EXHIBIT 4.1


ARK RESTAURANTS CORP.

2010 STOCK OPTION PLAN


	
  

 	
  

 	
  

 
	
 1.

 	
 Establishment, Purpose And Term Of Plan.

 
	
  

 	
  

 	
  

 
	
  

 	
 1.1.

 	
 Establishment.
 The Ark Restaurants Corp. 2010 Stock Option Plan (the “Plan”) is hereby established
 effective as of January 22, 2010.

 
	
  

 	
  

 	
  

 
	
  

 	
 1.2.

 	
 Purpose.
 The purpose of the Plan is to advance the interests of the Participating
 Company Group 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 Participating Company 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 have been issued and all restrictions on such shares under the
 terms of the Plan and the agreements evidencing Options granted under the
 Plan have lapsed. However, all Options shall be granted, if at all, within
 six (6) years from the earlier of the date the Plan is adopted by the Board
 or the date the Plan is duly approved by the stockholders of the Company.

 






	
  

 	
  

 	
  

 	
  

 
	
 2.

 	
 Definitions and Construction.

 
	
  

 	
  

 
	
  

 	
 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 the Company. 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
 of 1986, as amended, and any applicable regulations promulgated thereunder.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (c)

 	
 “Committee” means the Stock Option
 Committee or other committee of the Board duly appointed to administer the
 Plan and having such powers as shall be specified by 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 to
 the terms of the Plan and any applicable limitations imposed by law.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (d)

 	
 “Company” means Ark Restaurants Corp.,
 a New York corporation, or any successor corporation thereto.

 


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 (e)

 	
 “Director” means a member of the Board
 or of the board of directors of any other Participating Company.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (f)

 	
 “Disability” means the inability of
 the Optionee, in the opinion of a qualified physician acceptable to the
 Company, to perform the major duties of the Optionee’s position with the Participating
 Company Group because of the sickness or injury of the Optionee.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (g)

 	
 “Employee” means any person treated as
 an employee (including an Officer or a Director who is also treated as an
 employee) in the records of Participating Company and, with respect to any
 Incentive Stock Option granted to such person, who is an employee for
 purposes of Section 422 of the Code; provided, however, that neither service
 as a Director nor payment of a director’s fee shall be sufficient to
 constitute employment for purposes of the Plan. The Company shall exercise
 its discretion as to 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 the Plan 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 court of law or
 governmental agency subsequently makes a contrary determination.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (h)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (i)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (i)

 	
 If, on such
 date, the Stock is listed on a national or regional securities exchange or market
 system, 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 Nasdaq
 Global Market, The Nasdaq Capital 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
 Company deems reliable. If the Stock is not listed or admitted to trade on a
 national securities exchange, the Fair Market Value shall be the mean between
 the closing bid and asked price for the Stock on such date, as furnished by
 the Over-The-Counter Bulletin Board (the “OTCBB”) maintained by FINRA; and if
 the Common Stock is not listed or admitted to trade on a national securities
 exchange and closing bid and asked prices are not furnished by the OTCBB, the
 Fair Market Value shall be the mean between the closing bid and asked price
 for the Stock on such date, as furnished by the Pink Sheets, LLC (“Pink
 Sheets”) or similar organization. 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

 


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 on which the
 Stock was so traded prior to the relevant date, or such other appropriate day
 as shall be determined by the Board, in its discretion.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (ii)

 	
 If, on such
 date, the Stock is not listed on a national or regional securities exchange
 or market system, the Fair Market Value of a share of Stock shall be as
 determined by the Board consistent with Treasury Regulation Section
 1.409A-1(b)(5)(iv) (or successor provision) in good faith without regard to any
 restriction other than a restriction which, by its terms, will never lapse.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (j)

 	
 “Incentive Stock Option” means an
 Option intended to be (as set forth in the Option Agreement) and which
 qualifies as an incentive stock option within the meaning of Section 422(b)
 of the Code.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (k)

 	
 “Insider” means an Officer, a Director
 of the Company or other person whose transactions in Stock are subject to
 Section 16 of the Exchange Act.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (l)

 	
 “Nonstatutory Stock Option” means an
 Option not intended to be (as set forth in the Option Agreement) or which
 does not qualify as an Incentive Stock Option.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (m)

 	
 “Officer” means any person designated
 by the Board as an officer of the Company.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (n)

 	
 “Option” means a right to purchase
 Stock pursuant to the terms and conditions of the Plan. An Option may be
 either an Incentive Stock Option or a Nonstatutory Stock Option.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (o)

 	
 “Option Agreement” means a written
 agreement between the Company and an Optionee setting forth the terms,
 conditions and restriction of the Option granted to the Optionee and any
 shares acquired upon the exercise thereof.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (p)

 	
 “Optionee” means a person who has been
 granted one or more Options.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (q)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (r)

 	
 “Participating Company” means the
 Company or any Parent Corporation or Subsidiary Corporation.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (s)

 	
 “Participating Company Group” means,
 at any point in time, all corporations collectively which are then
 Participating Companies.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (t)

 	
 “Rule 16b-3” means Rule 16b-3 under
 the Exchange Act, as amended from time to time, or any successor rule or
 regulation.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (u)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (v)

 	
 “Service” means an Optionee’s
 employment or service with the Participating Company Group, whether in the
 capacity of an Employee or a Director. An Optionee’s Service shall not be
 deemed to have terminated merely because of a

 


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 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 Optionee
 renders such Service, provided that there is no interruption or termination
 of the Optionee’s Service. Furthermore, an Optionee’s Service with the
 Participating Company Group shall not be deemed to have terminated if the
 Optionee takes any military leave, sick leave, or other bona fide leave of
 absence approved in advance in writing by the Company; provided, however,
 that if any such leave exceeds ninety (90) days, on the ninety-first (91st)
 day of such leave the Optionee’s Service shall be deemed to have terminated
 unless the Optionee’s right to return to Service with the Participating Company
 Group is guaranteed by statute or contract. Notwithstanding the foregoing,
 unless otherwise designated by the Company or required by law, a leave of
 absence shall not be treated as Service for purposes of determining vesting
 under the Optionee’s Option Agreement. The 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 a
 Participating Company. Subject to the foregoing, the Company, in its
 discretion, shall determine whether the Optionee’s Service has terminated and
 the effective date of such termination.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (w)

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (x)

 	
 “Subsidiary Corporation” means any
 present or future “subsidiary corporation” of the Company, as defined in
 Section 424(f) of the Code, which would constitute an “eligible issuer of
 service recipient stock” under Treasury Regulation Section 1.409A-1(b)(5)(iii)(E)
 (or successor provision). 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (y)

 	
 “Ten Percent Owner Optionee” means an
 Optionee who, at the time an Option is granted to the Optionee, owns stock
 possessing more than ten percent (10%) of the total combined voting power of
 all classes of stock of a Participating Company within the meaning of Section
 422(b)(6) of the Code. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 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 indicated by 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 be administered by the
 Board through the Committee. All questions of interpretation of the Plan or
 of any Option shall be determined by the Committee, and such determinations
 shall be final and binding upon all persons having an interest in the Plan or
 such Option. 

 
	
  

 	
  

 	
  

 
	
  

 	
 3.2.

 	
 Authority of
 Officers. Any Officer shall have the authority to
 act on behalf of the Company with respect to any matter, right, obligation,
 determination or election which is 

 


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 the
 responsibility of or which is allocated to the Company herein, provided the
 Officer has apparent authority with respect to such matter, right,
 obligation, determination or election. 

 
	
  

 	
  

 	
  

 
	
  

 	
 3.3.

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

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (a)

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b)

 	
 to designate
 Options as Incentive Stock Options or Nonstatutory Stock Options; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (c)

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (d)

 	
 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 tax withholding obligation arising in
 connection with the Option or such shares, including by the withholding
 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, forfeiture or
 waiver of any shares acquired upon 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 and restrictions applicable to the Option or such shares
 not inconsistent with the terms of the Plan; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (e)

 	
 to approve
 one or more forms of Option Agreement; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (f)

 	
 to amend,
 modify, adjust, extend, cancel or renew any Option or to waive any
 restrictions or conditions applicable to any Option or any shares acquired
 upon the exercise thereof;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (g)

 	
 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’s termination of Service with the
 Participating Company Group;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (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 deems necessary 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;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (i)

 	
 to correct
 any defect, supply any omission or reconcile any inconsistency in the Plan or
 any Option Agreement and to make all other determinations and take such other

 


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 actions with
 respect to the Plan or any Option as the Board may deem advisable to the
 extent not inconsistent with the provisions of the Plan or applicable law;
 and 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (j)

 	
 provided, however, that the Committee
 shall not have such power to the extent that the mere possession (as opposed
 to the exercise) of such power would result in adverse tax consequences to
 any participant under Code Section 409A. In making such determinations, the
 Committee may take into account such factors as the Committee, in its
 absolute discretion, shall deem relevant. Subject to the express provisions
 of the Plan, the Committee shall also have the authority to interpret the
 Plan, to prescribe, amend and rescind rules and regulations relating to it,
 to determine the terms and provisions of the respective option instruments or
 agreements (which need not be identical) and to make all other determinations
 and take all other actions necessary or advisable for the administration of
 the Plan. The Committee’s determinations on the matters referred to in this
 Section 3.3 shall be conclusive. Any determination by a majority of the
 members of the Committee shall be deemed to have been made by the whole
 Committee. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.4.

 	
 Administration
 with Respect to Insiders. With respect to
 participation by Insiders in the Plan, at any time that any class of equity
 security of the Company is registered pursuant to Section 12 of the Exchange
 Act, the Plan shall be administered in compliance with the requirements, if
 any, of Rule 16b-3. 

 
	
  

 	
  

 	
  

 
	
  

 	
 3.5.

 	
 Indemnification.
 In addition to such other rights of indemnification as they may have as
 members of the Board or officers or employees of the Participating Company
 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, including attorneys’ 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 failure to 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 in
 satisfaction of a judgment in any such action, suit or proceeding, except in
 relation to matter 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 misconduct in 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. 

 
	
  

 	
  

 	
  

 
	
 4.

 	
 Shares Subject To Plan.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 4.1.

 	
 Maximum
 Number of Shares Issuable. 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 Five Hundred Thousand (500,000) and
 shall consist of authorized but unissued or reacquired 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 are acquired upon the exercise
 of an Option subject to a Company repurchase option and are repurchased 

 


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 by the
 Company at the Optionee’s exercise price, 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. However, except as
 adjusted pursuant to Section 4.2, in no event shall more than Five Hundred
 Thousand (500,000) shares of Stock be available in the aggregate or Five
 Hundred Thousand (500,000) in any one calendar year for issuance pursuant to
 the exercise of Incentive Stock Options (the “ISO Share Issuance Limit”). Notwithstanding the
 foregoing, at any such time as the offer and sale of securities pursuant to
 the Plan is subject to compliance with Section 260.140.45 of Title 10 of the
 California Code of Regulations (“Section
 260.140.5”), the total number of shares of Stock issuable upon
 the exercise of all outstanding Options (together with options outstanding
 under any other stock option plan of the Company) and the total number of
 shares provided for under any stock bonus or similar plan of the Company shall
 not exceed thirty percent (30%) (or such other higher percentage limitation
 as may be approved by the stockholders of the Company pursuant to Section
 260.140.45) of the then outstanding shares of the Company as calculated in
 accordance with the conditions and exclusions of Section 260.140.45. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 4.2.

 	
 Adjustments
 for Changes in Capital Structure. In the event of
 any 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 the Plan and to any outstanding Options, in the ISO Share
 Issuance Limit set forth in Section 4.1, 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 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, and the exercise price per share of, the
 outstanding Options shall be adjusted in a fair and equitable manner as
 determined by the Board, in its discretion. Notwithstanding the foregoing,
 any fractional share resulting from an adjustment pursuant to this Section
 4.2 shall be rounded down to the nearest whole number, 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 the Option. The adjustments determined
 by the Board pursuant to this Section 4.2 shall be final, binding and
 conclusive. Notwithstanding the foregoing, any adjustments made pursuant to
 this Section 4.2 shall be made in such a manner as to ensure that, after such
 adjustment, the affected Options either continue not to be subject to Section
 409A of the Code or else comply with the requirements of Section 409A of the
 Code. Neither the Committee nor the Board shall have the authority to make
 any adjustments pursuant to this Section 4.2 to the extent the existence of
 such authority would cause an Option that is not intended to be subject to
 Section 409A of the Code at the time such Option is granted to be subject
 thereto. 

 
	
  

 	
  

 
	
 5.

 	
 Eligibility and Option Limitations. 

 
	
  

 	
  

 
	
  

 	
 5.1.

 	
 Persons
 Eligible for Options. Options may be granted only to
 Employees and Directors. For purposes of the foregoing sentence, “Employees”
 and “Directors” shall include 

 


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 prospective
 Employees and prospective Directors to whom Options are granted in connection
 with written offers of an employment or other service relationship with the
 Participating Company Group in accordance with Section 5.2. Eligible persons
 may be granted more than one (1) Option. However, eligibility in accordance
 with this Section shall not entitle any person to be granted an Option, or,
 having been granted an Option, to be granted an additional Option. 

 
	
  

 	
  

 	
  

 
	
  

 	
 5.2.

 	
 Option Grant
 Restrictions. Any person who is not an Employee on
 the effective date of the grant of an Option to such person may be granted
 only a Nonstatutory Stock Option. An Incentive Stock Option granted to a
 prospective Employee upon the condition that such person become an Employee
 shall be deemed granted effective on the date such person commences Service
 with a Participating Company, with an exercise price determined as of such
 date in accordance with Section 6.2. 

 
	
  

 	
  

 	
  

 
	
  

 	
 5.3.

 	
 Fair Market
 Value Limitation. To the extent that options
 designated as Incentive Stock Options (granted under all stock option plans
 of the Participating Company Group, including the Plan) become exercisable by
 an Optionee for the first time during any calendar year for stock having a
 Fair Market Value greater than One Hundred Thousand Dollars ($100,000), the
 portions of such options which exceed such amount shall be treated as
 Nonstatutory Stock Options. For purposes of this Section 5.3, options
 designated as Incentive Stock Options shall be taken into account in the
 order in which they were granted, and the Fair Market Value of stock shall be
 determined as of the time the option with respect to such stock is granted.
 If the Code is amended to provide for a different limitation from that set
 forth in this Section 5.3, such different limitation shall be deemed
 incorporated herein effective as of the date and with respect to such Options
 as required or permitted by such amendment to the Code. If an Option is
 treated as an Incentive Stock Option in part and as a Nonstatutory Stock
 Option in part by reason of the limitation set forth in this Section 5.3, the
 Optionee may designate which portion of such Option the Optionee is
 exercising. In the absence of such designation, the Optionee shall be deemed
 to have exercised the Incentive Stock Option portion of the Option first.
 Separate certificates representing each such portion shall be issued upon the
 exercise of the Option. 

 
	
  

 	
  

 	
  

 
	
 6.

 	
 Terms and Conditions of Options. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.1.

 	
 General.
 Options shall be evidenced by Option Agreements specifying the number 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 terms and
 conditions set forth in this Section 6. 

 
	
  

 	
  

 	
  

 
	
  

 	
 6.2.

 	
 Exercise
 Price. The exercise price for each Option shall be
 established in the discretion of the Board; provided, however, that (a) the
 exercise price per share for an Option shall not be less than the Fair Market
 Value of a share of Stock on the effective date of grant of the Option
 determined in good faith by the Committee, with the approval of the Board, in
 accordance with the Plan and in accordance with the requirements of Code 

 


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 Sections
 409A and 422, and (b) no Incentive Stock Option granted to a Ten Percent
 Owner Optionee shall have an exercise price per share less than one hundred
 ten percent (110%) of the Fair Market Value of a share of Stock on the
 effective date of grant of the Option. Notwithstanding the foregoing, an
 Option (whether an Incentive Stock Option or a Nonstatutory Stock Option) may
 be granted with an exercise price lower than the minimum exercise price set
 forth above if such Option is granted pursuant to an assumption or
 substitution for another option in a manner qualifying under the provisions
 of Section 424(a) of the Code. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.3.

 	
 Exercisability
 and Term of Options. 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 Option Agreement evidencing such Option;
 provided, however, that (a) no Option shall be exercisable after the
 expiration of six (6) years after the effective date of grant of such Option,
 (b) no Incentive Stock Option granted to a Ten Percent Owner Optionee shall
 be exercisable after the expiration of five (5) years after the effective
 date of grant of such Option, and (c) no Option granted to a prospective
 Employee or prospective Director may become exercisable prior to the date on
 which such person commences Service with a Participating Company. Subject to
 the foregoing, unless otherwise specified by the Board in the grant of an
 Option, any Option granted hereunder shall terminate six (6) years after the
 effective date of grant of the Option, unless earlier terminated in
 accordance with its provisions. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.4.

 	
 Payment of
 Exercise Price. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (a)

 	
 Forms of Consideration 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)

 	
 by tender to
 the Company, or attestation to the ownership, of shares of Stock owned by the
 Optionee having a Fair Market Value not less than the exercise price, 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (iii)

 	
 by delivery
 of a properly executed notice together with irrevocable instructions to a
 broker providing for the assignment to the Company 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, without limitation, 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)

 	
 net issue
 exercise, whereby the Optionee surrenders an Option at the principal office
 of the Company (or such other office or agency as the Company may designate)
 together with a properly completed and executed exercise notice 

 


9









	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 reflecting
 such election, in which event the Company will issue to the Optionee that
 number of shares of Stock computed using the following formula: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
        Y (A – B)

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 X =

 	

 


 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
               A

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 Where:

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 X =

 	
 the number
 of shares of Stock to be issued to the Optionee; 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 Y =

 	
 the number
 of shares of Stock subject to the Option or, if only a portion of the Option
 is being exercised, the portion of the Option being cancelled (at the date of
 such calculation); 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 A =

 	
 the Fair
 Market Value of one share of Stock (at the date of such calculation); 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 B =

 	
 the exercise price per share for the Option (as adjusted to the date of the calculation); 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (v)

 	
 by such
 other consideration as may be approved by the Board from time to time to the
 extent permitted by applicable law, 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (vi)

 	
 by any
 combination of the foregoing methods. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 The Board
 may at any time or from time to time, by approval of or by amendment 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 one
 or more forms of consideration. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b)

 	
 Limitations on Forms of Consideration.
 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (i)

 	
 Tender of Stock. Notwithstanding the
 foregoing, an Option may not be exercised by tender to the Company, or
 attestation to the ownership, of shares of Stock to the extent such tender or
 attestation would constitute a 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, or attestation to the ownership, of shares of Stock
 unless such shares either have been owned by the Optionee for more than six
 (6) months (and not used for another Option exercise by attestation during
 such period) or were not acquired, directly or indirectly, from the Company. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (ii)

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

 


10









	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (iii)

 	
 Compliance with Law. No form of
 consideration to be used in payment of the exercise price shall be permitted
 if the exercise of an Option using such form of consideration would be a
 violation of any law. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.5.

 	
 Tax
 Withholding. 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 having a 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 acquired upon the exercise
 thereof. Alternatively or in addition, in its 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 make
 adequate 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 Fair Market Value of any
 shares of Stock withheld or tendered to satisfy any such tax withholding
 obligations shall not exceed the amount determined by the applicable minimum
 statutory withholding rates. The Company shall have no obligation to deliver
 shares of Stock or to release shares of Stock from an escrow established
 pursuant to the Option Agreement until the Participating Company Group’s tax
 withholding obligations have been satisfied by the Optionee. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.6.

 	
 Repurchase
 Rights; Potential Repayment of Awards. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (a)

 	
 Repurchase Rights. Shares issued under
 the Plan may be subject to a right of first refusal, one or more repurchase
 options, or other conditions and restrictions as determined by the Board in
 its discretion at the time the Option is granted. The Company shall have the
 right to assign at any time any right of first refusal or repurchase right it
 may have, whether or not such right is then exercisable, to one or more
 persons as may be selected by the Company. Notwithstanding the foregoing, no
 such right, condition or restriction shall be imposed which may constitute a
 deferral of compensation or cause the Stock to fail to be “service recipient
 stock” under Treasury Regulation Section 1.409A-1(b)(5) (or successor
 provision). Upon request by the Company, each Optionee shall execute any
 agreement evidencing such transfer restrictions prior to the receipt of
 shares of Stock hereunder and shall promptly present to the Company any and
 all certificates representing shares of Stock acquired hereunder for the
 placement on such certificates of appropriate legends evidencing any such
 transfer restrictions. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b)

 	
 Potential Repayment of Awards. The Board
 shall have the authority from time to time, in its discretion, to provide
 that the Optionee shall be required to repay the economic benefit (plus
 interest) of any previously exercised Options granted under the Plan in the
 event that the Optionee violates any separation agreement, non-

 


11









	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 compete
 agreement or any other agreement between the Optionee and any Participating
 Company. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.7.

 	
 Effect of
 Termination of Service. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (a)

 	
 Option Exercisability. Subject to
 earlier termination of the Option as otherwise provided herein and unless
 otherwise provided by the Board in the grant of an Option and set forth in
 the Option Agreement, an Option shall be exercisable after an Optionee’s
 termination of Service only during the applicable time period determined in
 accordance with this Section 6.7 and thereafter shall terminate: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (i)

 	
 Disability. If the Optionee’s Service
 terminates 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 legal representative) at any time prior to the expiration of
 twelve (12) months (or such longer period of time as determined by the Board,
 in its discretion) after the date on which the Optionee’s Service terminated,
 but in any event no 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 the Optionee’s Service terminates
 because of the death 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’s legal representative 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
 period of time as determined by the Board, in its discretion) after the date
 on which the Optionee’s Service terminated, but in any event no later than
 the Option Expiration Date. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (iii)

 	
 Retirement. If the Optionee’s Service terminates because of retirement
 pursuant to any applicable retirement plan of any Participating Company, 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 legal representative) at any time prior to the
 expiration of thirty-six (36) months (or such longer period of time as
 determined by the Board, in its discretion) after the date on which the
 Optionee’s Service terminated, but in any event no later than the Option
 Expiration Date. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (iv)

 	
 Voluntary Termination; Termination for Cause.
 If the Optionee’s Service terminates because either (1) the Optionee
 voluntarily terminates the Optionee’s Service (“Voluntary Termination”) or (2) the Optionee’s Service is
 terminated for cause (as hereinafter defined) by any Participating Company (“Termination for Cause”), the Option,
 to the extent unexercised and exercisable on the date on which the Optionee’s
 Service terminated, shall terminate immediately upon the termination of
 Optionee’s Service (unless otherwise determined by the Board, in its
 discretion). For the purposes hereof, 

 


12









	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 termination
 “for cause” shall mean termination as a result of or caused by Optionee’s
 theft, embezzlement or fraud involving any Participating Company, the
 violation of a material term or condition of Optionee’s employment,
 substantial failure on the part of Optionee to perform Optionee’s job duties,
 the disclosure by Optionee of confidential information of any Participating
 Company, the Optionee’s stealing trade secrets or intellectual property owned
 by any Participating Company, willful misconduct or dishonesty or conviction
 of or failure to contest prosecution for a felony or a crime of moral
 turpitude, excessive absenteeism unrelated to illness, any act by Optionee in
 competition with any Participating Company, or any other act, activity or
 conduct of Optionee which in the opinion of the Board is adverse to the best
 interests of any Participating Company. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (v)

 	
 Other Termination of Service. If the
 Optionee’s Service terminates for any reason, except Disability or death, 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
 at any time prior to the expiration of three (3) months (or such longer
 period of time as determined by the Board, in its 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 Optionee Subject to Section 16(b).
 Notwithstanding the foregoing, if a sale within the applicable time periods
 set forth in Section 6.7(a) of shares acquired upon the exercise of the
 Option would subject the Optionee to suit under Section 16(b) of the Exchange
 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. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (c)

 	
 Deferral of Option Shares. The Committee
 may from time to time establish procedures pursuant to which an Optionee may
 elect to defer, until a time or times later than the exercise of an Option,
 receipt of all or a portion of the shares of Stock subject to such Option
 and/or to receive cash at such later time or times in lieu of such deferred
 shares, all on such terms and conditions as the Committee shall determine. If
 any such deferrals are permitted, then notwithstanding Sections 6.3 and 6.4.
 above, an Optionee who elects such deferral shall not have any rights as a
 stockholder with respect to such deferred shares unless and until shares are
 actually delivered to the participant with respect thereto, except to the
 extent otherwise determined by the Committee. Notwithstanding anything herein
 to the contrary, in no event will any deferral of the delivery of shares of
 Stock or any other payment with respect to any Option be allowed if the
 Committee determines, in its sole discretion, that the deferral would result
 in the imposition of additional tax under Code Section 409A(a)(1)(B). 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.8.

 	
 Non-Transferability
 of Options. During the lifetime of the Optionee, an
 Option shall be exercisable only by the Optionee or the Optionee’s guardian
 or legal representative. No 

 


13









	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Option shall
 be assignable or transferable by the Optionee, except by will or by the laws
 of descent and distribution. Notwithstanding the foregoing, to the extent
 permitted by the Board, in its discretion, and set forth in the Option
 Agreement evidencing such Option, a Nonstatutory Stock Option shall be
 assignable or transferable subject to the applicable limitations, if any,
 described in Section 260.140.41 of Title 10 of the California Code of
 Regulations, Rule 701 under the Securities Act, and the General Instructions
 to Form S-8 Registration Statement under the Securities Act. The Board, in
 its discretion, may permit the transfer of an Option for estate-planning
 purposes by an Optionee to his or her spouse, biological or adopted children
 or grandchildren or to a trust exclusively for the benefit of such Optionee,
 spouse, children, and/or grandchildren; provided, however, that
 notwithstanding such transfer, the Optionee making such transfer shall be
 deemed to continue to be the owner of such Options for purposes of the Plan. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.9.

 	
 No Rights as
 Stockholder. Until the shares of Stock are issued
 (as evidenced by the appropriate entry on the books of the Company or of a
 duly authorized transfer agent of the Company), no right to vote or receive
 dividends or any other rights as a stockholder shall exist with respect to
 the shares of Stock subject to an Option, notwithstanding the exercise of the
 Option. The Company shall issue (or cause to be issued) such shares of Stock
 promptly after the Option is exercised. No adjustment will be made for a
 dividend or other right for which the record date is prior to the date the
 shares of Stock are issued, except as provided in Section 4.2 of the Plan. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 7.

 	
 Standard Forms of Option Agreement. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.1.

 	
 Option
 Agreement. Unless otherwise provided by the Board at
 the time the Option is granted, an Option shall comply with and be subject to
 the terms and conditions set forth in the form of Option Agreement approved
 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 from
 time to time to vary the terms of any standard form 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 or forms 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.

 	
 Change In Control.

 
	
  

 	
  

 	
  

 
	
  

 	
 8.1.

 	
 Definitions.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (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
 related transactions 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
 transfer of all or substantially all of the assets of the Company; or (iv) a
 liquidation or dissolution of the Company. 

 


14









	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b)

 	
 A “Change in Control” shall mean an
 Ownership Change Event or a series of related Ownership Change Events
 (collectively, a “Transaction”)
 wherein the stockholders of the Company immediately before the Transaction do
 not retain immediately after the Transaction, in substantially the same
 proportions as their ownership of shares of the Company’s voting stock
 immediately before the Transaction, direct or indirect beneficial ownership
 of more than fifty percent (50%) of the total combined voting power of the
 outstanding voting securities of the Company or, in the case of a Transaction
 described in Section 8.1(a)(iii), the corporation or other business entity to
 which the assets of the Company were transferred (the “Transferee”), as the case may be. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 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 other business entity or parent thereof, as the case may be
 (the “Acquiring Corporation”),
 may, without the consent of any Optionee, either assume the Company’s rights
 and obligations under outstanding Options or substitute for outstanding
 Options substantially equivalent options for the Acquiring Corporation’s
 stock. In the event the Acquiring Corporation elects not to assume or
 substitute for outstanding Options in connection with a Change in Control,
 then the vesting of each such outstanding Option and any shares acquired upon
 the exercise thereof held by Optionees whose Service has not terminated prior
 to such Change in Control shall be accelerated to the extent unexercised,
 effective as of the date ten (10) days prior to the date of the Change in
 Control, unless otherwise determined by the Board, in its discretion, and set
 forth in the Option Agreement evidencing such Option. With respect to any
 specific Optionee, if such Optionee’s Service is terminated within 90 days
 following such Change in Control for any reason other than a Voluntary
 Termination or Termination For Cause, then the vesting of each outstanding
 Option and any shares acquired upon the exercise thereof held by such
 Optionee shall be accelerated to the extent unexercised, effective as of the
 date ten (10) days prior to the date of the Change in Control, unless
 otherwise determined by the Board, in its discretion, and set forth in the
 Option Agreement evidencing such Option. The vesting of any Option thereof
 that was permissible solely by reason of this Section 8.2 and the provisions
 of such Option Agreement shall be conditioned upon the consummation of the
 Change in Control. Any Options which are neither assumed or substituted for
 by the Acquiring 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, shares acquired upon exercise of an Option
 prior to the Change in Control and any consideration received pursuant to the
 Change in Control with respect to such shares shall continue to be subject to
 all applicable provisions of the Option Agreement evidencing such Option except
 as otherwise provided in such Option Agreement. Furthermore, notwithstanding
 the foregoing, if the corporation the stock of which is subject to the
 outstanding Options immediately prior to an Ownership Change Event described
 in Section 8.1(a) constituting a Change in Control is the surviving or
 continuing corporation and immediately after such Ownership 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 the
 Code without regard to the provisions of Section 1504(b) of the Code, the 

 


15









	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 outstanding
 Options shall not terminate unless the Board otherwise provides in its
 discretion.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 9.

 	
 Compliance With Law. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 9.1.

 	
 General.
 The grant of Options and the issuance of shares of Stock upon exercise of
 Options shall be subject to compliance with all applicable requirements of
 federal, state and foreign law with respect to such securities. Options may
 not be exercised if the issuance of shares of Stock upon exercise would
 constitute a violation 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 of the Company, the shares issuable upon 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 the authority, 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 such
 requisite 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 law or regulation and to make any representation or
 warranty with respect thereto as may be requested by the Company. The Company
 will be under no obligation to register the Shares under the Securities Act,
 or to effect compliance with the registration, qualification or listing
 requirements of any state securities laws, stock exchange or automated
 quotation system, and the Company will have no liability for any inability or
 failure to do so. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 9.2.

 	
 Section 409A.
 Option awards under the Plan are intended not to provide for the deferral of
 compensation for purposes of Code Section 409A, and the Plan and each Option
 Agreement shall be interpreted and administered consistent with this intent.
 The Committee may amend any Option Agreement as necessary to confirm that
 such award does not provide for a deferral of compensation for purposes of
 Code Section 409A. Neither the Company nor the Committee, nor any employee or
 officer of either, shall have any liability for any tax imposed on a
 Participant under Code Section 409A with respect to the Plan, and if any tax
 is imposed on a Participant, the Participant shall have no recourse against
 the Company or the Committee, or any employee or officer of either, for
 payment of any such tax. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 10.

 	
 Termination Or Amendment Of Plan. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 The Board
 may terminate or amend the Plan at any time. However, subject to changes in
 applicable law, regulations or rules that would permit otherwise, without the
 approval of the Company’s stockholders, there shall be (a) no increase in the
 maximum aggregate number of shares of Stock that may be issued under the Plan
 (except by operation of the 

 


16









	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 provisions
 of Section 4.2), (b) no change in the class of persons eligible to receive
 Incentive Stock Options, (c) no reduction in the exercise price below 100%
 (110% in the case of an Incentive Stock Option granted to a 10% Holder) of
 the Fair Market Value of the shares of Stock issuable upon exercise of Options
 at the time of the granting thereof, other than to change the manner of
 determining the Fair Market Value thereof; (d) alter the maximum number of
 Shares available for the grant of Options in the form of Incentive Stock
 Options; (e) no material increase in the benefits accruing to participants
 under the Plan; (f) no modification of the requirements as to eligibility for
 participation in the Plan; (g) with respect to Options which are Incentive
 Stock Options, amend the Plan in any respect which would cause such Options
 to no longer qualify for Incentive Stock Option treatment pursuant to the
 Code; and (h) no other amendment of the Plan that would require approval of
 the Company’s stockholders under any applicable law, regulation or rule. No
 termination or amendment of the Plan shall affect any then outstanding Option
 unless expressly provided by the Board. In any event, no termination or
 amendment of the Plan may adversely affect any then outstanding Option
 without the consent of the Optionee, unless such termination or amendment is
 required to enable an Option designated as an Incentive Stock Option to
 qualify as an Incentive Stock Option or is necessary to comply with any
 applicable law, regulation or rule. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 11.

 	
 Designation of Beneficiary by Participant.
 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 An Optionee
 may designate one or more beneficiaries to receive any rights and payments to
 which such participant may be entitled in respect of any option granted under
 the Plan in the event of such participant’s death. Such designation shall be
 on a written form acceptable to and filed with the Committee. The Committee
 shall have the right to review and approve beneficiary designations. An
 Optionee may change the Optionee’s beneficiary(ies) from time to time in the
 same manner as the original designation, unless such participant has made an
 irrevocable designation. Any designation of beneficiary under the Plan (to
 the extent it is valid and enforceable under applicable law) shall be
 controlling over any other disposition, testamentary or otherwise, as
 determined by the Committee. If no designated beneficiary survives the
 participant and is living on the date on which any right or amount becomes
 payable to such participant’s beneficiary(ies), such payment will be made to
 the legal representatives of the participant’s estate, and the term
 “beneficiary” as used in the Plan shall be deemed to include such person or
 persons. If there is any question as to the legal right of any beneficiary to
 receive a distribution under the Plan, the Committee may determine that the
 amount in question be paid to the legal representatives of the estate of the
 participant, in which event the Company, the Committee, the Board and the
 Committee and the members thereof will have no further liability to any
 person or entity with respect to such amount. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 12.

 	
 No Obligation to Employ.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 The Plan
 shall not constitute a contract of employment and nothing in this Plan shall
 confer or be deemed to confer on any participant any right to continue in the
 employ of, or to continue any other relationship with, the Participating
 Company Group or limit in any way the right of the Participating Company
 Group to terminate the participant’s employment or other relationship at any
 time, with or without cause. 

 


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 13.

 	
 Non-exclusivity of the Plan. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Neither the
 adoption of the Plan by the Board, the submission of the Plan to the
 stockholders of the Company for approval, nor any provision of this Plan will
 be construed as creating any limitations on the power of the Board or the
 Committee to adopt such additional compensation arrangements as the Board may
 deem desirable, including, without limitation, the granting of Options
 otherwise than under the Plan, and such arrangements may be either generally
 applicable or applicable only in specific cases. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 14.

 	
 Governing Law.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 The
 validity, construction, interpretation, administration and effect of the
 Plan, and of its rules and regulations, and rights relating to the Plan and
 Options granted under the Plan and any agreements in connection therewith,
 shall be governed by the substantive laws, but not the choice of law rules,
 of the State of New York. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 15.

 	
 Stockholder Approval. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 The Plan or
 any increase in the maximum aggregate number of shares of Stock issuable
 thereunder as provided in Section 4.1 (the “Authorized Shares”) shall be approved by the
 stockholders of the Company within twelve (12) months of the date of adoption
 thereof by the Board. Option granted prior to stockholder approval of the
 Plan or in excess of the Authorized Shares previously approved by the
 stockholders shall become exercisable no earlier than the date of stockholder
 approval of the Plan or such increase in the Authorized Shares, as the case
 may be. 

 


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