EX-10.1 2004 Stock Incentive Plan



 





EXHIBIT 10.1




AUTHENTEC, INC.

2004 STOCK INCENTIVE PLAN

(as amended)




1. Establishment, Purpose and Types of Awards




     AUTHENTEC, INC., a Delaware corporation (the “Company”), hereby establishes the AUTHENTEC,
INC. 2004 STOCK INCENTIVE PLAN (the “Plan”). The purpose of the Plan is to promote the long-term
growth and profitability of the Company by (i) providing key people with incentives to improve
stockholder value and to contribute to the growth and financial success of the Company through
their future services, and (ii) enabling the Company to attract, retain and reward the
best-available persons. This Plan is a continuation, and amendment and restatement, of the
Company’s 1998 Stock Option Plan (the “1998 Plan”), the provisions of which shall continue to
control with respect to any options or stock awards outstanding thereunder to the extent necessary
to (x) avoid establishment of a new measurement date for financial accounting purposes, (y)
preserve the status of any options that are intended to qualify as “incentive stock options” within
the meaning of Section 422 of the Internal Revenue Code, or (z) implement and interpret the terms
of outstanding stock options granted under the 1998 Plan in such cases in which terms of the 1998
Plan are referenced or incorporated therein.



     The Plan permits the granting of stock options (including incentive stock options qualifying
under Code section 422 and nonstatutory stock options), stock appreciation rights, restricted or
unrestricted stock awards, phantom stock, performance awards, other stock-based awards, or any
combination of the foregoing.



2. Definitions




     Under this Plan, except where the context otherwise indicates, the following definitions
apply:




     (a) “Administrator” means the Board or the committee(s) or officer(s) appointed by the
Board that have authority to administer the Plan as provided in Section 3 hereof.




     (b) “Affiliate” means any entity, whether now or hereafter existing, which controls, is
controlled by, or is under common control with, the Company (including, but not limited to,
joint ventures, limited liability companies, and partnerships). For this purpose, “control”
shall mean ownership of 50% or more of the total combined voting power or value of all
classes of stock or interests of the entity.




     (c) “Award” means any stock option, stock appreciation right, stock award, phantom
stock award, performance award, or other stock-based award.




     (d) “Board” means the Board of Directors of the Company.




     (e) “Change in Control” means: the earliest to occur of (i) a merger or consolidation
to which the Company is a party and which results in, or is effected in connection with, a
change in ownership of a majority of the outstanding shares of voting stock of the Company,
(ii) any sale or transfer of all or substantially all of the assets of the Company to an
unaffiliated third party, (iii) the sale by the stockholders of the Company of a majority of
the voting stock of the Company to an unaffiliated third party or (iv) a liquidation or
dissolution of the Company.




     (f) “Code” means the Internal Revenue Code of 1986, as amended, and any regulations
promulgated thereunder.




     (g) “Common Stock” means shares of common stock of the Company, par value of one cent
($0.01) per share.




     (h) “Fair Market Value” of a share of Common Stock shall be determined in good faith by
the Board in accordance with the following provisions: (A) if the shares of Common Stock are
listed for trading on the American Stock Exchange or the New York Stock Exchange or included
in the NASDAQ National Market, the fair market value shall be the
closing sales price of the
shares on the American



 









 






Stock Exchange or the New York Stock Exchange or as reported on the NASDAQ National
Market (as applicable) on the date immediately preceding the date the Option is granted, or,
if there is no transaction on such date, then on the trading date nearest preceding the date
the Option is granted for which closing price information is available; (B) if the shares of
Common Stock are publicly traded but not listed for trading on the New York Stock Exchange
or American Stock Exchange or included in the NASDAQ National Market, the average of the
closing bid and asked prices on the date immediately preceding the date the Option is
granted; or (C) if the shares of Common Stock are not listed or reported in any of the
foregoing, then fair market value shall be determined by the Board in good faith in
accordance with the applicable provisions of Section 20.2031-2 of the Federal Estate Tax
Regulations, or in any other manner consistent with the Code and accompanying regulations.




     (i) “Grant Agreement” means a written document memorializing the terms and conditions
of an Award granted pursuant to the Plan and which shall incorporate the terms of the Plan.




     (j) “Termination for Cause” means Optionee’s termination if such termination results
from any one or more of the following events, circumstances or occurrences: (A) the
Optionee’s material breach of any written employment, consulting, advisory, proprietary
information, nondisclosure or other agreement with the Company and his or her subsequent
failure to cure such breach to the satisfaction of the Board within thirty (30) days
following written notice of such breach to the Optionee by the Company; (B) the Optionee’s
conviction of, or entry of a plea of guilty or nolo contendere to, a felony or any
misdemeanor involving moral turpitude if the Board reasonably determines that such
conviction or plea materially adversely affects the Company; (C) the commission of an act of
fraud or dishonesty by the Optionee if the Board reasonably determines that such act
materially adversely affects the Company; or (D) Optionee’s intentional damage or
destruction of substantial property of the Company. The determination of “cause” shall be
made by the Board and its determination shall be final and conclusive.



3. Administration





     (a) Administration of the Plan. The Plan shall be administered by the Board or by such
committee or committees as may be appointed by the Board from time to time. To the extent
allowed by applicable state law, the Board by resolution may authorize an officer or
officers to grant Awards (other than Stock Awards) to other officers and employees of the
Company and its Affiliates, and, to the extent of such authorization, such officer or
officers shall be the Administrator.




     (b) Powers of the Administrator. The Administrator shall have all the powers vested in
it by the terms of the Plan, such powers to include authority, in its sole and absolute
discretion, to grant Awards under the Plan, prescribe Grant Agreements evidencing such
Awards and establish programs for granting Awards.




     The Administrator shall have full power and authority to take all other actions
necessary to carry out the purpose and intent of the Plan, including, but not limited to,
the authority to: (i) determine the eligible persons to whom, and the time or times at
which Awards shall be granted; (ii) determine the types of Awards to be granted; (iii)
determine the number of shares to be covered by or used for reference purposes for each
Award; (iv) impose such terms, limitations, restrictions and conditions upon any such Award
as the Administrator shall deem appropriate; (v) modify, amend, extend or renew outstanding
Awards, or accept the surrender of outstanding Awards and substitute new Awards (provided
however, that, except as provided in Section 6 or 7(d) of the Plan, any modification that
would materially adversely affect any outstanding Award shall not be made without the
consent of the holder); (vi) accelerate or otherwise change the time in which an Award may
be exercised or becomes payable and to waive or accelerate the lapse, in whole or in part,
of any restriction or condition with respect to such Award, including, but not limited to,
any restriction or condition with respect to the vesting or exercisability of an Award
following termination of any grantee’s employment or other relationship with the Company;
(vii) establish objectives and conditions, if any, for earning Awards and determining
whether Awards will be paid after the end of a performance period; and (viii) for any
purpose, including but not limited to, qualifying for preferred tax treatment under foreign
tax laws or otherwise complying



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with the regulatory requirements of local or foreign jurisdictions, to establish,
amend, modify, administer or terminate sub-plans, and prescribe, amend and rescind rules and
regulations relating to such sub-plans.




     The Administrator shall have full power and authority, in its sole and absolute
discretion, to administer, construe and interpret the Plan, Grant Agreements and all other
documents relevant to the Plan and Awards issued thereunder, to establish, amend, rescind
and interpret such rules, regulations, agreements, guidelines and instruments for the
administration of the Plan and for the conduct of its business as the Administrator deems
necessary or advisable, and to correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent the Administrator
shall deem it desirable to carry it into effect.




     (c) Non-Uniform Determinations. The Administrator’s determinations under the Plan
(including without limitation, determinations of the persons to receive Awards, the form,
amount and timing of such Awards, the terms and provisions of such Awards and the Grant
Agreements evidencing such Awards) need not be uniform and may be made by the Administrator
selectively among persons who receive, or are eligible to receive, Awards under the Plan,
whether or not such persons are similarly situated.




     (d) Limited Liability. To the maximum extent permitted by law, no member of the
Administrator shall be liable for any action taken or decision made in good faith relating
to the Plan or any Award thereunder.




     (e) Indemnification. To the maximum extent permitted by law and by the Company’s
charter and by-laws, the members of the Administrator shall be indemnified by the Company in
respect of all their activities under the Plan.




     (f) Effect of Administrator’s Decision. All actions taken and decisions and
determinations made by the Administrator on all matters relating to the Plan pursuant to the
powers vested in it hereunder shall be in the Administrator’s sole and absolute discretion
and shall be conclusive and binding on all parties concerned, including the Company, its
stockholders, any participants in the Plan and any other employee, consultant, or director
of the Company, and their respective successors in interest.



4. Shares Available for the Plan; Maximum Awards




     Subject to adjustments as provided in Section 7(d) of the Plan, the shares of Common Stock
that may be issued with respect to Awards granted under the Plan shall not exceed an aggregate of
18,880,195 shares of Common Stock. All shares of Common Stock issued or issuable pursuant to
Options (as defined in the 1998 Plan) issued under the 1998 Plan shall be considered issued with
respect to Awards granted under this Plan for purposes of this Section 4. The Company shall
reserve such number of shares for Awards under the Plan, subject to adjustments as provided in
Section 7(d) of the Plan. If any Award, or portion of an Award, under the Plan expires or
terminates unexercised, becomes unexercisable, is settled in cash without delivery of shares of
Common Stock, or is forfeited or otherwise terminated, surrendered or canceled as to any shares, or
if any shares of Common Stock are repurchased by or surrendered to the Company in connection with
any Award (whether or not such surrendered shares were acquired pursuant to any Award), or if any
shares are withheld by the Company, the shares subject to such Award and the repurchased,
surrendered and withheld shares shall thereafter be available for further Awards under the Plan;
provided, however, that any such shares that are surrendered to or repurchased or withheld by the
Company in connection with any Award or that are otherwise forfeited after issuance shall not be
available for purchase pursuant to incentive stock options intended to qualify under Code section
422.



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     Subject to adjustments as provided in Section 7(d) of the Plan, the maximum number of shares
of Common Stock subject to Awards of any combination that may be granted during any one fiscal year
of the Company to any one individual under this Plan shall be limited to 3,000,000 shares. Such
per-individual limit
shall not be adjusted to effect a restoration of shares of Common Stock with respect to which the
related Award is terminated, surrendered or canceled.



5. Participation




     Participation in the Plan shall be open to all employees, officers, and directors of, and
other individuals providing bona fide services to or for, the Company, or of any Affiliate of the
Company, as may be selected by the Administrator from time to time. The Administrator may also
grant Awards to individuals in connection with hiring, retention or otherwise, prior to the date
the individual first performs services for the Company or an Affiliate, provided that such Awards
shall not become vested or exercisable prior to the date the individual first commences performance
of such services.



6. Awards




     The Administrator, in its sole discretion, establishes the terms of all Awards granted under
the Plan. Awards may be granted individually or in tandem with other types of Awards, concurrently
with or with respect to outstanding Awards. All Awards are subject to the terms and conditions
provided in the Grant Agreement. The Administrator may permit or require a recipient of an Award
to defer such individual’s receipt of the payment of cash or the delivery of Common Stock that
would otherwise be due to such individual by virtue of the exercise of, payment of, or lapse or
waiver of restrictions respecting, any Award. If any such payment deferral is required or
permitted, the Administrator shall, in its sole discretion, establish rules and procedures for such
payment deferrals.




     (a) Stock Options. The Administrator may from time to time grant to eligible
participants Awards of incentive stock options as that term is defined in Code section 422
or nonstatutory stock options; provided, however, that Awards of incentive
stock options shall be limited to employees of the Company or of any current or hereafter
existing “parent corporation” or “subsidiary corporation,” as defined in Code sections
424(e) and (f), respectively, of the Company and any other individuals who are eligible to
receive incentive stock options under the provisions of Code section 422. Options intended
to qualify as incentive stock options under Code section 422 must have an exercise price at
least equal to Fair Market Value as of the date of grant, but nonstatutory stock options may
be granted with an exercise price less than Fair Market Value. No stock option shall be an
incentive stock option unless so designated by the Administrator at the time of grant or in
the Grant Agreement evidencing such stock option.




     (b) Stock Appreciation Rights. The Administrator may from time to time grant to
eligible participants Awards of Stock Appreciation Rights (“SAR”). An SAR entitles the
grantee to receive, subject to the provisions of the Plan and the Grant Agreement, a payment
having an aggregate value equal to the product of (i) the excess of (A) the Fair Market
Value on the exercise date of one share of Common Stock over (B) the base price per share
specified in the Grant Agreement, times (ii) the number of shares specified by the SAR, or
portion thereof, which is exercised. Payment by the Company of the amount receivable upon
any exercise of an SAR may be made by the delivery of Common Stock or cash, or any
combination of Common Stock and cash, as determined in the sole discretion of the
Administrator. If upon settlement of the exercise of an SAR a grantee is to receive a
portion of such payment in shares of Common Stock, the number of shares shall be determined
by dividing such portion by the Fair Market Value of a share of Common Stock on the exercise
date. No fractional shares shall be used for such payment and the Administrator shall
determine whether cash shall be given in lieu of such fractional shares or whether such
fractional shares shall be eliminated.




     (c) Stock Awards. The Administrator may from time to time grant restricted or
unrestricted stock Awards to eligible participants in such amounts, on such terms and
conditions, and for such consideration, including no consideration or such minimum
consideration as may be required by law, as it shall determine. A stock Award may be paid
in Common Stock, in cash, or in a combination of Common Stock and cash, as determined in the
sole discretion of the Administrator.



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     (d) Phantom Stock. The Administrator may from time to time grant Awards to eligible
participants denominated in stock-equivalent units (“phantom stock”) in such amounts and on
such terms and conditions as it shall determine. Phantom stock units granted to a
participant shall be credited to a bookkeeping reserve account solely for accounting
purposes and shall not require a segregation of any of the Company’s assets. An Award of
phantom stock may be settled in Common Stock, in cash, or in a combination of Common Stock
and cash, as determined in the sole discretion of the Administrator. Except as otherwise
provided in the applicable Grant Agreement, the grantee shall not have the rights of a
stockholder with respect to any shares of Common Stock represented by a phantom stock unit
solely as a result of the grant of a phantom stock unit to the grantee.




     (e) Performance Awards. The Administrator may, in its discretion, grant performance
awards which become payable on account of attainment of one or more performance goals
established by the Administrator. Performance awards may be paid by the delivery of Common
Stock or cash, or any combination of Common Stock and cash, as determined in the sole
discretion of the Administrator. Performance goals established by the Administrator may be
based on the Company’s or an Affiliate’s operating income or one or more other business
criteria selected by the Administrator that apply to an individual or group of individuals,
a business unit, or the Company or an Affiliate as a whole, over such performance period as
the Administrator may designate.




     (f) Other Stock-Based Awards. The Administrator may from time to time grant other
stock-based awards to eligible participants in such amounts, on such terms and conditions,
and for such consideration, including no consideration or such minimum consideration as may
be required by law, as it shall determine. Other stock-based awards may be denominated in
cash, in Common Stock or other securities, in stock-equivalent units, in stock appreciation
units, in securities or debentures convertible into Common Stock, or in any combination of
the foregoing and may be paid in Common Stock or other securities, in cash, or in a
combination of Common Stock or other securities and cash, all as determined in the sole
discretion of the Administrator.



7. Miscellaneous





     (a) Withholding of Taxes. Grantees and holders of Awards shall pay to the Company or
its Affiliate, or make provision satisfactory to the Administrator for payment of, any taxes
required to be withheld in respect of Awards under the Plan no later than the date of the
event creating the tax liability. The Company or its Affiliate may, to the extent permitted
by law, deduct any such tax obligations from any payment of any kind otherwise due to the
grantee or holder of an Award. In the event that payment to the Company or its Affiliate of
such tax obligations is made in shares of Common Stock, such shares shall be valued at Fair
Market Value on the applicable date for such purposes and shall not exceed in amount the
minimum statutory tax withholding obligation.




     (b) Loans. To the extent otherwise permitted by law, and subject to the approval of
the Board, the Company or its Affiliate may make or guarantee loans to grantees to assist
grantees in exercising Awards and satisfying any withholding tax obligations.




     (c) Transferability. Except as otherwise determined by the Administrator, and in any
event in the case of an incentive stock option or a stock appreciation right granted with
respect to an incentive stock option, no Award granted under the Plan shall be transferable
by a grantee otherwise than by will or the laws of descent and distribution. Unless
otherwise determined by the Administrator in accord with the provisions of the immediately
preceding sentence, an Award may be exercised during the lifetime of the grantee, only by
the grantee or, during the period the grantee is under a legal disability, by the grantee’s
guardian or legal representative.



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     (d) Adjustments for Corporate Transactions and Other Events.




	 	(i)	 	Stock Dividend, Stock Split and Reverse Stock
Split. In the event of a stock dividend of, or stock split or reverse
stock split affecting, the Common Stock, (A) the maximum number of shares
of such Common Stock as to which Awards
may be granted under this Plan and the maximum number of shares with
respect to which Awards may be granted during any one fiscal year of
the Company to any individual, as provided in Section 4 of the Plan,
and (B) the number of shares covered by and the exercise price and
other terms of outstanding Awards, shall, without further action of the
Board, be adjusted to reflect such event unless the Board determines,
at the time it approves such stock dividend, stock split or reverse
stock split, that no such adjustment shall be made. The Administrator
may make adjustments, in its discretion, to address the treatment of
fractional shares and fractional cents that arise with respect to
outstanding Awards as a result of the stock dividend, stock split or
reverse stock split.
	 
	 	(ii)	 	Non-Change in Control Transactions. Except with
respect to the transactions set forth in Section 7(d)(i), in the event of
any change affecting the Common Stock, the Company or its capitalization,
by reason of a spin-off, split-up, dividend, recapitalization, merger,
consolidation or share exchange, other than any such change that is part
of a transaction resulting in a Change in Control of the Company, the
Administrator, in its discretion and without the consent of the holders
of the Awards, may make (A) appropriate adjustments to the maximum number
and kind of shares reserved for issuance or with respect to which Awards
may be granted under the Plan, in the aggregate and with respect to any
individual during any one fiscal year of the Company, as provided in
Section 4 of the Plan; and (B) any adjustments in outstanding Awards,
including but not limited to modifying the number, kind and price of
securities subject to Awards.
	 
	 	(iii)	 	Change in Control Transactions. In the event of
any transaction resulting in a Change in Control of the Company,
outstanding stock options and other Awards that are payable in or
convertible into Common Stock under this Plan will terminate upon the
effective time of such Change in Control unless provision is made in
connection with the transaction for the continuation or assumption of
such Awards by, or for the substitution of the equivalent awards of, the
surviving or successor entity or a parent thereof. In the event of such
termination, (A) the outstanding stock options and other Awards that will
terminate upon the effective time of the Change in Control shall become
fully vested immediately before the effective time of the Change in
Control, and (B) the holders of stock options and other Awards under the
Plan will be permitted, immediately before the Change in Control, to
exercise or convert all portions of such stock options or other Awards
under the Plan that are then exercisable or convertible or which become
exercisable or convertible upon or prior to the effective time of the
Change in Control. If, immediately before the Change in Control, no
stock of the Company is readily tradeable on an established securities
market or otherwise, and the vesting of an Award or Awards pursuant to
this Section 7(d)(iii) would be treated as a “parachute payment” (as
defined in section 280G of the Code), then such Award or Awards shall not
vest unless the requirements of the shareholder approval exemption of
section 280G(b)(5) of the Code have been satisfied with respect to such
Award or Awards.
	 
	 	(iv)	 	Unusual or Nonrecurring Events. The Administrator
is authorized to make, in its discretion and without the consent of
holders of Awards, adjustments in the terms and conditions of, and the
criteria included in, Awards in recognition of unusual or nonrecurring
events affecting the Company, or the financial statements of the Company
or any Affiliate, or of changes in applicable laws, regulations, or
accounting principles, whenever the Administrator determines that such
adjustments are appropriate in order to prevent dilution or enlargement
of the benefits or potential benefits intended to be made available under
the Plan.




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     (e) Substitution of Awards in Mergers and Acquisitions. Awards may be granted under
the Plan from time to time in substitution for awards held by employees, officers,
consultants or directors of entities who become or are about to become employees, officers,
consultants or directors of the Company or an Affiliate as the result of a merger or
consolidation of the employing entity with the Company or an Affiliate, or the acquisition
by the Company or an Affiliate of the assets or stock of the employing entity. The terms
and conditions of any substitute Awards so granted may vary from the terms and conditions
set forth herein to the extent that the Administrator deems appropriate at the time of grant
to conform the substitute Awards to the provisions of the awards for which they are
substituted.




     (f) Other Agreements. As a condition precedent to the grant of any Award under the
Plan, the exercise pursuant to such an Award, or to the delivery of certificates for shares
issued pursuant to any Award, the Administrator may require the grantee or the grantee’s
successor or permitted transferee, as the case may be, to become a party to a stock
restriction agreement, shareholders’ agreement, voting trust agreement or other agreements
regarding the Common Stock of the Company in such form(s) as the Administrator may determine
from time to time.




     (g) Termination, Amendment and Modification of the Plan. The Board may terminate,
amend or modify the Plan or any portion thereof at any time. Except as otherwise determined
by the Board, termination of the Plan shall not affect the Administrator’s ability to
exercise the powers granted to it hereunder with respect to Awards granted under the Plan
prior to the date of such termination.




     (h) Non-Guarantee of Employment or Service. Nothing in the Plan or in any Grant
Agreement thereunder shall confer any right on an individual to continue in the service of
the Company or shall interfere in any way with the right of the Company to terminate such
service at any time with or without cause or notice and whether or not such termination
results in (i) the failure of any Award to vest; (ii) the forfeiture of any unvested or
vested portion of any Award; and/or (iii) any other adverse effect on the individual’s
interests under the Plan.




     (i) Compliance with Securities Laws; Listing and Registration. If at any time the
Administrator determines that the delivery of Common Stock under the Plan is or may be
unlawful under the laws of any applicable jurisdiction, or Federal, state or foreign
securities laws, the right to exercise an Award or receive shares of Common Stock pursuant
to an Award shall be suspended until the Administrator determines that such delivery is
lawful. The Company shall have no obligation to effect any registration or qualification of
the Common Stock under Federal, state or foreign laws.




     The Company may require that a grantee, as a condition to exercise of an Award, and as
a condition to the delivery of any share certificate, make such written representations
(including representations to the effect that such person will not dispose of the Common
Stock so acquired in violation of Federal, state or foreign securities laws) and furnish
such information as may, in the opinion of counsel for the Company, be appropriate to permit
the Company to issue the Common Stock in compliance with applicable Federal, state or
foreign securities laws. The stock certificates for any shares of Common Stock issued
pursuant to this Plan may bear a legend restricting transferability of the shares of Common
Stock unless such shares are registered or an exemption from registration is available under
the Securities Act of 1933, as amended, and applicable state or foreign securities laws.




     (j) No Trust or Fund Created. Neither the Plan nor any Award shall create or be
construed to create a trust or separate fund of any kind or a fiduciary relationship between
the Company and a grantee or any other person. To the extent that any grantee or other
person acquires a right to receive payments from the Company pursuant to an Award, such
right shall be no greater than the right of any unsecured general creditor of the Company.



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     (k) Governing Law. The validity, construction and effect of the Plan, of Grant
Agreements entered into pursuant to the Plan, and of any rules, regulations, determinations
or decisions made by the Administrator relating to the Plan or such Grant Agreements, and
the rights of any and all persons having or claiming to have any interest therein or
thereunder, shall be determined exclusively in
accordance with applicable federal laws and the laws of the State of Delaware without
regard to its conflict of laws principles.




     (l) Effective Date; Termination Date. The Plan is effective as of the date on which
the Plan is adopted by the Board as an amendment and restatement of the 1998 Plan, subject
to approval of the stockholders within twelve months before or after such date. No Award
shall be granted under the Plan after the close of business on the day immediately preceding
the tenth anniversary of the effective date of the Plan, or if earlier, the tenth
anniversary of the date this Plan is approved by the stockholders. Subject to other
applicable provisions of the Plan, all Awards made under the Plan prior to such termination
of the Plan shall remain in effect until such Awards have been satisfied or terminated in
accordance with the Plan and the terms of such Awards.



PLAN APPROVAL




Date Approved by the Board: June 14, 2004                    




Date Approved by the Stockholders: June 14, 2004                    




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APPENDIX A

PROVISIONS FOR CALIFORNIA RESIDENTS




     With respect to Awards granted to California residents prior to a public offering of capital
stock of the Company that is effected pursuant to a registration statement filed with, and declared
effective by, the Securities and Exchange Commission under the Securities Act of 1933, as amended,
and only to the extent required by applicable law, the following provisions shall apply
notwithstanding anything in the Plan or a Grant Agreement to the contrary:




	1.	 	Stock appreciation rights Awards under Section 6(b) of the Plan or phantom stock Awards under
Section 6(d) of the Plan, which may be settled in shares of Company stock, shall not be issued to
California residents.
	 
	2.	 	With respect to any Award granted in the form of a stock option pursuant to Section 6(a) of the
Plan:






	 	(a)	 	The Award shall provide an exercise price which is not less than 85% of the Fair Market
Value of the underlying security at the time the option is granted, except that the price
shall be not less than 110% of the Fair Market Value in the case of any person who owns
securities possessing more than 10% of the total combined voting power (as defined in
Section 194.5 of the California Corporations Code) of all classes of securities of the
issuer or its parent or subsidiaries possessing voting power.
	 
	 	(b)	 	The exercise period shall be no more than 120 months from the date the option is
granted.
	 
	 	(c)	 	The options shall be non-transferable other than by will, by the laws of descent and
distribution, or, if and to the extent permitted under the Grant Agreement, as permitted by
Rule 701 of the Securities Act of 1933, as amended (17 C.F.R. 230.701).
	 
	 	(d)	 	The Award recipient shall have the right to exercise at the rate of at least 20% per
year over 5 years from the date the option is granted, subject to reasonable conditions such
as continued employment. However, in the case of an option granted to officers, directors,
managers or consultants of the Company or the issuer of the underlying security or any of
its affiliates, the option may become fully exercisable, subject to reasonable conditions
such as continued employment, at any time or during any period established by the issuer of
the option or the issuer of the underlying security or any of its affiliates.
	 
	 	(e)	 	Unless employment is terminated for “cause” as defined in Section 2(j) of the Plan , the
right to exercise the option in the event of termination of employment, to the extent that
the Award recipient is entitled to exercise on the date employment terminates, will be as
follows:






	 	(1)	 	At least 6 months from the date of termination if termination was caused by death
or disability.
	 
	 	(2)	 	At least 30 days from the date of termination if termination was caused by other
than death or disability.






	3.	 	With respect to an Award, granted pursuant to Section 6(c) of the Plan, that provides the Award
recipient the right to purchase stock:






	 	(a)	 	The Award shall provide a purchase price which is not less than 85% of the Fair Market
Value of the security at the time the Award recipient is granted the right to purchase
securities under the Grant Agreement, or at the time the purchase is consummated; or, not
less than 100% of the Fair Market Value of the security either at the time the Award
recipient is granted the right to purchase securities under the Grant Agreement, or at the
time the purchase is consummated, in the case of any person who owns securities possessing
more than 10% of the total combined voting power (as defined in Section 194.5 of the
California Corporations Code) of all classes of securities of the issuer or its parent or
subsidiaries possessing voting power.




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	 	(b)	 	The Award shall be non-transferable other than by will, by the laws of descent and
distribution, or, if and to the extent permitted under the Grant Agreement, as permitted by
Rule 701 of the Securities Act of 1933, as amended (17 C.F.R. 230.701).






	4.	 	The Plan shall have a termination date of not more than 10 years from the date the Plan is
adopted by the Board or the date the Plan is approved by the security holders, whichever is
earlier.
	 
	5.	 	Security holders representing a majority of the Company’s outstanding securities entitled to
vote must approve the Plan within 12 months before or after the date the Plan is adopted. Any
option exercised or any securities purchased before security holder approval is obtained must be
rescinded if security holder approval is not obtained within 12 months before or after the Plan is
adopted. Such securities shall not be counted in determining whether such approval is obtained.
	 
	6.	 	At the discretion of the Administrator, the Company may reserve to itself and/or its assignee(s)
in the Grant Agreement or any applicable stock restriction agreement a right to repurchase
securities held by an Award recipient upon such Award recipient’s termination of employment at any
time within 90 days after such Award recipient’s termination date (or in the case of securities
issued upon exercise of an option after the termination date, within 90 days after the date of such
exercise) for cash or cancellation of purchase money indebtedness, at:






	 	(A)	 	no less than the Fair Market Value of such securities as of the date of the Award
recipient’s termination of employment, provided, that such right to repurchase
securities terminates when the Company’s securities have become publicly traded; or
	 
	 	(B)	 	the Award recipient’s original purchase price, provided, that such right to
repurchase securities at the original purchase price lapses at the rate of at least 20% of
the securities per year over 5 years from the date the option is granted (without respect to
the date the option was exercised or became exercisable).





     The securities held by an officer, director, manager or consultant of the Company or an
affiliate may be subject to additional or greater restrictions.




	7.	 	The Company will provide financial statements to each Award recipient annually during the period
such individual has Awards outstanding, or as otherwise required under Section 260.140.46 of Title
10 of the California Code of Regulations. Notwithstanding the foregoing, the Company will not be
required to provide such financial statements to Award recipients when issuance is limited to key
employees whose services in connection with the Company assure them access to equivalent
information.
	 
	8.	 	The Company will comply with Section 260.140.1 of Title 10 of the California Code of Regulations
with respect to the voting rights of Common Stock and similar equity securities.
	 
	9.	 	The Plan is intended to comply with Section 25102(o) of the California Corporations Code. Any
provision of this Plan which is inconsistent with Section 25102(o), including without limitation
any provision of this Plan that is more restrictive than would be permitted by Section 25102(o) as
amended from time to time, shall, without further act or amendment by the Board, be reformed to
comply with the provisions of Section 25102(o). If at any time the Administrator determines that
the delivery of Common Stock under the Plan is or may be unlawful under the laws of any applicable
jurisdiction, or federal or state securities laws, the right to exercise an Award or receive shares
of Common Stock pursuant to an Award shall be suspended until the Administrator determines that
such delivery is lawful. The Company shall have no obligation to effect any registration or
qualification of the Common Stock under federal or state laws.






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