exv10w14



 






EXHIBIT 10.14




DOT HILL SYSTEMS CORP.




2000 AMENDED AND RESTATED NON-EMPLOYEE DIRECTORS’ STOCK OPTION PLAN




Adopted by the Board of Directors March 9, 2000

Approved By Stockholders May 8, 2000




Amendment and Restatement Adopted

by the Board of Directors July 25, 2005 and April 6, 2006

Amendment and Restatement Approved By Stockholders May 8, 2006




Effective Date: April 6, 2006

Termination Date: April 5, 2016




1. Purposes.




     (a) Eligible Option Recipients. The persons eligible to receive Options are the Non-Employee
Directors of the Company.



     (b) Available Options. The purpose of the Plan is to provide a means by which Non-Employee
Directors may be given an opportunity to benefit from increases in value of the Common Stock
through the granting of Nonstatutory Stock Options.



     (c) General Purpose. The Company, by means of the Plan, seeks to retain the services of its
Non-Employee Directors, to secure and retain the services of new Non-Employee Directors and to
provide incentives for such persons to exert maximum efforts for the success of the Company and its
Affiliates.



2. Definitions.




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



     (b) “Annual
Grant” means an Option granted pursuant to subsection 6(b) of the Plan.



     (c) “Annual
Meeting” means the annual meeting of the stockholders of the Company.



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



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



     (f) “Common Stock” means the common stock of the Company.



     (g) “Company” means Dot Hill Systems Corp., a Delaware corporation.



     (h) “Consultant” means any person, including an advisor, engaged by the Company or an
Affiliate to render consulting or advisory services and who is compensated for such services. A
person shall not be deemed a “Consultant” solely by reason of the performance of services as a
Director and/or the payment of compensation in relation thereto.



     (i) “Continuous Service” means that the Optionholder’s service with the Company as a
Non-Employee Director is not interrupted or terminated. The Optionholder’s Continuous Service in
any event shall not be deemed to have been interrupted or terminated by reason of a change in the
capacity in which the Optionholder renders service to the Company or an Affiliate of the Company.
For example, a change in status from a Non-Employee Director to an Employee or Consultant will not
constitute an interruption or termination of Continuous Service. The Board, in its sole
discretion, may determine whether Continuous Service shall be considered interrupted or terminated
in the case of any leave of absence approved by the Board, including sick leave, military leave or
any other personal leave.



     (j) “Director” means a member of the Board of Directors of the Company.



     (k) “Disability” means the permanent and total disability of a person within the meaning of
Section 22(e)(3) of the Code.



     (l) “Employee” means any person employed by the Company or an Affiliate. Service as a
Director and/or payment of compensation in relation thereto, in and of itself, shall not be
sufficient to constitute “employment” by the Company or an Affiliate.



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



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



          (i) If the Common Stock is listed on any established stock exchange, such as the New York
Stock Exchange, or traded on the Nasdaq National Market or the Nasdaq SmallCap Market, the Fair
Market Value of a share of Common Stock shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or market (or the exchange or
market with the greatest volume of trading in the Common Stock) on the last market trading day
prior to the day of determination, as reported in The Wall Street Journal or such other source as
the Board deems reliable.




          (ii) In the absence of such markets for the Common Stock, the Fair Market Value shall be
determined in good faith by the Board.




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     (o) “Initial Grant” means an Option granted pursuant to section 6(a) of the Plan.



     (p) “Non-Employee Director” means a Director who is not an Employee.



     (q) “Nonstatutory Stock Option” means an Option not intended to qualify as an “incentive stock
option” within the meaning of Section 422 of the Code and the regulations promulgated thereunder.



     (r) “Option” means a Nonstatutory Stock Option granted pursuant to the Plan.



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



     (t) “Optionholder” means a person to whom an Option is granted pursuant to the Plan or, if
applicable, such other person who holds an outstanding Option.



     (u) “Plan” means this Dot Hill Systems Corp. 2000 Non-Employee Directors’ Stock
Option Plan.



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



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



3. Administration.




     (a) Administration by Board. The Board shall administer the Plan. The Board may not delegate
administration of the Plan to a committee.



     (b) Powers of Board. The Board shall have the power, subject to, and within the limitations
of, the express provisions of the Plan:



          (i) To determine the provisions of each Option to the extent not specified in the Plan.




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




          (iii) To amend the Plan or an Option as provided in Section 12.




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




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     (c) Effect of Board’s Decision. All determinations, interpretations and constructions made by
the Board in good faith shall not be subject to review by any person and shall be final, binding
and conclusive on all persons.



4. Shares Subject to the Plan.




     (a) Share Reserve. Subject to the provisions of Section 11 relating to adjustments upon
changes in the Common Stock, the Common Stock that may be issued pursuant to Options shall not
exceed in the aggregate one million (1,000,000) shares of Common Stock.



     (b) Reversion of Shares to the Share Reserve. If any Option shall for any reason expire or
otherwise terminate, in whole or in part, without having been exercised in full, the shares of
Common Stock not acquired under such Option shall revert to and again become available for issuance
under the Plan.



     (c) Source of Shares. The shares of Common Stock subject to the Plan may be unissued shares
or reacquired shares, bought on the market or otherwise.



5. Eligibility.




     Options shall automatically be granted under the Plan to Non-Employee Directors in accordance
with Section 6.



6. Non-Discretionary Grants.




     (a) Initial Grants. Without any further action of the Board, each person who, at any time
after the Company’s 2005 Annual Meeting, is duly elected or appointed by the Board of Directors or
stockholders of the Company to serve as a Non-Employee Director and who, for at least one (1) year
preceding such election or appointment has at no time served as a Non-Employee Director, shall,
effective as of the effective date of such election or appointment, automatically be granted an
option to purchase fifty thousand (50,000) shares of Common Stock on the terms and conditions set
forth in this Plan. Termination of a Director’s status as an Employee shall not result in an
Initial Grant to such Director pursuant to this Subsection 6(a).



     (b) Annual Grants. Without any further action of the Board, each person who, immediately
following each Annual Meeting commencing with the 2006 Annual Meeting, is a Non-Employee Director
and who has been a Non-Employee Director for at least four (4) months prior to such Annual Meeting
shall, effective as of the date of such Annual Meeting, automatically be granted an option to
purchase twenty thousand (20,000) shares of Common Stock on the terms and conditions set forth in
this Plan.



7. Option Provisions.



     Each Option shall be in such form and shall contain such terms and conditions as required by
the Plan. Each Option shall contain such additional terms and conditions, not inconsistent with
the Plan, as the Board shall deem appropriate. Each Option shall include (through incorporation of
provisions hereof by reference in the Option or otherwise) the substance of each of the following
provisions:



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     (a) Term. No Option shall be exercisable after the expiration of ten (10) years from the date
it was granted.



     (b) Exercise Price. The exercise price of each Option shall be one hundred percent (100%) of
the Fair Market Value of the stock subject to the Option on the date the Option is granted.
Notwithstanding the foregoing, an Option may be granted with an exercise price lower than that set
forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution
for another option in a manner satisfying the provisions of Section 424(a) of the Code.



     (c) Consideration. The purchase price of stock acquired pursuant to an Option may be paid, to
the extent permitted by applicable statutes and regulations, in any combination of the following
methods:



          (i) By cash or check.




          (ii) Provided that at the time of exercise the Common Stock is publicly traded and quoted
regularly in The Wall Street Journal, by delivery of already-owned shares of Common Stock either
that the Optionholder has held for the period required to avoid a charge to the Company’s reported
earnings (generally six months) or that the Optionholder did not acquire, directly or indirectly
from the Company, that are owned free and clear of any liens, claims, encumbrances or security
interests, and that are valued at Fair Market Value on the date of exercise. “Delivery” for these
purposes shall include delivery to the Company of the Optionholder’s attestation of ownership of
such shares of Common Stock in a form approved by the Company. Notwithstanding the foregoing, the
Optionholder may not exercise the Option by tender to the Company of Common Stock to the extent
such tender would violate the provisions of any law, regulation or agreement restricting the
redemption of the Company’s stock.




          (iii) Provided that at the time of exercise the Common Stock is publicly traded and quoted
regularly in The Wall Street Journal, pursuant to a program developed under Regulation T as
promulgated by the Federal Reserve Board that, prior to the issuance of Common Stock, results in
either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to
pay the aggregate exercise price to the Company from the sales proceeds.




          (iv) Pursuant to the following deferred payment provisions:




               (1) One hundred percent (100%) of the aggregate exercise price, plus accrued interest, shall
be due four (4) years from date of exercise or upon termination of your Continuous Service.



               (2) Interest shall be compounded annually and shall be charged at the minimum rate of interest
necessary to avoid the treatment as interest, under any applicable provisions of the Code, of any
portion of any amounts other than amounts stated to be interest under the deferred payment
arrangement.



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               (3) At any time that the Company is incorporated in Delaware, payment of the Common Stock’s
“par value,” as defined in the Delaware General Corporation Law, shall be made in cash and not by
deferred payment.



               (4) The Optionholder must, as a part of his or her written notice of exercise, give notice of
the election of this payment alternative and must tender to the Company a promissory note and a
security agreement covering the purchased shares of Common Stock, both in form and substance
satisfactory to the Company, or such other or additional documentation as the Company may request.



     (d) Transferability. An Option is transferable by will or by the laws of descent and
distribution. Subject to this Subsection 7(d), an Option also is transferable (i) by instrument to
an inter vivos or testamentary trust, in a form accepted by the Company, in which the Option is to
be passed to beneficiaries upon the death of the trustor (settlor), and (ii) by gift, in a form
accepted by the Company, to a member of the “immediate family” of the Optionholder as that term is
defined in 17 C.F.R. 240.16a-1(e). An Option shall be exercisable during the lifetime of the
Optionholder only by the Optionholder and a permitted transferee as provided herein. However, the
Optionholder may, by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the Optionholder, shall
thereafter be entitled to exercise the Option. Any transfer by an Optionholder or permitted
transferee as provided under this Subsection 7(d), shall be subject to (i) the Company’s
obligation, if any, to execute and file with the Securities and Exchange Commission a Registration
Statement on Form S-8 or such appendices or amendments to the Company’s Registration Statement on
Form S-8 currently on file as may be necessary or appropriate for the Company’s compliance thereof,
and (ii) any rules and regulations, restrictions or limitations on the rights of transfer
promulgated under the Exchange Act or Securities Act.



     (e) Vesting Schedule. Options shall vest as follows:



          (i) Initial Grants shall vest (become exercisable) over a period of four (4) years with twelve
thousand five hundred (12,500) of the shares of Common Stock subject to each Initial Grant vesting
as of twelve (12) months after the date of the grant thereof, and an additional one thousand
forty-one (1,041) of the shares of Common Stock subject to such Initial Grant vesting each month
thereafter over the three (3) year period following such initial twelve (12) months (with one
thousand sixty-five (1,065) shares vesting as of the 36th such month).




          (ii) Annual Grants shall be fully vested as of the date of grant.




     (f) Early Exercise. If applicable, Options shall include a provision whereby the Optionholder
may elect at any time before the Optionholder’s Continuous Service terminates to exercise the
Option as to any part or all of the shares of Common Stock subject to the Option
prior to the full vesting of the Option. Any unvested shares of Common Stock so purchased
shall be subject to a repurchase option in favor of the Company to the extent such Option was
unvested when exercised and which corresponds with the vesting schedule applicable to such unvested
shares.



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     (g) Termination of Continuous Service. In the event an Optionholder’s Continuous Service
terminates (other than upon the Optionholder’s death or Disability), the Optionholder may exercise
his or her Option (to the extent that the Optionholder was entitled to exercise it as of the date
of termination) but only within such period of time ending on the earlier of (i) the date three (3)
months following the termination of the Optionholder’s Continuous Service (or such longer or
shorter prior specified in the Option Agreement), or (ii) the expiration of the term of the Option
as set forth in the Option Agreement. If, after termination, the Optionholder does not exercise
his or her Option within the time specified in the Option Agreement, the Option shall terminate.



     (h) Extension of Termination Date. If the exercise of the Option following the termination of
the Optionholder’s Continuous Service (other than upon the Optionholder’s death or Disability)
would be prohibited at any time solely because the issuance of shares would violate the
registration requirements under the Securities Act, then the Option shall terminate on the earlier
of (i) the expiration of the term of the Option set forth in subsection 7(a) or (ii) the expiration
of a period of three (3) months after the termination of the Optionholder’s Continuous Service
during which the exercise of the Option would not be in violation of such registration
requirements.



     (i) Disability of Optionholder. In the event an Optionholder’s Continuous Service terminates
as a result of the Optionholder’s Disability, the Optionholder may exercise his or her Option (to
the extent that the Optionholder was entitled to exercise it as of the date of termination), but
only within such period of time ending on the earlier of (i) the date twelve (12) months following
such termination (or such longer or shorter period specified in the Option Agreement), or (ii) the
expiration of the term of the Option as set forth in the Option Agreement. If, after termination,
the Optionholder does not exercise his or her Option within the time specified herein, the Option
shall terminate.



     (j) Death of Optionholder. In the event (i) an Optionholder’s Continuous Service terminates
as a result of the Optionholder’s death, or (ii) the Optionholder dies within the three-month
period after the termination of the Optionholder’s Continuous Service for a reason other than
death, then the Option may be exercised (to the extent the Optionholder was entitled to exercise
the Option as of the date of death) by the Optionholder’s estate, by a person who acquired the
right to exercise the Option by bequest or inheritance or by a person designated to exercise the
Option upon the Optionholder’s death, but only within the period ending on the earlier of (1) the
date eighteen (18) months following the date of death (or such longer or shorter period specified
in the Option Agreement), or (2) the expiration of the term of such Option as set forth in the
Option Agreement. If, after death, the Option is not exercised within the time specified herein,
the Option shall terminate.



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8. Covenants of the Company.




     (a) Availability of Shares. During the terms of the Options, the Company shall keep available
at all times the number of shares of Common Stock required to satisfy such Options.



     (b) Securities Law Compliance. The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such authority as may be required to grant
Options and to issue and sell shares of Common Stock upon exercise of the Options; provided,
however, that this undertaking shall not require the Company to register under the Securities Act
the Plan, any Option or any stock issued or issuable pursuant to any such Option. If, after
reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency
the authority which counsel for the Company deems necessary for the lawful issuance and sale of
stock under the Plan, the Company shall be relieved from any liability for failure to issue and
sell stock upon exercise of such Options unless and until such authority is obtained.



9. Use of Proceeds from Stock.




     Proceeds from the sale of stock pursuant to Options shall constitute general funds of the
Company.



10. Miscellaneous.




     (a) Stockholder Rights. No Optionholder shall be deemed to be the holder of, or to have any
of the rights of a holder with respect to, any shares subject to such Option unless and until such
Optionholder has satisfied all requirements for exercise of the Option pursuant to its terms.



     (b) No Service Rights. Nothing in the Plan or any instrument executed or Option granted
pursuant thereto shall confer upon any Optionholder any right to continue to serve the Company as a
Non-Employee Director or shall affect the right of the Company or an Affiliate to terminate (i) the
employment of an Employee with or without notice and with or without cause, (ii) the service of a
Consultant pursuant to the terms of such Consultant’s agreement with the Company or an Affiliate,
or (iii) the service of a Director pursuant to the Bylaws of the Company or an Affiliate, and any
applicable provisions of the corporate law of the state in which the Company or the Affiliate is
incorporated, as the case may be.



     (c) Investment Assurances. The Company may require an Optionholder, as a condition of
exercising or acquiring stock under any Option, (i) to give written assurances satisfactory to the
Company as to the Optionholder’s knowledge and experience in financial and business matters and/or
to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable
and experienced in financial and business matters and that he or she is capable of evaluating,
alone or together with the purchaser representative, the merits and risks of exercising the Option;
and (ii) to give written assurances satisfactory to the Company stating that the Optionholder is
acquiring the stock subject to the Option for the Optionholder’s own account and not with any
present intention of selling or otherwise distributing the stock.



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The foregoing requirements, and any assurances given pursuant to such requirements, shall be
inoperative if (iii) the issuance of the shares upon the exercise or acquisition of stock under the
Option has been registered under a then currently effective registration statement under the
Securities Act, or (iv) as to any particular requirement, a determination is made by counsel for
the Company that such requirement need not be met in the circumstances under the then applicable
securities laws. The Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or appropriate in order to
comply with applicable securities laws, including, but not limited to, legends restricting the
transfer of the stock.




     (d) Withholding Obligations. The Optionholder may satisfy any federal, state or local tax
withholding obligation relating to the exercise or acquisition of stock under an Option by any of
the following means (in addition to the Company’s right to withhold from any compensation paid to
the Optionholder by the Company) or by a combination of such means: (i) tendering a cash payment;
(ii) authorizing the Company to withhold shares from the shares of the Common Stock otherwise
issuable to the Optionholder as a result of the exercise or acquisition of stock under the Option,
provided, however, that no shares of Common Stock are withheld with a value exceeding the minimum
amount of tax required to be withheld by law; or (iii) delivering to the Company owned and
unencumbered shares of the Common Stock.



11. Adjustments upon Changes in Stock.




     (a) Capitalization Adjustments. If any change is made in the stock subject to the Plan, or
subject to any Option, without the receipt of consideration by the Company (through merger,
consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in
property other than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the receipt of
consideration by the Company), the Plan will be appropriately adjusted in the class(es) and maximum
number of securities subject both to the Plan pursuant to subsection 4(a) and to the
nondiscretionary Options specified in Section 6, and the outstanding Options will be appropriately
adjusted in the class(es) and number of securities and price per share of stock subject to such
outstanding Options. The Board shall make such adjustments, and its determination shall be final,
binding and conclusive. (The conversion of any convertible securities of the Company shall not be
treated as a transaction “without receipt of consideration” by the Company.)



     (b) Dissolution or Liquidation. In the event of a dissolution or liquidation of the Company,
then all outstanding Options shall terminate immediately prior to such event.



     (c) Asset Sale, Merger, Consolidation or Reverse Merger. In the event of (i) a sale, lease or
other disposition of all or substantially all of the assets of the Company; (ii) a merger or
consolidation in which the Company is not the surviving entity and in which the holders of the
Company’s outstanding voting stock immediately prior to such transaction own, immediately after
such transaction, securities representing less than fifty percent (50%) of the voting power of the
entity surviving such transaction or, where the surviving entity is a wholly-owned subsidiary of
another entity, the surviving entity’s parent; or (iii) a reverse merger in



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which the Company is the surviving entity but the shares of Common Stock outstanding
immediately preceding the merger are converted by virtue of the merger into other property, whether
in the form of securities of the surviving entity’s parent, cash or otherwise, and in which the
holders of the Company’s outstanding voting stock immediately prior to such transaction own,
immediately after such transaction, securities representing less than fifty percent (50%) of the
voting power of the Company or, where the Company is a wholly-owned subsidiary of another entity,
the Company’s parent (each, individually, a “Change in Control”), then with respect to Options held
by Optionholders whose Continuous Service has not terminated, the vesting of such Options (and, if
applicable, the time during which such Options may be exercised) shall be accelerated in full, and
the Options shall terminate if not exercised (if applicable) at or prior to such event. With
respect to any other Options held by Optionholders whose Continuous Service has terminated, such
Options shall terminate immediately if not exercised prior to such event.



     (d) Parachute Payments. If any payment or benefit the Optionholder would receive pursuant to
this Stock Option Agreement in connection with a Change in Control (“Payment”) would (i) constitute
a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this
sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then
such Payment shall be reduced to the Reduced Amount. The “Reduced Amount” shall be either (x) the
largest portion of the Payment that would result in no portion of the Payment being subject to the
Excise Tax or (y) the largest portion, up to and including the total, of the Payment, whichever
amount, after taking into account all applicable federal, state and local employment taxes, income
taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in the
Optionholder’s receipt, on an after-tax basis, of the greater amount of the Payment notwithstanding
that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in
payments or benefits constituting “parachute payments” is necessary so that the Payment equals the
Reduced Amount, reduction shall occur in the following order unless the Optionholder elects in
writing a different order: reduction of cash payments; cancellation of accelerated vesting of stock
or other equity based awards; reduction of employee benefits. In the event that acceleration of
vesting of stock or other equity-based award compensation is to be reduced, such acceleration of
vesting shall be cancelled in the reverse order of the date of grant of the Optionholder’s stock or
other equity-based awards unless the Optionholder elects in writing a different order for
cancellation.



     The accounting firm engaged by the Company for general audit purposes as of the day prior to
the effective date of the Change in Control shall perform the foregoing calculations. If the
accounting firm so engaged by the Company is serving as accountant or auditor for the individual,
entity or group effecting the Change in Control, the Company shall appoint a nationally recognized
accounting firm to make the determinations required hereunder. The Company shall bear all expenses
with respect to the determinations by such accounting firm required to be made hereunder.



     The accounting firm engaged to make the determinations hereunder shall provide its
calculations, together with detailed supporting documentation, to the Optionholder and the Company
within fifteen (15) calendar days after the date on which the Optionholder’s right to a



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Payment is triggered (if requested at that time by the Optionholder or the Company) or such
other time as requested by the Optionholder or the Company. If the accounting firm determines that
no Excise Tax is payable with respect to a Payment, either before or after the application of the
Reduced Amount, it shall furnish the Company and the Optionholder with an opinion reasonably
acceptable to the Optionholder that no Excise Tax will be imposed with respect to such Payment.
Any good faith determinations of the accounting firm made hereunder shall be final, binding and
conclusive upon the Optionholder and the Company.



12. Amendment of the Plan and Options.




     (a) Amendment of Plan. The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 11 relating to adjustments upon changes in stock, no
amendment shall be effective unless approved by the stockholders of the Company to the extent
stockholder approval is necessary to satisfy the requirements of Rule 16b-3 or any Nasdaq or
securities exchange listing requirements.



     (b) Stockholder Approval. The Board may, in its sole discretion, submit any other amendment
to the Plan for stockholder approval.



     (c) No Impairment of Rights. Rights under any Option granted before amendment of the Plan
shall not be impaired by any amendment of the Plan unless (i) the Company requests the consent of
the Optionholder, and (ii) the Optionholder consents in writing.



     (d) Amendment of Options. The Board at any time, and from time to time, may amend the terms
of any one or more Options; provided, however, that the rights under any Option shall not be
impaired by any such amendment unless (i) the Company requests the consent of the Optionholder, and
(ii) the Optionholder consents in writing.



13. Termination or Suspension of the Plan.




     (a) Plan Term. The Board may suspend or terminate the Plan at any time. Unless sooner
terminated, the Plan shall terminate on the day before the tenth Anniversary of the date the Plan
is adopted by the Board or approved by the stockholders of the Company, whichever is earlier. No
Options may be granted under the Plan while the Plan is suspended or after it is terminated.



     (b) No Impairment of Rights. Suspension or termination of the Plan shall not impair rights
and obligations under any Option granted while the Plan is in effect except with the written
consent of the Optionholder.



14. Effective Date of Plan.




     The Plan shall become effective on the date that the Plan is adopted by the Board, but no
Option shall be exercised unless and until the Plan has been approved by the stockholders of the
Company, which approval shall be within twelve (12) months before or after the date the Plan is
adopted by the Board.



15. Choice of Law.




     All questions concerning the construction, validity and interpretation of this Plan shall be
governed by the law of the State of California, without regard to such state’s conflict of laws
rules.




11.