**Exhibit 10.2**

 

DIGIMARC CORPORATION

1995 STOCK INCENTIVE PLAN, ASAMENDED

 

1.             Purposes and Scope ofthe Plan.

 

1.1  Purposes of Plan. The purposes of this StockIncentive Plan are to attract and retain the best available personnel forpositions of substantial responsibility, to provide additional incentive to theEmployees and Consultants of the Company and to promote the success of theCompany’s business.

 

1.2  Scope of Plan. Options granted hereunder maybe either “incentive stock options,” as defined in Section 422 of theInternal Revenue Code of 1986, as amended, or “nonqualified stock options,” atthe discretion of the Board and as reflected in the terms of the written optionagreement. In addition, shares of the Company’s Common Stock may be Sold hereunderindependent of any Option grant.

 

2.             Definitions.  As used herein, the following definitionsshall apply:

 

2.1  “Board” shall mean the Committee, if one hasbeen appointed, or the Board of Directors of the Company, if no Committee isappointed.

 

2.2  “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

2.3  “Common Stock”  shall mean the Common Stock of the Company.

 

2.4  “Company” shall mean Digimarc Corporation, an Oregon corporation.

 

2.5  “Committee” shall mean the Committeeappointed by the Board of Directors in accordance with Section of thePlan, if one is appointed.

 

2.6  “Consultant” shall mean any person who isengaged by the Company or any Subsidiary to render consulting services and iscompensated for such consulting services and any director of the Companywhether compensated for such services or not.

 

2.7  “Continuous Status as an Employee orConsultant” shall mean the absence of any interruption or termination ofservice as an Employee or Consultant. Continuous Status as an Employee orConsultant shall not be considered interrupted in the case of sick leave,military leave, or any other leave of absence approved by the Board; providedthat such leave is for a period of not more than ninety days or reemploymentupon the expiration of such leave is guaranteed by contract or statute.

 

2.8  “Employee” shall mean any person, includingofficers and directors, employed by the Company or any Parent or Subsidiary ofthe Company. The payment of a director’s fee by the Company shall not besufficient to constitute “employment” by the Company.

 

2.9  “Exchange Act”  shall mean the Securities Exchange Act of1934, as amended.

 

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2.10 “IncentiveStock Option” shall mean an Option intended to qualify as an incentive stockoption within the meaning of Section 422 of the Code.

 

2.11 “NonqualifiedStock Option” shall mean an Option not intended to qualify as an incentivestock option within the meaning of Section 422 of the Code.

 

2.12 “Option”shall mean a stock option granted pursuant to the Plan.

 

2.13 “OptionedStock” shall mean the Common Stock subject to an Option.

 

2.14 “Optionee”shall mean an Employee or Consultant who receives an Option.

 

2.15 “Parent”shall mean a “parent corporation,” whether now or hereafter existing, asdefined in Section 424 of the Code.

 

2.16 “Plan”shall mean this Stock Incentive Plan.

 

2.17 “Sale” or“Sold” shall include, with respect to the sale of Shares under the Plan, thesale of Shares for consideration in the form of cash or notes, as well as agrant of Shares without consideration, except past or future services.

 

2.18 “Share”shall mean a share of the Common Stock, as adjusted in accordance with Sectionof the Plan.

 

2.19 “Subsidiary”shall mean a “subsidiary corporation,” whether now or hereafter existing, asdefined in Section 424 of the Code.

 

3.             Stock Subject to thePlan.

 

3.1  Size of Plan Pool. Subject to the provisionsof Section of the Plan, the maximum aggregate number of Shares which maybe optioned and/or Sold under the Plan is 5,600,000 shares of Common Stock. TheShares may be authorized, but unissued, or reacquired Common Stock.

 

3.2  Return of Unexercised Option Shares. If anOption should expire or become unexercisable for any reason without having beenexercised in full, the unpurchased Shares which were subject thereto shall,unless the Plan shall have been terminated, become available for future Optiongrants and/or Sales under the Plan.

 

3.3  Return of Unvested or Restricted Shares. IfShares Sold under the Plan or purchased upon the exercise of an Option arerepurchased by the Company pursuant to restrictions applicable to such Shares,the number of Shares repurchased shall, unless the Plan shall have beenterminated, become available for future Option grants and/or Sales under thePlan.

 

3.4  Reservation of Shares. The Company, duringthe term of this Plan, will at all times reserve and keep available such numberof Shares as shall be sufficient to satisfy the requirements of the Plan.Inability of the Company to obtain authority from any regulatory body havingjurisdiction, which authority is deemed by the Company’s counsel to benecessary to the lawful issuance and sale of any Shares hereunder, shallrelieve the Company of any liability in

 

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respect of the failure to issueor sell such Shares as to which such requisite authority shall not have beenobtained.

 

4.             Administration of thePlan.

 

4.1  Procedure. The Plan shall be administered bythe Board of Directors of the Company.

 

4.1.1  Committee. Subject tosubparagraph, the Board of Directors may    appoint a Committee consisting of not less than two (2) members of theBoard of Directors to administer the Plan on behalf of the Board of Directors,subject to such terms and conditions as the Board of Directors may prescribe.Once appointed, the Committee shall continue to serve until otherwise directedby the Board of Directors. From time to time the Board of Directors mayincrease the size of the Committee and appoint additional members thereof,remove members (with or without cause) and appoint new members in substitutiontherefor, fill vacancies however caused, or remove all members of the Committeeand thereafter directly administer the Plan.

 

4.1.2  Conflicts. Members of theBoard who are either eligible for Options and/or Sales or have been grantedOptions or Sold Shares may vote on any matters affecting the administration ofthe Plan or the grant of any Options or Sale of any Shares pursuant to thePlan, except that no such member shall act upon the granting of an Option orSale of Shares to himself, but any such member may be counted in determiningthe existence of a quorum at any meeting of the Board during which action istaken with respect to the granting of Options or Sale of Shares to him.

 

4.1.3  Grants FollowingRegistration, to Officers or Directors, Only by Disinterested Persons.Notwithstanding the foregoing subparagraph, if and in any event the Companyregisters any class of any equity security pursuant to Section 12 of theSecurities Exchange Act of 1934, from the effective date of such registrationuntil six (6) months after the termination of such registration, anygrants of Options to officers or directors shall only be made by the Board ifeach member of the Board is a disinterested person, or if every member of theBoard is not a disinterested person, by a committee of two or more directors,each of whom is a disinterested person. A “disinterested person” is a directorwho has not, during the one year period prior to service as an administrator ofthe Plan, or during such service, been granted or awarded equity securitiespursuant to the Plan or any other plan of the Company or any of its affiliates,with these qualifications:

 

(a)  Formula Plans don’t disqualify. Participation in a formula planmeeting the conditions in paragraph (c)(2)(ii) of SEC Rule 16b-3 shallnot disqualify a director from being a disinterested person.

 

(b)  Ongoing Acquisition Plans Don’t Disqualify. Participation inan ongoing securities acquisition plan meeting the conditions in paragraph (d)(2) (i) ofSEC Rule 16b-3 shall not disqualify a director from being a disinterestedperson.

 

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(c)  Annual Retainers in Stock Don’t Disqualify. An election to receivean annual retainer fee in either cash or an equivalent amount of securities, orpartly in cash and partly in securities, shall not disqualify a director frombeing a disinterested person.

 

(d)  Disqualification applies Only To Plan In Which Director Participates.Participation in a plan shall not disqualify a director from being adisinterested person for the purpose of administering another plan that doesnot permit participation by directors.

 

4.2  Powers of the Board. Subject to theprovisions of the Plan, the Board shall have the authority, in its discretion,to do any or all of these things:

 

4.2.1  Grant Options. To grantIncentive Stock Options in accordance with Section 422 of the Code, orNonqualified Stock Options.

 

4.2.2  Authorize Sales.  To authorize Sales of Shares of Common Stockhereunder.

 

4.2.3  Determine Fair MarketValue. To determine, upon review of relevant information and in accordance withSection of the Plan, the fair market value of the Common Stock.

 

4.2.4  Determine Exercise or PurchasePrice. To determine the exercise/purchase price per Share of Options to begranted or Shares to be Sold, which exercise/purchase price shall be determinedin accordance with Section of the Plan.

 

4.2.5  Decide Who Gets Options.To determine the Employees or Consultants to whom, and the time or times atwhich, Options shall be granted and the number of Shares to be represented byeach Option.

 

4.2.6  Decide Who Gets Stock. Todetermine the Employees or Consultants to whom, and the time or times at which,Shares shall be Sold and the number of Shares to be Sold.

 

4.2.7  Interpret Plan.  To interpret the Plan.

 

4.2.8  Make Rules AboutPlan. To prescribe, amend and rescind rules and regulations relating to thePlan.

 

4.2.9  Set and Amend OptionTerms. To determine the terms and provisions of each Option granted (which neednot be identical) and, with the consent of the holder thereof, modify or amendeach Option.

 

4.2.10 Set and Amend Sale Terms. To determine the terms and provisionsof each Sale of Shares (which need not be identical) and, with the consent ofthe purchaser thereof, modify or amend each Sale.

 

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4.2.11 Change Exercise Dates of Options. To accelerate or defer (withthe consent of the Optionee) the exercise date of any Option.

 

4.2.12 Change Vesting Restrictions. To accelerate or defer (with theconsent of the Optionee or purchaser of Shares) the vesting restrictionsapplicable to Shares Sold under the Plan or pursuant to Options granted under thePlan.

 

4.2.13 Authorize Signers. To authorize any person to execute on behalfof the Company any instrument required to effectuate the grant of an Option orSale of Shares previously granted or authorized by the Board.

 

4.2.14 Establish Shareholder Agreement Restrictions. To determine therestrictions on transfer, vesting restrictions, repurchase rights, or otherrestrictions applicable to Shares issued under the Plan.

 

4.2.15 Cancel and Reissue Options (subject to Price Restrictions). Toeffect, at any time and from time to time, with the consent of the affectedOptionees, the cancellation of any or all outstanding Options under the Planand to grant in substitution therefor new Options under the Plan covering thesame or different numbers of Shares, but having an Option price per Shareconsistent with the provisions of Section of this Plan as of the date ofthe new Option grant.

 

4.2.16 Make Case by Case Exceptions at Termination of Employment. Toestablish, on a case-by-case basis, different terms and conditions pertainingto exercise or vesting rights upon termination of employment, whether at thetime of an Option grant or Sale of Shares, or thereafter.

 

4.2.17 Do Other Things Needed or Advisable. To make all otherdeterminations deemed necessary or advisable for the administration of thePlan.

 

4.3  Effect of Board’s Decision. All decisions,determinations and interpretations of the Board shall be final and binding onall Optionees and any other holders of any Options granted under the Plan orShares Sold under the Plan.

 

5.             Eligibility.

 

5.1  Persons Eligible. Options may be grantedand/or Shares Sold only to Employees and Consultants. Incentive Stock Optionsmay be granted only to Employees. An Employee or Consultant who has beengranted an Option or Sold Shares may, if he is otherwise eligible, be grantedan additional Option or Options or Sold additional Shares.

 

5.2  ISO Limitation. No Incentive Stock Option maybe granted to an Employee which, when aggregated with all other Incentive StockOptions granted to such Employee by the Company or any Parent or Subsidiary,would result in Shares having an aggregate fair market value (determined foreach Share as of the date of grant of the Option covering such Share) in excessof $100,000 becoming first available for purchase upon exercise of one or moreIncentive Stock Options during any calendar year.

 

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5.3  Section Limitations. Section of thePlan shall apply only to an Incentive Stock Option evidenced by an “IncentiveStock Option Agreement” which sets forth the intention of the Company and theOptionee that such Option shall qualify as an Incentive Stock Option. Section ofthe Plan shall not apply to any Option evidenced by a “Nonqualified StockOption Agreement” which sets forth the intention of the Company and theOptionee that such Option shall be a Nonqualified Stock Option.

 

5.4  No Right to Continued Employment. The Planshall not confer upon any Optionee any right with respect to continuation of employmentor consulting relationship with the Company, nor shall it interfere in any waywith his right or the Company’s right to terminate his employment or consultingrelationship at any time.

 

6.             Term of Plan. ThePlan shall become effective upon the earlier to occur of its adoption by theBoard of Directors or its approval by the stockholders of the Company asdescribed in Section of the Plan. It shall continue in effect for a termof ten (10) years, unless sooner terminated under Section of thePlan.

 

7.             Term of Options.

 

7.1  Term of ISOs to 10% or Less Holders. The termof each Incentive Stock Option shall be ten (10) years from the date ofgrant thereof or such shorter term as may be provided in the Stock OptionAgreement.

 

7.2  Term of Nonqualified Options to 10% or LessHolders. The term of each Nonqualified Stock Option shall be ten (10) yearsand one (1) day from the date of grant thereof or such other term as maybe provided in the Stock Option Agreement.

 

7.3  Terms for Holders of More than 10%. In thecase of an Option granted to an Optionee who, at the time the Option isgranted, owns stock representing more than ten percent (10%) of the votingpower of all classes of stock of the Company or any Parent or Subsidiary, (a) ifthe Option is an Incentive Stock Option, the term of the Option shall be five (5) yearsfrom the date of grant thereof or such shorter time as may be provided in theStock Option Agreement, or (b) if the Option is a Nonqualified StockOption, the term of the Option shall be five (5) years and one (1) dayfrom the date of grant thereof or such other term as may be provided in theStock Option Agreement.

 

8.             Exercise/PurchasePrice and Consideration.

 

8.1  Exercise/Purchase Price. The per-Shareexercise/purchase price for the Shares to be issued pursuant to exercise of anOption or a Sale (other than a Sale which is a grant for which no purchaseprice is payable) shall be such price as is determined by the Board, but shallbe subject to the requirements of this Section.

 

8.2  ISO Price.

 

8.2.1  ISO Price to Holders ofmore than 10%. In the case of an Incentive Stock Option granted to an Employeewho, at the time of the grant of such Incentive Stock Option, owns stockrepresenting more than ten percent (10%) of the voting power of all classes ofstock of the Company or any Parent or Subsidiary, the per

 

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Share exerciseprice shall be no less than one hundred ten percent (110%) of the fair marketvalue per Share on the date of the grant.

 

8.2.2  ISO Price to Holders of10% or Less. In the case of an Incentive Stock Option granted to any otherEmployee, the per Share exercise price shall be no less than one hundredpercent (100%) of the fair market value per Share on the date of grant.

 

8.3  Nonqualified Option and Sale Price.

 

8.3.1  Nonqualified Price toHolders of More than 10%. In the case of a Nonqualified Stock Option or Salegranted or Sold to a person who, at the time of the grant of such Option orauthorization of such Sale, owns stock representing more than ten percent (10%)of the voting power of all classes of stock of the Company or any Parent orSubsidiary, the per Share exercise/purchase price shall be no less than onehundred ten percent (110%) of the fair market value per Share on the date ofthe grant or authorization of Sale, unless otherwise expressly determined bythe Board of Directors.

 

8.3.2  Nonqualified Price toHolders of 10% or Less. In the case of a Nonqualified Stock Option or Salegranted or Sold to any other person, the per Share exercise/purchase priceshall be no less than eighty-five percent (85%) of the fair market value perShare on the date of grant or authorization of Sale, unless otherwise expresslydetermined by the Board of Directors.

 

8.3.3  Requirement for BelowMarket Options and Sales. Any determination to sell stock at less than fairmarket value on the date of the grant or authorization of Sale shall beaccompanied by an express finding by the Board of Directors specifying that thesale is in the best interest of the Company, and specifying both the fairmarket value and the grant or sale price of the stock.

 

8.4  Sales After Registration. In the case of anOption granted or Sale authorized on or after the effective date ofregistration of any class of equity security of the Company pursuant to Section 12of the Exchange Act and prior to six (6) months after the termination ofsuch registration, the per Share exercise/purchase price shall be no less thanone hundred percent (100%) of the fair market value per Share on the date ofgrant or authorization of Sale.

 

8.5  Fair Market Value. The fair market value perShare shall be determined by the Board in its discretion; provided, however,that where there is a public market for the Common Stock, the fair market valueper Share shall be the closing price of the Common Stock for the date of grantor authorization of Sale, as reported in The Wall Street Journal (or, ifnot so reported, as otherwise reported by the National Association ofSecurities Dealers Automated Quotation (NASDAQ) System) or, in the event theCommon Stock is listed on a stock exchange, the fair market value per Shareshall be the closing price on such exchange on the date of grant of the Optionor authorization of Sale, as reported in The Wall Street Journal.

 

8.6  Consideration. The consideration to be paidfor the Shares to be issued upon exercise of an Option or pursuant to a Sale,including the method of payment, shall be determined by the Board and mayconsist in whole or part of:

 

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8.6.1  Cash, Check, Note.  Cash, Check, or Promissory Note.

 

8.6.2  Transferred or WithheldShares. Transfer to the Company of Shares having a Fair Market Value at thetime of such exercise equal to the Option exercise price, or delivery ofinstructions to the Company to withhold from the Shares that would otherwise beissued on the exercise that number of Shares having a Fair Market Value at thetime of such exercise equal to the Option exercise price. If the Fair MarketValue of the number of whole Shares transferred or the number of whole Sharessurrendered is less than the total exercise price of the Option, the shortfallmust be made up in cash or by check.

 

9.             Time of GrantingOptions. The date of grant of an Option shall, for all purposes, be the date onwhich the Board makes the determination granting such Option. Notice of thedetermination shall be given to each Employee or Consultant to whom an Optionis so granted within a reasonable time after the date of such grant.

 

10.           Option Agreement.Options shall be evidenced by written option agreements in such form as theBoard shall approve.

 

11.           Nontransferability ofOptions. An Option may not be sold, pledged, assigned, hypothecated,transferred or disposed of in any manner other than by will, or by the laws ofdescent and distribution, and may be exercised during the lifetime of theOptionee only by the Optionee or, if incapacitated, by his or her legalguardian or legal representative.

 

12.           Exercise of Option.

 

12.1 WhenExercisable. Any Option granted hereunder shall be exercisable at such timesand under such conditions as determined by the Board, including performancecriteria with respect to the Company and/or the Optionee, and as shall bepermissible under the terms of the Plan.

 

12.2 NoFractional Shares. An Option may not be exercised for a fraction of a Share.

 

12.3 HowExercised. An Option shall be deemed to be exercised when written notice ofsuch exercise has been given to the Company in accordance with the terms of theOption by the person entitled to exercise the Option and full payment for theShares with respect to which the Option is exercised has been received by theCompany. Full payment may, as authorized by the Board, consist of anyconsideration and method of payment allowable under Section of the Plan.

 

12.3.1  Deposits for WithholdingTaxes. Each Optionee who exercises an Option shall, upon notification of theamount due (if any) and prior to or concurrent with delivery of the certificaterepresenting the Shares, pay to the Company amounts necessary to satisfyapplicable federal, state and local tax withholding requirements.

 

12.3.2  Shareholder Agreements.An Optionee must also provide a duly  executed copy of any stock transfer agreement then in effect and determined tobe applicable by the Board.

 

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12.4 NoShareholder Rights or Adjustments Until Issuance. Until the issuance (asevidenced by the appropriate entry on the books of the Company or of a dulyauthorized transfer agent of the Company) of the stock certificate evidencingsuch Shares, no right to vote or receive dividends or any other rights as astockholder shall exist with respect to the Optioned Stock, notwithstanding theexercise of the Option. No adjustment will be made for a dividend or otherright for which the record date is prior to the date the stock certificate isissued, except as provided in Section of the Plan.

 

12.5 Effect ofExercise on Plan Pool. Exercise of an Option in any manner shall result in adecrease in the number of Shares which thereafter may be available, both forpurposes of the Plan and for sale under the Option, by the number of Shares asto which the Option is exercised.

 

12.6Termination of Status as an Employee or Consultant. If an Employee or Consultantceases to serve as an Employee or Consultant (as the case may be), he may, butonly within three (3) months (or such other period of time not exceedingthe limitations of Section above as is determined by the Board at the timeof grant of an Option or thereafter) after the date he ceases to be an Employeeor Consultant (as the case may be) of the Company, exercise his Option to theextent that he was entitled to exercise it at the date of such termination. Tothe extent that he was not entitled to exercise the Option at the date of suchtermination, or if he does not exercise such Option (which he was entitled toexercise) within the time specified herein, the Option shall terminate.

 

12.7 Disabilityof Optionee. Notwithstanding the provisions of Section above, in the eventan Employee or Consultant is unable to continue his employment or consultingrelationship (as the case may be) with the Company as a result of his total andpermanent disability (as defined in Section 22(e)(3) of the Code), hemay, but only within twelve (12) months (or such other period of time notexceeding the limitations of Section above as is determined by the Boardat the time of grant of an Option or thereafter) from the date of termination,exercise his Option to the extent he was entitled to exercise it at the date ofsuch termination. To the extent that he was not entitled to exercise the Optionat the date of termination, or if he does not exercise such Option (which hewas entitled to exercise) within the time specified herein, the Option shallterminate.

 

12.8 Death ofOptionee. In the event of the death of an Optionee during the term of theOption who is at the time of his death an Employee or Consultant of the Companyand who shall have been in Continuous Status as an Employee or Consultant sincethe date of grant of the Option, the Option may be exercised, at any timewithin twelve (12) months (or such other period of time not exceeding thelimitations of Section above as is determined by the Board at the time ofgrant of an Option or thereafter) following the date of death, by the Optionee’sestate or by a person who acquired the right to exercise the Option by bequestor inheritance, but only to the extent of the right to exercise as of the dateof death.

 

13.           AdjustmentsUpon Changes in Capitalization or Merger.

 

13.1 StockSplits and the Like. Subject to any required action by the stockholders of theCompany, the number of shares of Common Stock covered by each outstandingOption and the number of shares of Common Stock which have been authorized forissuance under the Plan

 

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but as to which no Options haveyet been granted or Sales made or which have been returned to the Plan uponcancellation or expiration of an Option, as well as the price per share ofCommon Stock covered by each such outstanding Option, shall be proportionatelyadjusted for any increase or decrease in the number of issued shares of CommonStock resulting from a stock split, reverse stock split, stock dividend,combination or reclassification of the Common Stock, or any other increase ordecrease in the number of issued shares of Common Stock effected withoutreceipt of consideration by the Company; provided, however, that conversion ofany convertible securities of the Company shall not be deemed to have been “effectedwithout receipt of consideration.” Such adjustment shall be made by the Board,whose determination in that respect shall be final, binding and conclusive.Except as expressly provided herein, no issuance by the Company of shares ofstock of any class, or securities convertible into shares of stock of anyclass, shall affect, and no adjustment by reason thereof shall be made withrespect to, the number or price of shares of Common Stock subject to an Option.

 

13.2Termination on Dissolution or Liquidation. In the event of the proposeddissolution or liquidation of the Company, the Option will terminate immediatelyprior to the consummation of such proposed action, unless otherwise provided bythe Board. The Board may, in the exercise of its sole discretion in suchinstances, declare that any Option shall terminate as of a date fixed by theBoard and give each Optionee the right to exercise his Option as to all or anypart of the Optioned Stock, including Shares as to which the Option would nototherwise be exercisable.

 

13.3Substitution or Exercise on Sale or Merger. In the event of a proposed sale ofall or substantially all of the assets of the Company, or the merger of theCompany with or into another corporation, the Option shall be assumed or an equivalentoption shall be substituted by such successor corporation or a parent orsubsidiary of such successor corporation, unless the Board determines, in the exerciseof its sole discretion and in lieu of such assumption or substitution, that theOptionee shall have the right to exercise the Option as to all of the OptionedStock, including Shares as to which the Option would not otherwise be exercisable.If the Board makes an Option fully exercisable in lieu of assumption orsubstitution in the event of a merger or sale of assets, the Board shall notifythe Optionee that the Option shall be fully exercisable for a period of thirty(30) days from the date of such notice or such shorter period as the Board mayspecify in the notice, and the Option will terminate upon the expiration ofsuch period.

 

14.           Amendmentand Termination of the Plan.

 

14.1 Amendmentand Termination. The Board may amend or terminate the Plan from time to time insuch respects as the Board may deem advisable; provided, however, that ifrequired to qualify the Plan under Rule 16b-3 promulgated under Section 16of the Securities Exchange Act of 1934, as amended (“Rule 16b-3”), no amendmentshall be made more than once every six months that would change the amount,price or timing of the option grants, other than to comport with changes in theCode, or the rules and regulations promulgated thereunder; and provided, further,that, if required to qualify the Plan under Rule 16b-3, no amendment shallbe made without the approval of the stockholders of the Company in the mannerdescribed in Section of the Plan and within the times required by Section 422of the Code (if any), if the amendment would:

 

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14.1.1  Increase Shares. Increasethe number of Shares subject to the Plan, other than in connection with anadjustment under Section 13 of the Plan;

 

14.1.2  Change Class ofEmployee or Consultant Eligible. Make a change in the designation of the classof Employees or Consultants eligible to be granted Options; or

 

14.1.3  Increase Benefits AfterRegistration. If the Company has a class of equity security registered under Section 12of the Exchange Act at the time of such revision or amendment, cause anymaterial increase in the benefits accruing to participants under the Plan.

 

14.2Stockholder Approval. If any amendment requiring stockholder approval under Section ofthe Plan is made subsequent to the first registration of any class of equitysecurity by the Company under Section 12 of the Exchange Act, suchstockholder approval shall be solicited as described in Section of the Plan.

 

14.3 Effect ofAmendment or Termination. Any such amendment or termination of the Plan shallnot affect Options already granted, and such Options shall remain in full forceand effect as if this Plan had not been amended or terminated, unless mutuallyagreed otherwise between the Optionee and the Board, which agreement must be inwriting and signed by the Optionee and the Company.

 

15.  Conditions Upon Issuance of Shares.

 

15.1 GeneralCompliance Requirement. Shares shall not be issued pursuant to the exercise ofan Option or a Sale unless the exercise of such Option or consummation of theSale and the issuance and delivery of such Shares pursuant thereto shall complywith all relevant provisions of law, including, without limitation, theSecurities Act of 1933, as amended, applicable state securities laws, theExchange Act, the rules and regulations promulgated thereunder, and therequirements of any stock exchange (including NASDAQ) upon which the Shares maythen be listed, and shall be further subject to the approval of counsel for theCompany with respect to such compliance.

 

15.2Investment Intent Warranty. As a condition to the exercise of an Option or aSale, the Company may require the person exercising such Option or to whomShares are being Sold to represent and warrant at the time of any such exerciseor Sale that the Shares are being purchased only for investment and without anypresent intention to sell or distribute such Shares if, in the opinion ofcounsel for the Company, such a representation is required by any of theaforementioned relevant provisions of law.

 

16.Stockholder Approval. Continuance of the Plan shall be subject to approval bythe stockholders of the Company within twelve months before or after the datethe Plan is adopted. If such stockholder approval is obtained at a duly heldstockholders’ meeting, it may be obtained by the affirmative vote of the holdersof a majority of the outstanding shares of the Company, such holders beingpresent or represented and entitled to vote thereon. If and in the event thatthe Company registers any class of any equity security pursuant to Section 12of the Exchange Act, the approval of such stockholders of the Company shall beobtained as follows:

 

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16.1Solicitation. Approval shall be solicited substantially in accordance with Section 14(a) ofthe Exchange Act and the rules and regulations promulgated thereunder, orsolicited after the Company has furnished in writing to the holders entitled tovote substantially the same information concerning the Plan as that which wouldbe required by the rules and regulations in effect under Section 14(a) ofthe Exchange Act at the time such information is furnished.

 

16.2 Time.Approval shall be obtained at or prior to the first annual meeting ofstockholders held subsequent to the first registration of any class of equitysecurities of the Company under Section 12 of the Exchange Act.

 

16.3 If byWritten Consent: Compliance with State Law. If such stockholder approval isobtained by written consent, it must be obtained by the written consent ofstockholders of the Company in compliance with the requirements of applicablestate law.

 

17.  Six Month Holding Period for Affiliates. Ifthe Company registers any class of any equity security pursuant to Section 12of the Exchange Act, then from the effective date of such registration untilsix (6) months after the termination of such registration (the PublicPeriod), these limits will apply to each officer, director and beneficial ownerof ten percent (10%) or more of any class of equity securities of the Company(Affiliates.) During the Public Period, any Affiliate shall hold Shares Soldhereunder at least six months from the date of Sale. During the Public Period,at least six months must elapse from the date of grant of an Option to anAffiliate to the date the Affiliate disposes of the Shares acquired uponexercise of the Option, or (if the Option is disposed of other than byexercise) to the date of disposition of the Option itself.

 

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