Exhibit 10.2  


LOCAL MATTERS, INC.  


2004 EQUITY INCENTIVE PLAN  


Adopted: December 29, 2004

Amended by Board: March 31, 2005 and April 11, 2005

Approved by Stockholders: April 12, 2005 








   TABLE OF CONTENTS  



	 
	 	 
	 	 

	SECTION 1.	 	Establishment and Purpose	 	1
	

SECTION 2.	
 	

Definitions	
 	

1
	

SECTION 3.	
 	

Administration	
 	

2
	

a.	
 	

Committees of the Board of Directors	
 	

2
	

b.	
 	

Authority of the Board of Directors	
 	

3
	

SECTION 4.	
 	

Eligibility	
 	

3
	

a.	
 	

General Rule	
 	

3
	

b.	
 	

Ten-Percent Stockholders	
 	

3
	

SECTION 5.	
 	

Shares Subject To Plan	
 	

3
	

a.	
 	

Basic Limitation	
 	

3
	

b.	
 	

Additional Shares	
 	

3
	

SECTION 6.	
 	

Terms and Conditions of Awards or Sales	
 	

4
	

a.	
 	

Stock Purchase Agreement	
 	

4
	

b.	
 	

Duration of Offers and Nontransferability of Rights	
 	

4
	

c.	
 	

Purchase Price	
 	

4
	

d.	
 	

Withholding Taxes	
 	

4
	

e.	
 	

Restrictions on Transfer of Shares and Minimum Vesting	
 	

4
	

f.	
 	

Accelerated Vesting	
 	

4
	

SECTION 7.	
 	

Terms and Conditions of Options	
 	

4
	

a.	
 	

Stock Option Agreement	
 	

4
	

b.	
 	

Number of Shares	
 	

5
	

c.	
 	

Exercise Price	
 	

5
	

d.	
 	

Withholding Taxes	
 	

5
	

e.	
 	

Exercisability	
 	

5
	

f.	
 	

Accelerated Exercisability	
 	

5
	

g.	
 	

Basic Term	
 	

5
	

h.	
 	

Nontransferability	
 	

5
	

i.	
 	

Termination of Service (Except by Death)	
 	

5
	

j.	
 	

Leaves of Absence	
 	

6
	

k.	
 	

Death of Optionee	
 	

6
	

l.	
 	

No Rights as a Stockholder	
 	

6
	

m.	
 	

Modification, Extension and Assumption of Options	
 	

6
	 	 	 	 	 



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n.	
 	

Restrictions on Transfer of Shares and Minimum Vesting	
 	

6
	

SECTION 8.	
 	

Payment For Shares	
 	

7
	

a.	
 	

General Rule	
 	

7
	

b.	
 	

Surrender of Stock	
 	

7
	

c.	
 	

Services Rendered	
 	

7
	

d.	
 	

Promissory Note	
 	

7
	

e.	
 	

Exercise/Sale	
 	

7
	

f.	
 	

Exercise/Pledge	
 	

7
	

SECTION 9.	
 	

Adjustment of Shares	
 	

8
	

a.	
 	

General	
 	

8
	

b.	
 	

Mergers and Consolidations	
 	

8
	

c.	
 	

Reservation of Rights	
 	

8
	

SECTION 10.	
 	

Securities Law Requirements	
 	

8
	

a.	
 	

General	
 	

8
	

b.	
 	

Financial Reports	
 	

9
	

SECTION 11.	
 	

No Retention Rights	
 	

9
	

SECTION 12.	
 	

Duration and Amendments	
 	

9
	

a.	
 	

Term of the Plan	
 	

9
	

b.	
 	

Right to Amend or Terminate the Plan	
 	

9
	

c.	
 	

Effect of Amendment or Termination	
 	

9




3








   LOCAL MATTERS, INC.

2004 EQUITY INCENTIVE PLAN  


SECTION 1.    Establishment and Purpose.  


        The purpose of the Plan is to offer selected individuals an opportunity to acquire a proprietary interest in the success of the Company, or to increase such
interest, by purchasing Shares of the Company's Stock. The Plan provides both for the direct award or sale of Shares and for the grant of Options to purchase Shares. Options granted under the Plan may
include Nonstatutory Options as well as Incentive Stock Options intended to qualify under Section 422 of the Code. 


SECTION 2.    Definitions.  


        As used herein, the following definitions shall apply: 



	a)
	"Board
of Directors" shall mean the Board of Directors of the Company, as constituted from time to time.



	b)
	"Change
in Control" shall mean:



	(i)
	The
consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, if more than 50% of the combined voting power of the
continuing or surviving entity's securities outstanding immediately after such merger, consolidation or other reorganization is owned by persons who were not stockholders of the Company immediately
prior to such merger, consolidation or other reorganization; or



	(ii)
	The
sale, transfer or other disposition of all or substantially all of the Company's assets.



	(iii)
	A
transaction shall not constitute a Change in Control if its sole purpose is to change the state of the Company's incorporation or to create a holding company that will be owned in
substantially the same proportions by the persons who held the Company's securities immediately before such transaction.






	c)
	"Code"
shall mean the Internal Revenue Code of 1986, as amended.



	d)
	"Committee"
shall mean a committee of the Board of Directors, as described in Section 3(a).



	e)
	"Company"
shall mean Local Matters, Inc., a Delaware corporation.



	f)
	"Consultant"
shall mean a person who performs bona fide services for the Company, a Parent or a Subsidiary as a consultant or advisor, excluding Employees and Outside Directors.



	g)
	"Disability"
shall mean total and permanent disability as defined in Section 22(e)(3) of the Code.



	h)
	"Employee"
shall mean any individual who is a common-law employee of the Company, a Parent or a Subsidiary.



	i)
	"Exercise
Price" shall mean the amount for which one Share may be purchased upon exercise of an Option, as specified by the Board of Directors in the applicable Stock Option Agreement.



	j)
	"Fair
Market Value" shall mean the fair market value of a Share, as determined by the Board of Directors in good faith. Such determination shall be conclusive and binding on all
persons.



	k)
	"ISO"
shall mean an employee incentive stock option described in section 422(b) of the Code.



	l)
	"Nonstatutory
Option" shall mean a stock option not described in Sections 422(b) or 423(b) of the Code. 



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	m)
	"Option"
shall mean an ISO or Nonstatutory Option granted under the Plan and entitling the holder to purchase Shares.



	n)
	"Optionee"
shall mean an individual who holds an Option.



	o)
	"Outside
Director" shall mean a member of the Board of Directors who is not an Employee.



	p)
	"Parent"
shall mean any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock
possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Parent on a date after the
adoption of the Plan shall be considered a Parent commencing as of such date.



	q)
	"Plan"
shall mean this Local Matters, Inc. 2004 Equity Incentive Plan.



	r)
	"Purchase
Price" shall mean the consideration for which one Share may be acquired under the Plan (other than upon exercise of an Option), as specified by the Board of Directors.



	s)
	"Purchaser"
shall mean an individual to whom the Board of Directors has offered the right to acquire Shares under the Plan (other than upon exercise of an Option).



	t)
	"Service"
shall mean service as an Employee, Outside Director or Consultant.



	u)
	"Share"
shall mean one share of Stock, as adjusted in accordance with Section 9 (if applicable).



	v)
	"Stock"
shall mean the Common Stock of the Company, with a par value of $0.001 per Share and with the rights, preferences and privileges as set forth in the Company's Certificate of
Incorporation.



	w)
	"Stock
Award" means any right granted under the Plan to acquire Shares, including an Option.



	x)
	"Stock
Award Recipient" shall mean an individual who holds a Stock Award.



	y)
	"Stock
Option Agreement" shall mean the agreement between the Company and an Optionee, which contains the terms, conditions and restrictions pertaining to the Optionee's Option.



	z)
	"Stock
Purchase Agreement" shall mean the agreement between the Company and a Purchaser who acquires Shares under the Plan, which contains the terms, conditions and restrictions
pertaining to the acquisition of such Shares.



	aa)
	"Subsidiary"
means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that
attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date. 




SECTION 3.    Administration.  



	a.
	Committees
of the Board of Directors. 




        The
Plan may be administered by the Board or a Committee appointed by the Board, which Committee shall be constituted to comply with applicable laws. Each Committee shall have such
authority and be responsible for such functions as the Board of Directors has assigned to it. If no Committee has been appointed, the entire Board of Directors shall administer the Plan. Any reference 


2







 



to
the Board of Directors in the Plan shall be construed as a reference to the Committee (if any) to whom the Board of Directors has assigned a particular function. 



	b.
	Authority
of the Board of Directors. 




        Subject
to the provisions of the Plan, the Board of Directors shall have full authority and discretion to take any actions it deems necessary or advisable for the administration of the
Plan. All decisions, interpretations and other actions of the Board of Directors shall be final and binding on all Purchasers, all Optionees and all persons deriving their rights from a Purchaser or
Optionee. 


SECTION 4.    Eligibility.  



	a.
	General
Rule. 




        Only
Employees, Outside Directors and Consultants shall be eligible for the grant of Options or the direct award or sale of Shares. Only Employees shall be eligible for the grant of
ISOs. 



	b.
	Ten-Percent
Stockholders. 




        An
individual who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Company, its Parent or any of its Subsidiaries shall not be eligible
for designation as an Optionee or Purchaser unless (i) the Exercise Price is at least 110% of the Fair Market Value of a Share on the date of grant, (ii) the Purchase Price (if any) is
at least 100% of the Fair Market Value of a Share and (iii) in the case of an ISO, such ISO by its terms is not exercisable after the expiration of five years from the date of grant. For
purposes of this Subsection (b), in determining stock ownership, the attribution rules of Section 424(d) of the Code shall be applied. 


SECTION 5.    Shares Subject To Plan.  



	a.
	Basic
Limitation. 




        Shares
offered under the Plan may be authorized but unissued Shares or treasury Shares. Subject to the provisions of Section 9 relating to Adjustment of Shares, the aggregate
number of Shares that may be issued under the Plan (upon exercise of Options or other rights to acquire Shares) shall not exceed in the aggregate 3,725,000* Shares. The number of Shares that are
subject to Options or other rights outstanding at any time under the Plan shall not exceed the number of Shares available for issuance
under the Plan. The Company, during the term of the Plan, shall at all times reserve and keep available sufficient Shares to satisfy the requirements of the Plan. 




	*
	As
amended to reflect recapitalization of the Company on April 14, 2005.



	b.
	Additional
Shares. 






        In
the event that any outstanding Option or other right for any reason expires or is canceled or otherwise terminated, the Shares allocable to the unexercised portion of such Option or
other right shall again be available for the purposes of the Plan. In the event that Shares issued under the Plan are reacquired by the Company pursuant to any forfeiture provision, right of
repurchase or right of first refusal, such Shares shall again be available for the purposes of the Plan, except that subject to the provisions of Section 9 relating to Adjustment of Shares, the
aggregate number of Shares that may be issued under the Plan (upon exercise of Options or other rights to acquire Shares) shall not exceed in the aggregate 3,725,000* Shares. 




	*
	As
amended to reflect recapitalization of the Company on April 14, 2005. 


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SECTION 6.    Terms and Conditions of Awards or Sales.  



	a.
	Stock
Purchase Agreement. 




        Each
award or sale of Shares under the Plan (other than upon exercise of an Option) shall be evidenced by a Stock Purchase Agreement between the Purchaser and the Company. Such award or
sale shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan and which the Board of Directors
deems appropriate for inclusion in a Stock Purchase Agreement. The provisions of the various Stock Purchase Agreements entered into under the Plan need not be identical. 



	b.
	Duration
of Offers and Nontransferability of Rights. 




        Any
right to acquire Shares under the Plan (other than an Option) shall automatically expire if not exercised by the Purchaser within 30 days after the grant of such right was
communicated to the Purchaser by the Company. Such right shall not be transferable and shall be exercisable only by the Purchaser to whom such right was granted. 



	c.
	Purchase
Price. 




        The
Purchase Price of Shares to be offered under the Plan, if newly issued, shall not be less than 85% of the fair market value of such Shares, and a higher percentage may be required by
Section 4(b). Subject to the preceding sentence, the Purchase Price shall be determined by the Board of Directors at its sole discretion. The Purchase Price shall be payable in a form described
in Section 8. 



	d.
	Withholding
Taxes. 




        As
a condition to the purchase of Shares, the Purchaser shall make such arrangements as the Board of Directors may require for the satisfaction of any federal, state, local or foreign
withholding tax obligations that may arise in connection with such purchase. 



	e.
	Restrictions
on Transfer of Shares and Minimum Vesting. 




        Any
Shares awarded or sold under the Plan shall be subject to such special forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the
Board of Directors may determine. Such restrictions shall be set forth in the applicable Stock Purchase Agreement and shall apply in addition to any restrictions that may apply to holders of Shares
generally. In the case of a Purchaser who is not an officer of the Company, an Outside Director or a Consultant, any right to repurchase the Purchaser's Shares at the original Purchase Price (if any)
upon termination of the Purchaser's Service shall lapse at least as rapidly as 20% per year over the five-year period commencing on the date of the award or sale of the Shares. Any such
right may be exercised only within 90 days after the termination of the Purchaser's Service for cash or for cancellation of indebtedness incurred in purchasing the Shares. 



	f.
	Accelerated
Vesting. 




        Accelerated
Vesting and the lapsing of any right to repurchase a Purchaser's Shares at the original Purchase Price (if any) upon termination of the Purchaser's Service shall be specified
in the terms of each specific Stock Purchase Agreement. 


SECTION 7.    Terms and Conditions of Options.  



	a.
	Stock
Option Agreement. 




        Each
grant of an Option under the Plan shall be evidenced by a Stock Option Agreement between the Optionee and the Company. Such Option shall be subject to all applicable terms and
conditions of the Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan 


4







 



and
which the Board of Directors deems appropriate for inclusion in a Stock Option Agreement. The provisions of the various Stock Option Agreements entered into under the Plan need not be identical. 



	b.
	Number
of Shares. 




        Each
Stock Option Agreement shall specify the number of Shares that are subject to the Option and shall provide for the adjustment of such number in accordance with Section 9. The
Stock Option Agreement shall also specify whether the Option is an ISO or a Nonstatutory Option. 



	c.
	Exercise
Price. 




        Each
Stock Option Agreement shall specify the Exercise Price. The Exercise Price of an ISO shall not be less than 100% of the Fair Market Value of a Share on the date of grant, and a
higher percentage may be required by Section 4(b). The Exercise Price of a Nonstatutory Option shall not be less than 85% of the Fair Market Value of a Share on the date of grant, and a higher
percentage may be required by Section 4(b). Subject to the preceding two sentences, the Exercise Price under any Option shall be determined by the Board of Directors at its sole discretion. The
Exercise Price shall be payable in a form described in Section 8. 



	d.
	Withholding
Taxes. 




        As
a condition to the exercise of an Option, the Optionee shall make such arrangements as the Board of Directors may require for the satisfaction of any federal, state, local or foreign
withholding tax obligations that may arise in connection with such exercise. The Optionee shall also make such arrangements as the Board of Directors may require for the satisfaction of any federal,
state, local or foreign withholding tax obligations that may arise in connection with the disposition of Shares acquired by exercising an Option. 



	e.
	Exercisability.





        Each
Stock Option Agreement shall specify the date when all or any installment of the Option is to become vested and therefore exercisable. In the case of an Option intended to qualify
as an ISO, it shall vest at least as rapidly as 20% per year over the five-year period commencing on the date of grant. Subject to the preceding sentence, the exercisability provisions of
any Stock Option Agreement shall be determined by the Board of Directors at its sole discretion. 



	f.
	Accelerated
Exercisability. 





        Accelerated
exercisability (if any) shall be specified in each particular Stock Option Agreement, which shall provide if and when an Optionee's Options shall vest and become exercisable
in full. 



	g.
	Basic
Term. 




        The
Stock Option Agreement shall specify the term of the Option. The term shall not exceed 10 years from the date of grant, and a shorter term may be required by
Section 4(b). Subject to the preceding sentence, the Board of Directors at its sole discretion shall determine when an Option is to expire. 



	h.
	Nontransferability.





        No
Option shall be transferable by the Optionee other than by beneficiary designation, will or the laws of descent and distribution. An Option may be exercised during the lifetime of the
Optionee only by the Optionee or by the Optionee's guardian or legal representative. No Option or interest therein may be transferred, assigned, pledged or hypothecated by the Optionee during the
Optionee's lifetime, whether by operation of law or otherwise, or be made subject to execution, attachment or similar process. 



	i.
	Termination
of Service (Except by Death). 



5







 





        If
an Optionee's Service terminates for any reason other than the Optionee's death, then the Optionee's Options shall expire on the earliest of the following occasions: 




	(i)
	The
expiration date determined pursuant to Subsection (g) above;



	(ii)
	The
date 90-days after the termination of the Optionee's Service for any reason other than Disability, or such later date as the Board of Directors may determine; or



	(iii)
	The
date six months after the termination of the Optionee's Service by reason of Disability, or such later date as the Board of Directors may determine.






	j.
	Leaves
of Absence. 




        For
purposes of Subsection (i) above, Service shall be deemed to continue while the Optionee is on a bona fide leave of absence, if such leave was approved by the Company in
writing and if continued crediting of Service for this purpose is expressly required by the terms of such leave or by applicable law (as determined by the Company). 



	k.
	Death
of Optionee. 




        If
an Optionee dies while the Optionee is in Service, then the Optionee's Options shall expire on the earlier of the following dates: 



	(i)
	The
expiration date determined pursuant to Subsection (g) above; or



	(ii)
	The
date 12 months after the Optionee's death. 






        All
or part of the Optionee's Options may be exercised at any time before the expiration of such Options under the preceding sentence by the executors or administrators of the Optionee's
estate or by any person who has acquired such Options directly from the Optionee by beneficiary designation, bequest or inheritance, but only to the extent that such Options had become exercisable
before the Optionee's death or became exercisable as a result of the death. The balance of such Options shall lapse when the Optionee dies. 



	l.
	No
Rights as a Stockholder. 




        An
Optionee, or a transferee of an Optionee, shall have no rights as a stockholder with respect to any Shares covered by the Optionee's Option until such person becomes entitled to
receive such Shares by filing a notice of exercise and paying the Exercise Price pursuant to the terms of such Option. 



	m.
	Modification,
Extension and Assumption of Options. 




        Within
the limitations of the Plan, the Board of Directors may modify, extend or assume outstanding Options or may accept the cancellation of outstanding Options (whether granted by the
Company or another issuer) in return for the grant of new Options for the same or a different number of Shares and at the same or a different Exercise Price. The foregoing notwithstanding, no
modification of an Option shall, without the consent of the Optionee, impair the Optionee's rights or increase the Optionee's obligations under such Option. 



n.    Restrictions on Transfer of Shares and Minimum Vesting. 




        Any
Shares issued upon exercise of an Option shall be subject to such special forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the
Board of Directors may determine. Such restrictions shall be set forth in the applicable Stock Option Agreement and shall apply in addition to any restrictions that may apply to holders of Shares
generally. In the case of an Optionee who is not an officer of the Company, an Outside Director or a Consultant, any right to repurchase the Optionee's Shares at the original Exercise Price upon
termination of the Optionee's Service shall lapse at least as rapidly as 20% per year over the five-year period commencing on the 


6







 

date
of the option grant. Any such repurchase right may be exercised only within 90 days after the termination of the Optionee's Service for cash or for cancellation of indebtedness incurred in
purchasing the Shares. 


SECTION 8.    Payment For Shares.  



	a.
	General
Rule. 




        The
entire Purchase Price or Exercise Price of Shares issued under the Plan shall be payable in cash or cash equivalents at the time when such Shares are purchased, except as otherwise
provided in this Section 8. 



	b.
	Surrender
of Stock. 




        To
the extent that a Stock Option Agreement so provides, all or any part of the Exercise Price may be paid by surrendering, or attesting to the ownership of, Shares that are already
owned by the Optionee. Such Shares shall be surrendered to the Company in good form for transfer and shall be valued at
their Fair Market Value on the date when the Option is exercised. The Optionee shall not surrender, or attest to the ownership of, Shares in payment of the Exercise Price if such action would cause
the Company to recognize compensation expense (or additional compensation expense) with respect to the Option for financial reporting purposes. 


        In
general, the recognition of compensation expense as a result of a "stock for stock" exercise is avoided if the optionee has owned the old shares for at least six months or if the old
shares were not acquired by exercising an option. 



	c.
	Services
Rendered. 




        At
the discretion of the Board of Directors, Shares may be awarded under the Plan in consideration of services rendered to the Company, a Parent or a Subsidiary prior to the award. 



	d.
	Promissory
Note. 




        To
the extent that a Stock Option Agreement or Stock Purchase Agreement so provides, all or a portion of the Exercise Price or Purchase Price (as the case may be) of Shares issued under
the Plan may be paid with a full-recourse promissory note. However, the par value of the Shares, if newly issued, shall be paid in cash or cash equivalents. The Shares shall be pledged as
security for payment of the principal amount of the promissory note and interest thereon. The interest rate payable under the terms of the promissory note shall not be less than the minimum rate (if
any) required to avoid the imputation of additional interest under the Code. Subject to the foregoing, the Board of Directors (at its sole discretion) shall specify the term, interest rate,
amortization requirements (if any) and other provisions of such note. 



	e.
	Exercise/Sale.





        To
the extent that a Stock Option Agreement so provides, and if Stock is publicly traded, payment may be made all or in part by the delivery (on a form prescribed by the Company) of an
irrevocable direction to a securities broker approved by the Company to sell Shares and to deliver all or part of the sales proceeds to the Company in payment of all or part of the Exercise Price and
any withholding taxes. 



f.    Exercise/Pledge. 




        To
the extent that a Stock Option Agreement so provides, and if Stock is publicly traded, payment may be made all or in part by the delivery (on a form prescribed by the Company) of an
irrevocable direction to pledge Shares to a securities broker or lender approved by the Company, as security for a 


7







 

loan,
and to deliver all or part of the loan proceeds to the Company in payment of all or part of the Exercise Price and any withholding taxes. 


SECTION 9.    Adjustment of Shares.  



a.    General. 




        In
the event of a subdivision of the outstanding Stock, a declaration of a dividend payable in Shares, a declaration of an extraordinary dividend payable in a form other than Shares in
an amount that has a material effect on the Fair Market Value of the Stock, a combination or consolidation of the outstanding Stock into a lesser number of Shares, a recapitalization, a
spin-off, a reclassification or a similar occurrence, the Board of Directors shall make appropriate adjustments in one or more of (i) the number of Shares available for future
grants under Section 4, (ii) the number of Shares covered by each outstanding Stock Award or (iii) the Exercise Price or Purchase Price under each outstanding Stock Award. 



b.    Mergers and Consolidations. 




        In
the event that the Company is a party to a merger or consolidation, outstanding Stock Awards shall be subject to the agreement of merger or consolidation. Such agreement, without the
consent of the Stock Award Recipient, may provide for: 



	(i)
	The
continuation of such outstanding Stock Awards by the Company (if the Company is the surviving corporation);



	(ii)
	The
assumption of the Plan and such outstanding Stock Awards by the surviving corporation or its parent;



	(iii)
	The
substitution by the surviving corporation or its parent of rights to acquire Shares with substantially the same terms as such outstanding Stock Awards; or



	(iv)
	The
cancellation of each outstanding Stock Award after payment to the Stock Award Recipient of an amount in cash or cash equivalents equal to (A) the Fair Market Value of the
Shares subject to such Stock Award at the time of the merger or consolidation or the preference amount for the Stock issuable upon exercise of the Stock Award, whichever is greater, minus
(B) the Exercise Price or Purchase Price of the Shares subject to such Stock Award.



	c.
	Reservation
of Rights. 




        Except
as provided in this Section 9, a Stock Award Recipient shall have no rights by reason of (i) any subdivision or consolidation of shares of stock of any class,
(ii) the payment of any dividend or (iii) any other increase or decrease in the number of shares of stock of any class. Any issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number, Exercise Price, or Purchase Price of Shares
subject to a Stock Award. The grant of a Stock Award pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or
changes of its capital or business structure, to merge or consolidate or to dissolve, liquidate, sell or transfer all or any part of its business or assets. 



SECTION 10.    Securities Law Requirements.  



a.    General. 




        Shares
shall not be issued under the Plan unless the issuance and delivery of such Shares comply with (or are exempt from) all applicable requirements of law, including (without
limitation) the 


8







 

Securities
Act of 1933, as amended, the rules and regulations promulgated thereunder, state securities laws and regulations, and the regulations of any stock exchange or other securities market on
which the Company's securities may then be traded. 



b.    Financial Reports. 




        Following
the end of each fiscal year the Company shall make available to stockholders who have received or purchased Stock under the Plan its balance sheet and income statement. Such
balance sheet and income statement need not be audited. 



SECTION 11.    No Retention Rights.  


        Nothing in the Plan or in any right or Option granted under the Plan shall confer upon the Purchaser or Optionee any right to continue in Service for any period
of specific duration or interfere with or otherwise restrict in any way the rights of the Company (or any Parent or Subsidiary employing or retaining the Purchaser or Optionee) or of the Purchaser or
Optionee, which rights are hereby expressly reserved by each, to terminate his or her Service at any time and for any reason, with or without cause. 


SECTION 12.    Duration and Amendments.  



a.    Term of the Plan. 




        The
Plan, as set forth herein, shall become effective on the date of its adoption by the Board of Directors, subject to the approval of the Company's stockholders. In the event that the
stockholders fail to approve the Plan within 12 months after its adoption by the Board of Directors, any grants of Options or sales or awards of Shares that have already occurred shall be
rescinded, and no additional grants, sales or awards shall be made thereafter under the Plan. The Plan shall terminate automatically 10 years after its adoption by the Board of Directors and
may be terminated on any earlier date pursuant to Subsection (b) below. 



	b.
	Right
to Amend or Terminate the Plan. 




        The
Board of Directors may amend, suspend or terminate the Plan at any time and for any reason; provided, however, that any amendment of the Plan which increases the number of Shares
available for issuance under the Plan (except as provided in Section 9), or which materially changes the class of persons who are eligible for the grant of ISOs, shall be subject to the
approval of the Company's stockholders. Stockholder approval shall not be required for any other amendment of the Plan. 



	c.
	Effect
of Amendment or Termination. 




        No
Shares shall be issued or sold under the Plan after the termination thereof, except upon exercise of an Option granted prior to such termination. The termination of the Plan, or any
amendment thereof, shall not affect any Share previously issued or any Option previously granted under the Plan. 


9