Unassociated Document


    Amended
      

    


    2004
      STOCK OPTION PLAN,

    


    OF

    


    ROO
      GROUP, INC.

    


    


    
      	
              1.

            	
              PURPOSES
                OF THE PLAN 

            


    

    


    The
      purposes of the 2004 Stock Option Plan (the “Plan”) of ROO Group, Inc., a
      Delaware corporation (the “Company”), are to: 

    


    (a) Encourage
      selected employees, directors and consultants to improve operations and increase
      profits of the Company;

    


    (b) Encourage
      selected employees, directors and consultants to accept or continue employment
      or association with the Company or its Affiliates; and 

    


    (c) Increase
      the interest of selected employees, directors and consultants in the Company's
      welfare through participation in the growth in value of the common stock of
      the
      Company (the “Shares”).

    


    Options
      granted under this Plan (“Options”) may be “incentive stock options” (“ISOs”)
      intended to satisfy the requirements of Section 422 of the Internal Revenue
      Code
      of 1986, as amended, and the regulations thereunder (the “Code”), or
“non-qualified stock options” (“NQSOs”). 

    


    
      	
              2.

            	
              ELIGIBLE
                PERSONS 

            


    

    


    Every
      person who at the date of grant of an Option is an employee of the Company
      or of
      any Affiliate (as defined below) of the Company is eligible to receive NQSOs
      or
      ISOs under this Plan. Every person who at the date of grant is a consultant
      to,
      or non-employee director of, the Company or any Affiliate (as defined below)
      of
      the Company is eligible to receive NQSOs under this Plan. The term “Affiliate”
as used in the Plan means a parent or subsidiary corporation as defined in
      the
      applicable provisions (currently Sections 424(e) and (f), respectively) of
      the
      Code. The term “employee” includes an officer or director who is an employee of
      the Company. The term “consultant” includes persons employed by, or otherwise
      affiliated with, a consultant. 

    


    
      	
              3.

            	
              STOCK
                SUBJECT TO THIS PLAN; MAXIMUM NUMBER OF GRANTS


            


    

    


    Subject
      to the provisions of Section 6.1.1 of the Plan, the total number of Shares
      which
      may be issued under Options granted pursuant to this Plan shall not exceed
      Twelve million (12,000,000) Shares. The Shares covered by the portion of any
      grant under the Plan which expires unexercised shall become available again
      for
      grants under the Plan. 

    


    
      	
              4.

            	
              ADMINISTRATION

            


    

    


    (a) The
      Plan
      shall be administered by either the Board of Directors of the Company (the
      “Board”) or by a committee (the “Committee”) to which administration of the
      Plan, or of part of the Plan, may be delegated by the Board (in either case,
      the
“Administrator”). The Board shall appoint and remove members of such Committee,
      if any, in its discretion in accordance with applicable laws. If necessary
      in
      order to comply with Rule 16b-3 under the Securities Exchange Act of 1934,
      as
      amended (the “Exchange Act”) and Section 162(m) of the Code, the Committee
      shall, in the Board's discretion, be comprised solely of “non-employee
      directors” within the meaning of said Rule 16b-3 and “outside directors” within
      the meaning of Section 162(m) of the Code. The foregoing notwithstanding, the
      Administrator may delegate nondiscretionary administrative duties to such
      employees of the Company as it deems proper and the Board, in its absolute
      discretion, may at any time and from time to time exercise any and all rights
      and duties of the Administrator under the Plan. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b) Subject
      to the other provisions of this Plan, the Administrator shall have the
      authority, in its discretion: (i) to grant Options; (ii) to determine the fair
      market value of the Shares subject to Options; (iii) to determine the exercise
      price of Options granted; (iv) to determine the persons to whom, and the time
      or
      times at which, Options shall be granted, and the number of shares subject
      to
      each Option; (v) to interpret this Plan; (vi) to prescribe, amend, and rescind
      rules and regulations relating to this Plan; (vii) to determine the terms and
      provisions of each Option granted (which need not be identical), including
      but
      not limited to, the time or times at which Options shall be exercisable; (viii)
      with the consent of the optionee, to modify or amend any Option; (ix) to defer
      (with the consent of the optionee) the exercise date of any Option; (x) to
      authorize any person to execute on behalf of the Company any instrument
      evidencing the grant of an Option; and (xi) to make all other determinations
      deemed necessary or advisable for the administration of this Plan. The
      Administrator may delegate nondiscretionary administrative duties to such
      employees of the Company as it deems proper. 

    


    (c) All
      questions of interpretation, implementation, and application of this Plan shall
      be determined by the Administrator. Such determinations shall be final and
      binding on all persons. 

    


    
      	
              5.

            	
              GRANTING
                OF OPTIONS; OPTION AGREEMENT 

            


    

    


    (a) No
      Options shall be granted under this Plan after 10 years from the date of
      adoption of this Plan by the Board. 

    


    (b) Each
      Option shall be evidenced by a written stock option agreement, in form
      satisfactory to the Administrator, executed by the Company and the person to
      whom such Option is granted. 

    


    (c) The
      stock
      option agreement shall specify whether each Option it evidences is an NQSO
      or an
      ISO. 

    


    (d) Subject
      to Section 6.3.3 with respect to ISOs, the Administrator may approve the grant
      of Options under this Plan to persons who are expected to become employees,
      directors or consultants of the Company, but are not employees, directors or
      consultants at the date of approval, and the date of approval shall be deemed
      to
      be the date of grant unless otherwise specified by the Administrator.


    


    
      	
              6.

            	
              TERMS
                AND CONDITIONS OF OPTIONS 

            


    

    


    Each
      Option granted under this Plan shall be subject to the terms and conditions
      set
      forth in Section 6.1. NQSOs shall also be subject to the terms and conditions
      set forth in Section 6.2, but not those set forth in Section 6.3. ISOs shall
      also be subject to the terms and conditions set forth in Section 6.3, but not
      those set forth in Section 6.2. 

    


    6.1 Terms
      and
      Conditions to Which All Options Are Subject. All Options granted under this
      Plan
      shall be subject to the following terms and conditions: 

    


    6.1.1 Changes
      in Capital Structure. Subject to Section 6.1.2, if the stock of the Company
      is
      changed by reason of a stock split, reverse stock split, stock dividend, or
      recapitalization, combination or reclassification, appropriate adjustments
      shall
      be made by the Board in (a) the number and class of shares of stock subject
      to
      this Plan and each Option outstanding under this Plan, and (b) the exercise
      price of each outstanding Option; provided, however, that the Company shall
      not
      be required to issue fractional shares as a result of any such adjustments.
      Each
      such adjustment shall be subject to approval by the Board in its sole
      discretion. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    6.1.2 Change
      in
      Control. Upon the closing of a change in control transaction, as defined below,
      the Vesting Base Date of all outstanding options shall be accelerated by twelve
      (12) months. A Change in Control means,
      and
      shall be deemed to have occurred upon the occurrence of, any one of the
      following events: 

    


    (a) The
      acquisition in one or more transactions by any individual, entity or group
      (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a
      "Person") of beneficial ownership (within the meaning of Rule l3d-3 promulgated
      under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of
      shares or other securities (as defined in Section 3(a)(10) of the Exchange
      Act)
      representing 40% or more of outstanding Stock; provided, however, that a Change
      in Control as defined in this clause (a) shall not be deemed to occur in
      connection with any acquisition by the Company, an employee benefit plan of
      the
      Company or any Person who immediately prior to the effective date of this Plan
      is a holder of Stock (a "Current Stockholder") so long as such acquisition
      does
      not result in any Person other than the Company, such employee benefit plan
      or
      such Current Stockholder beneficially owning shares or securities representing
      40% or more of the outstanding Stock; or

    


    (b) Any
      election has occurred of persons as directors of the Company that causes
      two-thirds or more of the Board to consist of persons other than (i) persons
      who, were members of the Board on the effective date of this Plan and (ii)
      persons who were nominated by the Board for election as members of the Board
      at
      a time when at least two-thirds of the Board consisted of persons who were
      members of the Board on the effective date of this Plan; provided, however,
      that
      any person nominated for election by the Board when at least two-thirds of
      the
      members of the Board are persons described in subclause (i) or (ii) and persons
      who were themselves previously nominated in accordance with this clause (b)
      shall, for this purpose, be deemed to have been nominated by a Board composed
      of
      persons described in subclause (ii); or 

    


    (c) Approval
      by the stockholders of the Company of a reorganization, merger, consolidation
      or
      similar transaction (a "Reorganization Transaction"), in each case, unless,
      immediately following such Reorganization Transaction, more than 50% of,
      respectively, the outstanding shares of common stock (or similar equity
      security) of the corporation or other entity resulting from or surviving such
      Reorganization Transaction and the combined voting power of the securities
      of
      such corporation or other entity entitled to vote generally in the election
      of
      directors, is then beneficially owned, directly or indirectly, by the
      individuals and entities who were the respective beneficial owners of the
      outstanding Stock immediately prior to such Reorganization Transaction in
      substantially the same proportions as their ownership of the outstanding Stock
      immediately prior to such Reorganization Transaction; or 

    


    (d) Approval
      by the stockholders of the Company of (i) a complete liquidation or dissolution
      of the Company or (ii) the sale or other disposition of all or substantially
      all
      of the assets of the Company to a corporation or other entity, unless, with
      respect to such corporation or other entity, immediately following such sale
      or
      other disposition more than 50% of, respectively, the outstanding shares of
      common stock (or similar equity security) of such corporation or other entity
      and the combined voting power of the securities of such corporation or other
      entity entitled to vote generally in the election of directors, is then
      beneficially owned, directly or indirectly, by the individuals and entities
      who
      were the respective beneficial owners of the outstanding Stock immediately
      prior
      to such sale or disposition in substantially the same proportions as their
      ownership of the outstanding Stock immediately prior to such sale or
      disposition.

    


    6.1.3 Time
      of
      Option Exercise. Subject to Section 5 and Section 6.3.4, Options granted under
      this Plan shall be exercisable (a) immediately as of the effective date of
      the
      stock option agreement granting the Option, or (b) in accordance with a schedule
      as may be set by the Administrator (each such date on such schedule, the
“Vesting Base Date”) and specified in the written stock option agreement
      relating to such Option. In any case, no Option shall be exercisable until
      a
      written stock option agreement in form satisfactory to the Company is executed
      by the Company and the optionee. 

    


    6.1.4 Option
      Grant Date. The date of grant of an Option under this Plan shall be the date
      as
      of which the Administrator approves the grant. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    6.1.5 Nontransferability
      of Option Rights. Except with the express written approval of the Administrator
      which approval the Administrator is authorized to give only with respect to
      NQSOs, no Option granted under this Plan shall be assignable or otherwise
      transferable by the optionee except by will, by the laws of descent and
      distribution or pursuant to a qualified domestic relations order. During the
      life of the optionee, an Option shall be exercisable only by the optionee.
      

    


    6.1.6 Payment.
      Except as provided below, payment in full, in cash, shall be made for all stock
      purchased at the time written notice of exercise of an Option is given to the
      Company, and proceeds of any payment shall constitute general funds of the
      Company. The Administrator, in the exercise of its absolute discretion, may
      authorize any one or more of the following additional methods of payment:


    


    (a) Subject
      to the discretion of the Administrator and the terms of the stock option
      agreement granting the Option, delivery by the optionee of Shares already owned
      by the optionee for all or part of the Option price, provided the fair market
      value (determined as set forth in Section 6.1.10) of such Shares being delivered
      is equal on the date of exercise to the Option price, or such portion thereof
      as
      the optionee is authorized to pay by delivery of such stock; and 

    


    (b) Subject
      to the discretion of the Administrator, through the surrender of Shares then
      issuable upon exercise of the Option, provided the fair market value (determined
      as set forth in Section 6.1.10) of such Shares is equal on the date of exercise
      to the Option price, or such portion thereof as the optionee is authorized
      to
      pay by surrender of such stock. 

    


    6.1.7 Termination
      of Employment. If for any reason other than death or permanent and total
      disability, an optionee ceases to be employed by the Company or any of its
      Affiliates (such event being called a “Termination”), Options held at the date
      of Termination (to the extent then exercisable) may be exercised in whole or
      in
      part at any time within three months of the date of such Termination, or such
      other period of not less than 30 days after the date of such Termination as
      is
      specified in the Option Agreement or by amendment thereof (but in no event
      after
      the Expiration Date); provided, however, that if such exercise of the Option
      would result in liability for the optionee under Section 16(b) of the Exchange
      Act, then such three-month period automatically shall be extended until the
      tenth day following the last date upon which optionee has any liability under
      Section 16(b) (but in no event after the Expiration Date). If an optionee dies
      or becomes permanently and totally disabled (within the meaning of Section
      22(e)(3) of the Code) while employed by the Company or an Affiliate or within
      the period that the Option remains exercisable after Termination, Options then
      held (to the extent then exercisable) may be exercised, in whole or in part,
      by
      the optionee, by the optionee's personal representative or by the person to
      whom
      the Option is transferred by devise or the laws of descent and distribution,
      at
      any time within twelve months after the death or twelve months after the
      permanent and total disability of the optionee or any longer period specified
      in
      the Option Agreement or by amendment thereof (but in no event after the
      Expiration Date). For purposes of this Section 6.1.7, “employment” includes
      service as a director or as a consultant. For purposes of this Section 6.1.7,
      an
      optionee's employment shall not be deemed to terminate by reason of sick leave,
      military leave or other leave of absence approved by the Administrator, if
      the
      period of any such leave does not exceed 90 days or, if longer, if the
      optionee's right to reemployment by the Company or any Affiliate is guaranteed
      either contractually or by statute. 

     

    After
      the
      occurrence of a change in control transaction, as defined in 6.1.2, if any
      optionee’s employment is terminated without cause or their job responsibilities
      are materially altered, then all options held by such optionee that have not
      yet
      vested shall immediately vest. For purposes of this section 6.1.7, an optionee’s
      responsibilities shall be determined to be materially altered if there is a
      material reduction of optionee’s title, authority, duties or responsibilities,
      or the assignment to optionee of duties materially inconsistent with optionee’s
      positions with the Company. 

    


    6.1.8 Withholding
      and Employment Taxes. At the time of exercise of an Option and as a condition
      thereto, or at such other time as the amount of such obligations becomes
      determinable (the “Tax Date”), the optionee shall remit to the Company in cash
      all applicable federal and state withholding and employment taxes. Such
      obligation to remit may be satisfied, if authorized by the Administrator in
      its
      sole discretion, after considering any tax, accounting and financial
      consequences, by the optionee's (i) delivery of a promissory note in the
      required amount on such terms as the Administrator deems appropriate, (ii)
      tendering to the Company previously owned Shares or other securities of the
      Company with a fair market value equal to the required amount, or (iii) agreeing
      to have Shares (with a fair market value equal to the required amount) which
      are
      acquired upon exercise of the Option withheld by the Company. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    6.1.9 Other
      Provisions. Each Option granted under this Plan may contain such other terms,
      provisions, and conditions not inconsistent with this Plan as may be determined
      by the Administrator, and each ISO granted under this Plan shall include such
      provisions and conditions as are necessary to qualify the Option as an
“incentive stock option” within the meaning of Section 422 of the Code.


    


    6.1.10 Determination
      of Value. For purposes of the Plan, the fair market value of Shares or other
      securities of the Company shall be determined as follows: 

    


    (a) Fair
      market value shall be the closing price of such stock on the date before the
      date the value is to be determined on the principal recognized securities
      exchange or recognized securities market on which such stock is reported, but
      if
      selling prices are not reported, its fair market value shall be the mean between
      the high bid and low asked prices for such stock on the date before the date
      the
      value is to be determined (or if there are no quoted prices for such date,
      then
      for the last preceding business day on which there were quoted prices).


    


    (b) In
      the
      absence of an established market for the stock, the fair market value thereof
      shall be determined in good faith by the Administrator, with reference to the
      Company's net worth, prospective earning power, dividend-paying capacity, and
      other relevant factors, including the goodwill of the Company, the economic
      outlook in the Company's industry, the Company's position in the industry,
      the
      Company's management, and the values of stock of other corporations in the
      same
      or similar line of business. 

    


    6.1.11 Option
      Term. Subject to Section 6.3.4, no Option shall be exercisable more than 10
      years after the date of grant, or such lesser period of time as is set forth
      in
      the stock option agreement (the end of the maximum exercise period stated in
      the
      stock option agreement is referred to in this Plan as the “Expiration Date”).


    


    6.2 Terms
      and
      Conditions to Which Only NQSOs Are Subject. Options granted under this Plan
      which are designated as NQSOs shall be subject to the following terms and
      conditions: 

    


    6.2.1 Exercise
      Price.

    


    (a) Except
      as
      set forth in Section 6.2.1(b), the exercise price of an NQSO shall be not less
      than 85% of the fair market value (determined in accordance with Section 6.1.10)
      of the stock subject to the Option on the date of grant. 

    


    (b) To
      the
      extent required by applicable laws, rules and regulations, the exercise price
      of
      a NQSO granted to any person who owns, directly or by attribution under the
      Code
      (currently Section 424(d)), stock possessing more than ten percent of the total
      combined voting power of all classes of stock of the Company or of any Affiliate
      (a “Ten Percent Shareholder”) shall in no event be less than 110% of the fair
      market value (determined in accordance with Section 6.1.10) of the stock covered
      by the Option at the time the Option is granted. 

    


    6.3 Terms
      and
      Conditions to Which Only ISOs Are Subject. Options granted under this Plan
      which
      are designated as ISOs shall be subject to the following terms and conditions:
      

    


    6.3.1 Exercise
      Price.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    (a) Except
      as
      set forth in Section 6.3.1(b), the exercise price of an ISO shall be determined
      in accordance with the applicable provisions of the Code and shall in no event
      be less than the fair market value (determined in accordance with Section
      6.1.10) of the stock covered by the Option at the time the Option is granted.
      

    


    (b) The
      exercise price of an ISO granted to any Ten Percent Shareholder shall in no
      event be less than 110% of the fair market value (determined in accordance
      with
      Section 6.1.10) of the stock covered by the Option at the time the Option is
      granted.

    


    6.3.2 Disqualifying
      Dispositions. If stock acquired by exercise of an ISO granted pursuant to this
      Plan is disposed of in a “disqualifying disposition” within the meaning of
      Section 422 of the Code (a disposition within two years from the date of grant
      of the Option or within one year after the transfer of such stock on exercise
      of
      the Option), the holder of the stock immediately before the disposition shall
      promptly notify the Company in writing of the date and terms of the disposition
      and shall provide such other information regarding the Option as the Company
      may
      reasonably require. 

    


    6.3.3 Grant
      Date. If an ISO is granted in anticipation of employment as provided in Section
      5(d), the Option shall be deemed granted, without further approval, on the
      date
      the grantee assumes the employment relationship forming the basis for such
      grant, and, in addition, satisfies all requirements of this Plan for Options
      granted on that date. 

    


    6.3.4 Term.
      Notwithstanding Section 6.1.11, no ISO granted to any Ten Percent Shareholder
      shall be exercisable more than five years after the date of grant. 

    


    
      	
              7.

            	
              MANNER
                OF EXERCISE

            


    

    


    (a) An
      optionee wishing to exercise an Option shall give written notice to the Company
      at its principal executive office, to the attention of the officer of the
      Company designated by the Administrator, accompanied by payment of the exercise
      price and withholding taxes as provided in Sections 6.1.6 and 6.1.8. The date
      the Company receives written notice of an exercise hereunder accompanied by
      payment of the exercise price will be considered as the date such Option was
      exercised.

     

    (b) Promptly
      after receipt of written notice of exercise of an Option and the payments called
      for by Section 7(a), the Company shall, without stock issue or transfer taxes
      to
      the optionee or other person entitled to exercise the Option, deliver to the
      optionee or such other person a certificate or certificates for the requisite
      number of shares of stock. An optionee or permitted transferee of the Option
      shall not have any privileges as a shareholder with respect to any shares of
      stock covered by the Option until the date of issuance (as evidenced by the
      appropriate entry on the books of the Company or a duly authorized transfer
      agent) of such shares. 

    


    
      	
              8.

            	
              EMPLOYMENT
                OR CONSULTING RELATIONSHIP

            


    

    


    Nothing
      in this Plan or any Option granted hereunder shall interfere with or limit
      in
      any way the right of the Company or of any of its Affiliates to terminate any
      optionee's employment or consulting at any time, nor confer upon any optionee
      any right to continue in the employ of, or consult with, the Company or any
      of
      its Affiliates. 

    


    
      	
              9.

            	
              CONDITIONS
                UPON ISSUANCE OF SHARES 

            


    

    


    Shares
      shall not be issued pursuant to the exercise of an Option unless the exercise
      of
      such Option and the issuance and delivery of such shares pursuant thereto shall
      comply with all relevant provisions of law, including, without limitation,
      the
      Securities Act of 1933, as amended (the “Securities Act”). 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
 

    
      	
              10.

            	
              NON-EXCLUSIVITY
                OF THE PLAN 

            


    

    


    The
      adoption of the Plan shall not be construed as creating any limitations on
      the
      power of the Company to adopt such other incentive arrangements as it may deem
      desirable, including, without limitation, the granting of stock options other
      than under the Plan.

    


    11.   AMENDMENTS
      TO PLAN

    


    The
      Board
      may at any time amend, alter, suspend or discontinue this Plan. Without the
      consent of an optionee, no amendment, alteration, suspension or discontinuance
      may adversely affect outstanding Options except to conform this Plan and ISOs
      granted under this Plan to the requirements of federal or other tax laws
      relating to incentive stock options. No amendment, alteration, suspension or
      discontinuance shall require shareholder approval unless (a) shareholder
      approval is required to preserve incentive stock option treatment for federal
      income tax purposes or (b) the Board otherwise concludes that shareholder
      approval is advisable. 

    


    12.   EFFECTIVE
      DATE OF PLAN; TERMINATION

    


    This
      Plan
      shall become effective upon adoption by the Board; provided, however, that
      no
      Option shall be exercisable unless and until written consent of the shareholders
      of the Company, or approval of shareholders of the Company voting at a validly
      called shareholders' meeting, is obtained within twelve months after adoption
      by
      the Board. If such shareholder approval is not obtained within such time,
      Options granted hereunder shall be of the same force and effect as if such
      approval was obtained except that all ISOs granted hereunder shall be treated
      as
      NQSOs. Options may be granted and exercised under this Plan only after there
      has
      been compliance with all applicable federal and state securities laws. This
      Plan
      shall terminate within ten years from the date of its adoption by the
      Board.