repurchase right applicable to any Shares shall lapse as to 100% of
the number of Shares as to which the repurchase right would otherwise be applicable, in each case
assuming the Participant remained in Continuous Service Status for such period. The acceleration
of vesting and lapse of repurchase rights provided for in the previous sentence shall occur
immediately prior to the effective date of termination of the Participant’s Continuous Service
Status.




          For purposes of this Section 14(c), an Option or a Stock Purchase Right shall be considered
assumed, without limitation, if, at the time of issuance of the stock or other consideration upon a
Corporate Transaction or a Change of Control, as the case may be, each holder of an Option or Stock
Purchase Right would be entitled to receive upon exercise of the award the same number and kind of
shares of stock or the same amount of property, cash or securities as such holder would have been
entitled to receive upon the occurrence of the transaction if the holder had been, immediately
prior to such transaction, the holder of the number of Shares of Common Stock covered by the award
at such time (after giving effect to any adjustments in the number of Shares covered by the Option
or Stock Purchase Right as provided for in this Section 14); provided that if such consideration
received in the transaction is not solely common stock of the Successor Corporation, the
Administrator may, with the consent




			
	 	 	 
	
	 	Page 15






 









 





of the Successor Corporation, provide for the consideration to be received upon exercise of
the award to be solely common stock of the Successor Corporation equal to the Fair Market Value of
the per Share consideration received by holders of Common Stock in the transaction.




          (d) Certain Distributions. In the event of any distribution to the Company’s
stockholders of securities of any other entity or other assets (other than dividends payable in
cash or stock of the Company) without receipt of consideration by the Company, the Administrator
may, in its discretion, appropriately adjust the price per Share of Common Stock covered by each
outstanding Option or Stock Purchase Right to reflect the effect of such distribution.




     15. Time of Granting Options and Stock Purchase Rights. The date of grant of an
Option or Stock Purchase Right shall, for all purposes, be the date on which the Administrator
makes the determination granting such Option or Stock Purchase Right, or such other date as is
determined by the Administrator, provided that in the case of any Incentive Stock Option, the grant
date shall be the later of the date on which the Administrator makes the determination granting
such Incentive Stock Option or the date of commencement of the Optionee’s employment relationship
with the Company. Notice of the determination shall be given to each Employee or Consultant to
whom an Option or Stock Purchase Right is so granted within a reasonable time after the date of
such grant.



     16. Amendment and Termination of the Plan.



          (a) Authority to Amend or Terminate. The Board may at any time amend, alter, suspend
or discontinue the Plan, but no amendment, alteration, suspension or discontinuation (other than an
adjustment pursuant to Section 14 above) shall be made that would materially and adversely affect
the rights of any Optionee or holder of Stock Purchase Rights under any outstanding grant, without
his or her consent. In addition, to the extent necessary and desirable to comply with the
Applicable Laws, the Company shall obtain stockholder approval of any Plan amendment in such a
manner and to such a degree as required.




          (b) Effect of Amendment or Termination. Except as to amendments which the
Administrator has the authority under the Plan to make unilaterally, no amendment or termination of
the Plan shall materially and adversely affect Options or Stock Purchase Rights already granted,
unless mutually agreed otherwise between the Optionee or holder of the Stock Purchase Rights and
the Administrator, which agreement must be in writing and signed by the Optionee or holder and the
Company.




     17. Conditions Upon Issuance of Shares. Notwithstanding any other provision of the
Plan or any agreement entered into by the Company pursuant to the Plan, the Company shall not be
obligated, and shall have no liability for failure, to issue or deliver any Shares under the Plan
unless such issuance or delivery would comply with the Applicable Laws, with such compliance
determined by the Company in consultation with its legal counsel. As a condition to the exercise
of an Option or Stock Purchase Right, the Company may require the person exercising the award to
represent and warrant at the time of any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute such Shares if, in the opinion
of counsel for the Company, such a representation is required by law. Shares issued upon exercise
of awards granted prior to the date on which the Common Stock



			
	 	 	 
	
	 	Page 16






 









 





becomes a Listed Security shall be subject to a right of first refusal in favor of the Company
pursuant to which the Participant will be required to offer Shares to the Company before selling or
transferring them to any third party on such terms and subject to such conditions as is reflected
in the applicable Option Agreement or Restricted Stock Purchase Agreement. In addition, awards
issued prior to the date on which the Common Stock becomes a Listed Security shall require the
Participant to agree to a lock-up agreement in connection with public offerings of the Company’s
stock that applies to all capital stock and rights to purchase capital stock of the Company held by
the Participant on such terms and subject to such conditions as are reflected in the applicable
Option Agreement or Restricted Stock Purchase Agreement.




     18. Reservation of Shares. The Company, during the term of this Plan, will at all
times reserve and keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.



     19. Agreements. Options and Stock Purchase Rights shall be evidenced by Option
Agreements and Restricted Stock Purchase Agreements, respectively, in such form(s) as the
Administrator shall from time to time approve.



     20. Stockholder Approval. If required by the Applicable Laws, continuance of the Plan
shall be subject to approval by the stockholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such stockholder approval shall be obtained in the manner and
to the degree required under the Applicable Laws.



     21. Information and Documents to Optionees and Purchasers. Prior to the date, if any,
upon which the Common Stock becomes a Listed Security and if required by the Applicable Laws, the
Company shall provide financial statements at least annually to each Optionee and to each
individual who acquired Shares pursuant to the Plan, during the period such Optionee or purchaser
has one or more Options or Stock Purchase Rights outstanding, and in the case of an individual who
acquired Shares pursuant to the Plan, during the period such individual owns such Shares. The
Company shall not be required to provide such information if the issuance of Options or Stock
Purchase Rights under the Plan is limited to key employees whose duties in connection with the
Company assure their access to equivalent information.



			
	 	 	 
	
	 	Page 17