Document:

EXHIBIT 4.3

APPILOG,
INC.

2003
STOCK OPTION PLAN 

Effective November 25, 2003

1.   Purpose

Appilog, Inc. (the “Company”) desires to attract and retain the
best available talent and encourage the highest level of performance by
employees and other persons who perform services for the Company in order to
serve the best interests of the Company and its stockholders. By affording
eligible persons the opportunity to acquire proprietary interests in the
Company and by providing them incentives to put forth maximum efforts for the
success of the Company’s business, the Appilog, Inc. 2003 Stock Option Plan
(the “Plan”) is expected to
contribute to the attainment of those objectives. The Plan also includes a
special appendix, attached as Schedule A hereto, as an integral part of the
Plan, for the benefit of the employees of the Company’s Israeli subsidiary.

2.   Options and Shares of Common Stock Subject to the
Plan

Option grants under the Plan may be granted in the
form of (i) incentive stock options (“incentive
stock options”) as provided in Section 422 of the Internal Revenue
Code of 1986, as amended (the “Code”),
to purchase shares of the common stock, par value $0.0001 per share, of the
Company (the “Common Stock”); (ii)
options to purchase shares of Common Stock which are not intended to qualify as
incentive stock options (“non-qualified
options”) (unless otherwise indicated, references in the Plan to “options” include incentive stock options
and non-qualified options); or (iii) any combination of the foregoing as the
Committee (as defined in Section 3(a)) shall determine. The maximum aggregate
number of shares of Common Stock as to which options may be granted from time
to time under the Plan is 68,162,592 shares, subject to adjustment as provided
in Section 11. The shares available may be in whole or in part, as the Board of
Directors of the Company (the “Board of
Directors”) shall from time to time determine, authorized but
unissued shares or issued shares reacquired by the Company. Unless otherwise
provided by the Committee, shares covered by expired or terminated options will
be available for subsequent option grants under the Plan. Any shares issued by
the Company in respect of the assumption or substitution of outstanding options
from a corporation or other business entity by the Company shall not reduce the
number of shares available for option grants under the Plan.

3.   Administration 

(a)           The
Plan shall be administered by a committee (the “Committee”) consisting of not less than two members of the
Board of Directors who are selected by the Board of Directors. The term
Committee shall refer to the Board of Directors if at any time no committee of
the Board of Directors is constituted to administer the Plan.   

(b)           The
Committee shall have plenary authority in its discretion, subject to and not
inconsistent with the express provisions of the Plan (i) to grant options, (ii)
to determine the purchase price of the shares of Common Stock covered by each
option, (iii) the term of each option, (iv) the persons to whom, and the time
or times at which options shall be granted, (v) the number of shares to be
covered by each option, (vi) to designate options as incentive stock options or
non-qualified options, (vii) to interpret the Plan, (viii) to prescribe, amend
and rescind rules and regulations relating to the Plan, (ix) to determine the
terms and provisions of the option agreements as described in Section 16 (which
need not be identical), and (x) to make all other determinations deemed
necessary or advisable for the administration of the Plan. Except to the extent
prohibited by any applicable law, rule or regulation, including, without
limitation, the requirements applicable under Section 162(m) of the Code to any
option granted under the plan intended to be “qualified performance-based
compensation,” or the requirements for any award granted under the Plan to an
officer or director to be covered by any exemptive rule under Section 16 of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) (including Rule 16b-3, or any successor rule,
as the same may be amended from time to time), the Committee may delegate to
one or more of its members or to one or more agents such administrative duties
as it may deem advisable, and the Committee or any person to whom it has
delegated duties as aforesaid may employ one or more persons to render advice
with respect to any responsibility the Committee or such person may have under
the Plan.

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(c)           The
Committee may employ attorneys, consultants, accountants or other persons and
the Committee, the Company and its officers and directors shall be entitled to
rely upon the advice, opinions or valuations of any such persons. The Committee
shall have full discretionary authority in all matters related to the discharge
of its responsibilities and the exercise of its authority under the Plan. All
actions taken and all interpretations, decisions and determinations made by the
Committee in good faith shall be final and binding upon all persons who have
received option grants, the Company and all other interested persons. No member
or agent of the Committee shall be personally liable for any action, determination
or interpretation taken or made in good faith with respect to the Plan or
option grants made thereunder, and all members and agents of the Committee and
the Board of Directors shall be fully indemnified and protected by the Company
in respect of any such action, determination or interpretation.   

(d)           Subject
to the Company’s decision to the contrary, each member of the Board of
Directors and the Committee shall be indemnified and held harmless by the
Company against the cost or expense (including attorneys’ fees) reasonably
incurred by him, or any liability (including any sum paid in settlement of a
claim with the approval of the Company) arising out of any act or omission to
act on connection with the Plan, unless arising out of such member’s own fraud
or bad faith, to the extent permitted by applicable law. Such indemnification
shall be in addition to any rights or indemnification the member may have as a
director or otherwise under the Company’s Certificate of Incorporation or
bylaws, any agreement, any vote of stockholders or disinterested directors,
insurance policy or otherwise. 

4.   Eligibility; Factors to be
Considered in Granting Options 

(a)           Subject
to the limitations on the granting of options otherwise set forth in the Plan,
option grants will be limited to employees and directors (whether or not also
employees) of the Company or a Subsidiary (as defined in the last sentence of
this Section 4(a)) and to individuals who are not employees but who provide
services to the Company or a Subsidiary or to companies which provide services
to the Company, but only to the extent any such non-employees or companies (i)
provide bona fide services to the
Company or a Subsidiary; and (ii) provide services that are not in connection
with the offer or sale of the Company’s or a Subsidiary’s securities in a
capital-raising transaction, and do not directly or indirectly promote or
maintain a market for the Company’s or a Subsidiary’s securities (such service
providers who are neither employees nor directors are referred to in the Plan
as “consultants”); provided, however, that the issuance of
options hereunder to any non-individual shall only be permitted where the
issuance thereof shall not require any registration or filing with under any
federal or state securities law. In determining the eligible individuals to
whom options shall be granted and the number of shares to be covered by each
option, the Committee shall take into account the nature of the individuals’
duties, their present and potential contributions to the success of the Company
and such other factors as it shall deem relevant in connection with
accomplishing the purposes of the Plan. An eligible individual who has been
selected by the Committee to participate in the Plan and who holds an outstanding
option under the Plan is referred to in the Plan as an “optionee.” As used in the Plan, “Subsidiary” shall mean any present or
future corporation which is or would be a “subsidiary corporation” of the
Company as such term is defined in Section 424(f) of the Code. 

(b)           Option
grants may be granted singly, in combination or in tandem and may be made in
combination or in tandem with, in replacement of, or as alternatives to, awards
or grants under any other employee plan maintained by the Company and/or any
Subsidiary. No incentive stock option shall be granted to any individual
otherwise eligible to participate in the Plan who is not an employee of the
Company or a Subsidiary on the date of granting of such option. An optionee who
has been granted an option or options under the Plan may be granted additional
options, subject to such limitations as may be imposed by the Code on the grant
of incentive stock options. No grant of incentive stock options (under the Plan
and any other “incentive stock option” plans of the Company, any Subsidiary and
any “parent corporation” of the Company within the meaning of Section 424(e) of
the Code) shall result in the aggregate fair market value of Common Stock with
respect to which “incentive stock options” (within the meaning of Section 422
of the Code, but without regard to subsection (d) of such Section) are
exercisable for the first time by any employee during any calendar year
(determined at the time the incentive stock option is granted) exceeding
$100,000. 

(c)           The
adoption of the Plan shall not be deemed to give any employee of the Company or
any Subsidiary or any other person any right to be selected to participate in
the Plan or to be granted an option under the Plan. No person shall have any
rights or claims under the Plan except in accordance with the provisions of the
Plan and the applicable option agreement. 

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5.   Purchase Price 

(a)           The
purchase price of a share of the Common Stock covered by each option shall be
determined by the Committee, but, subject to Section 5(b) and unless otherwise
set forth in the applicable option agreement, shall not be less than 100% of
the fair market value (as hereinafter defined, the “Market Value”) of a share of the Common Stock on the date the
option is granted, and such purchase price shall not be reduced, by action of
the Committee or the Board of Directors or otherwise, at any time after the
date an option is granted (subject to Section 11(a)). For purposes of the Plan,
the Market Value of a share of Common Stock shall be the closing price for a
share of Common Stock on the date of the determination, or if such date is not
a trading day, then on the most recently preceding trading day; provided, however, that for purposes of
any incentive stock options granted under the Plan, such Market Value shall be
determined subject to Section 422(c)(7) of the Code. The closing price for a share
of Common Stock shall be: (a) if the Common Stock shall be listed or admitted
to trading on any national securities exchange, the average of the last
reported sales prices on the specified days (or if there is no reported sale on
any such trading date, the average of the closing bid and asked prices on such
trading date); (b) if the Common Stock is not traded or admitted to trading on
any national securities exchange, the closing price, if reported, or if the
closing price is not reported, the average of the closing bid and asked prices,
as reported by The Nasdaq Stock Market® or
similar source or, if no such source exists, as furnished by two members of the
National Association of Securities Dealers, Inc., selected by the Committee for
that purpose, on the specified dates; or (c) if the Common Stock is not traded
or admitted to trading on any national securities exchange or The Nasdaq Stock
Market®, the closing
price on such dates as determined in good faith by the Committee or the Board
of Directors. The Committee shall determine the date on which an option under
the Plan is granted, provided
that such date is consistent with the Code and any applicable rules or
regulations thereunder. In the absence of such determination, the date on which
the Committee adopts a resolution granting an option shall be considered the
date on which such option is granted, provided
the optionee to whom the option is granted is promptly notified of the grant
and an option agreement is duly executed as of the date of the resolution. The
purchase price shall be subject to adjustment as provided in Section 11(a).

(b)           No
incentive stock option shall be granted to an employee under the Plan who owns
(within the meaning of Section 424(d) of the Code), at the time the option
is granted, more than 10% of the total combined voting power of all classes of
stock of the Company or a Subsidiary or any “parent corporation” of the Company
within the meaning of Section 424(e) of the Code. This restriction does not
apply if at the time such incentive stock option is granted the option exercise
price per share of Common Stock subject to the option is at least 110% of the
Market Value of a share of Common Stock on the date such incentive stock option
is granted, and the incentive stock option by its terms is not exercisable
after the expiration of five years from such date of grant. 

6.   Terms of Option Grants

The term of each option granted under the Plan shall
be determined by the Committee and set forth in the option agreement evidencing
such option, provided, however,
that, subject to Section 5(b) and earlier termination as provided in Sections 9
and 10, no option shall be exercisable after 10 years from the date such option
was granted.

7.   Exercise; Loans 

(a)           Subject
to the provisions of the Plan, an option granted under the Plan shall become
vested and exercisable as determined by the Committee and set forth in the
option agreement evidencing such option. The Committee may, in its discretion,
determine as a condition of any option, that all or a stated percentage of the
option shall only become exercisable, in installments or otherwise, after
completion of a specified period of service with the Company and the
Subsidiaries or subject to any other condition or conditions. 

(b)           The
Committee may also, in its discretion, accelerate the exercisability of any
options at any time and provide, in any option agreement, that the option shall
become immediately exercisable as to all or any portion of the shares of Common
Stock remaining subject to the option on or following (i) a Change of Control
(as defined in this Section), (ii) the termination by the optionee of his or
her employment for Good Reason (as defined in this Section) or the termination
of the optionee’s employment by the Company without Cause (as defined in this
Section) or (iii) as otherwise determined by the Committee. The date, after the
occurrence of a Change of Control, upon which such a termination occurs shall
be referred to herein as an “acceleration
date”. For the purposes of the Plan, the following terms shall be
defined as follows: 

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“Cause”
shall mean (i) the continuing failure, as determined by the Company acting in
good faith, of the optionee to render services to the Company in accordance
with the optionee’s assigned duties, and such failure of performance continues
for a period of more than 30 days after written notice thereof has been
provided to the optionee by the Company; (ii) willful misconduct or gross
negligence of the optionee in the performance of his or her duties and services
to the Company or any of its subsidiaries; (iii) the conviction of the optionee
of a felony, whether or not committed in the course of performing services for
the Company or any of its subsidiaries; (iv) deliberate dishonesty, breach of
fiduciary duty or breach of the material terms of any employment,
noncompetition, nondisclosure or other agreement between the optionee and the
Company; (v) the commission by the optionee in the course of performing any
services for the Company or any of its subsidiaries of embezzlement, theft or
any other fraudulent act; (vi) the unauthorized disclosure by the optionee of
any material trade secret or material confidential information of the Company
or any of its subsidiaries; or (vii) the commission by the optionee of an act
which constitutes unfair competition with the Company or any of its
subsidiaries, including, without limitation, inducing any employee or customer
of the Company to breach a contract with the Company or any of its
subsidiaries.

A “Change of Control” shall be deemed to have
occurred as of the first day any one or more of the following conditions shall
have been satisfied:   

(i)            any
individual, corporation (other than the Company or any Subsidiary),
partnership, trust, association, pool, syndicate, or any other entity or any
group of persons acting in concert (other than any employee benefit plan (or
any trust forming a part thereof) of the Company or any Subsidiary) becomes the
beneficial owner, as that concept is defined in Rule 13d-3 promulgated by the
Securities and Exchange Commission under the Exchange Act of securities of the
Company possessing either (X) 50% or more of the voting power for the election
of directors of the Company or (Y) 50% or more in value of the outstanding
equity securities (or the right to acquire 50% or more) of the Company;

(ii)           there
shall be consummated any consolidation, merger, or other business combination
involving the Company or the securities of the Company in which (X) holders of
voting securities of the Company immediately prior to such consummation own, as
a group, immediately after such consummation, voting securities of the Company
(or, if the Company does not survive such transaction, voting securities of the
corporation surviving such transaction) having less than 50% of the total
voting power in an election of directors of the Company (or such other
surviving corporation) or (Y) holders of equity securities of the Company
immediately prior to such consummation own, as a group, immediately after such
consummation, equity securities of the Company (or, if the Company does not
survive such transaction, voting securities of the corporation surviving such
transaction) having less than 50% of the equity securities of the Company (or
such other surviving corporation); 

(iii)          during
any period of two consecutive years, individuals who at the beginning of such
period constitute the directors of the Company cease for any reason other than
voluntary resignation, death, disability or retirement to constitute at least a
majority thereof unless the election, or the nomination for election by the
Company’s shareholders, of each new director of the Company was approved by a
vote of at least two-thirds of the directors of the Company then still in
office who were directors of the Company at the beginning of any such period;
or 

iv)           there
shall be consummated any sale, lease, exchange, or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of the Company (on a consolidated basis) to a party which is not
controlled by or under common control with the Company.

“Good Reason” shall exist if any one of the
following events occur:   

(i)            a
significant adverse change, without the optionee’s written consent, in the
optionee’s working   conditions or status, including but not limited to a
significant change in the nature or scope of the optionee’s authority, powers,
functions, duties, or responsibilities; 

(ii)           the
optionee’s base salary for any fiscal year is less than 100% of the rate of
base salary paid to the optionee’s in the completed fiscal year immediately
preceding the Change of Control, or if the optionee’s total cash compensation
opportunities, including salary and incentives, for any fiscal year are less
than 100% percent of the total cash compensation opportunities made available
to the optionee in the completed fiscal year immediately preceding the Change
of Control; 

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(iii)          the
failure of the Company or its Subsidiaries to continue in effect any benefits
or perquisites, or any pension, life insurance, medical insurance or disability
plan in which the optionee was participating immediately prior to the Change of
Control unless the Company provides the optionee with a plan or plans that
provide substantially similar benefits, or the taking of any action by the
Company that would adversely affect the optionee’s benefit under any of such
plans or deprive the optionee of any material fringe benefit enjoyed by the
optionee immediately prior to the Change of Control; 

(iv)          any
purported termination of the optionee’s employment by the Company for Cause
which is not effected in compliance with the procedures set forth in the
definition of Cause above; or 

(v)           an
attempt by the Company or any Subsidiary to relocate the optionee to, or to
require the optionee to perform regular services at, any location that is more
than seventy-five (75) miles from the location at which the optionee was
regularly performing services prior to the Change of Control. 

(c)           An
option may be exercised at any time or from time to time (subject, in the case
of an incentive stock option, to such restrictions as may be imposed by the
Code), as to any or all full shares of Common Stock as to which the option has
become exercisable. Notwithstanding the foregoing provision, no option may be
exercised without the prior consent of the Committee by an employee who is
subject to Section 16(b) of the Exchange Act until the expiration of six months
from the date of the grant of the option. 

(d)           The
purchase price of the shares as to which an option is exercised shall be paid
in full to the Company at the time of exercise; payment may be made (i) in
cash, which may be paid by check, or other instrument acceptable to the
Company; (ii) with the consent of the Committee, and subject to such terms and
conditions as it may determine, by delivery of shares of the Common Stock which
have been owned by the optionee exercising such option for more than six months
(or such longer or shorter period of time required to avoid a charge to
earnings for financial accounting purposes), valued at the Market Value on the
date of exercise, or (iii) at the discretion of the Committee, in accordance
with a cashless exercise program (through broker accommodation), if any,
established by the Committee. In addition, the optionee exercising such option
shall promptly pay to the Company in cash any amount necessary to satisfy all
applicable federal, state or local tax requirements (and in no event shall
Common Stock be delivered with respect to such option until all such amounts
have been fully paid to the Company). The Committee may permit such amount to
be paid in shares of Common Stock previously owned by the optionee for more
than six months prior to such payment (or such longer or shorter period of time
required to avoid a charge to earnings for financial accounting purposes), or a
portion of the shares of Common Stock that otherwise would be distributed to
such optionee upon exercise of the option (provided,
however, that the amount of any Common Stock so withheld shall not
exceed the amount necessary to satisfy the Company’s or any Subsidiary’s
required tax withholding obligations using the minimum statutory withholding
rates for Federal, state, local and foreign tax purposes, including payroll
taxes, that are applicable to supplemental taxable income), in either case,
based on the Market Value of such shares on the date of payment, as determined
by the Committee, or a combination of cash and shares of such Common Stock. The
Company or a Subsidiary shall, to the extent permitted by law, have the right
to deduct any such taxes from any payment of any kind otherwise due to such
optionee.   

(e)           Except
as provided in Sections 8, 9 and 10, no options may be exercised at any time
unless the holder thereof is then an employee of or performing services for the
Company or one of its Subsidiaries.   

(f)            Upon,
but not until, the exercise of an option or portion thereof in accordance with
the Plan, the applicable option agreement and such rules and regulations as may
be established by the Committee, the holder thereof shall have the rights of a
stockholder with respect to the shares issued as a result of such exercise.
  

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(g)           The
Company may make loans to such optionees as the Committee, in its discretion,
may determine (including a holder who is a director or officer of the Company)
in connection with the exercise of options granted under the Plan; provided, however, that the Committee
shall not authorize the making of any loan where the possession of such
discretion or the making of such loan would result in a “modification” (as
defined in Section 424 of the Code) of any incentive stock option. Such loans
shall be subject to the following terms and conditions and such other terms and
conditions as the Committee shall determine not inconsistent with the Plan.
Such loans shall bear interest at such rates as the Committee shall determine
from time to time, which rates may be below then current market rates (except
in the case of incentive stock options). In no event may any such loan exceed
the fair market value, at the date of exercise, of the shares covered by the
option, or portion thereof, exercised by the holder. No loan shall have an
initial term exceeding five years, but any such loan may be renewable at the
discretion of the Committee. When a loan shall have been made, shares of Common
Stock having a fair market value at least equal to the principal amount of the
loan shall be pledged by the holder to the Company as security for payment of
the unpaid balance of the loan. Every loan shall comply with all applicable
laws, regulations and rules of the Board of Governors of the Federal Reserve
System and any other governmental agency having jurisdiction. 

8.   Transferability of Options 

(a)           Except
as otherwise provided in this Section 8, options granted under the Plan shall
not be transferable otherwise than by will or the laws of descent and
distribution, and may be exercised during the lifetime of the optionee who
received such option only by such optionee. 

(b)           No
transfer of any options by will or the laws of descent and distribution shall
be effective to bind the Company unless the Committee shall have been furnished
with (i) written notice thereof and with a copy of the will and/or such
evidence as the Committee may deem necessary to establish the validity of the
transfer and (ii) an agreement by the transferee to comply with all the terms
and conditions of the option grant that are or would have been applicable to
the employee to whom the option was granted and to be bound by the
acknowledgments made by the employee in connection with the grant of the
option. 

(c)           With
the approval of the Committee and subject to such conditions as the Committee
may prescribe, an optionee may, upon providing written notice to the Secretary
of the Company, elect to transfer any or all such optionee’s non-qualified
options to such optionee’s spouse, children, grandchildren and the spouses of
children and grandchildren or to trusts for the benefit of the optionee and/or
any of the foregoing family members of the optionee or to partnerships in which
the optionee and/or such family members are the only partners (“Permitted Transferees”); provided, however, that no such transfer by
any optionee may be made in exchange for consideration and following any such
transfer the option may not be subsequently transferred; and providedfurther, however, that following
any such transfer, the exercise, vesting and termination provisions of such
option and the Plan shall continue to be applied with respect to the optionee
who transferred such option. 

(d)           If
any rights exercisable by the optionee or benefits deliverable to the optionee
under the Plan have not been exercised or delivered, respectively, at the time
of the optionee’s death, such rights shall be exercisable by the optionee’s
Designated Beneficiary, and such benefits shall be delivered to the Designated
Beneficiary, in accordance with the provisions of the Plan and the applicable
option agreement. The “Designated Beneficiary”
shall be the beneficiary or beneficiaries designated by the optionee in a
writing filed with the Committee in such form and at such time as the Committee
shall require. If a deceased optionee fails to designate a beneficiary, or if
the Designated Beneficiary does not survive the optionee, any rights that would
have been exercisable by the optionee and any benefits distributable to the
optionee shall be exercised by or distributed to the legal representative of the
estate of the optionee. If a deceased optionee designates a beneficiary but the
Designated Beneficiary dies before the Designated Beneficiary’s exercise of all
rights under the Plan or the option agreement or before the complete
distribution of benefits to the Designated Beneficiary under the option
agreement, then any rights that would have been exercisable by the Designated
Beneficiary shall be exercised by the legal representative of the estate of the
Designated Beneficiary, and any benefits distributable to the Designated
Beneficiary shall be distributed to the legal representative of the estate of
the Designated Beneficiary. 

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9.   Termination of Service 

(a)           Unless
otherwise determined by the Committee, and subject to such restrictions as may
be imposed by the Code in the case of any incentive stock options, in the event
that the employment or other period of service with the Company and the
Subsidiaries of an optionee to whom an option has been granted under the Plan
shall be terminated (except as set forth in Section 10), such option may,
subject to the provisions of the Plan, be exercised (to the extent that the
optionee was entitled to do so under the Plan and the optionee’s option
agreement at the termination of his employment or period of service) at any
time within three months after such termination, or, in the case of an employee
whose termination results from retirement from active employment at or after
age 55 (as determined by the Committee in its good faith discretion) within one
year after such termination, but in no case later than the date on which the
option expires; provided, however,
that any option held by an employee or consultant whose employment or service
with the Company or a Subsidiary is terminated for Cause shall forthwith
terminate, to the extent not theretofore exercised.   

(b)           Options
granted under the Plan shall not be affected by any change of duties or
position so long as the optionee holding any such option continues to be an
employee, director or consultant of the Company or any of its Subsidiaries,
subject to any applicable limitations on the holding of incentive stock options; provided, however, that, in the event an
employee becomes a consultant to the Company, the right of such employee to
retain his or her options shall be at the sole discretion of the Committee. Any
option agreement, or any rules and regulations relating to the Plan, may
contain such provisions as the Committee shall approve with reference to the
determination of the date employment or period of service with the Company and
any Subsidiary terminates and the effect of leaves of absence. Any such rules
and regulations with reference to any option agreement shall be consistent with
the provisions of the Code and any applicable rules and regulations thereunder.

(c)           Nothing
in the Plan or in any option granted pursuant to the Plan shall confer upon any
employee, director or consultant any right to continue in the employ of, or in
any other relationship with, the Company or any of its Subsidiaries or interfere
in any way with the right of the Company or any such Subsidiary to terminate
any such employment or other relationship at any time. 

(d)           At
any time after the termination of employment of the optionee for any reason,
including death or disability, the Company shall have the right to purchase any
and all Common Stock acquired pursuant to the exercise of an option granted
under the Plan from the optionee, the optionee’s legal representative, or any
person who acquires options or related Common Stock from the optionee by will
or the laws of descent and distribution (the “Selling
Shareholder”). The purchase price of any such Common Stock for which
the Company exercises its option to purchase shall be equal to the fair market
value of such Common Stock, as determined in good faith by the Board of
Directors; provided that any
shares which are not vested shares shall be subject to repurchase by the
Company at the purchase price therefore as set forth in the applicable option
agreement; and provided further,
that, in the event that, within six months after the purchase by the Company of
such Common Stock from a Selling Shareholder, (i) a Qualified IPO or (ii) other
event occurs which results in a change of ownership of a majority of the
outstanding capital stock of the Company at a per share price in excess of the
price paid by the Company to such Selling Shareholder, such Selling Shareholder
shall be entitled to an additional payment equal to the difference between what
such Selling Shareholder was paid by the Company for each of such Selling
Shareholder’s shares and the per share price paid in connection with Qualified
IPO or other transaction. The purchase price shall be paid in three equal
annual installments, together with interest on the unpaid balance at the rate
of two percentage points less than the prime rate of interest of the Company’s
principal banking institution. 

The Company by written notice to the Selling
Shareholder shall specify a date not less than 10 nor more than 30 days from
the date of such notice to consummate the purchase and sale of such Common
Stock at the principal office of the Company. In the event the Selling
Shareholder disputes the fair market value of the Common Stock to be purchased
by the Company pursuant to this Section 9(c), such Selling Shareholder may
engage an appraiser, who shall be experienced in making appraisals of entities
engaged in the business of the Company, to value the Common Stock within 30
days of the date of the Company’s notice to consummate the purchase and sale.
If such appraisal is within 10% of the value determined by the Board of
Directors, the fair market value shall be determined by taking the numerical
average of the values determined by the Selling Shareholder’s appraiser and the
Board of Directors. If the appraisal is not within 10% of the value determined
by the Board of Directors, then the Board of Directors and the Selling
Shareholder’s appraiser shall mutually select a second appraiser, similarly
qualified, within 10 days of the receipt of the appraisal by the Selling
Shareholder’s appraiser, and shall immediately so notify the parties. Within 20
days of appointing the second appraiser, the second appraiser shall select
either the valuation determined by the Board or the Selling Shareholder’s
appraiser, and such determination as to fair market value shall be final and
binding on the parties hereto. The Selling Shareholder shall bear the 

 7
 

cost of the Selling Shareholder’s appraiser, and the
Company and the Selling Shareholder shall equally share the costs of the second
appraiser, if any.

At the closing of the purchase of shares by the
Company, the Selling Shareholder shall duly endorse Company certificates
representing such Common Stock in proper form for transfer, and upon such
endorsement, the Company shall deliver to the Selling Shareholder a check in
the amount of the first installment of the purchase price. The second and third
installments shall be paid no later than the first and second anniversaries of
the first installment payment date. If the Selling Shareholder fails to
properly endorse the share certificates, the Company may deposit the first
installment of the purchase price (and subsequent installments if necessary)
with the Treasurer of the Company and thereafter the Common Stock shall be deemed
to have been transferred to the Company and the Selling Shareholder, despite
the failure to properly endorse the share certificates, shall have no further
rights as a stockholder of the Company. In such event, the Treasurer of the
Company shall continue to hold the purchase price for such Common Stock until
such time as the share certificates are properly endorsed and delivered to the
Company. If any payment is delayed by reason of the Selling Shareholder’s
failure to properly endorse and deliver the certificates, no interest shall be
paid for the period commencing with the due date of any such payment and ending
with the actual date of payment.

10.   Death or Total Disability of Optionee

If an optionee ceases to be an employee, director or
consultant of the Company or any Subsidiary by reason of “total disability,”
such optionee’s option may be exercised, to the extent that the optionee or a
Permitted Transferee of the option was entitled to do so at the termination of
employment or service with the Company or such a Subsidiary, as set forth
herein and in the optionee’s option agreement (subject to the restrictions set
forth in Section 7 or otherwise applicable with respect to persons subject to
Section 16(b) of the Exchange Act) at any time within one year after the date
of such termination of employment or service, but in no case later than the
date on which the option expires. If an optionee shall die while an employee,
director or consultant of the Company or its Subsidiaries or within three
months (or, in the case of an employee whose termination results from
disability or retirement from active employment at or after age 55, within one
year) after the termination of such employment or other relationship with the
Company or such a Subsidiary (other than termination for cause), such optionee’s
option may be exercised, to the extent that the optionee or a Permitted
Transferee of the option was entitled to do so at the termination of employment
or service with the Company or such as Subsidiary (or at the date of death, if
later), as set forth herein and in the optionee’s option agreement by the
optionee, a legatee or legatees of the optionee under the optionee’s last will,
by the optionee’s personal representatives or distributees or by the Permitted
Transferee, whichever is applicable, at any time within one year after the date
of the optionee’s death, but in no case later than the date on which the option
expires. For purposes hereof, “total
disability” is defined as the permanent inability of an optionee, as
a result of accident or sickness, to perform any and every duty pertaining to
such optionee’s occupation or employment for which the optionee is suited by
reason of the optionee’s previous training, education and experience, as
determined by the Committee in its good faith discretion, and, for purposes of
incentive stock options granted under the plan, “total disability” shall mean “permanent and total disability,”
as defined in Section 22(e)(3) of the Code.

11.   Adjustment upon Changes in
Capitalization, etc.  

(a)           Notwithstanding
any other provision of the Plan, in the event of distributions to holders of
Common Stock other than a normal cash dividend, changes in the outstanding
Common Stock by reason of stock dividends, recapitalizations, mergers, consolidations,
combinations or exchanges of shares, separations, reorganizations,
liquidations, “spin-offs” or similar capital changes, the Committee may, in its
sole discretion, make such adjustments to the number, class and kind of shares
available under the Plan and to the number, class, kind and price of shares
available under any outstanding option as it may deem appropriate to prevent
dilution or enlargement of the rights of optionees or otherwise to reflect such
capital changes. Any such determination by the Committee shall be conclusive.
No adjustment shall be made in respect of an incentive stock option if such
adjustment would disqualify such option as an incentive stock option under
Section 422 of the Code and the Treasury Regulations thereunder, unless the
Committee determines otherwise. No adjustment shall be made in the minimum
number of shares with respect to which an option may be exercised at any time.
Any fractional shares resulting from such adjustments to options shall be
eliminated. Notwithstanding the foregoing, in the event of a stock split or
other technical adjustment in the number of authorized and/or issued shares of
Common Stock, the Committee shall make such adjustments to the number, class
and kind of shares available under the Plan and to the number, class, kind and
price of shares available under any outstanding option as it may deem
appropriate to prevent dilution or enlargement of the rights of optionees or
otherwise to reflect such capital changes. 

 8
 

(b)           In
the event of a Change of Control, in addition to or in lieu of the any
acceleration of outstanding options described in Section 7(b):

(i)            In
its discretion, and on such terms and conditions as it deems appropriate, the
Committee may provide, either by the terms of the option agreement applicable
to any option or by resolution adopted prior to the occurrence of the Change of
Control, that any outstanding option shall be adjusted by substituting for
Common Stock subject to such option stock or other securities of the surviving
corporation or any successor corporation to the Company, or a parent or
subsidiary thereof, or that may be issuable by another corporation that is a
party to the transaction resulting in the Change of Control, whether or not
such stock or other securities are publicly traded, in which event the
aggregate option exercise price shall remain the same and the amount of shares
or other securities subject to the option shall be the amount of shares or
other securities which could have been purchased on the closing date or
expiration date of such transaction with the proceeds which would have been
received by the optionee if the option had been exercised in full (or with
respect to a portion of such option, as determined by the Committee, in its
discretion) prior to such transaction or expiration date and the optionee
exchanged all of such shares in the transaction.

(ii)           In
its discretion, and on such terms and conditions as it deems appropriate, the
Committee may provide, either by the terms of the option agreement applicable
to any option or by resolution adopted prior to the occurrence of the Change of
Control, that any outstanding option shall be converted into a right to receive
cash on or following the closing date or expiration date of the transaction
resulting in the Change of Control in an amount equal to the highest value of
the consideration to be received in connection with such transaction for one
share of Common Stock, less the per share option exercise price of such option,
multiplied by the number of shares of Common Stock subject to such option, or a
portion thereof. 

(iii)          The
Committee may, in its discretion, provide that an option cannot be exercised
after such a Change of Control, to the extent that such option is or becomes
fully exercisable on or before such Change of Control and/or is subject to any
acceleration, adjustment or conversion in accordance with Section 7(b) or the
foregoing subsections (i) or (ii) of this Section 11(b). 

No optionee shall have any right to prevent the
consummation of any of the foregoing acts affecting the number of shares of
Common Stock available to such optionee. Any actions or determinations of the
Committee under this Section 11(b) or Section 7(b) need not be uniform as to
all outstanding options, nor treat all optionees identically. Notwithstanding
the foregoing adjustments, in no event may any option be exercised after ten
(10) years from the date it was originally granted.

12.   Effective Date; Compliance
with Law; Optionee Acknowledgments 

(a)           The
Plan shall be effective as of the date on which the Plan is approved by the
stockholders of the Company, which approval shall occur within 12 months before
or after the date the Plan is adopted by the Board of Directors. The Committee
thereafter may, in its discretion, grant options under the Plan, the grant,
exercise or payment of which shall be expressly subject to the conditions that,
to the extent required at the time of grant, exercise or payment, (i) if the
Company deems it necessary or desirable, a Registration Statement under the
Securities Act of 1933, as amended (the “Securities
Act”), with respect to such shares shall be effective, and (ii) any
requisite approval or consent of any governmental authority of any kind having
jurisdiction over options granted under the Plan shall have been obtained.

(b)           If
at any time counsel to the Company shall be of the opinion that any sale or
delivery of shares of Common Stock pursuant to an option under the Plan is or
may be in the circumstance unlawful or result in the imposition of excise taxes
on the Company or any Subsidiary under the statutes, rules or regulations of
any applicable jurisdiction, the Company shall have no obligation to make such
sale or delivery, or to make any application or to effect or to maintain any
qualification or registration under the Securities Act, or otherwise with
respect to shares of Common Stock or option grants under the Plan and the right
to exercise any option shall be suspended until, in the opinion of such
counsel, such sale or delivery shall be lawful or will not result in the
imposition of excise taxes on the Company or any Subsidiary. 

 9
 

(c)           The
Committee may require each person receiving Common Stock in connection with an
award under the Plan to represent and agree with the Company in writing that
such person is acquiring the shares of Common Stock for investment without a
view to the distribution thereof. The Committee, in its absolute discretion,
may impose such restrictions on the ownership and transferability of shares of
Common Stock purchasable or otherwise receivable by any person under any award
as it deems appropriate. Any such restrictions shall be set forth in the
applicable option agreement, and the certificates evidencing such shares may
include any legend that the Committee deems appropriate to reflect any such
restrictions. The Committee may require an optionee to give prompt written
notice to the Company concerning any disposition of shares of Common Stock
received upon the exercise of an incentive stock option within: (i) two years
from the date of granting such incentive stock option to such optionee or (ii)
one year from the transfer of such shares of Common Stock to such optionee or
(iii) such other period as the Committee may from time to time determine. The
Committee may direct that an optionee undertake in the applicable option
agreement to give such notice described in the preceding sentence, at such time
and containing such information as the Committee may prescribe, and/or that the
certificates evidencing shares of Common Stock acquired by exercise of an
incentive stock option refer to such requirement to give such notice. 

(d)           By
accepting any benefit under the Plan, each optionee and each person claiming
under or through such optionee shall be conclusively deemed to have indicated
their acceptance and ratification of, and consent to, all of the terms and
conditions of the Plan and any action taken under the Plan by the Committee,
the Company or the Board of Directors, in any case in accordance with the terms
and conditions of the Plan.

 10
 

13.   Termination
and Amendment

The Plan shall be of unlimited duration; provided,
however, that, to the extent required by the Code, no incentive
stock option may be granted under the Plan on a date that is more than 10 years
from the effective date of the Plan set forth in Section 12. The Board of
Directors may suspend, terminate, modify or amend the Plan, provided that any modification or
amendment that would (a) increase the aggregate number of shares that may be
issued under the Plan; (b) decrease the minimum option exercise price
requirements of Section 5 or otherwise materially increase the benefits
accruing to optionees under the Plan; (c) extend the duration of the period
during which incentive stock options may be granted under the Plan or the
period during which options may be exercised under Section 6; or (d) modify the
requirements as to eligibility for participation in the Plan shall be subject
to the approval of the Company’s stockholders to the extent required by Rule
16b-3 under the Exchange Act, or any other governing rules or regulations,
except that any such increase in shares of Common Stock or decrease in option
exercise price that may result from adjustments authorized by Section 11 does
not require such approval. If the Plan is terminated, the terms of the Plan
shall, notwithstanding such termination, continue to apply to awards granted
prior to such termination. In addition, no suspension, termination,
modification or amendment of the Plan, other than as may result from adjustments
authorized by Section 11, may, without the consent of the optionee to whom an
option shall theretofore have been granted, materially adversely affect the
rights of such optionee under such option. The Committee may amend the terms of
any option theretofore granted under the Plan, including any agreement
evidencing any such option, retroactively or prospectively, but no such
amendment, other than as may result from adjustments authorized by Section 11,
shall materially impair the previously accrued right of any optionee under any
outstanding option without his or her written consent.

14.   Right of First Refusal.

Until the closing
of a Qualified IPO (as hereinafter defined), any transfer of shares of the
Company’s capital stock acquired by the exercise of an option granted pursuant
to this plan (such shares to be referred to herein as “Option Shares”) shall be subject to the
following: 

(a)           Any
holder of Option Shares proposing to effect a sale, transfer or other
disposition of all or any of his Option Shares (the “Offeror”) pursuant to a bona fide offer received from a third
party shall first offer the Company, by written notice (which shall contain all
the information necessary to enable the Company to make an informed decision,
including the identity of the Offeror and of the proposed transferee(s) and the
proposed terms, including price, of sale of the Option Shares), to purchase
such Option Shares on terms of the proposed transfer. The Company may accept
such offer in respect of all or any of the Option Shares by giving the Offeror
notice to that effect within 30 days after receipt of the offer. 

(b)           If
the Company agrees to purchase less than all of the Option Shares, the Offeror
shall be entitled to transfer all (but not less than all) of the remaining
Option Shares to the proposed transferee(s) identified in the Offer, provided, however, that in no event shall
the Offeror transfer any of the remaining Option Shares to any transferee on
terms more favorable to the buyer(s) than those stated in the Offer, and provided further that any of the remaining
Option Shares not transferred within 90 days after the expiration of such 30
day period shall again be subject to the provisions of this Section 14. 

(c)           For
the purposes of this Section 14, the term “Qualified
IPO” shall mean the closing of a firm commitment underwritten public
offering of shares of common stock of the Company pursuant to an effective
registration statement under the United States Securities Act of 1933, as
amended, which results in (i) aggregate net proceeds to the Company of at least
$20,000,000 and (ii) a price paid by the public for such shares of at least
$1.40 (as adjusted to reflect any stock splits, stock dividends, combinations,
subdivisions, recapitalizations or the like with respect to the common stock of
the Company). 

 11
 

15.   Lock-Up.

If an underwriter to any registration of the Company’s
securities so requests, any sale or other disposition of Option Shares may be
subject to a “lock-up” period restricting such sales or other dispositions for
up to 180 days beginning on the effective date of the registration statement
pursuant to which an Qualified IPO was effected, and all optionees shall abide
by such customary “lock-up” as is required by the underwriter in such
registration; provided, however,
that all persons entitled to registration rights with respect to shares of
common stock of the Company which are not also Option Shares, all other persons
selling shares of common stock of the Company in such offering, all persons
holding in excess of 2% of the capital stock of the Company on a fully diluted
basis and all executive officers and directors of the Company shall also have
agreed not to sell publicly their common stock under the circumstances and
pursuant to the terms set forth in this Section 15; and provided, further, however, that any such
lock-up agreement shall provide that if the underwriter releases any shares
from the lock-up with respect to such offering prior to the scheduled
expiration date, the underwriter shall contemporaneously release a pro rata portion of the Option Shares from
such lock-up.

In addition, no optionee may participate in any
underwritten registration unless such person (i) agrees to sell such person’s
securities on the basis provided in any customary underwriting arrangements and
(ii) provides any relevant information and completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements, and
other documents required under the terms of such underwriting arrangements.

16.   Written Agreements

Each grant of options shall be evidenced by a written
agreement, executed by the optionee and the Company, which shall contain such
restrictions, terms and conditions, not inconsistent with the terms and
conditions of the Plan, as the Committee may require. Each such option
agreement shall state whether such option will be treated as an incentive stock
option or non-qualified option. The form of the non-qualified option agreement
is attached hereto as Appendix A, the form of the non-qualified option
agreement for outside directors is attached hereto as Appendix B, the form of
the incentive stock option agreement is attached hereto as Appendix C and the
form of the Israeli 102 stock option agreement is attached hereto as Appendix
D.

17.   Effect on Other Stock
Plans; Governing Law 

(a)           The
adoption of the Plan shall have no effect on option grants made or to be made,
pursuant to other stock plans or otherwise, to employees, directors or
consultants of the Company or its Subsidiaries, or any predecessors or
successors thereto. 

(b)           The
Plan shall be governed by and construed in accordance with the laws of the
State of Delaware, without regard to such state’s conflict of law provisions,
and, in any event, except as superseded by applicable Federal law. 

Signature
appears on following page

IN WITNESS WHEREOF, the Company has caused
its duly authorized officer to execute this Plan as of the 25th day of November, 2003. 

	
  

  	
  APPILOG, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Irwin Wallach, President

  

 

Signature
Page to Stock Option Plan

 

 12EXHIBIT 4.4

FRESHWATER SOFTWARE, INC.

1997 STOCK PLAN 

(As of April 2000)

1.             Purposes
of the Plan. The purposes of this Stock Plan are to attract and retain the best
available personnel for positions of substantial responsibility, to provide
additional incentive to Employees and Consultants of the Company and its
Subsidiaries 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 of an Option
and subject to the applicable provisions of Section 422 of the Code and the
regulations promulgated thereunder. 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 appointed pursuant to Section 4 of the
Plan. 

(b)           “Applicable
Laws” means the legal requirements relating to the administration of stock
option plans under U.S. state corporate laws, U.S. federal and state securities
laws, the Code 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 appointed by the Board of Directors in accordance with
Section 4 of the Plan. 

(f)            “Common
Stock” means the Common Stock of the Company. 

(g)           “Company”
means Freshwater Software, Inc., a California corporation. 

(h)           “Consultant”
means any person who is engaged by the Company or any Parent or Subsidiary to
render consulting or advisory services and is compensated for such services,
and any Director of the Company whether compensated for such services or not.
If the Company registers any class of any equity security pursuant to the
Exchange Act, the term Consultant shall thereafter not include Directors who
are not compensated for their services or are paid only a Director’s fee by the
Company. 

(i)            “Continuous
Status as an Employee or Consultant” means that the employment or consulting
relationship with the Company, any Parent or Subsidiary is not interrupted or
terminated. Continuous Status as an Employee or Consultant shall not be
considered interrupted 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. A leave of absence approved
by the Company shall include sick leave, military leave, or any other personal
leave approved by an authorized representative of the Company. 

 1
 

For
purposes of Incentive Stock Options, no such leave may exceed 90 days, unless
reemployment upon expiration of such leave is guaranteed by statute or
contract, including Company policies. If reemployment upon expiration of a
leave of absence approved by the Company is not so guaranteed, on the 91st 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. 

(j)            “Director”
means a member of the Board of Directors of the Company. 

(k)           “Employee”
means any person, including Officers and Directors, employed by the Company or
any Parent or Subsidiary of the Company. The payment of a Director’s fee by the
Company shall not 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, its Fair Market Value 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; or 

(iii)          In
the absence of an established market for the Common Stock, the Fair Market
Value thereof 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. 

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

(p)           “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. 

(q)           “Option”
means a stock option granted pursuant to the Plan. 

(r)            “Optioned
Stock” means the Common Stock subject to an Option or a Stock Purchase Right. 

 2
 

(s)           “Optionee”
means an Employee or Consultant who receives an Option or Stock Purchase Right.

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

(u)           “Plan”
means this 1997 Stock Plan. 

(v)           “Restricted
Stock” means shares of Common Stock acquired pursuant to a grant of a Stock
Purchase Right under Section 11 below. 

(w)          “Section
16(b)” means Section 16(b) of the Securities Exchange Act of 1934, as amended. 

(x)            “Share”
means a share of the Common Stock, as adjusted in accordance with Section 12
below. 

(y)           “Stock
Purchase Right” means a right to purchase Common Stock pursuant to Section 11
below. 

(z)            “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 12 of the Plan, the
maximum aggregate number of Shares which may be subject to option and sold
under the Plan is 5,090,908 Shares. 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). However,
Shares that have actually been issued under the Plan, upon exercise of either
an Option or Stock Purchase 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, and the original purchaser of such Shares did not receive any
benefits of ownership of such Shares, such Shares shall become available for
future grant under the Plan. For purposes of the preceding sentence, voting
rights shall not be considered a benefit of Share ownership.

4.             Administration
of the Plan. 

(a)           Initial
Plan Procedure. Prior to the date, if any, upon which the Company becomes
subject to the Exchange Act, the Plan shall be administered by the Board or a
Committee appointed by the Board. 

(b)           Plan
Procedure After the Date, if any, upon Which the Company becomes Subject to the
Exchange Act. 

(i)            Multiple
Administrative Bodies. If permitted by Rule 16b-3, the Plan may be administered
by different bodies with respect to Directors, Officers and Employees who are
neither Directors nor Officers. 

 3
 

(ii)           Administration
With Respect to Directors and Officers. With respect to grants of Options and
Stock Purchase Rights to Employees who are also Officers or Directors of the
Company, the Plan shall be administered by (A) the Board if the Board may
administer the Plan in compliance with the rules under Rule 16b-3 promulgated
under the Exchange Act or any successor thereto (“Rule 16b-3”) relating to the disinterested
administration of employee benefit plans under which Section 16(b) exempt
discretionary grants and awards of equity securities are to be made, or (B) a
Committee designated by the Board to administer the Plan, which Committee shall
be constituted to comply with the rules under Rule 16b-3 relating to the
disinterested administration of employee benefit plans under which Section
16(b) exempt discretionary grants and awards of equity securities are to be
made. Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From time to time the Board may
increase the size of the Committee and appoint additional members thereof,
remove members (with or without cause) and appoint new members in substitution
therefor, fill vacancies, however caused, and remove all members of the
Committee and thereafter directly administer the Plan, all to the extent
permitted by the rules under Rule 16b-3 relating to the disinterested
administration of employee benefit plans under which Section 16(b) exempt
discretionary grants and awards of equity securities are to be made. 

(iii)          Administration
With Respect to Other Employees and Consultants. With respect to grants of
Options and Stock Purchase Rights to Employees or Consultants who are neither
Directors nor Officers of the Company, the Plan shall be administered by (A)
the Board or (B) a Committee designated by the Board, which committee shall be
constituted in such a manner as to satisfy Applicable Laws. Once appointed,
such Committee shall continue to serve in its designated capacity until
otherwise directed by the Board. From time to time the Board may increase the
size of the Committee and appoint additional members thereof, remove members
(with or without cause) and appoint new members in substitution therefor, fill
vacancies, however caused, and remove all members of the Committee and
thereafter directly administer the Plan, all to the extent permitted by the
Applicable Laws. 

(c)           Powers
of the Administrator. Subject to the provisions of the Plan and, in the case of
a Committee, the specific duties delegated by the Board to such Committee, and
subject to the approval of any relevant authorities, including the approval, if
required, of any stock exchange upon which the Common Stock is listed, the
Administrator shall have the authority in its discretion: 

(i)            to
determine the Fair Market Value of the Common Stock, in accordance with Section
2(m) of the Plan; 

(ii)           to
select the Consultants and Employees to whom Options and Stock Purchase Rights
may from time to time be granted hereunder; 

(iii)          to
determine whether and to what extent Options and Stock Purchase Rights or any
combination thereof are granted hereunder; 

(iv)          to
determine the number of Shares to be covered by each such award granted
hereunder; 

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

 4
 

(vi)          to
determine the terms and conditions of any award granted hereunder; 

(vii)         to
determine whether and under what circumstances an Option may be settled in cash
under subsection 9(f) instead of Common Stock; 

(viii)        to
reduce the exercise price of any Option to the then current Fair Market Value
if the Fair Market Value of the Common Stock covered by such Option has
declined since the date the Option was granted; and 

(ix)           to
construe and interpret the terms of the Plan and awards granted pursuant to the
Plan. 

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

5.             Eligibility.

(a)           Nonstatutory
Stock Options and Stock Purchase Rights may be granted to Employees and
Consultants. Incentive Stock Options may be granted only to Employees. An
Employee or Consultant who has been granted an Option or Stock Purchase Right
may, if otherwise eligible, be granted additional Options or Stock Purchase
Rights. 

(b)           Each
Option shall be designated in the written 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 5(b),
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. 

(c)           Neither
the Plan nor any Option or Stock Purchase Right shall confer upon any Optionee
any right with respect to continuation of his or her employment or consulting
relationship with the Company, nor shall it interfere in any way with his or
her right or the Company’s right to terminate his or her employment or
consulting relationship at any time, with or without cause. 

6.             Term
of Plan. The Plan shall become effective upon the earlier to occur of its
adoption by the Board of Directors or its approval by the shareholders of the
Company, as described in Section 18 of the Plan. It shall continue in effect
for a term of ten (10) years unless sooner terminated under Section 14 of the
Plan.

 5
 

7.             Term
of Option. The term of each Option shall be the term 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
granted to an Optionee who, at the time the 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 term of the Option shall
be five (5) years from the date of grant thereof or such shorter term as
may be provided in the Option Agreement.

8.             Option
Exercise Price and Consideration. 

(a)           The
per share exercise price for the Shares to be issued upon exercise of an Option
shall be such price as is determined by the Administrator, but shall be subject
to the following: 

(i)            In
the case of an Incentive Stock Option 

(A)          granted
to an Employee who, at the time of grant of such Option, 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 other Employee, 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 person who, at the time of grant of such Option, 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 the grant. 

(B)           granted
to any other person, the per Share exercise price shall be no less than 85% of
the Fair Market Value per Share on the date of grant. 

 6
 

(b)           The
consideration to be paid for the Shares to be issued upon exercise of an
Option, including the method of payment, shall be determined by the
Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant). Such consideration may consist of (1) cash,
(2) check, (3) promissory note, (4) other Shares which (x) 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 (y) have a Fair Market Value
on the date of surrender equal to the aggregate exercise price of the Shares as
to which such Option shall be exercised, (5) delivery of a properly executed
exercise notice together with such other documentation as the Administrator and
a broker, if applicable, shall require to effect an exercise of the Option and
delivery to the Company of the sale or loan proceeds required to pay the
exercise price, or (6) any combination of the foregoing methods of payment. In
making its determination as to the type of consideration to accept, the
Administrator shall consider if acceptance of such consideration may be
reasonably expected to benefit the Company. 

9.             Exercise
of Option. 

(a)           Procedure
for Exercise; Rights as a Shareholder. Any Option granted hereunder shall be
exercisable at such times and under such conditions as determined by the
Administrator, including performance criteria with respect to the Company
and/or the Optionee, and as shall be permissible under the terms of the Plan,
but in no case at a rate of less than 20% per year over five (5) years from the
date the Option is granted. 

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

An Option shall be deemed to be exercised when written
notice of such exercise has been given to the Company in accordance with the
terms of the Option by the person entitled to exercise the Option and full
payment for the Shares with respect to which the Option is exercised has been
received by the Company. Full payment may, as authorized by the Administrator,
consist of any consideration and method of payment allowable under Section 8(b)
hereof. Until the issuance (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company) of the
stock certificate evidencing such Shares, no right to vote, receive dividends
or any other rights as a shareholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Company shall issue (or
cause to be issued) such stock certificate promptly upon exercise of the
Option. No adjustment shall be made for a dividend or other right for which the
record date is prior to the date the stock certificate is issued, except as
provided in Section 12 hereof.

Exercise of an
Option in any manner shall result in a decrease in the number of Shares which
thereafter may be 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.

 7
 

(b)           Termination
of Employment or Consulting Relationship. In the event of termination of an
Optionee’s Continuous Status as an Employee or Consultant (but not in the event
of an Optionee’s change of status from Employee to Consultant (in which case an
Employee’s Incentive Stock Option shall automatically convert to a Nonstatutory
Stock Option on the date three (3) months and one day following such change of
status) or from Consultant to Employee), such Optionee may, but only within
such period of time as is determined by the Administrator, of at least thirty
(30) days, with such determination in the case of an Incentive Stock Option not
exceeding three (3) months after the date of such termination (but in no event
later than the expiration date of the term of such Option as set forth in the
Option Agreement), exercise his or her Option to the extent that the Optionee
was entitled to exercise it at the date of such termination. To the extent that
the Optionee was not entitled to exercise the Option at the date of such
termination, or if the Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate. 

(c)           Disability
of Optionee. In the event of termination of an Optionee’s Continuous Status as
an Employee or Consultant as a result of his or her disability, the Optionee
may, but only within twelve (12) months from the date of such termination (and
in no event later than the expiration date of the term of such Option as set
forth in the Option Agreement), exercise the Option to the extent otherwise
entitled to exercise it at the date of such termination. If such disability is
not a “disability” as such term is defined in Section 22(e)(3) of the Code, in
the case of an Incentive Stock Option such Incentive Stock Option shall
automatically cease to be treated as an Incentive Stock Option and shall be
treated for tax purposes as a Nonstatutory Stock Option on the day three months
and one day following such termination. To the extent that the Optionee was not
entitled to exercise the Option at the date of termination, or if the Optionee
does not exercise such Option to the extent so entitled 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. In the event of the death of an Optionee, the Option may be
exercised at any time within twelve (12) months following 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 estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only to
the extent that the Optionee was entitled to exercise the Option on the date of
death. If, at the time of death, the Optionee was not entitled to exercise his
or her entire Option, the Shares covered by the unexercisable portion of the
Option shall immediately revert to the Plan. If, after the Optionee’s death,
the Optionee’s estate or a person who acquires the right to exercise the Option
by bequest or inheritance does not exercise the Option within the time
specified herein, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan. 

(e)           Rule
16b-3. Options granted to persons subject to Section 16(b) of the Exchange Act
must comply with Rule 16b-3 and shall contain such additional conditions or
restrictions as may be required thereunder to qualify for the maximum exemption
from Section 16 of the Exchange Act with respect to Plan transactions. 

 8
 

(f)            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. 

10.           Non-Transferability
of Options and Stock Purchase Rights. Options and Stock Purchase Rights may not
be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee.

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 of
the terms, conditions and restrictions related to the offer, including the
number of Shares that such person shall be entitled to purchase, the price to
be paid, and the time within which such person must accept such offer, which
shall in no event exceed thirty (30) days from the date upon which the
Administrator makes the determination to grant the Stock Purchase Right. The
offer shall be accepted by execution of a Restricted Stock purchase agreement
in the form determined by the Administrator. Shares purchased pursuant to the
grant of a Stock Purchase Right shall be referred to herein as “Restricted
Stock.” 

(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 employment 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 such rate as the Administrator may determine, 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. In addition, the
provisions of Restricted Stock purchase agreements need not be the same with
respect to each purchaser. 

(d)           Rights
as a Shareholder. Once the Stock Purchase Right is exercised, the purchaser
shall have rights equivalent to those of a shareholder and shall be a
shareholder when his or her purchase is entered upon the records of the duly
authorized transfer agent of the Company. No adjustment shall 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 12 of the Plan. 

 9
 

12.           Adjustments
Upon Changes in Capitalization or Merger. 

(a)           Changes
in Capitalization. Subject to any required action by the shareholders of the
Company, the number of shares of Common Stock covered by each outstanding
Option or 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. The 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 the Optionee at least fifteen (15) days
prior to such proposed action. To the extent it has not been previously
exercised, the Option or Stock Purchase Right shall terminate immediately prior
to the consummation of such proposed action. 

(c)           Merger.
In the event of a merger of the Company with or into another corporation, each
outstanding Option or Stock Purchase Right may be assumed or an equivalent
option or right may be substituted by such successor corporation or a parent or
subsidiary of such successor corporation. If, in such event, an Option or Stock
Purchase Right is not assumed or substituted, the Option or Stock Purchase
Right shall terminate as of the date of the closing of the merger. For the
purposes of this paragraph, the Option or Stock Purchase Right shall be
considered assumed if, following the merger, the Option or Stock Purchase 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,
the consideration (whether stock, cash, or other securities or property)
received in the merger by holders of Common Stock for each Share held on the
effective date of the transaction (and if the holders are offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares). If such consideration received in the merger 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. 

13.           Time
of Granting Options and Stock Purchase Rights. The date of grant of an Option
or Stock Purchase Right shall, for all purposes, be the date on which the
Administrator makes the determination granting such Option or Stock Purchase
Right, or such other date as is determined by the Administrator. Notice of the
determination shall be given to each Employee or Consultant to whom an Option
or Stock Purchase Right is so granted within a reasonable time after the date
of such grant.

14.           Amendment
and Termination of the Plan.

 10
 

(a)           Amendment
and Termination. The Board may at any time amend, alter, suspend or discontinue
the Plan, but no amendment, alteration, suspension or discontinuation shall be
made which would impair the rights of any Optionee under any grant theretofore
made, without his or her consent. In addition, to the extent necessary and
desirable to comply with Rule 16b-3 under the Exchange Act or with Section 422
of the Code (or any other applicable law or regulation, including the
requirements of the NASD or an established stock exchange), the Company shall
obtain shareholder approval of any Plan amendment in such a manner and to such
a degree as required. 

(b)           Effect
of Amendment or Termination. Any such amendment or termination of the Plan
shall not affect Options or Stock Purchase Rights already granted, and such
Options and Stock Purchase Rights shall remain in full force and effect as if
this Plan had not been amended or terminated, unless mutually agreed otherwise
between the Optionee and the Administrator, which agreement must be in writing
and signed by the Optionee and the Company. 

15.           Conditions
Upon Issuance of Shares. 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 pursuant thereto
shall comply with all relevant provisions of law, including, without
limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules
and regulations promulgated thereunder, and the requirements of any stock
exchange upon which the Shares may then be listed, and shall be further subject
to the approval of counsel for the Company with respect to such compliance.

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 by any of the aforementioned relevant provisions of law.

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

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.

17.           Agreements.
Options and Stock Purchase Rights shall be evidenced by written agreements in
such form as the Administrator shall approve from time to time.

18.           Shareholder
Approval. Continuance of the Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months before or after the date
the Plan is adopted. Such shareholder approval shall be obtained in the degree
and manner required under Applicable Laws and the rules of any stock exchange
upon which the Common Stock is listed.

19.           Information
to Optionees and Purchasers. 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 Optionee or purchaser has one or more
Options or Stock Purchase Rights 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

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