Exhibit
10.1


 


GAMEFLY,
INC.


 


2002
STOCK PLAN


(as
amended)


 


1.             Purposes of the Plan.  The purposes
of this 2002  Stock Plan, as amended and
restated October 28, 2009, 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 under
applicable U.S. state corporate laws, U.S. federal and applicable state
securities laws, the Code, any Stock Exchange rules or regulations and the
applicable laws 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)           “Change of Control” means a sale of all or substantially all of the
Company’s assets, or any merger, consolidation or other 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 voting
securities of the Company outstanding immediately prior to such transaction
continue to hold (either by the voting securities remaining outstanding or by
their being converted into voting securities of the surviving entity) a
majority of the total voting power represented by the voting securities of the
Company, or such surviving entity, outstanding immediately after such
transaction.


 


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


 


(g)           “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.


 


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


 

















 


(i)            “Company” means GameFly, Inc., a Delaware corporation.


 


(j)            “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.


 


(k)           “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.


 


(l)            “Corporate Transaction” means a sale of all or substantially all of the
Company’s assets, or a merger, consolidation or other capital reorganization of
the Company with or into another corporation, entity or person, and includes a
Change of Control.


 


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


 


(n)           “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.


 


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


 


(p)           “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.


 


(q)           “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.


 


(r)            “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.


 


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


 


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


 


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


 


(v)           “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.


 


(w)          “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.


 


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


 


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


 


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


 


(aa)         “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.


 


(bb)         “Plan” means this 2002 Stock Plan.


 


(cc)         “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.


 


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


 


(ee)         “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.


 


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


 


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


 


(hh)         “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.


 


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


 


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


 


(kk)         “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 5,637,382 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 not 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 


 


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requirements of Rule 16b-3 or Section 162(m) of the
Code, to the extent permitted or required by such provisions.


 


(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:


 


(i)            to determine the Fair Market Value of the Common
Stock, in accordance with Section 2(p) 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 adjustments 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 


 


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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 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


 


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(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.


 


(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) delivery of Optionee’s promissory note having such recourse, interest,
security and redemption provisions as the Administrator determines to be
appropriate (subject to the provisions of Section 153 of the Delaware
General Corporation Law); (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 more than six
months on the date of surrender (or such other period as may be required to
avoid the Company’s incurring an adverse accounting charge); (6) delivery
of a properly executed exercise notice together with such other documentation
as the Administrator and a securities broker approved by the Company shall
require to effect exercise of the Option and prompt delivery to the Company of
the sale or loan proceeds required to pay the exercise price and any applicable
withholding taxes; or (7) any combination of the foregoing methods of
payment.  In making its 


 


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determination as to the type of consideration to accept, the
Administrator shall consider if acceptance of such consideration may be
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 by the Applicable Laws, any Option granted on a date
on which the Common Stock is not a Listed Security shall become exercisable at
the rate of at least 20% per year over five years from the date the Option
is granted.  In the event that any of the
Shares issued upon exercise of an Option (which exercise occurs on a date on
which the Common Stock is not a Listed Security) should be subject to a right
of repurchase in the Company’s favor, such repurchase right shall, if required
by the Applicable Laws, lapse at the rate of at least 20% per year over five
years from the date the Option is granted. 
Notwithstanding the above, in the case of an Option granted to an
officer, Director or Consultant of the Company or any Parent, Subsidiary or
Affiliate of the Company, the Option may become fully exercisable, or a
repurchase right, if any, in favor of the Company shall lapse, at any time or
during any period established by the Administrator.


 


(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 


 


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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 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. 
In the
event of termination of an Optionee’s Continuous Service Status, such Optionee
may exercise an Option for 30 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 six 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 


 


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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.


 


(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.


 


(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). 
The purchase price for Shares repurchased pursuant to the Restricted
Stock Purchase Agreement shall be the original purchase price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at such rate as the
Administrator may determine, provided that with respect to a Stock Purchase
Right granted prior to the date, if any, on which the Common Stock becomes a
Listed Security to a purchaser who is not an officer, Director or Consultant of
the Company or of any Parent or Subsidiary of the Company, it shall lapse at a
minimum rate of 20% per year if required by the Applicable Laws.


 


(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


 


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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.


 


(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.


 


(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 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 the exercise of the Option or
Stock Purchase Right and 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 


 


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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).


 


(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, prior to the date, if any, on which the
Common Stock becomes a Listed Security, 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 to “Immediate
Family” (as defined below), on such terms and conditions as the Administrator
deems appropriate.  Following the date,
if any, on which the Common Stock becomes a Listed Security, the Administrator
may in its discretion grant transferable Nonstatutory Stock Options pursuant to
Option Agreements specifying the manner in which such Nonstatutory Stock
Options are transferable.  “Immediate
Family” means any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, 


 


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brother-in-law, or sister-in-law and shall include adoptive
relationships.


 


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 Sections 3(a) and 8 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 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, 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.


 


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 


 


13

















 


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 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 


 


14

















 


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.


 


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.


 


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