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Exhibit 10.4  


 
 

ALTIGEN COMMUNICATIONS, INC.    
    
    1999 STOCK PLAN    
    
    (AS AMENDED ON JUNE 2, 1999 AND AUGUST 15, 2002)    
    


        1.    Purposes of the Plan.    The purposes of this 1999 Stock Plan are: 



	•
	to
attract and retain the best available personnel for positions of substantial responsibility,



	•
	to
provide additional incentive to Employees, Directors and Consultants, and



	•
	to
promote the success of the Company's business. 




        Options
granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as determined by the Administrator at the time of grant. Stock Purchase Rights may also be
granted under the Plan. 


        2.    Definitions.    As used herein, the following definitions shall apply: 



        (a)   "Administrator"
means the Board or any of its Committees as shall be administering the Plan, in accordance with Section 4 of the
Plan. 


        (b)   "Applicable
Laws" means the requirements relating to the administration of stock option plans under U. S. state corporate laws, U.S. federal
and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Options
or Stock Purchase Rights are, or will be, granted under the Plan. 


        (c)   "Board"
means the Board of Directors of the Company. 


        (d)   "Code"
means the Internal Revenue Code of 1986, as amended. 


        (e)   "Committee"
means a committee of Directors appointed by the Board in accordance with Section 4 of the Plan. 


        (f)    "Common
Stock" means the common stock of the Company. 


        (g)   "Company"
means AltiGen Communications, Inc., a Delaware corporation. 


        (h)   "Consultant"
means any person, including an advisor, engaged by the Company or a Parent or Subsidiary to render services to such entity. 


        (i)    "Director"
means a member of the Board. 


        (j)    "Disability"
means total and permanent disability as defined in Section 22(e)(3) of the Code. 


        (k)   "Employee"
means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. A Service
Provider shall not cease to be an Employee in the case
of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor. For purposes
of Incentive Stock Options, no such leave may exceed ninety days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of
absence approved by the Company is not so guaranteed, on the 181st day of such leave any Incentive Stock Option held by the Optionee shall cease to be treated as an Incentive Stock Option and shall be
treated for tax purposes as a Nonstatutory Stock Option. Neither service as a Director nor payment of a director's fee by the Company shall be sufficient to constitute "employment" by the Company. 


        (l)    "Exchange
Act" means the Securities Exchange Act of 1934, as amended. 






 




        (m)  "Fair
Market Value" means, as of any date, the value of Common Stock determined as follows: 



        (i)    If
the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq
SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system
for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Administrator
deems reliable; 


        (ii)   If
the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share of Common Stock shall be
the mean between the high bid and low asked prices for the Common Stock on the last market trading day prior to the day of determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable; or 


        (iii)  In
the absence of an established market for the Common Stock, the Fair Market Value shall be determined in good faith by the Administrator. 




        (n)   "Incentive
Stock Option" means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the
Code and the regulations promulgated thereunder. 


        (o)   "Nonstatutory
Stock Option" means an Option not intended to qualify as an Incentive Stock Option. 


        (p)   "Notice
of Grant" means a written or electronic notice evidencing certain terms and conditions of an individual Option or Stock Purchase
Right grant. The Notice of Grant is part of the Option Agreement. 


        (q)   "Officer"
means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder. 


        (r)   "Option"
means a stock option granted pursuant to the Plan. 


        (s)   "Option
Agreement" means an agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant.
The Option Agreement is subject to the terms and conditions of the Plan. 


        (t)    "Option
Exchange Program" means a program whereby outstanding Options are surrendered in exchange for Options with a lower exercise price. 


        (u)   "Optioned
Stock" means the Common Stock subject to an Option or Stock Purchase Right. 


        (v)   "Optionee"
means the holder of an outstanding Option or Stock Purchase Right granted under the Plan. 


        (w)  "Parent"
means a "parent corporation," whether now or hereafter existing, as defined in Section 424(e) of the Code. 


        (x)   "Plan"
means this Amended and Restated 1999 Stock Plan. 


        (y)   "Restricted
Stock" means shares of Common Stock acquired pursuant to a grant of Stock Purchase Rights under Section 11 of the Plan. 


        (z)   "Restricted
Stock Purchase Agreement" means a written agreement between the Company and the Optionee evidencing the terms and restrictions
applying to stock purchased 



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under
a Stock Purchase Right. The Restricted Stock Purchase Agreement is subject to the terms and conditions of the Plan and the Notice of Grant. 


        (aa)
"Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect
when discretion is being exercised with respect to the Plan. 



        (bb)
"Section 16(b)" means Section 16(b) of the Exchange Act. 


        (cc)
"Service Provider" means an Employee, Director or Consultant. 


        (dd)
"Share" means a share of the Common Stock, as adjusted in accordance with Section 13 of the Plan. 


        (ee)
"Stock Purchase Right" means the right to purchase Common Stock pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant. 



        (ff)
"Subsidiary" means a "subsidiary corporation", whether now or hereafter existing, as defined in Section 424(f) of the Code. 




        3.    Stock Subject to the Plan.    Subject to the provisions of Section 13 of the
Plan, the maximum aggregate number of Shares which may be optioned and sold under the Plan is 2,096,247 Shares (post one-for-1.66965 stock split), plus an annual increase to be
added on the first day of the Company's fiscal year (beginning in 2000) equal to the lesser of (i) 1,796,783 Shares (post one-for-1.66965 stock split), or
(ii) five percent (5%) of the outstanding Shares on such date, or (iii) such lesser amount as determined by the Board of Directors. The Shares may be authorized, but unissued, or
reacquired Common Stock. 


        If
an Option or Stock Purchase Right expires or becomes unexercisable without having been exercised in full, or is surrendered pursuant to an Option Exchange Program, the unpurchased
Shares which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has
terminated); provided, however, that Shares that have actually been issued under the Plan, whether upon exercise of an Option or Right, shall
not be returned to the Plan and shall not become available for future distribution under the Plan, except that if Shares of Restricted Stock are repurchased by the Company at their original purchase
price, such Shares shall become available for future grant under the Plan. 


        4.    Administration of the Plan.    



        (a)    Procedure.    



        (i)    Multiple
Administrative Bodies.    The Plan may be administered by different Committees with respect to different groups of
Service Providers. 


        (ii)   Section 162(m).    To
the extent that the Administrator determines it to be desirable to qualify Options granted hereunder
as "performance-based compensation" within the meaning of Section 162(m) of the Code, the Plan shall be administered by a Committee of two or more "outside directors" within the meaning of
Section 162(m) of the Code. 


        (iii)  Rule 16b-3.    To
the extent desirable to qualify transactions hereunder as exempt under
Rule 16b-3, the transactions contemplated hereunder shall be structured to satisfy the requirements for exemption under Rule 16b-3. 


        (iv)  Other
Administration.    Other than as provided above, the Plan shall be administered by (A) the Board or (B) a
Committee, which committee shall be constituted to satisfy Applicable Laws. 




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        (b)    Powers of the Administrator.    Subject to the provisions of the Plan, and in the
case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator shall have the authority, in its discretion: 



        (i)    to
determine the Fair Market Value; 


        (ii)   to
select the Service Providers to whom Options and Stock Purchase Rights may be granted hereunder; 


        (iii)  to
determine the number of shares of Common Stock to be covered by each Option and Stock Purchase Right granted hereunder; 


        (iv)  to
approve forms of agreement for use under the Plan; 


        (v)   to
determine the terms and conditions, not inconsistent with the terms of the Plan, of any Option or Stock Purchase Right granted hereunder. Such terms and conditions
include, but are not limited to, the exercise price, the time or times when Options or Stock Purchase Rights may be exercised (which may be based on performance criteria), any vesting acceleration or
waiver of forfeiture restrictions, and any restriction or limitation regarding any Option or Stock Purchase Right or the shares of Common Stock relating thereto, based in each case on such factors as
the Administrator, in its sole discretion, shall determine; 


        (vi)  to
reduce the exercise price of any Option or Stock Purchase Right to the then current Fair Market Value if the Fair Market Value of the Common Stock covered by such
Option or Stock Purchase Right shall have declined since the date the Option or Stock Purchase Right was granted; 


        (vii) to
institute an Option Exchange Program; 


        (viii) to
construe and interpret the terms of the Plan and awards granted pursuant to the Plan; 


        (ix)  to
prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the
purpose of qualifying for preferred tax treatment under foreign tax laws; 


        (x)   to
modify or amend each Option or Stock Purchase Right (subject to Section 15(c) of the Plan), including the discretionary authority to extend the
post-termination exercisability period of Options longer than is otherwise provided for in the Plan; 



        (xi)  to
allow Optionees to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued upon exercise of an Option or Stock
Purchase Right that number of Shares having a Fair Market Value equal to the amount required to be withheld. The Fair Market Value of the Shares to be withheld shall be determined on the date that the
amount of tax to be
withheld is to be determined. All elections by an Optionee to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or
advisable; 


        (xii) to
authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Option or Stock Purchase Right previously granted by the
Administrator; 


        (xiii) to
make all other determinations deemed necessary or advisable for administering the Plan. 




        (c)    Effect of Administrator's Decision.    The Administrator's decisions,
determinations and interpretations shall be final and binding on all Optionees and any other holders of Options or Stock Purchase Rights. 



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        5.    Eligibility.    Nonstatutory Stock Options and Stock Purchase Rights may be granted
to Service Providers. Incentive Stock Options may be granted only to Employees. 


        6.    Limitations.    



        (a)   Each
Option shall be designated in the Option Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to
the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Optionee during any calendar year (under all plans
of the Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive Stock Options shall be
taken into account in the order in which they were granted. The Fair Market Value of the Shares shall be determined as of the time the Option with respect to such Shares is granted. 


        (b)   Neither
the Plan nor any Option or Stock Purchase Right shall confer upon an Optionee any right with respect to continuing the Optionee's relationship as a Service
Provider with the Company, nor shall they interfere in any way with the Optionee's right or the Company's right to terminate such relationship at any time, with or without cause. 


        (c)   The
following limitations shall apply to grants of Options: 



        (i)    No
Service Provider shall be granted, in any fiscal year of the Company, Options to purchase more than 1,000,000 Shares. 



        (ii)   In
connection with his or her initial service, a Service Provider may be granted Options to purchase up to an additional 1,000,000 Shares which shall not count against
the limit set forth in subsection (i) above. 


        (iii)  The
foregoing limitations shall be adjusted proportionately in connection with any change in the Company's capitalization as described in Section 13. 


        (iv)  If
an Option is cancelled in the same fiscal year of the Company in which it was granted (other than in connection with a transaction described in Section 13),
the cancelled Option will be counted against the limits set forth in subsections (i) and (ii) above. For this purpose, if the exercise price of an Option is reduced, the transaction will
be treated as a cancellation of the Option and the grant of a new Option. 





        7.    Term of Plan.    Subject to Section 19 of the Plan, the Plan shall become
effective upon its adoption by the Board. It shall continue in effect for a term of ten (10) years unless terminated earlier under Section 15 of the Plan. 


        8.    Term of Option.    The term of each Option shall be stated in the Option Agreement;
provided, however, that the term shall be no more than ten (10) years from the date of grant thereof. In the case of an Incentive Stock Option, the term shall be ten (10) years from the
date of grant or such shorter term as may be provided in the Option Agreement. Moreover, in the case of an Incentive Stock Option granted to an Optionee who, at the time the Incentive Stock Option is
granted, owns stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock
Option shall be five (5) years from the date of grant or such shorter term as may be provided in the Option Agreement. 


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        9.    Option Exercise Price and Consideration.    



        (a)    Exercise Price.    The per share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be determined by the Administrator, subject to the following: 



        (i)    In
the case of an Incentive Stock Option 



        (A)  granted
to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant. 



        (B)  granted
to any Employee other than an Employee described in paragraph (A) immediately above, the per Share exercise price shall be no less than 100% of the Fair
Market Value per Share on the date of grant. 




        (ii)   In
the case of a Nonstatutory Stock Option 



        (A)  granted
to a Service Provider who, at the time the Nonstatutory Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant. 



        (B)  intended
to qualify as "performance-based compensation" within the meaning of Section 162(m) of the Code, the per Share exercise price shall be no less than 100%
of the Fair Market Value per Share on the date of grant. 


        (C)  Granted
to any other Service Provider, the per Share exercise price shall be no less than 85% of the Fair Market Value per Share on the date of grant. 




        (iii)  Notwithstanding
the foregoing, Options may be granted with a per Share exercise price of less than 100% of the Fair Market Value per Share on the date of grant
pursuant to a merger or other corporate transaction. 




        (b)    Waiting Period and Exercise Dates.    At the time an Option is granted, the
Administrator shall fix the period within which the Option may be exercised and shall determine any conditions which must be satisfied before the Option may be exercised. 



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        (c)    Form of Consideration.    The Administrator shall determine the acceptable form of
consideration for exercising an Option, including the method of payment. In the case of an Incentive Stock Option, the Administrator shall determine the acceptable form of consideration at the time of
grant. Such consideration may consist entirely of: 



        (i)    cash; 


        (ii)   check;



        (iii)  promissory
note; 


        (iv)  other
Shares which (A) in the case of Shares acquired upon exercise of an option, have been owned by the Optionee for more than six months on the date of
surrender, and (B) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised; 



        (v)   consideration
received by the Company under a cashless exercise program implemented by the Company in connection with the Plan; 


        (vi)  a
reduction in the amount of any Company liability to the Optionee, including any liability attributable to the Optionee's participation in any Company-sponsored
deferred compensation program or arrangement; 


        (vii) any
combination of the foregoing methods of payment; or 


        (viii) such
other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws. 





        10.    Exercise of Option.    



        (a)    Procedure for Exercise; Rights as a Stockholder.    Any Option granted hereunder
shall be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement. Except in the cases of
Options granted to Officers, Directors and Consultants, Options shall become exercisable at a rate of no less than 20% per year over five (5) years from the date the Options are granted. Unless
the Administrator provides otherwise, vesting of Options granted hereunder shall be tolled during any unpaid leave of absence. An Option may not be exercised for a fraction of a Share. 


        An
Option shall be deemed exercised when the Company receives: (i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to
exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of
the Optionee and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to
vote or receive dividends or any other rights as a stockholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Company shall issue (or cause to be
issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as
provided in Section 13 of the Plan. 


        Exercising
an Option in any manner shall decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to
which the Option is exercised. 



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        (b)    Termination of Relationship as a Service Provider.    If an Optionee ceases to be
a Service Provider, other than upon the Optionee's death or Disability, the Optionee may exercise his or her Option within thirty (30) days of termination, or such longer period of time as
specified in the Option Agreement, to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for three (3) months following the Optionee's termination. If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified by the Administrator, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. 



        (c)    Disability of Optionee.    If an Optionee ceases to be a Service Provider as a
result of the Optionee's Disability, the Optionee may exercise his or her Option within six (6) months of termination, or such longer period of time as may be specified in the Option Agreement,
to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). In the absence of a specified
time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following the Optionee's termination. If, on the date of termination, the Optionee is not vested as to
his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time
specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. 


        (d)    Death of Optionee.    If an Optionee dies while a Service Provider, the Option may
be exercised within six (6) months following Optionee's death, or such longer period of time as may be specified in the Option Agreement, to the extent that the Option is vested on the date of
death (but in no event later than the expiration of the term of such Option as set forth in the Notice of Grant), by the Optionee's designated beneficiary, provided such beneficiary has been
designated prior to Optionee's death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Optionee, then such Option may be exercised by the personal
representative of the Optionee's estate or by the person(s) to whom the Option is transferred pursuant to the Optionee's will or in accordance with the laws of descent and distribution. In the absence
of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following the Optionee's termination. If, at the time of death, the Optionee is not
vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall immediately revert to the Plan. If the Option is not so exercised within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. 



        (e)    Buyout Provisions.    The Administrator may at any time offer to buy out for a
payment in cash or Shares an Option previously granted based on such terms and conditions as the Administrator shall establish and communicate to the Optionee at the time that such offer is made. 




        11.    Stock Purchase Rights.    



        (a)    Rights to Purchase.    Stock Purchase Rights may be issued either alone, in
addition to, or in tandem with other awards granted under the Plan and/or cash awards made outside of the Plan. After the Administrator determines that it will offer Stock Purchase Rights under the
Plan, it shall advise the offeree in writing or electronically, by means of a Notice of Grant, of the terms, conditions and restrictions related to the offer, including the number of Shares that the
offeree shall be entitled to purchase, the price to be paid, and the time within which the offeree must accept such offer. The terms of the offer shall comply in all respects with
Section 260.140.42 of 



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Title
10 of the California Code of Regulations. The offer shall be accepted by execution of a Restricted Stock Purchase Agreement in the form determined by the Administrator. 


        (b)    Repurchase Option.    Unless the Administrator determines otherwise, the
Restricted Stock Purchase Agreement shall grant the Company a repurchase option exercisable upon the voluntary or involuntary termination of the purchaser's service with the Company for any reason
(including death or Disability). The purchase price for Shares repurchased pursuant to the Restricted Stock Purchase Agreement shall be the original price paid by the purchaser and may be paid by
cancellation of any indebtedness of the purchaser to the Company. The repurchase option shall lapse at a rate determined by the Administrator, but in no case at a rate of less than 20% per year over
five years from the date of purchase. 


        (c)    Other Provisions.    The Restricted Stock Purchase Agreement shall contain such
other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Administrator in its sole discretion. 


        (d)    Rights as a Stockholder.    Once the Stock Purchase Right is exercised, the
purchaser shall have the rights equivalent to those of a stockholder, and shall be a stockholder when his or her purchase is entered upon the records of the duly authorized transfer agent of the
Company. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Stock Purchase Right is exercised, except as provided in Section 13 of the
Plan. 




        12.    Limited Transferability of Options and Stock Purchase Rights.    Unless determined
otherwise by the Administrator, Options and Stock Purchase Rights may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or the laws of descent
and distribution, and may be exercised during the lifetime of the Optionee, only by the Optionee. If the Administrator in its sole discretion makes an Option transferable, such Option or Stock
Purchase Right may only be transferred (i) by will, (ii) by the laws of descent and distribution, or (iii) as permitted by Rule 701 of the Securities Act of 1933, as
amended. 


        13.    Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset Sale.    



        (a)    Changes in Capitalization.    Subject to any required action by the stockholders
of the Company, the number of shares of Common Stock covered by each outstanding Option and Stock Purchase Right, and the number of shares of Common Stock which have been authorized for issuance under
the Plan but as to which no Options or Stock Purchase Rights have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Option or Stock Purchase Right, as well
as the price per share of Common Stock covered by each such outstanding Option or Stock Purchase Right, shall be proportionately adjusted for any increase or decrease in the number of issued shares of
Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued shares of
Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the
Company shall not be deemed to have been "effected without 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 of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or
price of shares of Common Stock subject to an Option or Stock Purchase Right. 


        (b)    Dissolution or Liquidation.    In the event of the proposed dissolution or
liquidation of the Company, the Administrator shall notify each Optionee as soon as practicable prior to the effective date of such proposed transaction. The Administrator in its discretion may
provide for an Optionee to have the right to exercise his or her Option until ten (10) days prior to such 



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transaction
as to all of the Optioned Stock covered thereby, including Shares as to which the Option would not otherwise be exercisable. In addition, the Administrator may provide that any Company
repurchase option applicable to any Shares purchased upon exercise of an Option or Stock Purchase Right shall lapse as to all such Shares, provided the proposed
dissolution or liquidation takes place at the time and in the manner contemplated. To the extent it has not been previously exercised, an Option or Stock Purchase Right will terminate immediately
prior to the consummation of such proposed action. 


        (c)    Merger or Asset Sale.    In the event of a merger of the Company with or into
another corporation, or the sale of substantially all of the assets of the Company, each outstanding Option and Stock Purchase Right shall be assumed or an equivalent option or right substituted by
the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the Option or Stock Purchase Right,
the Optionee shall fully vest in and have the right to exercise the Option or Stock Purchase Right as to all of the Optioned Stock, including Shares as to which it would not otherwise be vested or
exercisable. If an Option or Stock Purchase Right becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Administrator shall notify
the Optionee in writing or electronically that the Option or Stock Purchase Right shall be fully vested and exercisable for a period of fifteen (15) days from the date of such notice, and the
Option or Stock Purchase Right shall terminate upon the expiration of such period. For the purposes of this paragraph, the Option or Stock Purchase Right shall be considered assumed if, following the
merger or sale of assets, the option or right confers the right to purchase or receive, for each Share of Optioned Stock subject to the Option or Stock Purchase Right immediately prior to the merger
or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each Share held on the effective
date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of assets is not solely common stock of the successor corporation
or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option or Stock Purchase Right, for each
Share of Optioned Stock subject to the Option or Stock Purchase Right, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration
received by holders of Common Stock in the merger or sale of assets. 




        14.    Date of Grant.    The date of grant of an Option or Stock Purchase Right shall be,
for all purposes, the date on which the Administrator makes the determination granting such Option or Stock Purchase
Right, or such other later date as is determined by the Administrator. Notice of the determination shall be provided to each Optionee within a reasonable time after the date of such grant. 



        15.    Amendment and Termination of the Plan.    



        (a)    Amendment and Termination.    The Board may at any time amend, alter, suspend or
terminate the Plan. 


        (b)    Stockholder Approval.    The Company shall obtain stockholder approval of any Plan
amendment to the extent necessary and desirable to comply with Applicable Laws. 



        (c)    Effect of Amendment or Termination.    No amendment, alteration, suspension or
termination of the Plan shall impair the rights of any Optionee, unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in writing and signed by the
Optionee and the Company. Termination of the Plan shall not affect the Administrator's ability to exercise the powers granted to it hereunder with respect to Options granted under the Plan prior to
the date of such termination. 



10





 





        16.    Conditions Upon Issuance of Shares.    



        (a)    Legal Compliance.    Shares shall not be issued pursuant to the exercise of an
Option or Stock Purchase Right unless the exercise of such Option or Stock Purchase Right and the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to
the approval of counsel for the Company with respect to such compliance. 


        (b)    Investment Representations.    As a condition to the exercise of an Option or
Stock Purchase Right, the Company may require the person exercising such Option or Stock Purchase Right to represent and warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required. 




        17.    Inability to Obtain Authority.    The inability of the Company to obtain authority
from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the
lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have
been obtained. 


        18.    Reservation of Shares.    The Company, during the term of this Plan, will at all
times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan. 


        19.    Stockholder Approval.    The Plan shall be subject to approval by the stockholders
of the Company within twelve (12) months after the date the Plan is adopted. Such stockholder approval shall be obtained in the manner and to the degree required under Applicable Laws. 


        20.    Information to Optionees.    The Company shall provide to each Optionee and to
each individual who acquires Shares pursuant to the Plan, not less frequently than annually during the period such participant has one or more Options outstanding, and, in the case of an individual
who acquires Shares pursuant to the Plan, during the period such individual owns such Shares, copies of annual financial statements. The Company shall not be required to provide such statements to key
employees whose duties in connection with the Company assure their access to equivalent information. 


11






  



 
 

ALTIGEN COMMUNICATIONS, INC.    
    
    AMENDED AND RESTATED 1999 STOCK PLAN    
    
    STOCK OPTION AGREEMENT    
    



        Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Option Agreement. 


I.    NOTICE OF STOCK OPTION GRANT  


        «NAME» 


        The
undersigned Optionee has been granted an Option to purchase Common Stock of the Company, subject to the terms and conditions of the Plan and this Option Agreement, as follows: 



	Grant Number	 	

	

Date of Grant	
 	


	

Vesting Commencement Date	
 	


	

Exercise Price per Share	
 	


	

Total Number of Shares Granted	
 	


	

Total Exercise Price	
 	


	

Type of Option:	
 	

____ Incentive Stock Option
	

 	
 	

____ Nonstatutory Stock Option
	

Term/Expiration Date:	
 	








Vesting Schedule: 




        25%
of the Shares subject to the Option shall vest twelve (12) months after the Vesting Commencement Date set forth above and 1/48 of the Shares subject to the Option shall vest
each month thereafter, subject to Optionee continuing as a Service Provider on such dates. 



Termination Period: 




        This
Option shall be exercisable for three (3) months after Optionee ceases to be a Service Provider. Upon Optionee's death or disability, this Option may be exercised for such
longer period as provided in the Plan. In no event may Optionee exercise this Option after the Term/Expiration Date as provided above. 


II.    AGREEMENT  


        1.    Grant of Option.    The Plan Administrator of the Company hereby grants to the
Optionee named in the Notice of Grant (the "Optionee"), an option (the "Option") to purchase the number of Shares set forth in the Notice of Grant, at the exercise price per Share set forth in the
Notice of Grant (the "Exercise Price"), and subject to the terms and conditions of the Plan, which is incorporated herein by reference. Subject to Section 15(c) of the Plan, in the event of a
conflict between the terms and conditions of the Plan and this Option Agreement, the terms and conditions of the Plan shall prevail. 


        If
designated in the Notice of Grant as an Incentive Stock Option ("ISO"), this Option is intended to qualify as an Incentive Stock Option as defined in Section 422 of the Code.
Nevertheless, to the 


1





 



extent
that it exceeds the $100,000 rule of Code Section 422(d), this Option shall be treated as a Nonstatutory Stock Option ("NSO"). 


        2.    Exercise of Option.    



        (a)    Right to Exercise.    This Option shall be exercisable during its term in
accordance with the Vesting Schedule set out in the Notice of Grant and with the applicable provisions of the Plan and this Option Agreement. 


        (b)    Method of Exercise.    This Option shall be exercisable by delivery of an exercise
notice in the form attached as Exhibit A (the "Exercise Notice") which shall state the election to exercise the Option, the number of Shares with respect to which the Option is being exercised,
and such other representations and agreements as may be required by the Company. The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to all Exercised Shares. This
Option shall be deemed to be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by the aggregate Exercise Price. 


        No
Shares shall be issued pursuant to the exercise of an Option unless such issuance and such exercise complies with Applicable Laws. Assuming such compliance, for income tax purposes
the Shares shall be considered transferred to the Optionee on the date on which the Option is exercised with respect to such Shares. 




        3.    Method of Payment.    Payment of the aggregate Exercise Price shall be by any of
the following, or a combination thereof, at the election of the Optionee: 



        (a)   cash
or check; 


        (b)   consideration
received by the Company under a formal cashless exercise program adopted by the Company in connection with the Plan; or 


        (c)   surrender
of other Shares which, (i) in the case of Shares acquired from the Company, either directly or indirectly, have been owned by the Optionee for more than
six (6) months on the date of surrender, and (ii) have a Fair Market Value on the date of surrender equal to the aggregate Exercise Price of the Exercised Shares. 




        4.    Restrictions on Exercise.    This Option may not be exercised until such time as
the Plan has been approved by the shareholders of the Company, or if the issuance of such Shares upon such exercise or the method of payment of consideration for such shares would constitute a
violation of any Applicable Law. 


        5.    Non-Transferability of Option.    This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of Optionee only by Optionee. The terms of the Plan and this Option Agreement shall
be binding upon the executors, administrators, heirs, successors and assigns of the Optionee. 


        6.    Term of Option.    This Option may be exercised only within the term set out in the
Notice of Grant, and may be exercised during such term only in accordance with the Plan and the terms of this Option. 


        7.    Tax Obligations.    



        (a)    Withholding Taxes.    Optionee agrees to make appropriate arrangements with the
Company (or the Parent or Subsidiary employing or retaining Optionee) for the satisfaction of all Federal, state, local and foreign income and employment tax withholding requirements applicable to the
Option exercise. Optionee acknowledges and agrees that the Company may refuse to honor the exercise and refuse to deliver Shares if such withholding amounts are not delivered at the time of exercise. 



2





 

        (b)    Notice of Disqualifying Disposition of ISO Shares.    If the Option granted to
Optionee herein is an ISO, and if Optionee sells or otherwise disposes of any of the Shares acquired pursuant to the ISO on or before the later of (1) the date two years after the Date of
Grant, or (2) the date one year after the date of exercise, the Optionee shall immediately notify the Company in writing of such disposition. Optionee agrees that Optionee may be subject to
income tax withholding by the Company on the compensation income recognized by the Optionee. 




        8.    Entire Agreement; Governing Law.    The Plan is incorporated herein by reference.
The Plan and this Option Agreement constitute the entire agreement of the parties with respect to the subject matter
hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee's
interest except by means of a writing signed by the Company and Optionee. This agreement is governed by the internal substantive laws but not the choice of law rules of California. 



        9.    No Guarantee of Continued Service.    OPTIONEE ACKNOWLEDGES AND AGREES THAT THE
VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION
OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN
EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S
RIGHT TO TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE. 


[Remainder of Page Intentionally Left Blank.]


3









        Optionee acknowledges receipt of a copy of the Plan and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts this Option subject to all of the
terms and provisions thereof. Optionee has reviewed the Plan and this Option in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option and fully
understands all provisions of the Option. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the
Plan or this Option. Optionee further agrees to notify the Company upon any change in the residence address indicated below. 



	OPTIONEE:	 	AltiGen Communications, Inc.
	

 Signature	
 	

 By
	

 Print Name	
 	

 Name
	

	
 	

 Title
	

 Residence Address	
 	

 







 
 

EXHIBIT A
  
    EXERCISE NOTICE AND AGREEMENT  
    


AltiGen
Communications, Inc.

47427 Fremont Blvd.

Fremont, CA 94538 


Attention:
Stock Option Plan Administrator 



	Re:
	Exercise
of Stock Option Pursuant to Amended and Restated 1999 Stock Option Plan 







	

Name of Optionee:	
 	


	

Optionee's Address:	
 	


	

Optionee's Social Security Number:	
 	

        -        -            

	

Date of Option Agreement:	
 	


	

Exercise Date:	
 	


	

The Shares Purchased are Incentive Stock Options:

(circle one)	
 	

Yes / No
	

Number of Shares Purchased Pursuant to this Notice:	
 	


	Exercise Price per Share:	 	$

	Aggregate Exercise Price:	 	$

	Add Withholding:	 	$

	Amount of Check Enclosed:	 	$






        1.    Exercise of Option.    Pursuant to the Amended and Restated 1999 Stock Option Plan
(the "Plan") of AltiGen Communications, Inc., a Delaware corporation (the "Company") and the Stock Option Agreement ("Option Agreement") entered into as of the date set forth above between the
undersigned Optionee and the Company, Optionee hereby elects, effective as of the date of this notice, to exercise Optionee's option to purchase the number of shares of common stock (the "Shares") of
the Company indicated above. 


        2.    Payment; Taxes.    Enclosed is Optionee's check in the amount indicated above,
which is the full exercise price for the Shares plus any applicable withholding of taxes. Before the Company issues the Shares, Optionee shall make appropriate arrangements with the Company for
payment of Optionee's tax obligation as a result of this Option exercise if such withholding is not included in the above payment. 


        3.    Deemed Date of Exercise.    The date of exercise shall be deemed to be the first
date after which this Notice is filed with Company upon which Shares become eligible for issuance to Optionee under applicable state and federal laws and regulatory requirements. 


        4.    Compliance with Laws.    Optionee understands and acknowledges that the purchase
and sale of the Shares may be subject to approval under the state and federal securities laws and other laws and, notwithstanding any other provision of the Option Agreement to the contrary, the
exercise of any rights to purchase Shares is expressly conditioned upon approval (if necessary) and compliance with all such laws. 








        5.    Representations of Optionee.    Optionee represents and warrants to the Company, as
follows: 



	(a)
	Optionee
has received, read, and understood the Plan and the Option Agreement and agrees to abide by and be bound by their terms and conditions.



	(b)
	The
Options exercised herewith are exercisable only according to the schedule in the Option Agreement.



	(c)
	Optionee
is aware of the business affairs and financial condition of the Company and has acquired sufficient information about the Company to reach an informed and knowledgeable
decision to acquire the Shares. 




        6.    Refusal to Transfer.    The Company shall not be required (a) to transfer on
its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Agreement, the Option Agreement, or the Plan or (b) to treat as owner of such
Shares or to accord the right to vote or receive dividends to any purchaser or other transferee to whom such Shares shall have been so transferred. 


        7.    Tax Consultation.    Optionee understands that Optionee may suffer adverse tax
consequences as a result of Optionee's purchase or disposition of the Shares. Optionee represents that Optionee has consulted with any tax consultants Optionee deems advisable in connection with the
purchase or disposition of the Shares and that Optionee is not relying on the Company for any tax advice. 


        8.    Entire Agreement.    The Plan and the Option Agreement are incorporated herein by
reference. This Agreement, the Plan, and the Option Agreement constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and
Optionee with respect to the subject matter hereof. 


[Remainder of Page Intentionally Left Blank.]







	Submitted by:	 	Accepted by:
	

"OPTIONEE":	
 	

"COMPANY"
	 	 	AltiGen Communications, Inc.,

a Delaware corporation
	

 Signature	
 	

 By
	

 Print Name	
 	

 Name
	

 	
 	

 Title











QuickLinks


ALTIGEN COMMUNICATIONS, INC. 1999 STOCK PLAN (AS AMENDED ON JUNE 2, 1999 AND AUGUST 15, 2002)


ALTIGEN COMMUNICATIONS, INC. AMENDED AND RESTATED 1999 STOCK PLAN STOCK OPTION AGREEMENT


EXHIBIT A EXERCISE NOTICE AND AGREEMENT