Document:

1998 Nonstatutory Stock Option Plan

 
EXHIBIT 10.30

 
POWER INTEGRATIONS, INC. 
 
1998 NONSTATUTORY STOCK OPTION PLAN 
 
1.    ESTABLISHMENT,
PURPOSE AND TERM OF PLAN. 
 
1.1    Establishment.    The Power Integrations, Inc. 1998 Nonstatutory
Stock Option Plan (the “Plan”) is hereby established effective as of July 1, 1998. 
 
1.2    Purpose.    The purpose of the Plan is to advance the interests of
the Participating Company Group and its stockholders by providing an incentive to attract, retain and reward persons performing services for the Participating Company Group and by motivating such persons to contribute to the growth and profitability
of the Participating Company Group. 
 
1.3    Term of Plan.    The Plan shall continue in effect until the earlier of its termination by the Board or the date on which all of the shares of Stock available for issuance under
the Plan have been issued and all restrictions on such shares under the terms of the Plan and the agreements evidencing Options granted under the Plan have lapsed. 
 
2.    DEFINITIONS AND
CONSTRUCTION. 
 
2.1    Definitions.    Whenever used herein, the following terms shall have their respective meanings set forth below: 
 
(a)    “Board” means the Board of Directors of the Company. If one or more Committees have been appointed by the Board to administer the Plan, “Board” also means
such Committee(s). 
 
(b)    “Code” means the Internal Revenue Code of 1986, as amended, and any applicable regulations promulgated thereunder. 
 
(c)    “Committee” means the Compensation
Committee or other committee of the Board duly appointed to administer the Plan and having such powers as shall be specified by the Board. Unless the powers of the Committee have been specifically limited, the Committee shall have all of the powers
of the Board granted herein, including, without limitation, the power to amend or terminate the Plan at any time, subject to the terms of the Plan and any applicable limitations imposed by law. 
 
(d)    “Company” means Power Integrations, Inc., a Delaware corporation, or any successor corporation thereto. 
 

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(e)    “Consultant” means any person, including an advisor, engaged by a Participating Company to render services other than as an Employee or a Director. 
 
(f)    “Director” means a member of the Board or of the board of directors of any other Participating Company. 
 
(g)    “Disability” means the inability of the
Optionee, in the opinion of a qualified physician acceptable to the Company, to perform the major duties of the Optionee’s position with the Participating Company group because of the sickness or injury of the Optionee. 
 
(h)    “Employee” means any person treated as an employee (including an officer or a Director who is also treated as an employee) in the records of a Participating Company; provided,
however, that neither service as a Director nor payment of a director’s fee shall be sufficient to constitute employment for purposes of the Plan. 
 
(i)    “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 
(j)    “Fair Market Value” means, as of any date, the value of a share of Stock or other property as determined by the Board, in its sole discretion, or by the Company, in its sole
discretion, if such determination is expressly allocated to the Company herein, subject to the following: 
 
(i)    If, on such date, there is a public market for the Stock, the Fair Market Value of a share of
Stock shall be the closing sale price of a share of Stock (or the mean of the closing bid and asked prices of a share of Stock if the Stock is so quoted instead) as quoted on the Nasdaq National Market, the Nasdaq Small-Cap Market or such other
national or regional securities exchange or market system constituting the primary market for the Stock, as reported in the Wall Street Journal or such other source as the Company deems reliable. If the relevant date does not fall on a day on
which the Stock has traded on such securities exchange or market system, the date on which the Fair Market Value shall be established shall be the last day on which the Stock was so traded prior to the relevant date, or such other appropriate day as
shall be determined by the Board, in its sole discretion. 
 
(ii)    If, on such date, there is no public market for the Stock, the Fair Market Value of a share of Stock shall be as determined by the Board without regard to any restriction
other than a restriction which, by its terms, will never lapse. 
 
(k)    “Option” means a right to purchase Stock (subject to adjustment as provided in Section 4.2) pursuant to the terms and conditions of the Plan. Options
are intended to be nonstatutory stock options and shall not be treated as incentive stock options within the meaning of Section 422(b) of the Code. 
 
(l)    “Option Agreement” means a written agreement between the Company and an
Optionee setting forth the terms, conditions and restrictions of the Option granted to the Optionee and any shares acquired upon the exercise thereof. 
 

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(m)    “Optionee” means a person who has been granted one or more Options. 
 
(n)    “Parent Corporation” means any present or future “parent
corporation” of the Company, as defined in Section 424(e) of the Code. 
 
(o)    “Participating Company” means the Company or any Parent Corporation or Subsidiary Corporation. 
 
(p)    “Participating Company Group” means, at any point in time, all corporations collectively which are then Participating Companies. 
 
(q)    “Securities Act” means the Securities Act of 1933, as amended. 
 
(r)    “Service” means an Optionee’s employment or service with the
Participating Company Group, whether in the capacity of an Employee, a Director or a Consultant. The Optionee’s Service shall not be deemed to have terminated merely because of a change in the capacity in which the Optionee renders Service to
the Participating Company Group or a change in the Participating Company for which the Optionee renders such Service, provided that there is no interruption or termination of the Optionee’s Service. Furthermore, an Optionee’s Service with
the Participating Company Group shall not be deemed to have terminated if the Optionee takes any military leave, sick leave, or other bona fide leave of absence approved by the Company; provided, however, that if any such leave exceeds ninety (90)
days, on the ninety-first (91st) day of such leave the Optionee’s Service shall be deemed to have terminated unless the Optionee’s right to return to Service with the Participating Company Group is guaranteed by statute or contract.
Notwithstanding the foregoing, unless otherwise designated by the Company or required by law, a leave of absence shall not be treated as Service for purposes of determining vesting under the Optionee’s Option Agreement. The Optionee’s
Service shall be deemed to have terminated either upon an actual termination of Service or upon the corporation for which the Optionee performs Service ceasing to be a Participating Company. Subject to the foregoing, the Company, in its sole
discretion, shall determine whether the Optionee’s Service has terminated and the effective date of such termination. 
 
(s)    “Stock” means the common stock of the Company, as adjusted from time to
time in accordance with Section 4.2. 
 
(t)    “Subsidiary Corporation” means any present or future “subsidiary corporation” of the Company, as defined in Section 424(f) of the Code. 
 
2.2    Construction.    Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of the Plan. Except when
otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise. 
 
3.    ADMINISTRATION. 
 

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3.1    Administration by the Board.    The Plan shall be administered by the Board. All questions of interpretation of the Plan or of any Option shall be determined by the Board, and
such determinations shall be final and binding upon all persons having an interest in the Plan or such Option. Any officer of a Participating Company shall have the authority to act on behalf of the Company with respect to any matter, right,
obligation, determination or election which is the responsibility of or which is allocated to the Company herein, provided the officer has apparent authority with respect to such matter, right, obligation, determination or election. 
 
3.2    Powers of the
Board.    In addition to any other powers set forth in the Plan and subject to the provisions of the Plan, the Board shall have the full and final power and authority, in its sole discretion: 
 
(a)    to determine the
persons to whom, and the time or times at which, Options shall be granted and the number of shares of Stock to be subject to each Option; 
 
(b)    to determine the Fair Market Value of shares of Stock or other property; 
 
(c)    to determine the
terms, conditions and restrictions applicable to each Option (which need not be identical) and any shares acquired upon the exercise thereof, including, without limitation, (i) the exercise price of the Option, (ii) the method of payment for shares
purchased upon the exercise of the Option, (iii) the method for satisfaction of any tax withholding obligation arising in connection with the Option or such shares, including by the withholding or delivery of shares of stock, (iv) the timing, terms
and conditions of the exercisability of the Option or the vesting of any shares acquired upon the exercise thereof, (v) the time of the expiration of the Option, (vi) the effect of the Optionee’s termination of Service with the Participating
Company Group on any of the foregoing, and (vii) all other terms, conditions and restrictions applicable to the Option or such shares not inconsistent with the terms of the Plan; 
 
(d)    to approve one or more forms of Option Agreement; 
 
(e)    to amend, modify,
extend, cancel, renew, reprice or otherwise adjust the exercise price of, or grant a new Option in substitution for, any Option or to waive any restrictions or conditions applicable to any Option or any shares acquired upon the exercise thereof;

 
(f)    to
accelerate, continue, extend or defer the exercisability of any Option or the vesting of any shares acquired upon the exercise thereof, including with respect to the period following an Optionee’s termination of Service with the Participating
Company Group; 
 
(g)    to prescribe, amend or rescind rules, guidelines and policies relating to the Plan, or to adopt supplements to, or alternative versions of, the Plan, including, without limitation, as the Board deems
necessary or desirable to comply with the laws of, or to 
 

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accommodate
the tax policy or custom of, foreign jurisdictions whose citizens may be granted Options; and 
 
(h)    to correct any defect, supply any omission or reconcile any inconsistency in the Plan or any
Option Agreement and to make all other determinations and take such other actions with respect to the Plan or any Option as the Board may deem advisable to the extent consistent with the Plan and applicable law. 
 
4.    SHARES
SUBJECT TO PLAN. 
 
4.1    Maximum Number of Shares Issuable.    Subject to adjustment as
provided in Section 4.2, the maximum aggregate number of shares of Stock that may be issued under the Plan shall be 1,000,000 and shall consist of authorized but unissued or reacquired shares of Stock or any combination thereof. If an outstanding
Option for any reason expires or is terminated or canceled or shares of Stock acquired, subject to repurchase, upon the exercise of an Option are repurchased by the Company, the shares of Stock allocable to the unexercised portion of such Option, or
such repurchased shares of Stock, shall again be available for issuance under the Plan. 
 
4.2    Adjustments for Changes in Capital Structure.    In the event of any
stock dividend, stock split, reverse stock split, recapitalization, combination, reclassification or similar change in the capital structure of the Company, appropriate adjustments shall be made in the number and class of shares subject to the Plan,
and to any outstanding Options and in the exercise price per share of any outstanding Options. If a majority of the shares which are of the same class as the shares that are subject to outstanding Options are exchanged for, converted into, or
otherwise become (whether or not pursuant to an Ownership Change Event, as defined in Section 8.1) shares of another corporation (the “New Shares”), the Board may unilaterally amend the outstanding Options to provide that
such Options are exercisable for New Shares. In the event of any such amendment, the number of shares subject to, and the exercise price per share of, the outstanding Options shall be adjusted in a fair and equitable manner as determined by the
Board, in its sole discretion. Notwithstanding the foregoing, any fractional share resulting from an adjustment pursuant to this Section 4.2 shall be rounded up or down to the nearest whole number, as determined by the Board, and in no event may the
exercise price of any Option be decreased to an amount less than the par value, if any, of the stock subject to the Option. The adjustments determined by the Board pursuant to this Section 4.2 shall be final, binding and conclusive. 
 
5.    ELIGIBILITY. 
 
Options may be granted only to Employees and Consultants; provided, however, that no Option shall be granted to any person
whose eligibility to receive an Option under the Plan at the time of grant would require the approval of the Company’s stockholders pursuant to any applicable law, regulation or rule, including, without limitation, the rules applicable to the
listing of the Company’s securities on the Nasdaq National Market System. For purposes of the foregoing sentence, “Employees” and “Consultants” shall include prospective Employees and prospective
Consultants to whom Options are granted in connection with written offers of an 
 

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employment or
other service relationship with the Participating Company Group. Eligible persons may be granted more than one (1) Option. 
 
6.    TERMS AND CONDITIONS OF
OPTIONS. 
 
Options shall be evidenced by Option Agreements specifying the number of shares of Stock covered thereby, in such form as the Board shall from time to time establish. No Option or purported Option shall be a valid and binding
obligation of the Company unless evidenced by a fully executed Option Agreement. Option Agreements may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:

 
6.1    Exercise Price.    The exercise price for each Option shall be established in the sole discretion of the Board; provided, however, that the exercise price per share for an Option
shall be not less than eighty-five percent (85%) of the Fair Market Value of a share of Stock on the effective date of grant of the Option, Notwithstanding the foregoing, an Option may be granted with an exercise price lower than the minimum
exercise price set forth above if such Option is granted pursuant to an assumption or substitution for another option in a manner qualifying under the provisions of Section 424(a) of the Code. 
 
6.2    Exercise
Period.    Options shall be exercisable at such time or times, or upon such event or events, and subject to such terms, conditions, performance criteria, and restrictions as shall be determined by the Board and set forth in
the Option Agreement evidencing such Option; provided, however, that no Option granted to a prospective Employee or prospective Consultant may become exercisable prior to the date on which such person commences Service with a Participating Company.

 
6.3    Payment of Exercise Price. 
 
(a)    Forms of Consideration Authorized.    Except as otherwise
provided below, payment of the exercise price for the number of shares of Stock being purchased pursuant to any Option shall be made (i) in cash, by check, or cash equivalent, (ii) by tender to the Company of shares of Stock owned by the Optionee
having a Fair Market Value (as determined by the Company without regard to any restrictions on transferability applicable to such stock by reason of federal or state securities laws or agreements with an underwriter for the Company) not less than
the exercise price, (iii) by the assignment of the proceeds of a sale or loan with respect to some or all of the shares being acquired upon the exercise of the Option (including, without limitation, through an exercise complying with the provisions
of Regulation T as promulgated from time to time by the Board of Governors of the Federal Reserve System) (a “Cashless Exercise”), (iv) by the Optionee’s promissory note in a form approved by the Company, (v) by such
other consideration as may be approved by the Board from time to time to the extent permitted by applicable law, or (vi) by any combination thereof. The Board may at any time or from time to time, by adoption of or by amendment to the standard
form(s) of Option Agreement described in Section 7, or by other means, grant Options which do not permit all of the foregoing forms of consideration to be used in payment of the exercise price or which otherwise restrict one or more forms of
consideration. 
 

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(b)    Tender of Stock.    Notwithstanding the foregoing, an Option may not be exercised by tender to the Company of shares of Stock to the extent such tender of Stock would
constitute a violation of the provisions of any law, regulation or agreement restricting the redemption of the Company’s stock. Unless otherwise provided by the Board, an Option may not be exercised by tender to the Company of shares of Stock
unless such shares either have been owned by the Optionee for more than six (6) months or were not acquired, directly or indirectly, from the Company. 
 
(c)    Cashless Exercise.    The Company reserves, at any and all
times, the right, in the Company’s sole and absolute discretion, to establish, decline to approve or terminate any program or procedures for the exercise of Options by means of a Cashless Exercise. 
 
(d)    Payment by
Promissory Note.    No promissory note shall be permitted if the exercise of an Option using a promissory note would be a violation of any law. Any permitted promissory note shall be on such terms as the Board shall
determine at the time the Option is granted. The Board shall have the authority to permit or require the Optionee to secure any promissory note used to exercise an Option with the shares of Stock acquired upon the exercise of the Option or with
other collateral acceptable to the Company. Unless otherwise provided by the Board, if the Company at any time is subject to the regulations promulgated by the Board of Governors of the Federal Reserve System or any other governmental entity
affecting the extension of credit in connection with the Company’s securities, any promissory note shall comply with such applicable regulations, and the Optionee shall pay the unpaid principal and accrued interest, if any, to the extent
necessary to comply with such applicable regulations. 
 
6.4    Tax Withholding.    The Company shall have the right, but not the obligation, to deduct from the shares of Stock issuable upon the exercise of an Option, or to accept
from the Optionee the tender of, a number of whole shares of Stock having a Fair Market Value, as determined by the Company, equal to all or any part of the federal, state, local and foreign taxes, if any, required by law to be withheld by the
Participating Company Group with respect to such Option or the shares acquired upon the exercise thereof. Alternatively or in addition, in its sole discretion, the Company shall have the right to require the Optionee, through payroll withholding,
cash payment or otherwise, including by means of a Cashless Exercise, to make adequate provision for any such tax withholding obligations of the Participating Company Group arising in connection with the Option or the shares acquired upon the
exercise thereof. The Company shall have no obligation to deliver shares of Stock or to release shares of Stock from an escrow established pursuant to the Option Agreement until the Participating Company Group’s tax withholding obligations have
been satisfied by the Optionee. 
 
6.5    Repurchase Rights.    Shares issued under the Plan may be subject to a right of first refusal, one or more repurchase options, or other conditions and restrictions as determined
by the Board in its sole discretion at the time the Option is granted. The Company shall have the right to assign at any time any repurchase right it may have, whether or not such right is then exercisable, to one or more persons as may be selected
by the Company. Upon request by the Company, each Optionee shall execute any agreement evidencing such transfer restrictions prior to the receipt of shares of Stock hereunder and shall promptly present to the 
 

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Company any
and all certificates representing shares of Stock acquired hereunder for the placement on such certificates of appropriate legends evidencing any such transfer restrictions. 
 
6.6    Effect of Termination of Service. 
 
(a)    Option
Exercisability.    Subject to earlier termination of the Option as otherwise provided herein, an Option shall be exercisable after an Optionee’s termination of Service as follows: 
 
(i)    Disability.    If the Optionee’s Service with the Participating Company Group is terminated because of the Disability of the Optionee, the Option, to the extent unexercised
and exercisable on the date on which the Optionee’s Service terminated, may be exercised by the Optionee (or the Optionee’s guardian or legal representative) at any time prior to the expiration of six (6) months (or such longer or shorter
period of time as determined by the Board, in its sole discretion) after the date on which the Optionee’s Service terminated, but in any event no later than the date of expiration of the Option’s term as set forth in the Option Agreement
evidencing such Option (the “Option Expiration Date”). 
 
(ii)    Death.    If the Optionee’s Service with the Participating Company Group is terminated because of the death of the Optionee, the Option, to
the extent unexercised and exercisable on the date on which the Optionee’s Service terminated, may be exercised by the Optionee’s legal representative or other person who acquired the right to exercise the Option by reason of the
Optionee’s death at any time prior to the expiration of six (6) months (or such longer or shorter period of time as determined by the Board, in its sole discretion) after the date on which the Optionee’s Service terminated, but in any
event no later than the Option Expiration Date. The Optionee’s Service shall be deemed to have terminated on account of death if the Optionee dies within three (3) months after the Optionee’s termination of Service. 
 
(iii)    Other
Termination of Service.    If the Optionee’s Service with the Participating Company Group terminates for any reason, except Disability or death, the Option, to the extent unexercised and exercisable by the Optionee on
the date on which the Optionee’s Service terminated, may be exercised by the Optionee within three (3) months (or such longer or shorter period of time as determined by the Board, in its sole discretion) after the date on which the
Optionee’s Service terminated, but in any event no later than the Option Expiration Date. 
 
(b)    Extension if Exercise Prevented by
Law.    Notwithstanding the foregoing, if the exercise of an Option within the applicable time periods set forth in Section 6.6(a) is prevented by the provisions of Section 12 below, the Option shall remain
exercisable until three (3) months after the date the Optionee is notified by the Company that the Option is exercisable, but in any event no later than the Option Expiration Date. 
 
(c)    Extension if Optionee Subject to Section
16(b).    Notwithstanding the foregoing, if a sale within the applicable time periods set forth in Section 6.6(a) of shares acquired upon the exercise of the Option would subject the Optionee to suit under Section 16(b)

 

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of the
Exchange Act, the Option shall remain exercisable until the earliest to occur of (i) the tenth (10th) day following the date on which a sale of such shares by the Optionee would no longer be subject to such suit, (ii) the one hundred and ninetieth
(190th) day after the Optionee’s termination of Service, or (iii) the Option Expiration Date. 
 
7.    STANDARD FORM OF OPTION
AGREEMENT. 
 
7.1    General.    Unless otherwise provided by the Board at the time the Option is granted, an Option shall comply with and be subject to the terms and conditions set forth in
the form of Immediately Exercisable Nonstatutory Stock Option Agreement adopted by the Board concurrently with its adoption of the Plan and as amended from time to time. 
 
7.2    Standard Term of Options.    Except as
otherwise provided by the Board in the grant of an Option, any Option granted hereunder shall have a term of ten (10) years from the effective date of grant of the Option. 
 
7.3    Authority to Vary Terms.    The Board
shall have the authority from time to time to vary the terms of any standard form of Option Agreement described in this Section 7 either in connection with the grant or amendment of an individual Option or in connection with the authorization of a
new standard form or forms; provided, however, that the terms and conditions of any such new, revised or amended standard form or forms of Option Agreement shall be in accordance with the terms of the Plan. 
 
8.    CHANGE
IN CONTROL. 
 
8.1    Definitions. 
 
(a)    An “Ownership Change Event” shall be deemed to have occurred if any of
the following occurs with respect to the Company: 
 
(i)    the direct or indirect sale or exchange in a single or series of related transactions by the stockholders of the Company of more than fifty percent (50%) of the voting stock of the Company;

 
(ii)    a
merger or consolidation in which the Company is a party; 
 
(iii)    the sale, exchange, or transfer of all or substantially all of the assets of the Company; or 
 
(iv)    a liquidation or dissolution of the Company. 
 
(b)    A
“Change in Control” shall mean an Ownership Change Event or a series of related Ownership Change Events (collectively, the “Transaction”) wherein the stockholders of the Company immediately before the
Transaction do not retain immediately after the Transaction, in substantially the same proportions as their ownership of shares of the Company’s voting stock immediately before the Transaction, direct or indirect beneficial ownership of more
than fifty percent (50%) of the total combined voting power of the 
 

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outstanding
voting stock of the Company or the corporation or corporations to which the assets of the Company were transferred (the “Transferee Corporation(s)”), as the case may be. For purposes of the preceding sentence, indirect
beneficial ownership shall include, without limitation, an interest resulting from ownership of the voting stock of one or more corporations which, as a result of the Transaction, own the Company or the Transferee Corporation(s), as the case may be,
either directly or through one or more subsidiary corporations. The Board shall have the right to determine whether multiple sales or exchanges of the voting stock of the Company or multiple Ownership Change Events are related, and its determination
shall be final, binding and conclusive. 
 
8.2    Effect of Change in Control on Options.    In the event of a Change in Control, the surviving, continuing, successor, or purchasing corporation or parent corporation thereof, as
the case may be (the “Acquiring Corporation”), may either assume the Company’s rights and obligations under outstanding Options or substitute for outstanding Options substantially equivalent options for the Acquiring
Corporation’s stock. For purposes of this Section 8.2, an Option shall be deemed assumed if, following the Change in Control, the Option confers the right to purchase in accordance with its terms and conditions, for each share of Stock subject
to the Option immediately prior to the Change in Control, the consideration (whether stock, cash or other securities or property) to which a holder of a share of Stock on the effective date of the Change in Control was entitled. Any Options which
are neither assumed or substituted for by the Acquiring Corporation in connection with the Change in Control nor exercised as of the date of the Change in Control shall terminate and cease to be outstanding effective as of the date of the Change in
Control. Notwithstanding the foregoing, shares acquired upon exercise of an Option prior to the Change in Control and any consideration received pursuant to the Change in Control with respect to such shares shall continue to be subject to all
applicable provisions of the Option Agreement evidencing such Option except as otherwise provided in such Option Agreement. Furthermore, notwithstanding the foregoing, if the corporation the stock of which is subject to the outstanding Options
immediately prior to an Ownership Change Event described in Section 8.1(a)(i) constituting a Change in Control is the surviving or continuing corporation and immediately after such Ownership Change Event less than fifty percent (50%) of the total
combined voting power of its voting stock is held by another corporation or by other corporations that are members of an affiliated group within the meaning of Section 1504(a) of the Code without regard to the provisions of Section 1504(b) of the
Code, the outstanding Options shall not terminate unless the Board otherwise provides in its sole discretion. 
 
9.    PROVISION OF INFORMATION.

 
Each Optionee shall be given
access to information concerning the Company equivalent to that information generally made available to the Company’s common stockholders. 
 
10.    NONTRANSFERABILITY OF OPTIONS.

 
During the lifetime of the
Optionee, an Option shall be exercisable only by the Optionee or the Optionee’s guardian or legal representative. No Option shall be assignable or transferable by the Optionee, except by will or by the laws of descent and distribution.

 

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11.    COMPLIANCE WITH SECURITIES LAW. 
 
The grant of Options and the issuance of shares of Stock upon exercise of Options shall be
subject to compliance with all applicable requirements of federal, state or foreign law with respect to such securities. Options may not be exercised if the issuance of shares of Stock upon exercise would constitute a violation of any applicable
federal, state or foreign securities laws or other law or regulations or the requirements of any stock exchange or market system upon which the Stock may then be listed. In addition, no Option may be exercised unless (a) a registration statement
under the Securities Act shall at the time of exercise of the Option be in effect with respect to the shares issuable upon exercise of the Option or (b) in the opinion of legal counsel to the Company, the shares issuable upon exercise of the Option
may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the
Company’s legal counsel to be necessary to the lawful issuance and sale of any shares hereunder shall relieve the Company of any liability in respect of the failure to issue or sell such shares as to which such requisite authority shall not
have been obtained. As a condition to the exercise of any Option, the Company may require the Optionee to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any
representation or warranty with respect thereto as may be requested by the Company. 
 
12.    INDEMNIFICATION. 
 
In addition to such other rights of indemnification as they may have as members of the Board or officers or employees of
the Participating Company Group, members of the Board and any officers or employees of the Participating Company Group to whom authority to act for the Board or the Company is delegated shall be indemnified by the Company against all reasonable
expenses, including attorneys’ fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any
action taken or failure to act under or in connection with the Plan, or any right granted hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the
Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such person is liable for gross negligence, bad
faith or intentional misconduct in duties; provided, however, that within sixty (60) days after the institution of such action, suit or proceeding, such person shall offer to the Company, in writing, the opportunity at its own expense to handle and
defend the same. 
 
13.    TERMINATION OR AMENDMENT OF PLAN. 
 
The Board may terminate or amend the Plan at any time. However, no termination or amendment
of the Plan may adversely affect any then outstanding Option or any unexercised portion thereof, without the consent of the Optionee, unless such termination or amendment is necessary to comply with any applicable law, regulation or rule.

 

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IN WITNESS
WHEREOF, the undersigned Secretary of the Company certifies that the foregoing is the Power Integrations, Inc. 1998 Nonstatutory Stock Option Plan as duly adopted by the Board on July 1, 1998. 
 

	
	 /s/    ROBERT G. STAPLES

	 Robert G. Staples, Secretary

 
 

12Amended and Restated 1998 Stock Option Plan

Exhibit 10.1 
 
CYBERSOURCE CORPORATION 
 
1998 STOCK OPTION PLAN 
 
(amended December 31, 1998) 
(amended and restated February 26, 2003) 
 
1. PURPOSE. This 1998 Stock Option Plan1
(“Plan”) is established as a compensatory plan to attract, retain and provide equity incentives to selected persons to promote the financial success of CyberSource Corporation, a Delaware Corporation (formerly Internet Commerce Services
Corporation (the “Company”)). Capitalized terms not previously defined herein are defined in Section 18 of this Plan. 
 
2. TYPES OF OPTIONS AND SHARES. Options granted under this Plan (the “Options”) may be either (a) incentive stock
options (“ISOs”) within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or (b) nonqualified stock options (“NQSOs”), as designated at the time of grant. The shares of stock that
may be purchased upon exercise of Options granted under this Plan (the “Shares”) are shares of Common Stock of the Company (“Common Stock”). 
 
3. NUMBER OF SHARES. The aggregate number of Shares that may be issued pursuant to Options
granted under this Plan is 3,800,000 Shares, subject to adjustment as provided in this Plan. If any Option expires or is terminated without being exercised in whole or in part, the unexercised or released Shares from such Option shall be available
for future grant and purchase under this Plan. At all times during the term of this Plan, the Company shall reserve and keep available such number of Shares as shall be required to satisfy the requirements of outstanding Options under this Plan.

 
4. ELIGIBILITY. 
 
(a) General Rules of
Eligibility. Options may be granted to employees, officers, directors, consultants, independent contractors and advisors (provided such consultants, contractors and advisors render bona fide services not in connection with the offer and sale
of securities in a capital-raising transaction) of the Company or any Parent, Subsidiary or Affiliate of the Company. ISOs may be granted only to employees (including officers and directors who are also employees) of the Company or a Parent or
Subsidiary of the Company. The Committee (as defined in Section 15) in its sole discretion shall select the recipients of Options (“Optionees”). An Optionee may be granted more than one Option under this Plan. 
 
(b) Company Assumption of
Options. The Company may also, from time to time, assume outstanding options granted by another company, whether in connection with an acquisition of such other company or otherwise, by either (i) granting an Option under this Plan

	1	 	Approved by the Company’s Board of Directors on March 17, 1998. Approved by the Company’s Shareholders on March 17, 1998. 

 

1 

in replacement of the Option assumed by the Company, or (ii) treating the assumed option as if it had been granted under this Plan if the
terms of such assumed option could be applied to an Option granted under this Plan. Such assumption shall be permissible if the holder of the assumed option would have been eligible to be granted an Option hereunder if the other company had applied
the rules of this Plan to such grant. 
 
5.
TERMS AND CONDITIONS OF OPTIONS. The Committee shall determine whether each Option is to be an ISO or an NQSO, the number of Shares subject to the Option, the exercise price of the Option, the period during which the Option may be exercised,
and all other terms and conditions of the Option, subject to the following: 
 
(a) Form of Option Grant. Each Option granted under this Plan shall be evidenced by a written Stock Option Grant (the “Grant”) in substantially the form attached hereto as
Exhibit A or such other form as shall be approved by the Committee. 
 
(b) Date of Grant. The date of grant of an Option shall be the date on which the Committee makes the determination to grant such Option unless otherwise specified by the Committee and
subject to applicable provisions of the Code. The Grant representing the Option will be delivered to the Optionee with a copy of this Plan within a reasonable time after the date of grant; provided, however, that if, for any reason, including a
unilateral decision by the Company not to execute an agreement evidencing such option, a written Grant is not executed within sixty (60) days after the date of grant, such option shall be deemed null and void. No Option shall be exercisable until
such Grant is executed by the Company and the Optionee. 
 
(c) Exercise Price. The exercise price of an NQSO shall be not less than eighty-five percent (85%) of the Fair Market Value of the Shares on the date the Option is granted. The exercise price of an ISO shall be
not less than one hundred percent (100%) of the Fair Market Value of the Shares on the date the Option is granted. The exercise price of any Option granted to a person owning more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or any Parent or Subsidiary of the Company (“Ten Percent Shareholders”) shall not be less than one hundred ten percent (110%) of the Fair Market Value of the Shares on the date the Option is granted.

 
(d) Exercise
Period. Options shall be exercisable within the times or upon the events determined by the Committee as set forth in the Grant; provided, however, that each Option must become exercisable at a rate of at least twenty percent (20%) per year
over five (5) years from the date the Option is granted; provided further, that no Option shall be exercisable after the expiration of ten (10) years from the date the Option is granted; and provided further, that no ISO granted to a Ten Percent
Shareholder shall be exercisable after the expiration of five (5) years from the date the Option is granted. 
 
(e) Limitations on Options. The aggregate Fair Market Value (determined as of the time an Option is granted)
of stock with respect to which ISOs are exercisable for the first time by an Optionee during any calendar year (under this Plan or under any other incentive stock option plan of the Company or any Parent or Subsidiary of the Company) shall not
exceed one hundred thousand dollars ($100,000). To the extent that the Fair Market Value of stock with respect to which ISOs are exercisable for the first time by an Optionee during any calendar year 

 

2 

exceeds $100,000, the Options for the amount in excess of $ 100,000 shall be treated as not being ISOs and shall be treated as NQSOs. The
foregoing shall be applied by taking Options into account in the order in which they were granted. In the event that the Code or the regulations promulgated thereunder are amended after the effective date of this Plan to provide for a different
limit on the Fair Market Value of Shares permitted to be subject to ISOs, such different limit shall be incorporated herein and shall apply to any Options granted after the effective date of such amendment. The foregoing provisions of this Plan
notwithstanding, no Optionee shall be granted Options under this Plan in any one fiscal year which in the aggregate shall permit the Optionee to purchase more than 500,000 shares of Common Stock, provided that a newly-hired Optionee may in addition
receive a one-time Option grant to purchase up to an additional 500,000 shares of Common Stock upon acceptance of employment with the Company or any Parent, Subsidiary or Affiliate of the Company. To the extent the Board of Directors of the Company
determines that limitations such as the provisions of this Section 5(e) are no longer required to preserve the deductibility for the Company of option-related compensation under Section 162(m) of the Code, the Board of Directors may modify or
eliminate the limitations contained in this Section 5(e). 
 
(f) Options Non-Transferable. Options granted under this Plan, and any interest therein, shall not be transferable or assignable by the Optionee, and may not be made subject to execution,
attachment or similar process, otherwise than by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionee only by the Optionee or any permitted transferee. 
 
(g) Assumed Options. In the
event the Company assumes an option granted by another company in accordance with Section 4(b) above, the terms and conditions of such option shall remain unchanged (except the exercise price and the number and nature of shares issuable upon
exercise, which will be adjusted appropriately pursuant to Section 424 of the Code and the Treasury Regulations applicable thereto). In the event the Company elects to grant a new Option rather than assuming an existing option (as specified in
Section 4), such new Option need not be granted at Fair Market Value on the date of grant and may instead be granted with a similarly adjusted exercise price. 
 
(h) Termination of Options. Except as otherwise provided in an Optionee’s Grant, Options granted under
the Plan shall terminate and may not be exercised if the Optionee ceases to be employed by, or provide services to, the Company or any Parent or Subsidiary of the Company (or, in the case of a NQSO, by or to any Affiliate of the Company). An
Optionee shall be considered to be employed by the Company for all purposes under this Section 5(h) if the Optionee is an officer, director or full-time employee of the Company or any Parent, Subsidiary or Affiliate of the Company or if the
Committee determines that the Optionee is rendering substantial services as a part-time employee, consultant, contractor or advisor to the Company or any Parent, Subsidiary or Affiliate of the Company. The Committee shall have discretion to
determine whether an Optionee has ceased to be employed by the Company or any Parent, Subsidiary or Affiliate of the Company and the effective date on which such employment terminated (the “Termination Date”). 
 

3 

 
(i) Termination Generally. If an Optionee ceases to be employed by the Company and all Parents, Subsidiaries or Affiliates of the Company for any reason except death or disability, the Options which are then exercisable
(and only to the extent exercisable) (the “Vested Options”) by the Optionee on the Termination Date, may be exercised by the Optionee, but only within three months after the Termination Date or such shorter period of time as provided in
the Grant, but in no event less than thirty (30) days; provided that Options may not be exercised in any event after the Expiration Date. 
 
(ii) Death or Disability. If an Optionee’s employment with the Company and all Parents, Subsidiaries
and Affiliates of the Company is terminated because of the death of the Optionee or the permanent and total disability of the Optionee within the meaning of Section 22(e)(3) of the Code, the Vested Options, as determined on the Termination Date, may
be exercised by the Optionee (or the Optionee’s legal representative), but only within twelve (12) months after the Termination Date; and provided further that Options may not be exercised in any event later than the Expiration Date. If an
Optionee’s employment with the Company and all Parents, Subsidiaries and Affiliates of the Company is terminated because of a disability of the Optionee which is not permanent and total within the meaning of Section 22(e)(3) of the Code, the
Vested Options, as determined on the Termination Date, may be exercised by the Optionee or the Optionee’s legal representative, but only within six (6) months after the Termination Date; and provided further that Options may not be exercised in
any event later than the Expiration Date. 
 
6.
EXERCISE OF OPTIONS. 
 
(a) Notices. Options may be exercised only by delivery to the Company of a written exercise agreement in a form approved by the Committee (which need not be the same for each Optionee), stating the number of Shares
being purchased, the restrictions imposed on the Shares, if any, and such representations and agreements regarding the Optionee’s investment intent and access to information, if any, as may be required by the Company to comply with applicable
securities laws, together with payment in full of the exercise price for the number of Shares being purchased. 
 
(b) Payment. Payment for the Shares may be made in cash (by check) or, where permitted by law any of the
following methods approved by the Committee at the date of grant of this option, or any combination thereof: (i) by cancellation of indebtedness of the Company to the Optionee; (ii) by surrender of shares of Common Stock of the Company already owned
by the Optionee, having a Fair Market Value equal to the exercise price of the Option; (iii) by waiver of compensation due or accrued to Optionee for services rendered; (iv) through delivery of a promissory note for the full exercise price bearing
interest at such rate with the note due at such time, on a secured or unsecured basis, as determined by the Committee; (v) provided that a public market for the Company’s stock exists, through a “same day sale” commitment from the
Optionee and a broker-dealer that is a member of the National Association of Securities Dealers, Inc. (an “NASD Dealer”) whereby the Optionee irrevocably elects to exercise the Option and to sell a portion of the Shares so purchased to pay
for the exercise price and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the exercise price 

 

4 

directly to the Company; and/or (vi) provided that a public market for the Company’s stock exists, through a “margin”
commitment from the Optionee and an NASD Dealer whereby the Optionee irrevocably elects to exercise the Option and to pledge the Shares so purchased to the NASD Dealer in a margin account as security for a loan from the NASD Dealer in the amount of
the exercise price, and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the exercise price directly to the Company. 
 
(c) Withholding Taxes. Prior to issuance of the Shares upon exercise of an Option, the Optionee shall pay or
make adequate provision for any federal or state withholding obligations of the Company, if applicable. Where approved by the Committee in its sole discretion, the Optionee may provide for payment of withholding taxes upon exercise of the Option by
requesting that the Company retain Shares with a Fair Market Value equal to the minimum amount of taxes required to be withheld. In such case, the Company shall issue the net number of Shares to the Optionee by deducting the Shares retained from the
Shares exercised. The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined in accordance with Section 83 of the Code (the “Tax Date”). All elections by
Optionees to have Shares withheld for this purpose shall be made in writing in a form acceptable to the Committee and shall be subject to the following restrictions: 
 
(i) the election must be made on or prior to the applicable Tax Date; 
 
(ii) once made, the election shall be
irrevocable as to the particular Shares as to which the election is made; 
 
(iii) all elections shall be subject to the consent or disapproval of the Committee; 
 
(iv) if the Optionee is an officer or director of the Company or other person (in each case, an “Insider”) whose
transactions in the Company’s Common Stock are subject to Section 16(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and if the Company is subject to Section 16(b) of the Exchange Act, the election must
comply with Rule 16b-3 as promulgated by the Securities and Exchange Commission (“Rule 16b-3”). 
 
(d) Limitations on Exercise. Notwithstanding anything else to the contrary in the Plan or any Grant, no
Option may be exercisable later than the expiration date of the Option. 
 
7. RESTRICTIONS ON SHARES. At the discretion of the Committee, the Company may reserve to itself and/or its assignee(s) in the Grant (a) a right of first refusal to purchase all Shares that an Optionee (or a
subsequent transferee) may propose to transfer to a third party and/or (b) for so long as the Company’s stock is not publicly traded, a right to repurchase a portion of or all Shares held by an Optionee upon the Optionee’s termination of
employment or service with the Company or its Parent, Subsidiary or Affiliate of the Company for any reason within a specified time as determined by the Committee at the time of grant at the higher of (i) the Optionee’s original purchase price
or, (ii) the Fair Market Value of such Shares. 
 

5 

 
8.
MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. The Committee shall have the power to modify, extend or renew outstanding Options and to authorize the grant of new Options in substitution therefor, provided that any such action may
not, without the written consent of the Optionee, impair any rights under any Option previously granted. Any outstanding ISO that is modified, extended, renewed or otherwise altered shall be treated in accordance with Section 424(h) of the Code. The
Committee shall have the power to reduce the exercise price of outstanding options; provided, however, that the exercise price per share may not be reduced below the minimum exercise price that would be permitted under Section 5(c) of this Plan for
options granted on the date the action is taken to reduce the exercise price. 
 
9. PRIVILEGES OF STOCK OWNERSHIP. No Optionee shall have any of the rights of a shareholder with respect to any Shares subject to an Option until such Option is properly exercised. No
adjustment shall be made for dividends or distributions or other rights for which the record date is prior to such date, except as provided in this Plan. The Company shall provide to each Optionee, regardless of the reports provided to shareholders
in general, a copy of the annual financial statements of the Company within a reasonable time frame following the end of the fiscal year of the Company. 
 
10. NO OBLIGATION TO EMPLOY; NO RIGHT TO FUTURE GRANTS. Nothing in this Plan or any Option granted under this Plan shall
confer on any Optionee any right (a) to continue in the employ of, or other relationship with, the Company or any Parent or Subsidiary of the Company or limit in any way the right of the Company or any Parent, Subsidiary or Affiliate of the Company
to terminate the Optionee’s employment or other relationship at any time, with or without cause, or (b) to have any Option(s) granted to such Optionee under this Plan, or any other plan, or to acquire any other securities of the Company, in the
future. 
 
11. ADJUSTMENT OF OPTION
SHARES. In the event that the number of outstanding shares of Common Stock of the Company is changed by a stock dividend, stock split, reverse stock split, combination, reclassification or similar change in the capital structure of the
Company without consideration, or if a substantial portion of the assets of the Company are distributed, without consideration in a spin-off or similar transaction, to the shareholders of the Company, the number of Shares available under this Plan
and the number of Shares subject to outstanding Options and the exercise price per share of such Options shall be proportionately adjusted, subject to any required action by the Board or shareholders of the Company and compliance with applicable
securities laws; provided, however, that a fractional share shall not be issued upon exercise of any Option and any fractions of a Share that would have resulted shall either be cashed out at Fair Market Value or the number of Shares issuable under
the Option shall be rounded down to the nearest whole number, as determined by the Committee; and provided further that the exercise price may not be decreased to below the par value, if any, for the Shares. 
 
12. ASSUMPTION OF OPTIONS BY SUCCESSORS.

 

6 

 
(a) In the event of (i) a merger or consolidation as a result of which the holders of voting securities of the Company prior to the transaction hold shares representing less than 51% of the voting securities of the Company after
giving effect to the transaction (other than a merger or consolidation with a wholly-owned subsidiary or where there is no substantial change in the shareholders of the corporation and the Options granted under this Plan are assumed by the successor
corporation), or (ii) the sale of all or substantially all of the assets of the Company, any or all outstanding Options shall be assumed by the successor corporation, which assumption shall be binding on all Optionees, an equivalent option shall be
substituted by such successor corporation or the successor corporation shall provide substantially similar consideration to Optionees as was provided to shareholders (after taking into account the existing provisions of the Optionees’ options
such as the exercise price and the vesting schedule), and, in the case o outstanding shares subject to a repurchase option, issue substantially similar shares or other property subject to repurchase restrictions no less favorable to the Optionee.

 
(b) In the event such successor
corporation, if any, refuses to assume or substitute, as provided above, pursuant to an event described in subsection (a) above, or in the event of a dissolution or liquidation of the Company, the Options shall, notwithstanding any contrary terms in
the Grant, expire on a date specified in a written notice given by the Committee to the Optionees specifying the terms and conditions of such termination (which date shall be at least twenty (20) days after the date the Committee gives the written
notice). 
 
13. ADOPTION AND SHAREHOLDER
APPROVAL. The Plan became effective when adopted by the Board of Directors (the “Board”) on March 17, 1998. The shareholders of the Company also approved the Plan on March 17, 1998. On December 31, 1998, the Board adopted and
approved and amendment to the Plan removing Director Formula Grants. On February 26, 2003, the Board adopted and approved an amendment and restatement of the Plan to revise the definition of Fair Market Value such that the fair market value of a
share of Common Stock of the Company shall be determined based on the closing price for a share on the date of determination, which amendment is not subject to approval by the shareholders of the Company. 
 
14. ADMINISTRATION. This Plan may be
administered by the Board or a Committee appointed by the Board (the “Committee”). At all times during which the Company is registered under the Exchange Act, the Committee shall be comprised solely of two or more Non-Employee Directors.
As used in this Plan, references to the “Committee” shall mean either such Committee or the Board if no committee has been established. The interpretation by the Committee of any of the provisions of this Plan, any related agreements, or
any Option granted under this Plan shall be final and binding upon the Company and all persons having an interest in any Option or any Shares purchased pursuant to an Option. All references herein to the 
 
15. TERM OF PLAN. Options may be granted
pursuant to this Plan from time to time on or prior to March 16, 2008, a date which is less than ten years after the earlier of the date of approval of this Plan by the Board or the shareholders of the Company pursuant to Section 14 of this Plan.

 

7 

 
16.
AMENDMENT OR TERMINATION OF PLAN. The Board or Committee 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 Option theretofore granted, without his or her consent, or which, without the approval of the shareholders of the Company would: 
 
(a) except as provided in Section 12 of the Plan, increase the total number of Shares reserved for the purposes of the
Plan; 
 
(b) extend the duration
of the Plan; 
 
(c) extend the
period during and over which Options may be exercised under the Plan; or 
 
(d) change the class of persons eligible to receive Options granted hereunder (except as may be required to comport with changes in the Code, ERISA or regulations promulgated thereunder). 
 
Without limiting the foregoing, the Board or Committee may at
any time or from time to time authorize the Company, with the consent of the respective Optionees, to issue new Options in exchange for the surrender and cancellation of any or all outstanding Options. 
 
17. CERTAIN DEFINITIONS. As used in this Plan,
the following terms shall have the following meanings: 
 
(a) “Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if, at the time of the granting of the Option, each of the corporations other
than the Company owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. 
 
(b) “Subsidiary” means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the time of the granting of the Option, each of the corporations other than the last corporation in the unbroken chain owns stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations in such chain. 
 
(c) “Affiliate” means software.net Corporation, a Delaware corporation, and any corporation that
directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, another corporation, where “control” (including the terms “controlled by” and “under common control
with”) means the possession, direct or indirect, of the power to cause the direction of the management and policies of the corporation, whether through the ownership of voting securities, by contract or otherwise. 
 
(d) “Non-employee
Directors” shall have the meaning set forth in Rule 16b-3(b)(3) as promulgated by the Securities and Exchange Commission under Section 16(b) of the 

 

8 

Exchange Act, as such rule is amended from time to time and as interpreted by the Securities and Exchange Commission. 
 
(e) “Fair Market
Value” shall mean, 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 on the date of determination (or, if no closing sales price or closing bid was reported on that date, as applicable, on the last trading date such closing sales price or closing bid was reported), as reported in The Wall Street Journal or
such other source as the Committee deems reliable; 
 
(ii) If the Common Stock is regularly quoted on an automated quotation system (including the OTC Bulletin Board) or by a recognized securities dealer, but selling prices are not reported, the Fair Market Value of a share of
Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on the date of determination (or, if no such prices were reported on that date, on the last date such prices were reported), as reported in The Wall Street
Journal or such other source as the Committee deems reliable; or 
 
(iii) In the absence of an established market for the Common Stock of the type described in (i) and (ii), above, the Fair Market Value thereof shall be determined by the Committee in good faith.

 
18. APPLICABLE LAW AND
REGULATIONS. The obligations of the Company under this Plan are subject to the approval of state and federal authorities or agencies with jurisdiction over the subject matter hereof. The Company shall not be obligated to issue or deliver
shares under this Plan if such issuance or delivery would violate applicable state or federal securities laws. 
 
 

9 

 
EXHIBIT
A 
 
STOCK OPTION GRANT

 
Optionee:
                                        
                                        
                                        
                          
 
Address:
                                        
                                        
                                        
                           
 
Total Shares Subject to Option:
                                        
                                        
                             
 
Exercise Price Per Share:
                                        
                                        
                                       
  
 
Date of Grant:
                                        
                                        
                                        
                   
 
Expiration Date of Option:
                                        
                                        
                                     
 

	      Type of Stock Option:
	 	 Incentive:    
__________                    

	 	 	 Nonqualified: _________

 
1.
Grant of Option. CyberSource Corporation, a Delaware corporation (the “Company”), hereby grants to the optionee named above (“Optionee”) an option (this “Option”) to purchase the total number of shares of
Common Stock (“Common Stock”) of the Company set forth above (the “Shares”) at the exercise price per share set forth above (the “Exercise Price”), subject to all of the terms and conditions of this Grant and the
Company’s 1998 Stock Option Plan, as amended to the date hereof (the “Plan”). If designated as an Incentive Stock Option above, this Option is intended to qualify as an “incentive stock option” (“ISO”) within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to them in the Plan. 
 
2. Exercise Period of Option 
 
(a) (ISOs). The Optionee has
option rights hereunder to purchase a total of                  Shares which shall become exercisable during the time periods as set forth in this Section
2. On and after                  [one year from date of grant], this Option may be exercised by the Optionee for the purchase of
                 [fraction] of the Shares covered by this Option
(                 Shares), or any portion thereof. On or after the last day of each full month following
                 [one year from the date of grant] this Option may be exercised by the Optionee for the purchase of an additional [fraction] of the Shares covered
by this Option (Shares), or any portion thereof. Once a portion of this Option becomes exercisable it shall remain exercisable until the Expiration Date, or until it terminates pursuant to the terms of Section 4 hereof, whichever is first to occur.

 
(b) (NQSOs). The
Optionee has option rights hereunder to purchase a total of                  Shares which shall become exercisable by the Optionee at any time on or after
nine (9) months after                 . Once a portion of this Option becomes exercisable it shall remain exercisable until the Expiration Date, or until
it terminates pursuant to the terms of Section 4 hereof, whichever is first to occur. 
 

10 

 
(c) The minimum number of Shares that may be purchased upon any partial exercise of the Option is one hundred (100) shares; and 
 
(d) This Option shall expire on the Expiration Date set forth above and must be exercised, if at all, on or before the
Expiration Date. The portion of Shares as to which an Option is exercisable in accordance with the above schedule as of the applicable dates shall be deemed “Vested Options.” 
 
3. Restriction on Exercise. This Option may not be exercised unless such exercise is in
compliance with the Securities Act of 1933, as amended, and all applicable state securities laws, as they are in effect on the date of exercise, and the requirements of any stock exchange or over-the-counter market on which the Company’s Common
Stock may be listed or quoted at the time of exercise. Optionee understands that the Company is under no obligation to register, qualify or list the Shares with the Securities and Exchange Commission, any state securities commission or any stock
exchange to effect such compliance. 
 
4.
Termination of Option. Except as provided below in this Section 4, this Option shall terminate and may not be exercised if Optionee ceases to be employed by, or provide services to, the Company or by any Parent or Subsidiary of the
Company (or, in the case of a nonqualified stock option, by or to any Affiliate of the Company). Optionee shall be considered to be employed by the Company for all purposes under this Section 4 if Optionee is an officer, director or full-time
employee of the Company or any Parent, Subsidiary or Affiliate of the Company or if the Committee determines that Optionee is rendering substantial services as a part-time employee, consultant, contractor or advisor to the Company or any Parent,
Subsidiary or Affiliate of the Company. The Committee shall have discretion to determine whether Optionee has ceased to be employed by the Company or any Parent, Subsidiary or Affiliate of the Company and the effective date on which such employment
terminated (the “Termination Date”). 
 
(a) Termination Generally. If Optionee ceases to be employed by the Company and all Parents, Subsidiaries or Affiliates of the Company for any reason except death or disability, the Vested Options, to the extent (and
only to the extent) exercisable by Optionee on the Termination Date, may be exercised by Optionee, but only within thirty (30) days after the Termination Date; provided that this Option may not be exercised in any event after the Expiration Date.

 
(b) Death or
Disability. If Optionee’s employment with the Company and all Parents, Subsidiaries and Affiliates of the Company is terminated because of the death of Optionee or the disability of Optionee, including, without limitation, such
disability as defined in Section 22(e)(3) of the Code, the Vested Options, to the extent (and only to the extent) exercisable by Optionee on the Termination Date, may be exercised by Optionee (or Optionee’s legal representative), but only
within twelve (12) months after the Termination Date; provided that this Option may not be exercised in any event later than the Expiration Date. 
 
(c) No Right to Employment. Nothing in the Plan or this Grant shall confer on Optionee any right to continue
in the employ of, or other relationship with, the Company or any Parent, Subsidiary or Affiliate of the Company or limit in any way the right of the Company or 

 

11 

any Parent, Subsidiary or Affiliate of the Company to terminate Optionee’s employment or other relationship at any time, with or without
cause. 
 
5. Manner of Exercise

 
(a) Exercise
Agreement. This Option shall be exercisable by delivery to the Company of an executed written Stock Option Exercise Agreement in the form attached hereto as Exhibit 1, or in such other form as may be approved by the Company, which shall set
forth Optionee’s election to exercise some or all of this Option, the number of Shares being purchased, any restrictions imposed on the Shares and such other representations and agreements as may be required by the Company to comply with
applicable securities laws. 
 
(b)
Exercise Price. The Stock Option Exercise Agreement shall be accompanied by full payment of the Exercise Price for the Shares being purchased. Payment for the Shares may be made in cash (by check), or, where permitted by law, by any of
the following methods approved by the Committee at the date of grant of this Option, or any combinations thereof. 
 
(i) by cancellation of indebtedness of the Company to the Optionee; 
 
(ii) by surrender of shares of Common Stock
of the Company already owned by the Optionee, or which were obtained by Optionee in the open public market, having a Fair Market Value equal to the exercise price of the Option; 
 
(iii) by waiver of compensation due or accrued to Optionee for services rendered;

 
(iv) by delivery of a
promissory note in the amount of $                 with such terms as determined by the Committee; 
 
(v) provided that a public market for the Company’s stock exists, through a “same
day sale” commitment from the Optionee and a broker dealer that is a member of the National Association of Securities Dealers, Inc. (an “NASD Dealer”) whereby the Optionee irrevocably elects to exercise the Option and to sell a
portion of the Shares so purchased to pay for the exercise price and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the exercise price directly to the Company; or 
 
(vi) provided that a public market for the
Company’s stock exists, through a “margin” commitment from the Optionee and an NASD Dealer whereby the Optionee irrevocably elects to exercise this option and to pledge the Shares so purchased to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in the amount of the exercise price, and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the exercise price directly to the Company. 
 
(c) Withholding Taxes. Prior to the
issuance of the Shares upon exercise of this Option, Optionee must pay or make adequate provision for any applicable federal or state withholding obligations of the Company. The Optionee may provide for payment of 

 

12 

Optionee’s minimum statutory withholding taxes upon exercise of the Option by requesting that the Company retain Shares with a Fair
Market Value equal to the minimum amount of taxes required to be withheld, all as set forth in Section 6(c) of the Plan. In such case, the Company shall issue the net number of Shares to the Optionee by deducting the Shares retained from the Shares
exercised. 
 
(d)
Issuance of Shares. Provided that such Stock Option Exercise Agreement and payment are in form and substance satisfactory to counsel for the Company, the Company shall cause the Shares to be issued in the name of Optionee or
Optionee’s legal representative. 
 
6.
Notice of Disqualifying Disposition of ISO Shares. If the Option granted to Optionee herein is an ISO, and if Optionee sells or otherwise disposes of any of the Shares acquired pursuant to the ISO on or before the later of (1) the date
two years after the Date of Grant, or (2) the date one year after exercise of the ISO with respect to the Shares to be sold or disposed of, the Optionee shall immediately notify the Company in writing of such disposition. Optionee acknowledges and
agrees that Optionee may be subject to income tax withholding by the Company on the compensation income recognized by the Optionee from any such early disposition by payment in cash or out of the current wages or other earnings payable to the
Optionee. 
 
7. Nontransferability of
Option. This Option may not be transferred in any manner other than by will or by the laws of descent and distribution and may be exercised during the lifetime of Optionee only by Optionee or any permitted transferee. The terms of this
Option shall be binding upon the executors, administrators, successors and assigns of the Optionee. 
 
8. Restrictions on Shares. The Company and the Company’s shareholder have certain rights of first refusal that are set
forth in Article X of the Company’s Bylaws. A copy of Article X of the Bylaws is available upon request from the Secretary of the Company. The Company reserves to itself for so long as the Company’s stock is not publicly traded (a) the
right of first refusal to purchase all Shares that Optionee (or a subsequent transferee) may propose to transfer to a third party and/or (b) the right to repurchase within one year of the Optionee’s termination of employment or service with the
Company or its Parent, Subsidiary or Affiliate of the Company, a portion of or all Shares held by an Optionee at the higher of (i) the Optionee’s original purchase price or, (ii) the Fair Market Value of such Shares. 
 
9. Federal Tax Consequences. Set forth below is
a brief summary as of the date this form of Option Grant was adopted of some of the federal tax consequences of exercise of this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE
SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES. 
 
(a) Exercise of ISO. If this Option qualifies as an ISO, there will be no regular federal income tax
liability upon the exercise of this Option, although the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price will be treated as an adjustment to alternative minimum taxable income for federal income
tax 

 

13 

purposes and may subject the Optionee to an alternative minimum tax liability in the year of exercise. 
 
(b) Exercise of Nonqualified Stock
Option. If this Option does not qualify as an ISO (a “nonqualified stock option”), there may be a regular federal income tax liability upon the exercise of the Option. The Optionee will be treated as having received compensation
income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price. The Company will be required to withhold from Optionee’s compensation or collect
from Optionee and pay to the applicable taxing authorities an amount equal to a percentage of this compensation income at the time of exercise. 
 
(c) Disposition of Shares. In the case of a nonqualified stock option, if Shares are held for at least one
year before disposition, any gain on disposition of the Shares will be treated as long-term capital gain for federal and California income tax purposes. In the case of an ISO, if Shares are held for at least one year after the date of exercise and
at least two years after the Date of Grant, any gain on disposition of the Shares will be treated as long-term capital gain for federal and California income tax purposes. If Shares acquired pursuant to an ISO are disposed of within such one-year or
two-year periods (a “disqualifying disposition”), gain on such disqualifying disposition will be treated as compensation income (taxable at ordinary income rates) to the extent of the excess, if any, of the Fair Market Value of the Shares
on the date of exercise over the Exercise Price (the “Spread”). Any gain in excess of the Spread shall be treated as capital gain. 
 
10. Interpretation. Any dispute regarding the interpretation of this Grant shall be submitted by Optionee or the Company to
the Company’s Board of Directors or the Committee, which shall review such dispute at its next regular meeting. The resolution of such a dispute by the Board or Committee shall be final and binding on the Company and on Optionee 
 
11. Entire Agreement. The Plan and the Stock
Option Exercise Agreement attached hereto as Exhibit I are incorporated herein by this reference. This Grant, the Plan and the Stock Option Exercise Agreement constitute the entire agreement of the parties hereto and supersede all prior undertakings
and agreements with respect to the subject matter hereof. 
 

	 INTERNET COMMERCE SERVICES
 CORPORATION, a Delaware corporation

	
	 By:
	 	  

	 Name:
	 	  

	 Title:
	 	  

 

14 

 
ACCEPTANCE 
 
Optionee hereby acknowledges receipt of a copy of the Plan, represents that Optionee has read and understands the terms and provisions thereof, and accepts this Option subject to all the terms and conditions of the Plan and this
Stock Option Grant. Optionee acknowledges that there may be adverse tax consequences upon exercise of this Option or disposition of the Shares and that Optionee should consult a tax adviser prior to such exercise or disposition. 
 

	 OPTIONEE

	
	 By:
	 	  

	 Name:
	 	  

	 Date:
	 	  

 
 

15 

 
EXHIBIT 1

TO STOCK OPTION GRANT 
 
STOCK OPTION EXERCISE AGREEMENT 
 
This Agreement is made this                  day of
                , 19         between CyberSource Corporation, a Delaware corporation (the “Company”), and
the optionee named below (“Optionee”). 
 
Optionee:
                                       
                                        
                                        
                                        
              
Social Security
Number:                                     
                                        
                                        
                                
Address:
                                       
                                        
                                        
                                        
               
Number of Shares
Purchased:                                      
                                        
                                        
                     
Price Per
Share:
                                       
                                        
                                        
                                        
    
Aggregate Purchase
Price:                                       
                                        
                                        
                          
Date of Option Grant:
                                       
                                        
                                        
                                  

	 Type of Stock Option:
	 	 Incentive:     ___________

	 	 	 Nonqualified: __________

 
Optionee
hereby delivers to the Company the Aggregate Purchase Price, to the extent permitted in the Option Grant, as follows [check as applicable and complete]: 
 
cash (check) in the amount of $
                 receipt of which is acknowledged by the Company; 
 
by delivery of                  fully-paid,
nonassessable and vested shares of the Common Stock of the Company owned by Optionee and owned free and clear of all liens, claims, encumbrances or security interests, valued at the current fair market value of $ per share (determined in
accordance with the Plan); 
 
by the waiver hereby
of compensation due or accrued for services rendered in the amount of $                 ; 
 
through delivery of a promissory note in the amount of $
                 with such terms as determined by the Committee; 
 
by delivery of a “same day sale” commitment from the Optionee and a broker dealer that is a member of the National Association
of Securities Dealers, Inc. (an “NASD Dealer”) whereby the Optionee irrevocably elects to exercise the Option and to sell a portion of the Shares so purchased to pay for the exercise price of 
 
$
             and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the exercise price directly to the Company (this payment method may be used only if a
public market for the Company’s stock exists); or 
 

16 

 
by delivery
of a “margin” commitment from the Optionee and an NASD Dealer whereby the Optionee irrevocably elects to exercise this option and to pledge the Shares so purchased to the NASD Dealer in a margin account as security for a loan from the NASD
Dealer in the amount of the exercise price, and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the exercise price of $             directly
to the Company (this payment method may be used only if a public market for the Company’s stock exists). 
 
The Company and Optionee hereby agree as follows: 
 
1. Purchase of Shares. On this date and subject to the terms and conditions of this Agreement,
Optionee hereby exercises the Stock Option Grant between the Company and Optionee dated as of the Date of Option Grant set forth above (the “Grant”), with respect to the Number of Shares Purchased set forth above of the Company’s
Common Stock (the “Shares”) at an aggregate purchase price equal to the Aggregate Purchase Price set forth above (the “Purchase Price”) and the Price per Share set forth above (the “Purchase Price Per Share”). The term
“Shares” refers to the Shares purchased under this Agreement and includes all securities received (a) in replacement of the Shares, and (b) as a result of stock dividends or stock splits in respect of the Shares. Capitalized terms used
herein that are not defined herein have the definitions ascribed to them in the Plan or the Grant. 
 
2. Representations of Purchaser. Optionee represents and warrants to the Company that: 
 
(a) Optionee has received, read and
understood the Plan and the Grant and agrees to abide by and be bound by their terms and conditions. 
 
(b) Optionee is capable of evaluating the merits and risks of this investment, has the ability to protect Optionee’s
own interests in this transaction and is financially capable of bearing a total loss of this investment. 
 
(c) Optionee is fully aware of (i) the highly speculative nature of the investment in the Shares; (ii) the financial
hazards involved; and (iii) the lack of liquidity of the Shares and the restrictions on transferability of the Shares (e.g., that Optionee may not be able to sell or dispose of the Shares or use them as collateral for loans). 
 
(d) Optionee is purchasing the Shares for
Optionee’s own account for investment purposes only and not with a view to, or for sale in connection with, a distribution of the Shares within the meaning of the Securities Act of 1933, as amended (the “1933 Act”). 
 
(e) Optionee has no present intention of
selling or otherwise disposing of all or any portion of the Shares. 
 
3. Compliance with Securities Laws. Optionee understands and acknowledges that the Shares have not be en registered under the 1933 Act and that, notwithstanding any other provision of the Grant to the contrary,
the exercise of any rights to purchase any Shares is 

 

17 

expressly conditioned upon compliance with the 1933 Act and all applicable state securities laws. Optionee agrees to cooperate with the
Company to ensure compliance with such laws. The Shares are being issued under the 1933 Act pursuant to [the Company will check the applicable box]: 
 
the exemption provided by Rule 701; 
 
the exemption provided by Rule 504; 
 
Section 4(2) of the 1933 Act; 
 
other: ________________________________________________________________________________________________ 
 
4. Federal Restrictions on Transfer. Optionee
understands that the Shares must be held indefinitely unless they are registered under the 1933 Act or unless an exemption from such registration is available and that the certificate(s) representing the Shares will bear a legend to that effect.
Optionee understands that the Company is under no obligation to register the Shares, and that an exemption may not be available or may not permit Optionee to transfer Shares in the amounts or at the times proposed by Optionee. 
 
(a) Rule 144. Optionee has been
advised that Rule 144 promulgated under the 1933 Act, which permits certain resales or unregistered securities, is not presently available with respect to the Shares and, in any event, requires that a minimum of one (1) year elapse between the date
of acquisition of Shares from the Company or an affiliate of the Company and any resale under Rule 144. Prior to an initial public offering of the Company’s stock, “nonaffiliates” (i.e. persons other than officers, directors and major
shareholders of the Company) may resell only under Rule 144(k), which requires that a minimum of two (2) years elapse between the date of acquisition of Shares from the Company or an affiliate of the Company and any resale under Rule 144(k). Rule
144(k) is not available to affiliates. 
 
(b) Rule 701. If the exemption relied upon for exercise of the Shares is Rule 701, the Shares will become freely transferable, subject to limited conditions regarding the method of sale, by nonaffiliates ninety (90) days after
the first sale of common stock of the Company to the general public pursuant to a registration statement filed with and declared effective by the Securities and Exchange Commission (the “SEC”), subject to any lengthier market standoff
agreement contained in this Agreement or entered into by Optionee. Affiliates must comply with the provisions (other than the holding period requirements) of Rule 144. 
 
5. State Law Restrictions on Transfer. Optionee understands that transfer of the Shares may be
restricted by applicable state securities laws, and that the certificate(s) representing the Shares may bear a legend or legends to that effect. 
 
6. Market Standoff Agreement. Optionee agrees in connection with any registration of the Company’s securities that,
upon the request of the Company or the underwriters managing any public offering of the Company’s securities, Optionee will not sell or otherwise dispose of any Shares without the prior written consent of the Company or such underwriters, as
the case may be, for a period of time (not to exceed one hundred eighty (180) 

 

18 

days) from the effective date of such registration as the Company or the underwriters may specify for employee shareholders generally.

 
7. Legends. Optionee understands
and agrees that the certificate(s) representing the Shares will bear a legend in substantially the following forms, in addition to any other legends required by applicable law: 
 

	 	“THE	 	SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE ‘SECURITIES ACT’), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE SECURITIES ACT OR, IN THE OPINION OF COUNSEL, PREPARED AT ISSUER’S REQUEST AND EXPENSE, IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER,
SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.” 

 
8. Stop-Transfer Notices. Optionee understands and agrees that, in order or ensure compliance with the restrictions referred to herein, the Company may issue appropriate
“stop-transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records. 
 
9. Tax Consequences. OPTIONEE UNDERSTANDS THAT
OPTIONEE MAY SUFFER ADVERSE TAX CONSEQUENCES AS A RESULT OF OPTIONEE’S PURCHASE OR DISPOSITION OF THE SHARES. OPTIONEE REPRESENTS THAT OPTIONEE HAS CONSULTED WITH ANY TAX CONSULTANT(S) OPTIONEE DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR
DISPOSITION OF THE SHARES AND THAT OPTIONEE IS NOT RELYING ON THE COMPANY FOR ANY TAX ADVICE. 
 
10 Repurchase Options. The Company and the Company’s shareholders have certain rights of first refusal that are set forth in Article X of the Company’s Bylaws. A copy of Article
X of the Bylaws is available upon request from the Secretary of the Company. The Company reserves to itself for so long as the Company’s stock is not publicly traded (a) the right of first refusal to purchase all Shares that Optionee (or a
subsequent transferee) may propose to transfer to a third party and/or (b) the right to repurchase within one year of the Optionee’s termination of employment or service with the Company or its Parent, Subsidiary or Affiliate of the Company, a
portion of or all Shares held by an Optionee at the higher of (i) the Optionee’s original purchase price or, (ii) the Fair Market Value of such Shares. 
 
11. Entire Agreement. The Plan and Grant are incorporated herein by reference. This Agreement, the Plan and the Grant
constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and are governed by California law except for that body of
law pertaining to conflict of laws. 
 

19 

 

	 Submitted By:
	 	 	 	 Accepted By:

	
	 OPTIONEE:
	 	  

	 	 	 	 	 	 
	 	 	 [print name]
	 	 	 	 	 	 
	
	 	 	
	 	 	 	 By:
	 	  

	 	 	 [signature]
	 	 	 	 Its:
	 	  

	
	 Dated:
	 	
	 	 	 	 Dated:
	 	  

	
	 Address:
	 	  

	 	 	 	 	 	 
	
	 	 	
	 	 	 	 	 	 
	
	 	 	
	 	 	 	 	 	 

 

20

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