exv10w4



 





Exhibit 10.4




TENIK DIGITAL ARTS INC.

2004 STOCK OPTION PLAN




     1. Establishment, Purpose and Term of Plan.



          1.1 Establishment. The Teknik Digital Arts Inc. 2004 Stock Option Plan
(the “Plan”) is hereby established effective as of December 31, 2003.



          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 officers, directors, and key employees 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 ten (10) 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 Compensation 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 Teknik Digital Arts Inc., a Nevada 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 a
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 determine in good faith and in the exercise of its
discretion 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 National Market, The Nasdaq SmallCap 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 relevant date does not fall
on a day on which the Stock has traded on such securities exchange or market
system, the date on which the Fair Market Value shall be established shall be
the last day on which the Stock was 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



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as determined by the Board 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) “Key Employee” means any Employee determined by the Board to be key to
any portion of the Participating Company business (including an Officer or a
Director who is also treated as a key employee) 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 Board shall determine in its complete
discretion whether any individual has become or has ceased to be a Key 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 Board’s determination, all such
determinations by the Board shall be final, binding and conclusive,
notwithstanding that the Board, the Company or any court of law or governmental
agency subsequently makes a contrary determination



               (m) “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.



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



               (o) “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.



               (p) “Option Agreement” means a written agreement between the Company and
an Optionee setting forth the terms, conditions and restrictions of the Option
granted to the Optionee and any shares acquired upon the exercise thereof. An
Option Agreement may consist of a form of “Notice of Grant of Stock Option” and
a form of “Stock Option Agreement” incorporated therein by reference, or such
other form or forms as the Board may approve from time to time.



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



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



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



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



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



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



               (w) “Service” means an Optionee’s employment or service with the
Participating Company Group, whether in the capacity of an Employee, a Key
Employee, an Officer, a Director or a Consultant. An Optionee’s Service shall
not be deemed to have terminated merely because of a change in the capacity in
which the Optionee renders Service to the Participating Company Group or a
change in the Participating Company for which the 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 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.



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



               (y) “Stock Appreciation Right” means the right, exercisable by a
Participant, to receive a cash payment from the Company upon the exercise of an
Option in the manner, and upon such terms and conditions, as are specified by
the Committee.



               (z) “Subsidiary Corporation” means any present or future “subsidiary
corporation” of the Company, as defined in Section 424(f) of the Code.



               (aa) “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.



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          2.2 Construction. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan. Except when otherwise 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. All questions of interpretation of the Plan or of any Option shall be
determined by the Board, and such determinations shall be final and binding
upon all persons having an interest in the Plan or such Option.



          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 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 Board. In addition to any other powers set forth in the
Plan and subject to the provisions of the Plan, the Board 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 or delivery of shares of stock, (iv) the timing, terms and
conditions of the exercisability of the Option or the vesting 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, (vii) whether a Stock
Appreciation Right will be granted in conjunction with such Option, and (viii)
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;



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               (f) to amend, modify, 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; and



               (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 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.



          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 matters
as to which it shall be adjudged in such action, suit or proceeding that such
person is liable for gross negligence, bad faith or intentional 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.



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     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 one million (1,000,000) 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 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 two million (2,000,000) shares of
Stock be available for issuance pursuant to the exercise of Incentive Stock
Options (the “ISO Share Issuance
Limit”).



          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.



     5. Eligibility and Option Limitations.



          5.1 Persons Eligible for Options. Options may be granted only to Key
Employees, Officers and Directors. For purposes of the foregoing sentence,
“Key Employees,” “Officers” and “Directors” shall include prospective Key
Employees, prospective Officers 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. 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
Key Employee upon the condition



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that such person become a Key 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 6.1.



          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.



          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 following terms
and conditions:



          6.1 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 Incentive Stock Option shall be not less than
the Fair Market Value of a share of Stock on the effective date of grant of the
Option 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.



          6.2 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, unless any Option



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Agreement provides for less favorable conditions (a) no Option shall be
exercisable after the expiration of ten (10) 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 Key Employee, prospective Officer 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 ten (10) years after the effective date of grant of the Option,
unless earlier terminated in accordance with its provisions.



          6.3 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) provided that the Optionee is an
Employee (unless otherwise not prohibited by law, including, without
limitation, any regulation promulgated by the Board of Governors of the Federal
Reserve System) and in the Company’s sole discretion at the time the Option is
exercised, by delivery of the Optionee’s promissory note in a form approved by
the Company for the aggregate exercise price, provided that, if the Company is
incorporated in the State of Delaware, the Optionee shall pay in cash that
portion of the aggregate exercise price not less than the par value of the
shares being acquired, (v) by such other consideration as may be approved by
the Board from time to time to the extent permitted by applicable law, or (vi)
by any combination thereof. The Board may at any time or from time to time, by
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.



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



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



          6.4 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.



          6.5 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
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. 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.



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          6.6 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 6.6 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. The Optionee’s
Service shall be deemed to have terminated on account of death if the Optionee
dies within three (3) months (or such longer period of time as determined by
the Board, in its discretion) after the Optionee’s termination of Service.



                    (iii) Termination After Change in Control. The Board may, in its
discretion, provide in any Option Agreement that if the Optionee’s Service
ceases as a result of “Termination After Change in Control” (as defined in such
Option Agreement), then (1) 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 six (6) 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, and (2) the exercisability and vesting of the Option and any
shares acquired upon the exercise thereof shall be accelerated effective as of
the date on which the Optionee’s Service terminated to such extent, if any, as
shall have been determined by the Board, in its discretion, and set forth in
the Option Agreement.



                    (iv) Termination for Cause. Notwithstanding any other provision of the
Plan to the contrary, if the Optionee’s Service with the Participating Company
Group is terminated for Cause, as defined by the Optionee’s Option Agreement or
contract of employment or service (or, if not defined in any of the foregoing,
as defined below), the Option shall terminate and cease to be exercisable
immediately upon such termination of Service. Unless otherwise defined by the
Optionee’s Option Agreement or contract of employment or



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service,
for purposes of this Section 6.6(a)(iv) “Cause” shall mean any of
the following: (1) the Optionee’s theft, dishonesty, or falsification of any
Participating Company documents or records; (2) the Optionee’s improper use or
disclosure of a Participating Company’s confidential or proprietary
information; (3) any action by the Optionee which has a detrimental effect on a
Participating Company’s reputation or business; (4) the Optionee’s failure or
inability to perform any reasonable assigned duties after written notice from a
Participating Company of, and a reasonable opportunity to cure, such failure or
inability; (5) any material breach by the Optionee of any employment or service
agreement between the Optionee and a Participating Company, which breach is not
cured pursuant to the terms of such agreement; or (6) the Optionee’s conviction
(including any plea of guilty or nolo contendere) of any criminal act which
impairs the Optionee’s ability to perform his or her duties with a
Participating Company.



                    (v) Other Termination of Service. If the Optionee’s Service terminates
for any reason, except Cause, Disability, death or Termination After Change in
Control, 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 Exercise Prevented by Law. Notwithstanding the
foregoing, if the exercise of an Option within the applicable time periods set
forth in Section 6.6(a) is prevented by the provisions of Section 10 below, the
Option shall remain exercisable until three (3) months (or such longer period
of time as determined by the Board, in its discretion) after the date the
Optionee is notified by the Company that the Option is exercisable, but in any
event no later than the Option Expiration Date.



               (c) Extension if Optionee Subject to Section 16(b). Notwithstanding the
foregoing, if a sale within the applicable time periods set forth in Section
6.6(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.



          6.7 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 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 Rule 701 under the Securities Act
and the General Instructions to Form S-8 Registration Statement under the
Securities Act.



          6.8 Stock Appreciation Rights. The Committee may grant Stock Appreciation
Rights with respect to an Option, with such Stock Appreciation Rights
exercisable



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on such terms and conditions as the Committee shall establish. A Stock
Appreciation Right may be granted concurrently with the grant of an Option or,
in the case of a Nonstatutory Stock Option, after the grant of such Option.
Each Stock Appreciation Right shall expire no later than the expiration of the
Option to which it relates and shall be exercisable only to the extent the
related Option is exercisable.



     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.



               (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 stocks 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. For
purposes of the preceding sentence, indirect beneficial ownership shall
include, without limitation, an interest resulting from ownership of the voting
securities of one or more corporations or other business entities which own the
Company or the Transferee, as the case may be, either directly or through one
or more subsidiary corporations or other business entities. The Board shall
have the right to determine whether multiple sales or exchanges of the voting
securities of the Company or



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multiple Ownership Change Events are related, and its determination shall
be final, binding and conclusive.



          8.2 Effect of Change in Control on Options. In the event of a Change in
Control, the surviving, continuing, successor, or purchasing corporation or
other business entity or parent thereof, as the case may be (the
“Acquiring Corporation”), may, without the consent of the 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. 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, unless otherwise
provided in any applicable Option Agreement, 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)(i)
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 outstanding Options shall not
terminate unless the Board otherwise provides in its discretion.



     9. Provision of Information.



          The Company shall deliver to each Optionee such disclosures as are
required in accordance with Rule 701 under the Securities Act.



     10. Compliance with Securities Law.



          The grant of Options and the issuance 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 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 to 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



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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.



     11. 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 provisions of Section 4.2), (b) no
change in the class of persons eligible to receive Incentive Stock Options, and
(c) 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.



     12. 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. Options 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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