**Exhibit 10.12**

 

**BORLAND SOFTWARE CORPORATION**

 

**1998 NONSTATUTORY STOCK OPTION PLAN**

 

 

1.1**    Establishment**.  The Borland Software Corporation 1998 Nonstatutory Stock Option Plan (the *“********Plan********”*) is hereby establishedeffective as of January 28, 1998 (the *“**************Effective Date**************”*). 

 

1.2**    Purpose**.  The purpose of the Plan is to advance the interests of the Participating CompanyGroup and its stockholders by providing an incentive to attract, retain and reward persons performing services for the Participating Company Group and by motivating such persons to contribute to the growth and profitability of the ParticipatingCompany Group. 

 

1.3**    Term of Plan**.  The Plan shall continue in effect until the earlier of its termination by the Board or the date on which all of the shares of Stock available for issuance under the Plan havebeen issued and all restrictions on such shares under the terms of the Plan and the agreements evidencing Options granted under the Plan have lapsed. 

 

 

2.1**    Definitions**.  Whenever used herein, the following terms shall have their respective meanings set forth below: 

 

(a)*    “****Board****”* means the Board of Directors of theCompany. If one or more Committees have been appointed by the Board to administer the Plan, *“********Board********”* also means such Committee(s). 

 

(b)*    “****Code****”* means the Internal Revenue Code of1986, as amended, and any applicable regulations promulgated thereunder. 

 

(c)*    “****Committee****”* means the Compensation Committee or other committee of the Board duly appointed to administer the Plan and having such powers as shall be specifiedby the Board. Unless the powers of the Committee have been specifically limited, the Committee shall have all of the powers of the Board granted herein, including, without limitation, the power to amend or terminate the Plan at any time, subject tothe terms of the Plan and any applicable limitations imposed by law. 

 

(d)*    “****Company****”* means Borland Software Corporation, a Delaware corporation, or any successor corporation thereto. 

 

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(e)*    “****Consultant****”* means any person, including an advisor, engaged by a Participating Company to render services other than as an Employee or a Director. 

 

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

 

(g)*    “****Disability****”* means the permanent and total disability of the Optioneewithin the meaning of Section 22(e)(3) of the Code. 

 

(h)*    “****Employee****”* means any person treated as an employee in the records of a Participating Company. The Company shall determine in good faith and in the exercise of itsdiscretion whether an individual has become or has ceased to be an Employee and the effective date of such individual’s employment or termination of employment, as the case may be. For purposes of an individual’s rights, if any, under thePlan as of the time of the Company’s determination, all such determinations by the Company shall be final, binding and conclusive, notwithstanding that the Company or any governmental agency subsequently makes a contrary determination.

 

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

 

(j)*    “****Fair Market Value****”* means, as of any date, the value of a share of Stockor other property as determined by the Board, in its sole discretion, or by the Company, in its sole discretion, if such determination is expressly allocated to the Company herein, subject to the following: 

 

(i)    If, on such date, there is apublic market for the Stock, the Fair Market Value of a share of Stock shall be the closing price of a share of Stock (or the mean of the closing bid and asked prices of a share of Stock if the Stock is so quoted instead) as quoted on the NasdaqNational Market, the Nasdaq Small-Cap Market or such other national or regional securities exchange or market system constituting the primary market for the Stock, as reported in the Wall Street Journal or such other source as the Companydeems reliable. If the relevant date does not fall on a day on which the Stock has traded on such securities exchange or market system, the date on which the Fair Market Value shall be established shall be the last day on which the Stock was sotraded prior to the relevant date, or such other appropriate day as shall be determined by the Board, in its sole discretion. 

 

(ii)    If, on such date, there is no public market for the Stock, the Fair Market Value of a share of Stock shall beas determined by the Board without regard to any restriction other than a restriction which, by its terms, will never lapse. 

 

(k)*    “****Insider****”* means an officer or a Director of the Company or any otherperson whose transactions in Stock are subject to Section 16 of the Exchange Act. 

 

(l)*    “****Nonstatutory Stock Option****”* means an Option not intended to be an incentive stock option within the meaning of Section 422(b) of theCode. 

 

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(m)*    “****Option****”* means a right to purchase Stock (subject to adjustment as provided in Section 4.2) pursuant to the terms and conditions of the Plan. All Options shall beNonstatutory Stock Options. 

 

(n)    “***Option Agreement****”* means a written agreement between the Company and an Optionee setting forth the terms, conditions and restrictions of the Option granted to the Optionee andany shares acquired upon the exercise thereof. 

 

(o)*    “****Optionee****”* means a person who has been granted one or more Options. 

 

(p)*    “****Parent Corporation****”* means any present or future “parentcorporation” of the Company, as defined in Section 424(e) of the Code. 

 

(q)*    “****Participating Company****”* means the Company or any Parent Corporation or Subsidiary Corporation. 

 

(r)*    “****ParticipatingCompany Group****”* means, at any point in time, all corporations collectively which are then Participating Companies. 

 

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

 

(t)*    “****Service****”* means an Optionee’s employment or service with the Participating Company Group, whether in the capacity of an Employee, a Director or a Consultant. AnOptionee’s Service shall not be deemed to have terminated merely because of a change in the capacity in which the Optionee renders Service to the Participating Company Group or a change in the Participating Company for which the Optioneerenders such Service, provided that there is no interruption or termination of the Optionee’s Service. An Optionee’s Service with the Participating Company Group shall not be deemed to have terminated if the Optionee takes any militaryleave, sick leave, or other bona fide leave of absence approved by the Company; provided, however, that, unless otherwise designated by the Company or required by law, a leave of absence shall not be treated as Service for purposes of determiningvesting under the Optionee’s Option Agreement. An Optionee’s Service shall be deemed to have terminated either upon an actual termination of Service or upon the corporation for which the Optionee performs Service ceasing to be aParticipating Company. Subject to the foregoing, the Company, in its sole discretion, shall determine whether an Optionee’s Service has terminated and the effective date of such termination. 

 

(u)    “***Stock****”* means the common stock of the Company, as adjusted from time to time in accordance with Section 4.2. 

 

(v)*    “****Subsidiary Corporation****”* means any presentor future “subsidiary corporation” of the Company, as defined in Section 424(f) of the Code. 

 

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2.2**    Construction**.  Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of the Plan. Except when otherwise indicatedby the context, the singular shall include the plural and the plural shall include the singular. Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise. 

 
 3. **ADMINISTRATION**. 
 

3.1**    Administration by the Board***.*  The Plan shall beadministered by the Board. All questions of interpretation of the Plan or of any Option shall be determined by the Board, and such determinations shall be final and binding upon all persons having an interest in the Plan or such Option. Any officerof a Participating Company shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, determination or election which is the responsibility of or which is allocated to the Company herein, provided theofficer has apparent authority with respect to such matter, right, obligation, determination or election. 

 

3.2***    *****Powers of the Board*****.***  In addition to any other powers set forth inthe Plan and subject to the provisions of the Plan, the Board shall have the full and final power and authority, in its sole discretion: 

 

(a)    to determine the persons to whom, and the time or times at which, Options shall be granted and the number ofshares of Stock to be subject to each Option; 

 

(b)    to determine the Fair Market Value of shares of Stock or other property; 

 

(c)    to determine the terms, conditions and restrictions applicable to each Option (which need not be identical)and any shares acquired upon the exercise thereof, including, without limitation, (i) the exercise price of the Option, (ii) the method of payment for shares purchased upon the exercise of the Option, (iii) the method for satisfaction of any taxwithholding obligation arising in connection with the Option or such shares, including by the withholding or delivery of shares of stock, (iv) the timing, terms and conditions of the exercisability of the Option or the vesting of any shares acquiredupon the exercise thereof, (v) the time of the expiration of the Option, (vi) the effect of the Optionee’s termination of Service with the Participating Company Group on any of the foregoing, and (vii) all other terms, conditions andrestrictions applicable to the Option or such shares not inconsistent with the terms of the Plan; 

 

(d)    to approve one or more forms of Option Agreement; 

 

(e)    to amend, modify, extend, cancel, renew, or grant a new Option in substitutionfor, any Option or to waive any restrictions or conditions applicable to any Option or any shares acquired upon the exercise thereof; 

 

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(f)    to accelerate, continue, extend or defer the exercisability of any Option or the vesting of any shares acquired upon the exercise thereof, including with respect to the period following an Optionee’stermination of Service with the Participating Company Group; 

 

(g)    to delegate to any proper officer of the Company the authority to grant one or more Options, without further approval of the Board, to any person eligible pursuant to Section 5, other than a person who, atthe time of such grant, is an Insider; provided, however, that (i) such Options shall not be granted to any one person within any fiscal year of the Company for more than 250,000 shares in the aggregate, (ii) the exercise price per share of eachsuch Option shall be equal to the Fair Market Value per share of the Stock on the effective date of grant (or, if the Stock has not traded on such date, on the last day preceding the effective date of grant on which the Stock was traded), and (iii)each such Option shall be subject to the terms and conditions of the appropriate standard form of Option Agreement approved by the Board and shall conform to the provisions of the Plan and such other guidelines as shall be established from time totime by the Board; 

 

(h)    to prescribe, amend or rescind rules, guidelines and policies relating to the Plan, or to adopt supplements to, or alternative versions of, the Plan, including, without limitation, as the Board deemsnecessary or desirable to comply with the laws of, or to accommodate the tax policy or custom of, foreign jurisdictions whose citizens may be granted Options; and 

 

(i)    to correct any defect, supply any omission or reconcile any inconsistency in thePlan or any Option Agreement and to make all other determinations and take such other actions with respect to the Plan or any Option as the Board may deem advisable to the extent consistent with the Plan and applicable law. 

 
 4. **SHARES SUBJECTTO PLAN**. 
 

4.1    **Maximum Number of SharesIssuable**.  Subject to adjustment as provided in Section 4.2, the maximum aggregate number of shares of Stock that may be issued under the Plan shall be two hundred thousand (200,000) and shall consist of authorized but unissued orreacquired shares of Stock or any combination thereof. If an outstanding Option for any reason expires or is terminated or canceled, or if shares of Stock acquired, subject to repurchase, upon the exercise of an Option are repurchased by theCompany, the shares of Stock allocable to the unexercised portion of such Option or such repurchased shares of Stock shall again be available for issuance under the Plan. 

 

4.2    **Adjustments for Changes in Capital Structure**.  In the event ofany stock dividend, stock split, reverse stock split, recapitalization, combination, reclassification or similar change in the capital structure of the Company, appropriate adjustments shall be made in the number and class of shares subject to thePlan and to any outstanding Options and in the exercise price per share of any outstanding Options. If a majority of the shares which are of the same class as the shares that are subject to outstanding Options are exchanged for, converted 

 

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into, or otherwise become (whether or not pursuant to an Ownership Change Event, as defined in Section 8.1) shares of another corporation(the *“****New Shares****”*), the Board may unilaterally amend the outstanding Options to provide that such Options are exercisable for New Shares. In the event of any such amendment, the number of shares subject to, andthe exercise price per share of, the outstanding Options shall be adjusted in a fair and equitable manner as determined by the Board, in its sole discretion. Notwithstanding the foregoing, any fractional share resulting from an adjustment pursuantto this Section 4.2 shall be rounded up or down to the nearest whole number, as determined by the Board, and in no event may the exercise price of any Option be decreased to an amount less than the par value, if any, of the stock subject to theOption. The adjustments determined by the Board pursuant to this Section 4.2 shall be final, binding and conclusive. 

 
 5. **ELIGIBILITYAND OPTION LIMITATIONS**.
 

5.1    **Persons Eligible for Options**.  Options may be granted only to Employees and Consultants. For purposes of the foregoing sentence, “Employees” and “Consultants” shallinclude prospective Employees and prospective Consultants to whom Options are granted in connection with written offers of employment or other service relationship with the Participating Company Group. However, notwithstanding any other provisionherein to the contrary, no person shall be eligible to be granted an Option under the Plan whose eligibility would require approval of the Plan by the stockholders of the Company under any law or regulation or the rules of any stock exchange ormarket system upon which the Stock may then be listed. If not inconsistent with any such law, regulation or rule, an Option may be granted to a person, not previously employed by the Company, as an inducement essential to entering into an employmentcontract with the Company. Eligible persons may be granted more than one (1) Option. 

 

5.2    **Options Authorized**.  Options granted under the Plan may only be Nonstatutory Stock Options. 

 
 6. **TERMSAND CONDITIONSOF OPTIONS.**
 

Options shall be evidenced by Option Agreements specifying thenumber of shares of Stock covered thereby, in such form as the Board shall from time to time establish. No Option or purported Option shall be a valid and binding obligation of the Company unless evidenced by a fully executed Option Agreement.Option Agreements may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions: 

 

6.1    **Exercise Price**.  The exercise price for each Option shall be established in the solediscretion of the Board; provided, however, that the exercise price per share shall be not less than eighty-five percent (85%) of the Fair Market Value of a share of Stock on the effective date of grant of the Option. Notwithstanding the foregoing,an Option may be granted with an exercise price lower than the minimum exercise price set forth above if such Option is granted 

 

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pursuant to an assumption or substitution for another option in the manner described in Section 424(a) of the Code. 

 

6.2**    ExercisePeriod.**  Options shall be exercisable at such time or times, or upon such event or events, and subject to such terms, conditions, performance criteria, and restrictions as shall be determined by the Board and set forth in the OptionAgreement evidencing such Option; provided, however, that no Option granted to a prospective Employee or prospective Consultant may become exercisable prior to the date on which such person commences Service with a Participating Company. Subject tothe foregoing, unless otherwise specified by the Board in the grant of an Option, any Option granted hereunder shall have a term of ten (10) years from the effective date of the grant of the Option. 

 

6.3    **Payment of Exercise Price**.

 

(a)***    Forms ofConsideration Authorized.***  Except as otherwise provided below, payment of the exercise price for the number of shares of Stock being purchased pursuant to any Option shall be made (i) in cash, by check, or cash equivalent, (ii) bytender to the Company of shares of Stock owned by the Optionee having a Fair Market Value (as determined by the Company without regard to any restrictions on transferability applicable to such stock by reason of federal or state securities laws oragreements with an underwriter for the Company) not less than the exercise price, (iii) by the assignment of the proceeds of a sale or loan with respect to some or all of the shares being acquired upon the exercise of the Option (including, withoutlimitation, through an exercise complying with the provisions of Regulation T as promulgated from time to time by the Board of Governors of the Federal Reserve System) (a “***Cashless Exercise***”), (iv) provided that theOptionee is an Employee, by cash for a portion of the aggregate exercise price not less than the par value of the shares being acquired and the Optionee’s promissory note in a form approved by the Company for the balance of the aggregateexercise price, (v) by such other consideration as may be approved by the Board from time to time to the extent permitted by applicable law, or (vi) by any combination thereof. The Board may at any time or from time to time, by adoption of or byamendment to the standard forms of Option Agreement described in Section 7, or by other means, grant Options which do not permit all of the foregoing forms of consideration to be used in payment of the exercise price or which otherwise restrict oneor more forms of consideration. 

 

(b)***    Tender of Stock*****.**  Notwithstanding the foregoing, an Option may not be exercised by tender to the Company of shares of Stock to the extent such tender of Stock would constitutea violation of the provisions of any law, regulation or agreement restricting the redemption of the Company’s stock. Unless otherwise provided by the Board, an Option may not be exercised by tender to the Company of shares of Stock unless suchshares either have been owned by the Optionee for more than six (6) months or were not acquired, directly or indirectly, from the Company. 

 

(c)***    Cashless Exercise.***  The Company reserves, at any and all times, the right, in theCompany’s sole and absolute discretion, to establish, decline to approve or 

 

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terminate any program or procedures for the exercise of Options by means of a Cashless Exercise. 

 

(d)***    Payment by PromissoryNote.***  No promissory note shall be permitted if the exercise of an Option using a promissory note would be a violation of any law. Any permitted promissory note shall be on such terms as the Board shall determine at the time theOption is granted. The Board shall have the authority to permit or require the Optionee to secure any promissory note used to exercise an Option with the shares of Stock acquired upon the exercise of the Option or with other collateral acceptable tothe Company. Unless otherwise provided by the Board, if the Company at any time is subject to the regulations promulgated by the Board of Governors of the Federal Reserve System or any other governmental entity affecting the extension of credit inconnection with the Company’s securities, any promissory note shall comply with such applicable regulations, and the Optionee shall pay the unpaid principal and accrued interest, if any, to the extent necessary to comply with such applicableregulations. 

 

6.4    **TaxWithholding.**  The Company shall have the right, but not the obligation, to deduct from the shares of Stock issuable upon the exercise of an Option, or to accept from the Optionee the tender of, a number of whole shares of Stock havinga Fair Market Value, as determined by the Company, equal to all or any part of the federal, state, local and foreign taxes, if any, required by law to be withheld by the Participating Company Group with respect to such Option or the shares acquiredupon the exercise thereof. Alternatively or in addition, in its sole discretion, the Company shall have the right to require the Optionee, through payroll withholding, cash payment or otherwise, including by means of a Cashless Exercise, to makeadequate provision for any such tax withholding obligations of the Participating Company Group arising in connection with the Option or the shares acquired upon the exercise thereof. The Company shall have no obligation to deliver shares of Stockuntil the Participating Company Group’s tax withholding obligations have been satisfied by the Optionee. 

 

6.5**    Effect of Termination of Service.**

 

(a)***    Option Exercisability.***  Subject to earlier termination ofthe Option as otherwise provided herein, an Option shall be exercisable after an Optionee’s termination of Service as follows: 

 

(i)**    Disability.**  If the Optionee’s Service with the Participating Company Group isterminated because of the Disability of the Optionee, the Option, to the extent unexercised and exercisable on the date on which the Optionee’s Service terminated, may be exercised by the Optionee (or the Optionee’s guardian or legalrepresentative) at any time prior to the expiration of twelve (12) months (or such longer or shorter period of time as determined by the Board, in its sole discretion) after the date on which the Optionee’s Service terminated, but in any eventno later than the date of expiration of the Option’s term as set forth in the Option Agreement evidencing such Option (the *“********Option Expiration Date********”*). 

 

(ii)**    Death.**  If theOptionee’s Service with the Participating Company Group is terminated because of the death of the Optionee, the Option, to the extent 

 

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unexercised and exercisable on the date on which the Optionee’s Service terminated, may be exercised by the Optionee’s legalrepresentative or other person who acquired the right to exercise the Option by reason of the Optionee’s death at any time prior to the expiration of twelve (12) months (or such longer or shorter period of time as determined by the Board, inits sole discretion) after the date on which the Optionee’s Service terminated, but in any event no later than the Option Expiration Date. The Optionee’s Service shall be deemed to have terminated on account of death if the Optionee dieswithin three (3) months after the Optionee’s termination of Service. 

 

(iii)**    Other Termination of Service.**  If the Optionee’s Service with the Participating Company Group terminates for any reason, except Disability, death orCause, as provided in Section 6.5(d) below, the Option, to the extent unexercised and exercisable by the Optionee on the date on which the Optionee’s Service terminated, may be exercised by the Optionee within three (3) months (or such longeror shorter period of time as determined by the Board, in its sole discretion) after the date on which the Optionee’s Service terminated, but in any event no later than the Option Expiration Date. 

 

(b)    ***Extension if ExercisePrevented by Law.***  Notwithstanding the foregoing, if the exercise of an Option within the applicable time periods set forth in Section 6.5(a) is prevented by the provisions of Section 11 below, the Option shall remain exercisableuntil three (3) months after the date the Optionee is notified by the Company that the Option is exercisable, but in any event no later than the Option Expiration Date. 

 

(c)***    Extension if Optionee Subject toSection16(b).***  Notwithstanding the foregoing, if a sale within the applicable time periods set forth in Section 6.5(a) of shares acquired upon the exercise of the Option would subject the Optionee to suit under Section 16(b) of theExchange Act, the Option shall remain exercisable until the earliest to occur of (i) the tenth (10th) day following the date on which a sale of such shares by the Optionee would no longer be subject to such suit, (ii) the one hundred and ninetieth(190th) day after the Optionee’s termination of Service, or (iii) the Option Expiration Date. 

 

(d)***    Termination for Cause.***  Except as otherwise provided in a contract of employment orservice between a Participating Company and an Optionee, and notwithstanding any other provision of the Plan to the contrary, if the Optionee’s Service with the Participating Company Group is terminated for Cause as defined below, the Optionshall terminate and cease to be exercisable immediately upon such termination of Service. For purposes of this Section 6.5(d), ***“Cause”*** shall mean any of the following: (1) the Optionee’s theft, dishonesty, orfalsification of any Participating Company documents or records; (2) the Optionee’s improper use or disclosure of a Participating Company’s confidential or proprietary information; (3) any action by the Optionee which has a detrimentaleffect on a Participating Company’s reputation or business; (4) the Optionee’s failure or inability to perform any reasonable assigned duties after written notice from the Participating Company Group of, and a reasonable opportunity tocure, such failure or inability; (5) any material breach by the Optionee of any agreement of employment or service between the Optionee and the Participating Company Group, which breach is not cured pursuant to the terms of such agreement; or (6)the Optionee’s 

 

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conviction (including any plea of guilty or nolo contendere) of any criminal act which impairs the Optionee’s ability to perform his orher duties with the Participating Company Group. A determination by the Board that the Optionee was terminated for Cause shall be final and binding upon the Optionee for all purposes and shall not be subject to review by any governmental agency orcourt of law. 

 
 7.**** **STANDARD FORMSOF OPTION AGREEMENT**.
 

7.1**    Nonstatutory Stock Option Agreement.**  Unless otherwise provided by the Board at the time the Option is granted, each Option shall comply with and be subject to the terms and conditions setforth in the appropriate form of Nonstatutory Stock Option Agreement adopted by the Board concurrently with its adoption of the Plan and as amended from time to time. 

 

7.2    **Authority to Vary Terms.**  The Board shall have the authority fromtime to time to vary the terms of any of the standard forms of Option Agreement described in this Section 7 either in connection with the grant or amendment of an individual Option or in connection with the authorization of a new standard form orforms; provided, however, that the terms and conditions of any such new, revised or amended standard form or forms of Option Agreement are not inconsistent with the terms of the Plan. 

 
 8. **CHANGEIN CONTROL.**
 

8.1**    Definitions.**  Except as otherwise determined by the Board and set forth in an Option Agreement, the following terms shall have their respective meanings set forth below: 

 

(a)    An******“***Ownership Change Event***”****** shall be deemed to have occurred if any of the following occurs with respect to the Company: 

 

(i)    the direct or indirect sale or exchange in a single or series of relatedtransactions by the stockholders of the Company of more than fifty percent (50%) of the voting stock of the Company; 

 

(ii)    a merger or consolidation in which the Company is a party; 

 

(iii)    the sale, exchange, or transferof all or substantially all of the assets of the Company; or 

 

(iv)    a liquidation or dissolution of the Company. 

 

(b)    A “***Change in Control***” shall mean an Ownership Change Event or a series of relatedOwnership Change Events (collectively, the “***Transaction***”) wherein the stockholders of the Company immediately before the Transaction do not retain immediately after the Transaction, in substantially the same proportions astheir ownership of shares of the Company’s voting stock immediately before the Transaction, direct or indirect beneficial 

 

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ownership of more than fifty percent (50%) of the total combined voting power of the outstanding voting stock of the Company or thecorporation or corporations to which the assets of the Company were transferred (the ******“***Transferee Corporation(s)***”******), as the case may be. For purposes of the preceding sentence, indirect beneficialownership shall include, without limitation, an interest resulting from ownership of the voting stock of one or more corporations which, as a result of the Transaction, own the Company or the Transferee Corporation(s), as the case may be, eitherdirectly or through one or more subsidiary corporations. The Board shall have the right to determine whether multiple sales or exchanges of the voting stock of the Company or multiple Ownership Change Events are related, and its determination shallbe final, binding and conclusive. 

 

8.2**    Effect of Change in Control on Options.**  In the event of a Change in Control, the surviving, continuing, successor, or purchasing corporation or parent corporation thereof, as the case maybe (the ******“***Acquiring Corporation***”******), may either assume the Company’s rights and obligations under outstanding Options or substitute for outstanding Options substantially equivalent options forthe Acquiring Corporation’s stock. For purposes of this Section 8.2, an Option shall be deemed assumed if, following the Change in Control, the Option confers the right to purchase in accordance with its terms and conditions, for each share ofStock subject to the Option immediately prior to the Change in Control, the consideration (whether stock, cash or other securities or property) to which a holder of a share of Stock on the effective date of the Change in Control was entitled. TheBoard may, in its sole discretion, provide in any Option Agreement that, in the event of a Change in Control, the exercisability and vesting of the outstanding Option shall accelerate upon such circumstances and to such extent as specified in suchOption Agreement. The exercise or vesting of any Option that was permissible solely by reason of such provision shall be conditioned upon the consummation of the Change in Control. Any Options which are neither assumed or substituted for by theAcquiring Corporation in connection with the Change in Control nor exercised as of the date of the Change in Control shall terminate and cease to be outstanding effective as of the date of the Change in Control. Notwithstanding the foregoing, if thecorporation the stock of which is subject to the outstanding Options immediately prior to an Ownership Change Event described in Section 8.1(a)(i) constituting a Change in Control is the surviving or continuing corporation and immediately after suchOwnership Change Event less than fifty percent (50%) of the total combined voting power of its voting stock is held by another corporation or by other corporations that are members of an affiliated group within the meaning of Section 1504(a) of theCode without regard to the provisions of Section 1504(b) of the Code, the outstanding Options shall not terminate unless the Board otherwise provides in its sole discretion. 

 
 9. **PROVISIONOF INFORMATION.**
 

Each Optionee shall be given access to information concerningthe Company equivalent to that information generally made available to the Company’s common stockholders. 

 
 10. **TRANSFERABILITYOF OPTIONS.**
 

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During thelifetime of the Optionee, an Option shall be exercisable only by the Optionee or the Optionee’s guardian or legal representative. No Option shall be assignable or transferable by the Optionee, except by will or by the laws of descent anddistribution. Notwithstanding the foregoing, an Option shall be assignable or transferable to the extent permitted by the Board and set forth in the Option Agreement evidencing such Option. 

 
 11. **COMPLIANCEWITH SECURITIES LAW.**
 

The grant of Options and the issuance of shares of Stock uponexercise of Options shall be subject to compliance with all applicable requirements of federal, state or foreign law with respect to such securities. Options may not be exercised if the issuance of shares of Stock upon exercise would constitute aviolation of any applicable federal, state or foreign securities laws or other law or regulations or the requirements of any stock exchange or market system upon which the Stock may then be listed. In addition, no Option may be exercised unless (a)a registration statement under the Securities Act shall at the time of exercise of the Option be in effect with respect to the shares issuable upon exercise of the Option or (b) in the opinion of legal counsel to the Company, the shares issuableupon exercise of the Option may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act. The inability of the Company to obtain from any regulatory body having jurisdiction theauthority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any shares hereunder shall relieve the Company of any liability in respect of the failure to issue or sell such shares as to which suchrequisite authority shall not have been obtained. As a condition to the exercise of any Option, the Company may require the Optionee to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable lawor regulation and to make any representation or warranty with respect thereto as may be requested by the Company. 

 
 12. **INDEMNIFICATION.**
 

In addition to such other rights of indemnification as they may have as members of the Board or officers or employees of the ParticipatingCompany Group, members of the Board and any officers or employees of the Participating Company Group to whom authority to act for the Board or the Company is delegated shall be indemnified by the Company against all reasonable expenses, includingattorneys’ fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failureto act under or in connection with the Plan, or any right granted hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them insatisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconductin duties; provided, however, that within sixty (60) days after the institution of such action, suit or proceeding, such person shall offer to the Company, in writing, the opportunity at its own expense to handle and defend the same. 

 

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 13. **TERMINATIONOR AMENDMENTOF PLAN.**
 

The Board may terminate or amend the Plan at any time.However, no termination or amendment of the Plan may adversely affect any then outstanding Option or any unexercised portion thereof, without the consent of the Optionee, unless such termination or amendment is necessary to comply with anyapplicable law, regulation or rule. 

 

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**PLANHISTORY**

 
  
January 28, 1998
  
Board adopts Plan, with an initial share reserve of 200,000 shares.
  
April 21, 1998
  
Board ratifies the approval of the final form of the Plan.