Document:

Exhibit 10.4

 

ENVISION SOLAR INTERNATIONAL, INC.

 

STOCK OPTION AGREEMENT

(2011 Stock Incentive Plan)

 

Envision Solar International,
Inc. (the “Company”), pursuant to the 2011 Stock Incentive Plan (as such plan may be amended and/or restated,
the “Plan”), hereby grants to Optionee listed below (“Optionee”), options (the “Options”)
to purchase the number of shares of the Company’s Common Stock (“Shares”) set forth below, subject to
the terms and conditions of the Plan and this Stock Option Agreement. Unless otherwise defined herein, the terms defined in the
Plan shall have the same defined meanings in this Stock Option Agreement.

 

BACKGROUND

 

A.       Optionee
is serving as an employee of the Company (the “Employee”) and the Company desires to award Employee for his or her
services to the Company; and

 

B.       The
Company has adopted the Plan pursuant to which shares of common stock, par value $0.001 per share, of the Company have been reserved
for issuance under the Plan.

 

	I.	NOTICE OF STOCK OPTION GRANT

 

	Optionee:	 	 
	 	 	 
	Date of Stock Option Agreement:	 	 
	 	 	 
	Date of Grant:	 	 
	 	 	 
	Vesting Commencement Date:	 	 
	 	 	 
	Exercise Price per Share:	 	$
	 	 	 
	Total Number of Shares Underlying Option Grant:	 	          Shares
	 	 	 
	Total Exercise Price:	 	$
	 	 	 
	Term/Expiration Date:	 	 
	 	 	 
	Type of Option:	 	  Incentive Stock Option	 	x Non-Qualified Stock Option
	 	 	 	 	 

 

Vesting Schedule:     This
Option shall vest and become exercisable only to the extent that all, or any portion of it, has vested in Optionee. Except as
otherwise provided herein, the Option shall vest in Optionee (hereinafter referred to singularly as a “Vesting Date”
and collectively as ‘Vesting Dates”) until the Option is fully vested, as set forth in the following schedule (“Vesting
Schedule”):

 

	No. of Shares to be Vested	 	Vesting Date
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 

 

 

 

 

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	II.	AGREEMENT

 

1.               
Grant of Option. The Company hereby irrevocably grants from the Plan to Optionee an Option to purchase the number
of Shares set forth in the Notice of Stock Option Grant (“Notice of Grant”), at the exercise price per Share set forth
in the Notice of Grant (the “Exercise Price”) and subject to the Vesting Schedule. Notwithstanding anything to the
contrary anywhere else in this Stock Option Agreement, the Option is subject to the terms, definitions and provisions of the Plan
adopted by the Company, which is incorporated herein by reference.

 

If designated in the
Notice of Grant as an Incentive Stock Option, this Option is intended to qualify as an Incentive Stock Option as defined in Section
422 of the Code; provided, however, that to the extent that the aggregate Fair Market Value of stock with respect to which
Incentive Stock Options (within the meaning of Code Section 422, but without regard to Code Section 422(d)), including the Option,
are exercisable for the first time by Optionee during any calendar year, exceeds $100,000, such options shall be treated as not
qualifying under Code Section 422, but rather shall be treated as Non-Qualified Stock Options to the extent required by Code Section
422. The rule set forth in the preceding sentence shall be applied by taking options into account in the order in which they were
granted. For purposes of these rules, the Fair Market Value of stock shall be determined as of the time the option with respect
to such stock is granted.

 

		2.	Exercise of Option. This Option is exercisable as follows:

 

(a)       Right
to Exercise.

 

(i)              This
Option shall be exercisable cumulatively according to the Vesting Schedule set forth in the Notice of Grant. For purposes of this
Stock Option Agreement, Shares subject to this Option shall vest as provided in the Vesting Schedule set forth in the Notice of
Grant.

 

(ii)            
This Option may not be exercised for a fraction of a Share.

 

(iii)           In
the event of Optionee’s death, disability or other termination of Optionee’s status as a director, officer, employee,
or consultant of the Company, as the case may be, the exercisability of the Option is governed by Section 7 below and the Termination
Provisions set forth in the Notice of Grant.

 

(iv)           
In no event may this Option be exercised after the date of expiration of the term of this Option as set forth in the Notice
of Grant.

 

(b)       Method
of Exercise. This Option shall be exercisable by written Notice (substantially in the form attached as Exhibit A). The
Notice must state the number of Shares for which the Option is being exercised, and such other representations and agreements with
respect to such Shares as may be required by the Company pursuant to the provisions of the Plan. The Notice must be signed by Optionee
and shall be delivered in person or by certified mail to the Secretary of the Company. The Notice must be accompanied by payment
of the Exercise Price plus payment of any applicable withholding tax. This Option shall be deemed to be exercised upon receipt
by the Company of such written Notice accompanied by the Exercise Price and payment of any applicable withholding tax. No Shares
shall be issued pursuant to the exercise of an Option unless such issuance and such exercise comply with all relevant provisions
of law and the requirements of any stock exchange upon which the Shares may then be listed. Assuming such compliance, for income
tax purposes the Shares shall be considered transferred to Optionee on the date on which the Option is exercised with respect to
such Shares.

 

3.               
Optionee’s Representations. If the Shares purchasable pursuant to the exercise of this Option have not been
registered under the Securities Act or any applicable state laws at the time this Option is exercised, Optionee shall, if required
by the Company, concurrently with the exercise of all or any portion of this Option, deliver to the Company his or her Investment
Representation Statement in the form attached hereto as Exhibit B and shall make such other written representations as are
deemed necessary or appropriate by the Company and/or its counsel.

 

 

 

 

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4.               
Lock-Up Period. Optionee hereby agrees that, if so requested by the Company or any representative of the underwriters
(the “Managing Underwriter”) in connection with any registration of the offering of any securities of the Company
under the Securities Act or any applicable state laws, Optionee shall not sell or otherwise transfer any Shares or other securities
of the Company during the 180-day period (or such longer period as may be requested in writing by the Managing Underwriter and
agreed to in writing by the Company) (the “Market Standoff Period”) following the effective date of a registration
statement of the Company filed under the Securities Act; provided, however, that such restriction shall apply only to the
first registration statement of the Company to become effective under the Securities Act that includes securities to be sold on
behalf of the Company to the public in an underwritten public offering under the Securities Act. The Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions until the end of such Market Standoff Period and
these restrictions shall be binding on any transferee of such Shares.

 

5.               
Method of Payment. Payment of the Exercise Price shall be payable in US dollars by any of the following, or a combination
thereof, at the election of Optionee:

 

(a)                       
cash;

 

(b)                       
uncertified, or certified check; bank draft; or

 

(c)                       
with the consent of the Company’s Board of Directors (the “Board”),

 

		(i)	by delivery of Shares of Common Stock in payment of all or any part of the Exercise Price, which
shares shall be valued for this purpose at the Fair Market Value (as such term is defined in the Plan) on the date such Option
is exercised; or;

 

		(ii)	by instructing the Company to withhold from the Shares of Common Stock issuable upon exercise of
the option, sufficient shares of Common Stock to pay all or any part of the Exercise Price and/or any related withholding tax obligations,
which shares shall be valued for this purpose at the Fair Market Value or in such other manner as may be authorized from time to
time by the Board (Cashless Exercise).

 

All Shares that shall
be purchased upon the exercise of the Option as provided herein shall be fully paid and non-assessable.

 

6.               
Restrictions on Exercise. If the issuance of Shares upon such exercise or if the method of payment for such Shares
would constitute a violation of any applicable federal or state securities or other law or regulation, then the Option may not
be exercised. The Company may require Optionee to make any representation and warranty to the Company as may be required by any
applicable law or regulation before allowing the Option to be exercised.

 

7.               
Termination of Relationship. In the case Optionee ceases to be a director, officer, employee, or consultant (“Severance”),
this Stock Option Agreement shall terminate with respect to all unvested Options on the date of the Severance, and with respect
to vested Options, on the earlier of (i) the Expiration Date or (ii) one (1) year from the date of Severance if the Optionee was
disabled (within the meaning of Section 22(e)(3) of the Internal Revenue Code) at the time of his or her Severance or (iii) one
(1) year from the date of Severance if the Optionee’s death caused the Severance or (iv) ninety (90) days immediately subsequent
to his or her Severance for any other reason unless the Severance is for “cause” as defined in a separate written agreement
between the Optionee and the Company, in which case, if specifically addressed in such separate written agreement, this Stock Option
Agreement will terminate as provided in the separate written agreement with respect to vested Options.

 

8.               
Non-Transferability of Option. This Option may not be transferred in any manner except by will or by the laws of
descent or distribution. It may be exercised during the lifetime of Optionee only by Optionee. The terms of this Option shall be
binding upon the executors, administrators, heirs, successors and assigns of Optionee.

 

9.               
Term of Option. This Option may be exercised only within the term set forth in the Notice of Grant.

 

 

 

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10.            
Restrictions on Shares. Optionee hereby agrees that Shares purchased upon the exercise of the Option shall be subject
to such terms and conditions as the Board or the Administrator shall determine in its sole discretion, including, without limitation,
restrictions on the transferability of Shares, the right of the Company to repurchase Shares, the right of the Company to require
that Shares be transferred in the event of certain transactions, a right of first refusal in favor of the Company with respect
to permitted transfers of Shares, tag-along rights and take-along rights. Such terms and conditions may, in the Administrator’s
sole discretion, be contained in the Exercise Notice with respect to the Option or in such other agreement as the Board or the
Administrator shall determine and which Optionee hereby agrees to enter into at the request of the Company.

 

11.            
No Right to Employment. Nothing in the Plan or in this Stock Option Agreement shall confer upon Optionee any right
to serve or continue as an employee, officer, director, or consultant of the Company or any Parent or Subsidiary, or shall interfere
with or restrict in any way the rights of the Company or any Parent or Subsidiary, which are hereby expressly reserved, to discharge
Optionee at any time for any reason whatsoever, with or without Cause, except to the extent expressly provided otherwise in a written
employment agreement between Optionee and the Company or any Parent or Subsidiary.

 

This Stock
Option Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which shall
constitute one document.

 

 

	 	ENVISION SOLAR INTERNATIONAL, INC.
	 	 
	 	By:	 
	 	Name:	Desmond Wheatley
	 	Title:	Chief Executive Officer

 

OPTIONEE ACKNOWLEDGES AND AGREES
THAT THE VESTING OF SHARES PURSUANT TO THE OPTION HEREOF IS EARNED ONLY BY CONTINUING AS A BOARD MEMBER OR EXECUTIVE OFFICER AT
THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE
FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS STOCK OPTION AGREEMENT, NOR IN THE COMPANY’S 2011 STOCK INCENTIVE PLAN
WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION AS A BOARD MEMBER
OR EXECUTIVE OFFICER OF THE COMPANY OR ANY PARENT OR SUBSIDIARY, NOR SHALL IT INTERFERE IN ANY WAY WITH OPTIONEE’S RIGHT
OR THE COMPANY’S RIGHT TO TERMINATE OPTIONEE’S BOARD MEMBER OR EXECUTIVE OFFICER RELATIONSHIP AT ANY TIME, WITH OR
WITHOUT CAUSE AND WITH OR WITHOUT PRIOR NOTICE.

 

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

 

	Dated:	 	 	 	By:	 
	 	 	 	 	Name:	 
	 	 	 	 	 	 
	 	 	 	 	Address:	 
	 	 	 	 	 	 

 

 

 

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EXHIBIT A

 

ENVISION SOLAR INTERNATIONAL, INC.

 

2011 Stock Incentive Plan

 

EXERCISE NOTICE

 

Envision Solar International, Inc.

Attention: Legal Department c/o Secretary

 

1.       Exercise
of Option. Effective as of today, , the undersigned (“Optionee”), hereby elects to exercise Optionee’s
option to purchase _________ shares of the Common Stock (the “Shares”) of Envision Solar International, Inc.,
a Nevada corporation (the “Company”) under and pursuant to the 2011 Stock Incentive Plan (as such plan may be
amended and/or restated, the “Plan”) and the Stock Option Agreement dated _________, 201_ (the “Option
Agreement”). Capitalized terms used herein without definition shall have the meanings given in the Option Agreement.

 

	 	Date of Grant:	________	 	 
	 	 	 	 	 
	 	Number of Shares as to which Option is Exercised:	_________	 	 
	 	 	 	 	 
	 	Exercise Price per Share:	$	 	 
	 	 	 	 	 
	 	Total Exercise Price:	__________	 	 
	 	 	 	 	 
	 	Certificate to be issued in name of:	 	 	 
	 	 	 	 	 
	 	Cash Payment delivered herewith:	 	$	 	 
	 	 	 	 	 
	Type of Option:	[  ]  Incentive Stock Option	[x]  Non-Qualified Stock Option	 	 
	 	 	 	 	 	 	 	 

 

2.       Representations
of Optionee. Optionee acknowledges that Optionee has received, read and understood the Plan and the Option Agreement. Optionee
agrees to abide by and be bound by their terms and conditions.

 

3.       Rights
as Stockholder. Until the stock certificate evidencing such Shares is issued (as evidenced by the appropriate entry on the
books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other
rights as a stockholder shall exist with respect to Shares subject to the Option, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such stock certificate promptly after the Option is exercised.

 

No adjustment will be made for a dividend
or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 14
of the Plan. Optionee shall enjoy rights as a stockholder until such time as Optionee disposes of the Shares or the Company and/or
its assignee(s) exercises the Right of First Refusal or the Take-Along Right hereunder (each as defined below). Upon such exercise,
Optionee shall have no further rights as a holder of the Shares so purchased except the right to receive payment for such Shares
in accordance with the provisions of this Exercise Notice. Optionee shall forthwith cause the certificate(s) evidencing the Shares
so purchased to be surrendered to the Company for transfer or cancellation.

 

4.       Company’s
Right of First Refusal. Before any Shares held by Optionee (including, for purposes of Sections 4 and 5 hereof, any permitted
transferee holding Shares) may be sold, pledged, assigned, hypothecated, transferred, or otherwise disposed of (including transfer
by gift or operation of law) (collectively, a “Transfer”), the Company or its assignee(s) shall have a right
of first refusal to purchase the Shares on the terms and conditions set forth in this Section 4 (the “Right of First Refusal”),
subject to Sections 4(f) and 4(g) of this Exercise Notice.

 

 

 

    	 	A-1	 

     

    

 

(a)            
Notice of Proposed Transfer. Optionee shall deliver to the Company a written notice (the “Notice”)
stating: (i) Optionee’s bona fide intention to sell or otherwise Transfer such Shares; (ii) the name of each proposed purchaser
or other transferee (“Proposed Transferee”); (iii) the number of Shares to be Transferred to each Proposed Transferee;
and (iv) the bona fide cash price or other consideration for which Optionee proposes to Transfer the Shares (the “Offered
Price”). Optionee shall offer the Shares at the Offered Price to the Company or its assignee(s).

 

(b)            
Exercise of Right of First Refusal.  Within ten (10) days after receipt of the Notice, the Company and/or its assignee(s)
may elect in writing to purchase all, but not less than all, of the Shares proposed to be transferred to any one or more of the
Proposed Transferees. The purchase price will be determined in accordance with subsection (c) below.

 

(c)            
Purchase Price. The purchase price (the “ROFR Purchase Price”) for the Shares repurchased under
this Section shall be the Offered Price. If the Offered Price includes consideration other than cash, the cash equivalent value
of the non-cash consideration shall be determined by the Company’s Board of Directors (the “Board”) in good faith.

 

(d)            
Payment. Payment of the ROFR Purchase Price shall be made, at the option of the Company or its assignee(s), in cash
(by check), by cancellation of all or a portion of any outstanding indebtedness of Optionee to the Company (or, in the case of
repurchase by an assignee, to the assignee), or by any combination thereof within thirty (30) days after receipt of the Notice
or in the manner and at the times set forth in the Notice.

 

(e)            
Optionee’s Right to Transfer. If all of the Shares proposed in the Notice to be transferred to a given Proposed
Transferee are not purchased by the Company and/or its assignee(s) as provided in this Section, then Optionee may sell or otherwise
Transfer such Shares to that Proposed Transferee at the Offered Price or at a higher price, provided that such sale or other Transfer
is consummated within one hundred twenty (120) days after the date of the Notice, and provided further that any such sale or other
Transfer is effected in accordance with any applicable securities laws and the Proposed Transferee agrees in writing that (i) the
provisions hereof, including without limitation the provisions of Sections 4 and 5 shall continue to apply to the Shares in the
hands of such Proposed Transferee and (ii) that such Proposed Transferee will not transfer the Shares to any other purchaser or
transferee unless such future purchases or transferee agrees in writing to be bound by the provisions hereof, including without
limitation the provisions of Sections 4 and 5 hereof. If the Shares described in the Notice are not Transferred to the Proposed
Transferee within such period, a new Notice shall be given to the Company, and the Company and/or its assignees shall again be
offered the Right of First Refusal as provided herein before any Shares held by the holder may be sold or otherwise Transferred.

 

(f)             
Exception for Certain Family Transfers. Anything to the contrary contained in this Section 4 notwithstanding, the
Transfer of any or all of the Shares during Optionee’s lifetime or on Optionee’s death by will or intestacy to Optionee’s
Immediate Family or a trust for the benefit of Optionee’s Immediate Family shall be exempt from the Right of First Refusal.
As used herein, “Immediate Family” shall mean spouse, lineal descendant or antecedent, father, mother, brother
or sister or stepchild (whether or not adopted). In such case, the transferee or other recipient shall receive and hold the Shares
so Transferred subject to the provisions hereof, including without limitation the provisions of Sections 4 and 5 hereof, and there
shall be no further Transfer of such Shares except in accordance with the terms hereof.

 

(g)            
Termination of Right of First Refusal. The Right of First Refusal shall terminate as to the Shares upon the Public
Trading Date of the Shares. For the purposes of the Stock Option Agreement and this Exercise Notice, the “Public Trading
Date” of the Shares is the date on which the Shares first become freely tradable under the Securities Act of 1933, as amended
(the “Act”), either pursuant to Rule 144 or another provision of the Act. The holder of the Shares may apply to have
all restrictive transfer legends removed from the certificates evidencing the Shares without delivering a notice to the Company
pursuant to Section 4(a) of this Exercise Notice, provided that the request for legend removal is made at such times and in such
manner that removal is accomplished in compliance with the Act and the rules and regulations promulgated under the Act.

 

5.       Company
Take-Along Right.

 

(a)            
Approved Sale. If the Board shall deliver a notice to Optionee (a “Sale Event Notice”) stating
that the Board has approved a sale of all or a portion of the Company (an “Approved Sale”) and specifying the
name and address of the proposed parties to such transaction and the consideration payable in connection therewith, Optionee shall
(i) consent to and raise no objections against the Approved Sale or the process pursuant to which the Approved Sale was arranged,
(ii) waive any dissenter’s rights and other similar rights, and (iii) if the Approved Sale is structured as a sale of securities,
agree to sell Optionee’s Shares on the terms and conditions of the Approved Sale which terms and conditions shall treat all
stockholders of the Company equally (on a pro rata basis), except that shares having a liquidation preference may, if so provided
in the documents governing such shares, receive an amount of consideration equal to such liquidation preference in addition to
the consideration being paid to the holders of Shares not having a liquidation preference. Notwithstanding the foregoing, the sale
of the Shares in an Approved Sale shall be further subject to the terms of the Plan.

 

 

 

    	 	A-2	 

     

    

 

Optionee will take all
necessary and desirable lawful actions as directed by the Board and the stockholders of the Company approving the Approved Sale
in connection with the consummation of any Approved Sale, including without limitation, the execution of such agreements and such
instruments and other actions reasonably necessary to (A) provide the representations, warranties, indemnities, covenants, conditions,
non-compete agreements, escrow agreements and other provisions and agreements relating to such Approved Sale and, (B) effectuate
the allocation and distribution of the aggregate consideration upon the Approved Sale, provided, that this Section 5 shall
not require Optionee to indemnify the purchaser in any Approved Sale for breaches of the representations, warranties or covenants
of the Company or any other stockholder, except to the extent (x) Optionee is not required to incur more than its pro rata share
of such indemnity obligation (based on the total consideration to be received by all stockholders that are similarly situated and
hold the same class or series of capital stock) and (y) such indemnity obligation is provided for and limited to a post-closing
escrow or holdback arrangement of cash or stock paid in connection with the Approved Sale.

 

(b)       Costs.
Optionee will bear Optionee’s pro rata share (based upon the amount of consideration to be received) of the reasonable
costs of any sale of Shares pursuant to an Approved Sale to the extent such costs are incurred for the benefit of all selling stockholders
of the Company and are not otherwise paid by the Company or the acquiring party. Costs incurred by Optionee on Optionee’s
own behalf will not be considered costs of the transaction hereunder.

 

(c)            
Share Delivery. At the consummation of the Approved Sale, Optionee shall, if applicable, deliver certificates representing
the Shares to be transferred, duly endorsed for transfer and accompanied by all requisite stock transfer taxes, if any, and the
Shares to be transferred shall be free and clear of any liens, claims or encumbrances (other than restrictions imposed by this
Exercise Notice) and Optionee shall so represent and warrant.

 

(d)            
Termination of Company Take-Along Right. The Take-Along Right shall terminate as to the Shares upon the Public Trading
Date of the Shares, as defined in Section 4(g) of this Exercise Notice.

 

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

 

7.       Lock-Up
Period. Optionee hereby agrees that if so requested by the Company or any representative of the underwriters (the “Managing
Underwriter”) in connection with any registration of the offering of any securities of the Company under the Securities
Act or any applicable state laws, Optionee shall not sell or otherwise transfer any Shares or other securities of the Company during
the 180-day period (or such longer period as may be requested in writing by the Managing Underwriter and agreed to in writing by
the Company) (the “Market Standoff Period”) following the effective date of a registration statement of the
Company filed under the Securities Act; provided, that such restriction shall apply only to the first registration statement
of the Company to become effective under the Securities Act that includes securities to be sold on behalf of the Company to the
public in an underwritten public offering under the Securities Act. The Company may impose stop-transfer instructions with respect
to securities subject to the foregoing restrictions until the end of such Market Standoff Period.

 

8.       Restrictive
Legends and Stop-Transfer Orders.

 

(a)            
Legends. Optionee understands and agrees that the Company shall cause the legends set forth below or legends substantially
equivalent thereto, to be placed upon any certificate(s) evidencing ownership of the Shares together with any other legends that
may be required by state or federal securities laws:

 

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

 

THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND RIGHT OF FIRST REFUSAL OPTIONS HELD BY THE ISSUER OR ITS ASSIGNEE(S)
AS SET FORTH IN THE EXERCISE NOTICE BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED
AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE
SHARES UNTIL THE SHARES FIRST BECOME FREELY TRADEABLE IN OPEN MARKET TRANSACTIONS IN A PUBLIC TRADING MARKET UNDER THE ACT.

 

 

 

    	 	A-3	 

     

    

 

(b)            
Stop-Transfer Notices. Optionee agrees that, in order to 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.

 

(c)            
Refusal to Transfer. The Company shall not be required (i) to transfer on its books any Shares that have been sold
or otherwise transferred in violation of any of the provisions of this Exercise Notice or (ii) to treat as owner of such Shares
or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall have been so transferred.

 

9.       Successors
and Assigns. The Company may assign any of its rights under this Exercise Notice to single or multiple assignees, and this
Exercise Notice shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer
herein set forth, this Exercise Notice shall be binding upon Optionee and his or her heirs, executors, administrators, successors
and assigns.

 

10.       Remedies
Cumulative. All rights and remedies under this Exercise Notice are cumulative, and none is intended to be exclusive of another.
The Company shall have all rights and remedies available to it at law or in equity against the Optionee in the event of a breach
of this Exercise Notice by the Optionee. No delay or omission in insisting upon the strict observance of performance of any provision
of this Exercise Notice, or in exercising any right or remedy, shall be construed as a waiver or relinquishment of such provision,
nor shall it impair such right or remedy. Every right and remedy may be exercised from time to time and as often as deemed expedient.

 

11.       Governing
Law; Severability. This Exercise Notice shall be governed by and construed in accordance with the laws of the State of Nevada
excluding that body of law pertaining to conflicts of law. Should any provision of this Exercise Notice be determined by a court
of law to be illegal or unenforceable, the other provisions shall nevertheless remain effective and shall remain enforceable.

 

12.       Notices.
Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery
or upon deposit in the United States mail by certified mail, with postage and fees prepaid, addressed to the other party at its
address as shown below beneath its signature, or to such other address as such party may designate in writing from time to time
to the other party.

 

13.       Further
Instruments. The parties agree to execute such further instruments and to take such further action as may be reasonably necessary
to carry out the purposes and intent of this Exercise Notice.

 

14.       Delivery
of Payment. Optionee herewith delivers to the Company the full Exercise Price for the Shares, as well as any applicable withholding
tax.

 

15.       Entire
Agreement. The Plan and Option Agreement are incorporated herein by reference. This Exercise Notice, the Plan, the Option Agreement
and the Investment Representation Statement 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.

 

 

	Accepted by:	 	Submitted by:
	 	 	 
	ENVISION SOLAR INTERNATIONAL, INC.	 	OPTIONEE
	 	 	 
	By:	 	 	By:	 
	 	 	 
	 	 	 
	Address:	 	Address:
	 	 	 
	 	 	 	 	 

 

 

 

    	 	A-4	 

     

    

 

EXHIBIT B

 

INVESTMENT REPRESENTATION STATEMENT

 

	OPTIONEE	:	 
	 	 	 
	COMPANY	:	Envision Solar International, Inc.
	 	 	 
	SECURITY	:	Options to purchase Common Stock
	 	 	 
	AMOUNT	:	_________ shares
	 	 	 
	DATE	:	 

 

In connection with
the purchase of the above-listed shares of Common Stock (the “Securities”) of Envision Solar International,
Inc. (the “Company”), the undersigned (the “Optionee”) represents to the Company the following:

 

(a)            
Optionee is aware of the Company’s business affairs and financial condition and has acquired sufficient information
about the Company to reach an informed and knowledgeable decision to acquire the Securities. Optionee is acquiring these Securities
for investment for Optionee’s own account only and not with a view to, or for resale in connection with, any “distribution”
thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”).

 

(b)            
Optionee acknowledges and understands that the Securities constitute “restricted securities” under the Securities
Act and have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends
upon, among other things, the bona fide nature of Optionee’s investment intent as expressed herein. Optionee understands
that the Securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption
from such registration is available. Optionee further acknowledges and understands that the Company is under no obligation to register
the Securities. Optionee understands that the certificate evidencing the Securities will be imprinted with a legend which prohibits
the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel satisfactory
to the Company and any other legend required under applicable state securities laws.

 

(c)            
Optionee is familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in
substance, permit limited public resale of “restricted securities” acquired, directly or indirectly from the issuer
thereof, in a non-public offering subject to the satisfaction of certain conditions. Rule 701 provides that if the issuer qualifies
under Rule 701 at the time of the grant of the Option to Optionee, the exercise will be exempt from registration under the Securities
Act.

 

(d)            
In the event the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, ninety (90) days thereafter (or such longer period as any market stand-off agreement may require) the
Securities exempt under Rule 701 may be resold, subject to the satisfaction of certain of the conditions specified by Rule 144,
including, in the case of an affiliate, (i) the resale being made through a broker in an unsolicited “broker’s transaction”
or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934, as amended),
(ii) the availability of certain public information about the Company, (iii) the amount of Securities being sold during any three
(3) month period not exceeding the limitations specified in Rule 144(e), and (iv) the timely filing of a Form 144, if applicable.

 

(e)            
In the event that the Company does not qualify under Rule 701 at the time of grant of the Option, then the Securities may
be resold beginning ninety (90) days after the Company becomes subject to the reporting requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, as amended, in certain limited circumstances subject to the provisions of Rule 144, which
requires the resale to occur not less than six months after the later of (1) the date the Securities were sold by the Company or
the date the Securities were sold by an affiliate of the Company, within the meaning of Rule 144 and (2) the availability of certain
public information about the Company (subject to certain exceptions); and, in the case of a sale of the Securities by an affiliate,
the satisfaction of the conditions set forth in sections (i), (ii), (iii) and (iv) of paragraph (d) of this Statement.

 

 

 

    	 	B-1	 

     

    

 

(f)             
Optionee further understands that in the event all of the applicable requirements of Rule 701 or 144 are not satisfied,
registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and
that, notwithstanding the fact that Rules 144 and 701 are not exclusive, the Staff of the Securities and Exchange Commission has
expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise
than pursuant to Rules 144 or 701 will have a substantial burden of proof in establishing that an exemption from registration is
available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do
so at their own risk. Optionee understands that no assurances can be given that any such other registration exemption will be available
in such event.

 

(g)            
Optionee understands and acknowledges that the Company will rely upon the accuracy and truth of the foregoing representations
and Optionee hereby consents to such reliance.

 

	 	Signature of Optionee:
	 	 
	 	 
	 	 
	 	 

Date:       _____________

 

 

 

 

 

 

    	 	B-2Exhibit

EXHIBIT 10.3
SELLAS LIFE SCIENCES GROUP, INC.
2019 EQUITY INCENTIVE PLAN

Adopted by Board on July 26, 2019
Approved by Shareholders on September 10, 2019
		
	1.
	DEFINITIONS.

Unless otherwise specified or unless the context otherwise requires, the following terms, as used in this Sellas Life Sciences Group, Inc. 2019 Equity Incentive Plan, have the following meanings:
Administrator means the Board of Directors, unless it has delegated power to act on its behalf to the Committee, in which case the term “Administrator” means the Committee.
Affiliate means a corporation or other entity, which, for purposes of Section 424 of the Code, is a parent or subsidiary of the Company, direct or indirect.
Agreement means a written or electronic document setting forth the terms of a Stock Right delivered pursuant to the Plan in such form as the Administrator shall approve.
Board of Directors means the Board of Directors of the Company.
Cause means, with respect to a Participant (a) dishonesty with respect to the Company or any Affiliate, (b) insubordination, substantial malfeasance or non‐feasance of duty, (c) unauthorized disclosure of confidential information, (d) breach by a Participant of any provision of any employment, consulting, advisory, nondisclosure, non-competition or similar agreement between the Participant and the Company or any Affiliate, and (e) conduct substantially prejudicial to the business of the Company or any Affiliate; provided, however, that any provision in an agreement between a Participant and the Company or an Affiliate, which contains a conflicting definition of Cause for termination and which is in effect at the time of such termination, shall supersede this definition with respect to that Participant.  The determination of the Administrator as to the existence of Cause will be conclusive on the Participant and the Company.
Change of Control means the occurrence of any of the following events:
Ownership.  Any “Person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “Beneficial Owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities (excluding for this purpose any such voting securities held by the 

1

Company or its Affiliates or by any employee benefit plan of the Company) pursuant to a transaction or a series of related transactions which the Board of Directors does not approve; or
Merger/Sale of Assets.  (A) A merger or consolidation of the Company whether or not approved by the Board of Directors, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or the parent of such entity) more than 50% of the total voting power represented by the voting securities of the Company or such surviving entity or parent of such corporation, as the case may be, outstanding immediately after such merger or consolidation; or (B) the sale or disposition by the Company of all or substantially all of the Company’s assets in a transaction requiring stockholder approval; or
Change in Board Composition.  A change in the composition of the Board of Directors, as a result of which fewer than a majority of the directors are Incumbent Directors.  “Incumbent Directors” shall mean directors who either (A) are directors of the Company as of the date of initial adoption of this Plan, or (B) are elected, or nominated for election, to the Board of Directors with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company).
provided, that if any payment or benefit payable hereunder upon or following a Change of Control would be required to comply with the limitations of Section 409A(a)(2)(A)(v) of the Code in order to avoid an additional tax under Section 409A of the Code, such payment or benefit shall be made only if such Change of Control constitutes a change in ownership or control of the Company, or a change in ownership of the Company’s assets in accordance with Section 409A of the Code.
Code means the United States Internal Revenue Code of 1986, as amended including any successor statute, regulation and guidance thereto.
Committee means the committee of the Board of Directors, if any, to which the Board of Directors has delegated power to act under or pursuant to the provisions of the Plan.
Common Stock means shares of the Company’s common stock, $0.0001 par value per share.
Company means Sellas Life Sciences Group, Inc., a Delaware corporation.
Consultant means any natural person who is an advisor or consultant who provides bona fide services to the Company or its Affiliates, provided that such services are 

2

not in connection with the offer or sale of securities in a capital raising transaction, and do not directly or indirectly promote or maintain a market for the Company’s or its Affiliates’ securities.
Corporate Transaction means a merger, consolidation, or sale of all or substantially all of the Company’s assets or the acquisition of all of the outstanding voting stock of the Company in a single transaction or a series of related transactions by a single entity other than a transaction to merely change the state of incorporation.
Disability or Disabled means permanent and total disability as defined in Section 22(e)(3) of the Code.
Employee means any employee of the Company or of an Affiliate (including, without limitation, an employee who is also serving as an officer or director of the Company or of an Affiliate), designated by the Administrator to be eligible to be granted one or more Stock Rights under the Plan.
Exchange Act means the United States Securities Exchange Act of 1934, as amended.
Fair Market Value of a Share of Common Stock means:
If the Common Stock is listed on a national securities exchange or traded in the over‐the‐counter market and sales prices are regularly reported for the Common Stock, the closing or, if not applicable, the last price of the Common Stock on the composite tape or other comparable reporting system for the trading day on the applicable date and if such applicable date is not a trading day, the last market trading day prior to such date; 
If the Common Stock is not traded on a national securities exchange but is traded on the over‐the‐counter market, if sales prices are not regularly reported for the Common Stock for the trading day referred to in clause (1), and if bid and asked prices for the Common Stock are regularly reported, the mean between the bid and the asked price for the Common Stock at the close of trading in the over-the-counter market for the most recent trading day on which Common Stock was traded on the applicable date and if such applicable date is not a trading day, the last market trading day prior to such date; and
If the Common Stock is neither listed on a national securities exchange nor traded in the over‐the‐counter market, such value as the Administrator, in good faith, shall determine in compliance with applicable laws.
ISO means a stock option intended to qualify as an incentive stock option under Section 422 of the Code.
Non‐Qualified Option means a stock option which is not intended to qualify as an ISO.

3

Option means an ISO or Non‐Qualified Option granted under the Plan.
Participant means an Employee, director or Consultant of the Company or an Affiliate to whom one or more Stock Rights are granted under the Plan. As used herein, “Participant” shall include “Participant’s Survivors” where the context requires.
Performance-Based Award means a Stock Grant or Stock-Based Award which vests based on the attainment of written Performance Goals as set forth in Paragraph 9 hereof.
Performance Goals means performance goals determined by the Committee in its sole discretion and set forth in an Agreement. The satisfaction of Performance Goals shall be subject to certification by the Committee. The Committee has the authority to take appropriate action with respect to the Performance Goals (including, without limitation, making adjustments to the Performance Goals or determining the satisfaction of the Performance Goals in connection with a Corporate Transaction) provided that any such action does not otherwise violate the terms of the Plan.   
Plan means this Sellas Life Sciences Group, Inc. 2019 Equity Incentive Plan.
Securities Act means the United States Securities Act of 1933, as amended.
Shares means shares of the Common Stock as to which Stock Rights have been or may be granted under the Plan or any shares of capital stock into which the Shares are changed or for which they are exchanged within the provisions of Paragraph 3 of the Plan.  The Shares issued under the Plan may be authorized and unissued shares or shares held by the Company in its treasury, or both.
Stock-Based Award means a grant by the Company under the Plan of an equity award or an equity based award, which is not an Option or a Stock Grant.
Stock Grant means a grant by the Company of Shares under the Plan.
Stock Right means a right to Shares or the value of Shares of the Company granted pursuant to the Plan -- an ISO, a Non-Qualified Option, a Stock Grant or a Stock-Based Award.
Survivor means a deceased Participant’s legal representatives and/or any person or persons who acquired the Participant’s rights to a Stock Right by will or by the laws of descent and distribution.
		
	2.
	PURPOSES OF THE PLAN.

The Plan is intended to encourage ownership of Shares by Employees and directors of and certain Consultants to the Company and its Affiliates in order to attract and retain such people, to induce them to work for the benefit of the Company or of an Affiliate and to provide additional 

4

incentive for them to promote the success of the Company or of an Affiliate.  The Plan provides for the granting of ISOs, Non‐Qualified Options, Stock Grants and Stock-Based Awards.
		
	3.
	SHARES SUBJECT TO THE PLAN.

(a)     The number of Shares which may be issued from time to time pursuant to this Plan shall be the sum of: (i) ten million (10,000,000) Shares of Common Stock and (ii) any shares of Common Stock that are represented by awards granted under the Company’s 2017 Equity Incentive Plan that are forfeited, expire or are cancelled without delivery of shares of Common Stock or which result in the forfeiture of shares of Common Stock back to the Company on or after September 10, 2019, or the equivalent of such number of Shares after the Administrator, in its sole discretion, has interpreted the effect of any stock split, stock dividend, combination, recapitalization or similar transaction in accordance with Paragraph 25 of this Plan; provided, however, that no more than 1,210,405 Shares shall be added to the Plan pursuant to subsection (ii). 
(b)    Notwithstanding Subparagraph (a) above, on the first day of each fiscal year of the Company during the period beginning in fiscal year 2020, and ending on the second day of fiscal year 2023, the number of Shares that may be issued from time to time pursuant to the Plan shall be increased by an amount equal to the lesser of (i) 5% of the number of outstanding shares of Common Stock as of the end of the prior fiscal year; and (ii) an amount determined by the Administrator.
(c)    If an Option ceases to be “outstanding”, in whole or in part (other than by exercise), or if the Company shall reacquire (at not more than its original issuance price) any Shares issued pursuant to a Stock Grant or Stock-Based Award, or if any Stock Right expires or is forfeited, cancelled, or otherwise terminated or results in any Shares not being issued, the unissued or reacquired Shares which were subject to such Stock Right shall again be available for issuance from time to time pursuant to this Plan.  Notwithstanding the foregoing, if a Stock Right is exercised, in whole or in part, by tender or withholding of Shares or if the Company or an Affiliate’s tax withholding obligation is satisfied by the tender or withholding of Shares, the number of Shares deemed to have been issued under the Plan for purposes of the limitation set forth in Paragraph 3(a) above shall be the number of Shares that were subject to the Stock Right or portion thereof, and not the net number of Shares actually issued.  In addition, Shares repurchased by the Company with the proceeds of the option exercise price may not be reissued under the Plan.  However, in the case of ISOs, the foregoing provisions shall be subject to any limitations under the Code.
(d)    The maximum number of Shares that may be issued as ISOs under the Plan shall be eighty million (80,000,000).
		
	4.
	ADMINISTRATION OF THE PLAN.

The Administrator of the Plan will be the Board of Directors, except to the extent the Board of Directors delegates its authority to the Committee, in which case the Committee shall be the Administrator.  Subject to the provisions of the Plan, the Administrator is authorized to:
(a)    Interpret the provisions of the Plan and all Stock Rights and to make all rules and determinations which it deems necessary or advisable for the administration of the Plan;

5

(b)    Determine which Employees, directors and Consultants shall be granted Stock Rights;
(c)    Determine the number of Shares for which a Stock Right or Stock Rights shall be granted, provided however that in no event shall the aggregate grant date fair value of Stock Rights to be granted to any non-employee director under the Plan in any calendar year, taken together with any cash fees paid by the Company to such non-employee director during such calendar year for service on the Board of Directors, exceed four hundred thousand dollars ($400,000), except that the foregoing limitation shall not apply to awards granted to a non-employee director in the calendar year in which the director is first appointed or elected to the Board of Directors;
(d)    Specify the terms and conditions upon which a Stock Right or Stock Rights may be granted provided that no dividends or dividend equivalents shall be paid on any Stock Right prior to the vesting of the underlying Shares;
(e)    Amend any term or condition of any outstanding Stock Right, other than reducing the exercise price or purchase price or extending the expiration date of an Option, provided that (i) such term or condition as amended is not prohibited by the Plan; (ii) any such amendment shall not impair the rights of a Participant under any Stock Right previously granted without such Participant’s consent or in the event of death of the Participant the Participant’s Survivors; and (iii) any such amendment shall be made only after the Administrator determines whether such amendment would cause any adverse tax consequences to the Participant, including, but not limited to, the annual vesting limitation contained in Section 422(d) of the Code and described in Paragraph 6(b)(iv) below with respect to ISOs and pursuant to Section 409A of the Code; 
(f)    Determine and make any adjustments in the Performance Goals included in any Performance-Based Awards in compliance with (d) above; and
(g)    Adopt any sub-plans applicable to residents of any specified jurisdiction as it deems necessary or appropriate in order to comply with or take advantage of any tax or other laws applicable to the Company, any Affiliate or to Participants or to otherwise facilitate the administration of the Plan, which sub-plans may include additional restrictions or conditions applicable to Stock Rights or Shares issuable pursuant to a Stock Right;
provided, however, that all such interpretations, rules, determinations, terms and conditions shall be made and prescribed in the context of potential tax consequences under Section 409A of the Code and preserving the tax status under Section 422 of the Code of those Options which are designated as ISOs.  Subject to the foregoing, the interpretation and construction by the Administrator of any provisions of the Plan or of any Stock Right granted under it shall be final, unless otherwise determined by the Board of Directors, if the Administrator is the Committee.  In addition, if the Administrator is the Committee, the Board of Directors may take any action under the Plan that would otherwise be the responsibility of the Committee.
To the extent permitted under applicable law, the Board of Directors or the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any portion of its responsibilities and powers to any other person selected by 

6

it. The Board of Directors or the Committee may revoke any such allocation or delegation at any time.  Notwithstanding the foregoing, only the Board of Directors or the Committee shall be authorized to grant a Stock Right to any director of the Company or to any “officer” of the Company as defined by Rule 16a-1 under the Exchange Act.
		
	5.
	ELIGIBILITY FOR PARTICIPATION.

The Administrator will, in its sole discretion, name the Participants in the Plan; provided, however, that each Participant must be an Employee, director or Consultant of the Company or of an Affiliate at the time a Stock Right is granted.  Notwithstanding the foregoing, the Administrator may authorize the grant of a Stock Right to a person not then an Employee, director or Consultant of the Company or of an Affiliate; provided, however, that the actual grant of such Stock Right shall be conditioned upon such person becoming eligible to become a Participant at or prior to the time of the execution of the Agreement evidencing such Stock Right.  ISOs may be granted only to Employees who are deemed to be residents of the United States for tax purposes.  Non‐Qualified Options, Stock Grants and Stock-Based Awards may be granted to any Employee, director or Consultant of the Company or an Affiliate.  The granting of any Stock Right to any individual shall neither entitle that individual to, nor disqualify him or her from, participation in any other grant of Stock Rights or any grant under any other benefit plan established by the Company or any Affiliate for Employees, directors or Consultants.
		
	6.
	TERMS AND CONDITIONS OF OPTIONS.

Each Option shall be set forth in an Option Agreement, duly executed by the Company and, to the extent required by law or requested by the Company, by the Participant.  The Administrator may provide that Options be granted subject to such terms and conditions, consistent with the terms and conditions specifically required under this Plan, as the Administrator may deem appropriate including, without limitation, subsequent approval by the shareholders of the Company of this Plan or any amendments thereto.  The Option Agreements shall be subject to at least the following terms and conditions:
(a)    Non‐Qualified Options:  Each Option intended to be a Non‐Qualified Option shall be subject to the terms and conditions which the Administrator determines to be appropriate and in the best interest of the Company, subject to the following minimum standards for any such Non‐Qualified Option:
		
	(i)
	Exercise Price: Each Option Agreement shall state the exercise price (per share) of the Shares covered by each Option, which exercise price shall be determined by the Administrator and shall be at least equal to the Fair Market Value per share of the Common Stock on the date of grant of the Option.

		
	(ii)
	Number of Shares: Each Option Agreement shall state the number of Shares to which it pertains.

		
	(iii)
	Vesting:  Each Option Agreement shall state the date or dates on which it first is exercisable and the date after which it may no longer be exercised, 

7

and may provide that the Option rights accrue or become exercisable in installments over a period of months or years, or upon the occurrence of certain performance conditions or the attainment of stated goals or events.  
		
	(iv)
	Additional Conditions:  Exercise of any Option may be conditioned upon the Participant’s execution of a shareholders agreement in a form satisfactory to the Administrator providing for certain protections for the Company and its other shareholders, including requirements that:

		
	A.
	The Participant’s or the Participant’s Survivors’ right to sell or transfer the Shares may be restricted; and

		
	B.
	The Participant or the Participant’s Survivors may be required to execute letters of investment intent and must also acknowledge that the Shares will bear legends noting any applicable restrictions.

		
	(v)
	Term of Option:  Each Option shall terminate not more than ten years from the date of the grant or at such earlier time as the Option Agreement may provide.

(b)    ISOs:  Each Option intended to be an ISO shall be issued only to an Employee who is deemed to be a resident of the United States for tax purposes, and shall be subject to the following terms and conditions, with such additional restrictions or changes as the Administrator determines are appropriate but not in conflict with Section 422 of the Code and relevant regulations and rulings of the Internal Revenue Service:
		
	(i)
	Minimum Standards:  The ISO shall meet the minimum standards required of Non‐Qualified Options, as described in Paragraph 6(a) above, except clause (i) and (v) thereunder.

		
	(ii)
	Exercise Price:  Immediately before the ISO is granted, if the Participant owns, directly or by reason of the applicable attribution rules in Section 424(d) of the Code:

		
	A.
	10% or less of the total combined voting power of all classes of stock of the Company or an Affiliate, the exercise price per share of the Shares covered by each ISO shall not be less than 100% of the Fair Market Value per share of the Common Stock on the date of grant of the Option; or

		
	B.
	More than 10% of the total combined voting power of all classes of stock of the Company or an Affiliate, the exercise price per share of the Shares covered by each ISO shall not be less than 110% of the Fair Market Value per share of the Common Stock on the date of grant of the Option.

8

		
	(iii)
	Term of Option:  For Participants who own:

		
	A.
	10% or less of the total combined voting power of all classes of stock of the Company or an Affiliate, each ISO shall terminate not more than ten years from the date of the grant or at such earlier time as the Option Agreement may provide; or

		
	B.
	More than 10% of the total combined voting power of all classes of stock of the Company or an Affiliate, each ISO shall terminate not more than five years from the date of the grant or at such earlier time as the Option Agreement may provide.

		
	(iv)
	Limitation on Yearly Exercise:  The Option Agreements shall restrict the amount of ISOs which may become exercisable in any calendar year (under this or any other ISO plan of the Company or an Affiliate) so that the aggregate Fair Market Value (determined on the date each ISO is granted) of the stock with respect to which ISOs are exercisable for the first time by the Participant in any calendar year does not exceed $100,000.

		
	7.
	TERMS AND CONDITIONS OF STOCK GRANTS.

Each Stock Grant to a Participant shall state the principal terms in an Agreement duly executed by the Company and, to the extent required by law or requested by the Company, by the Participant.  The Agreement shall be in a form approved by the Administrator and shall contain terms and conditions which the Administrator determines to be appropriate and in the best interest of the Company, subject to the following minimum standards:
(a)    Each Agreement shall state the purchase price per share, if any, of the Shares covered by each Stock Grant, which purchase price shall be determined by the Administrator but shall not be less than the minimum consideration required by the Delaware General Corporation Law, if any, on the date of the grant of the Stock Grant;
(b)    Each Agreement shall state the number of Shares to which the Stock Grant pertains; 
(c)    Each Agreement shall include the terms of any right of the Company to restrict or reacquire the Shares subject to the Stock Grant, including the time period or attainment of Performance Goals or such other performance criteria upon which such rights shall accrue and the purchase price therefor, if any; and
(d)    Dividends (other than stock dividends to be issued pursuant to Section 25 of the Plan) may accrue but shall not be paid prior to the time, and may be paid only to the extent that the restrictions or rights to reacquire the Shares subject to the Stock Grant lapse.

		
	8.
	TERMS AND CONDITIONS OF OTHER STOCK-BASED AWARDS.  

9

The Administrator shall have the right to grant other Stock-Based Awards based upon the Common Stock having such terms and conditions as the Administrator may determine, including, without limitation, the grant of Shares based upon certain conditions, the grant of securities convertible into Shares and the grant of stock appreciation rights, phantom stock awards or stock units.  The principal terms of each Stock-Based Award shall be set forth in an Agreement, duly executed by the Company and, to the extent required by law or requested by the Company, by the Participant.  The Agreement shall be in a form approved by the Administrator and shall contain terms and conditions which the Administrator determines to be appropriate and in the best interest of the Company.  Each Agreement shall include the terms of any right of the Company including the right to terminate the Stock-Based Award without the issuance of Shares, the terms of any vesting conditions, Performance Goals or events upon which Shares shall be issued, provided that dividends (other than stock dividends to be issued pursuant to Section 25 of the Plan) or dividend equivalents may accrue but shall not be paid prior to and may be paid only to the extent that the Shares subject to the Stock-Based Award vest. Under no circumstances may the Agreement covering stock appreciation rights (a) have an exercise or base price (per share) that is less than the Fair Market Value per share of Common Stock on the date of grant or (b) expire more than ten years following the date of grant.
The Company intends that the Plan and any Stock-Based Awards granted hereunder be exempt from the application of Section 409A of the Code or meet the requirements of paragraphs (2), (3) and (4) of subsection (a) of Section 409A of the Code, to the extent applicable, and be operated in accordance with Section 409A so that any compensation deferred under any Stock-Based Award (and applicable investment earnings) shall not be included in income under Section 409A of the Code.  Any ambiguities in the Plan shall be construed to effect the intent as described in this Paragraph 8.
		
	9.
	PERFORMANCE-BASED AWARDS.

The Committee shall determine whether, with respect to a performance period, the applicable Performance Goals have been met with respect to a given Participant and, if they have, to so certify and ascertain the amount of the applicable Performance-Based Award.  No Performance-Based Awards will be issued for such performance period until such certification is made by the Committee.  The number of Shares issued in respect of a Performance-Based Award determined by the Committee for a performance period shall be paid to the Participant at such time as determined by the Committee in its sole discretion after the end of such performance period, and any dividends (other than stock dividends to be issued pursuant to Section 25 of the Plan) or dividend equivalents that accrue shall only be paid in respect of the number of Shares earned in respect of such Performance-Based Award.  
		
	10.
	EXERCISE OF OPTIONS AND ISSUE OF SHARES.

An Option (or any part or installment thereof) shall be exercised by giving written notice to the Company or its designee (in a form acceptable to the Administrator, which may include electronic notice), together with provision for payment of the aggregate exercise price in accordance with this Paragraph for the Shares as to which the Option is being exercised, and upon compliance with any other condition(s) set forth in the Option Agreement.  Such notice shall be signed by the person exercising the Option (which signature may be provided electronically in a form acceptable 

10

to the Administrator), shall state the number of Shares with respect to which the Option is being exercised and shall contain any representation required by the Plan or the Option Agreement.  Payment of the exercise price for the Shares as to which such Option is being exercised shall be made (a) in United States dollars in cash or by check; or (b) at the discretion of the Administrator, through delivery of shares of Common Stock held for at least six months (if required to avoid negative accounting treatment) having a Fair Market Value equal as of the date of the exercise to the aggregate cash exercise price for the number of Shares as to which the Option is being exercised; or (c) at the discretion of the Administrator, by having the Company retain from the Shares otherwise issuable upon exercise of the Option, a number of Shares having a Fair Market Value equal as of the date of exercise to the aggregate exercise price for the number of Shares as to which the Option is being exercised; or (d) at the discretion of the Administrator, in accordance with a cashless exercise program established with a securities brokerage firm, and approved by the Administrator; or (e) at the discretion of the Administrator, by any combination of (a), (b), (c) and (d) above or (f) at the discretion of the Administrator, by payment of such other lawful consideration as the Administrator may determine. Notwithstanding the foregoing, the Administrator shall accept only such payment on exercise of an ISO as is permitted by Section 422 of the Code.
The Company shall then reasonably promptly deliver the Shares as to which such Option was exercised to the Participant (or to the Participant’s Survivors, as the case may be).  In determining what constitutes “reasonably promptly,” it is expressly understood that the issuance and delivery of the Shares may be delayed by the Company in order to comply with any law or regulation (including, without limitation, state securities or “blue sky” laws) which requires the Company to take any action with respect to the Shares prior to their issuance.  The Shares shall, upon delivery, be fully paid, non-assessable Shares.
		
	11.
	PAYMENT IN CONNECTION WITH THE ISSUANCE OF STOCK GRANTS AND STOCK-BASED AWARDS AND ISSUE OF SHARES.

Any Stock Grant or Stock-Based Award requiring payment of a purchase price for the Shares as to which such Stock Grant or Stock-Based Award is being granted shall be made (a) in United States dollars in cash or by check; or (b) at the discretion of the Administrator, through delivery of shares of Common Stock held for at least six months (if required to avoid negative accounting treatment) and having a Fair Market Value equal as of the date of payment to the purchase price of the Stock Grant or Stock-Based Award; or (c) at the discretion of the Administrator, by any combination of (a) and (b) above; or (d) at the discretion of the Administrator, by payment of such other lawful consideration as the Administrator may determine.
The Company shall when required by the applicable Agreement, reasonably promptly deliver the Shares as to which such Stock Grant or Stock-Based Award was made to the Participant (or to the Participant’s Survivors, as the case may be), subject to any escrow provision set forth in the applicable Agreement.  In determining what constitutes “reasonably promptly,” it is expressly understood that the issuance and delivery of the Shares may be delayed by the Company in order to comply with any law or regulation (including, without limitation, state securities or “blue sky” laws) which requires the Company to take any action with respect to the Shares prior to their issuance.
		
	12.
	RIGHTS AS A SHAREHOLDER.

11

No Participant to whom a Stock Right has been granted shall have rights as a shareholder with respect to any Shares covered by such Stock Right except after due exercise of an Option or issuance of Shares as set forth in any Agreement, tender of the aggregate exercise or purchase price, if any, for the Shares being purchased and registration of the Shares in the Company’s share register in the name of the Participant.
		
	13.
	ASSIGNABILITY AND TRANSFERABILITY OF STOCK RIGHTS.

By its terms, a Stock Right granted to a Participant shall not be transferable by the Participant other than (i) by will or by the laws of descent and distribution, or (ii) as approved by the Administrator in its discretion and set forth in the applicable Agreement provided that no Stock Right may be transferred by a Participant for value.  Notwithstanding the foregoing, an ISO transferred except in compliance with clause (i) above shall no longer qualify as an ISO.  The designation of a beneficiary of a Stock Right by a Participant, with the prior approval of the Administrator and in such form as the Administrator shall prescribe, shall not be deemed a transfer prohibited by this Paragraph.  Except as provided above during the Participant’s lifetime a Stock Right shall only be exercisable by or issued to such Participant (or his or her legal representative) and shall not be assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process.  Any attempted transfer, assignment, pledge, hypothecation or other disposition of any Stock Right or of any rights granted thereunder contrary to the provisions of this Plan, or the levy of any attachment or similar process upon a Stock Right, shall be null and void.
		
	14.
	EFFECT ON OPTIONS OF TERMINATION OF SERVICE OTHER THAN FOR CAUSE OR DEATH OR DISABILITY.

Except as otherwise provided in a Participant’s Option Agreement, in the event of a termination of service (whether as an Employee, director or Consultant) with the Company or an Affiliate before the Participant has exercised an Option, the following rules apply:
(a)    A Participant who ceases to be an Employee, director or Consultant of the Company or of an Affiliate (for any reason other than termination for Cause, Disability, or death for which events there are special rules in Paragraphs 15, 16, and 17, respectively), may exercise any Option granted to him or her to the extent that the Option is exercisable on the date of such termination of service, but only within such term as the Administrator has designated in a Participant’s Option Agreement.
(b)    Except as provided in Subparagraph (c) below, or Paragraph 16 or 17, in no event may an Option intended to be an ISO, be exercised later than three months after the Participant’s termination of employment.  
(c)    The provisions of this Paragraph, and not the provisions of Paragraph 16 or 17, shall apply to a Participant who subsequently becomes Disabled or dies after the termination of employment, director status or consultancy; provided, however, in the case of a Participant’s Disability or death within three months after the termination of employment, director status or consultancy, the Participant or the Participant’s Survivors may exercise the Option within one year 

12

after the date of the Participant’s termination of service, but in no event after the date of expiration of the term of the Option.
(d)    Notwithstanding anything herein to the contrary, if subsequent to a Participant’s termination of employment, termination of director status or termination of consultancy, but prior to the exercise of an Option, the Administrator determines that, either prior or subsequent to the Participant’s termination, the Participant engaged in conduct which would constitute Cause, then such Participant shall forthwith cease to have any right to exercise any Option.
(e)    A Participant to whom an Option has been granted under the Plan who is absent from the Company or an Affiliate because of temporary disability (any disability other than a Disability as defined in Paragraph 1 hereof), or who is on leave of absence for any purpose, shall not, during the period of any such absence, be deemed, by virtue of such absence alone, to have terminated such Participant’s employment, director status or consultancy with the Company or with an Affiliate, except as the Administrator may otherwise expressly provide; provided, however, that, for ISOs, any leave of absence granted by the Administrator of greater than three months, unless pursuant to a contract or statute that guarantees the right to reemployment, shall cause such ISO to become a Non-Qualified Option on the date that is six months following the commencement of such leave of absence.
(f)    Except as required by law or as set forth in a Participant’s Option Agreement, Options granted under the Plan shall not be affected by any change of a Participant’s status within or among the Company and any Affiliates, so long as the Participant continues to be an Employee, director or Consultant of the Company or any Affiliate.
		
	15.
	EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR CAUSE.

Except as otherwise provided in a Participant’s Option Agreement, the following rules apply if the Participant’s service (whether as an Employee, director or Consultant) with the Company or an Affiliate is terminated for Cause prior to the time that all his or her outstanding Options have been exercised:
(a)    All outstanding and unexercised Options as of the time the Participant is notified his or her service is terminated for Cause will immediately be forfeited.
(b)    Cause is not limited to events which have occurred prior to a Participant’s termination of service, nor is it necessary that the Administrator’s finding of Cause occur prior to termination.  If the Administrator determines, subsequent to a Participant’s termination of service but prior to the exercise of an Option, that either prior or subsequent to the Participant’s termination the Participant engaged in conduct which would constitute Cause, then the right to exercise any Option is forfeited.
		
	16.
	EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR DISABILITY.

Except as otherwise provided in a Participant’s Option Agreement:

13

(a)    A Participant who ceases to be an Employee, director or Consultant of the Company or of an Affiliate by reason of Disability may exercise any Option granted to such Participant to the extent that the Option has become exercisable but has not been exercised on the date of the Participant’s termination of service due to Disability; and in the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion through the date of the Participant’s termination of service due to Disability of any additional vesting rights that would have accrued on the next vesting date had the Participant not become Disabled.  The proration shall be based upon the number of days accrued in the current vesting period prior to the date of the Participant’s termination of service due to Disability. 
(b)    A Disabled Participant may exercise the Option only within the period ending one year after the date of the Participant’s termination of service due to Disability, notwithstanding that the Participant might have been able to exercise the Option as to some or all of the Shares on a later date if the Participant had not been terminated due to Disability and had continued to be an Employee, director or Consultant or, if earlier, within the originally prescribed term of the Option.  
(c)    The Administrator shall make the determination both of whether Disability has occurred and the date of its occurrence (unless a procedure for such determination is set forth in another agreement between the Company and such Participant, in which case such procedure shall be used for such determination).  If requested, the Participant shall be examined by a physician selected or approved by the Administrator, the cost of which examination shall be paid for by the Company.
		
	17.
	EFFECT ON OPTIONS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.

Except as otherwise provided in a Participant’s Option Agreement:
(a)    In the event of the death of a Participant while the Participant is an Employee, director or Consultant of the Company or of an Affiliate, such Option may be exercised by the Participant’s Survivors to the extent that the Option has become exercisable but has not been exercised on the date of death; and in the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion through the date of death of any additional vesting rights that would have accrued on the next vesting date had the Participant not died.  The proration shall be based upon the number of days accrued in the current vesting period prior to the Participant’s date of death.
(b)    If the Participant’s Survivors wish to exercise the Option, they must take all necessary steps to exercise the Option within one year after the date of death of such Participant, notwithstanding that the decedent might have been able to exercise the Option as to some or all of the Shares on a later date if he or she had not died and had continued to be an Employee, director or Consultant or, if earlier, within the originally prescribed term of the Option.  
		
	18.
	EFFECT OF TERMINATION OF SERVICE ON UNACCEPTED STOCK GRANTS AND STOCK-BASED AWARDS.

14

In the event of a termination of service (whether as an Employee, director or Consultant) with the Company or an Affiliate for any reason before the Participant has accepted a Stock Grant or a Stock-Based Award and paid the purchase price, if required, such grant shall terminate.
For purposes of this Paragraph 18 and Paragraph 19 below, a Participant to whom a Stock Grant or a Stock-Based Award has been issued under the Plan who is absent from work with the Company or with an Affiliate because of temporary disability (any disability other than a Disability as defined in Paragraph 1 hereof), or who is on leave of absence for any purpose, shall not, during the period of any such absence, be deemed, by virtue of such absence alone, to have terminated such Participant’s employment, director status or consultancy with the Company or with an Affiliate, except as the Administrator may otherwise expressly provide.
In addition, for purposes of this Paragraph 18 and Paragraph 19 below, any change of employment or other service within or among the Company and any Affiliates shall not be treated as a termination of employment, director status or consultancy so long as the Participant continues to be an Employee, director or Consultant of the Company or any Affiliate.
		
	19.
	EFFECT ON STOCK GRANTS AND STOCK-BASED AWARDS OF TERMINATION OF SERVICE OTHER THAN FOR CAUSE, DEATH OR DISABILITY.

Except as otherwise provided in a Participant’s Agreement, in the event of a termination of service for any reason (whether as an Employee, director or Consultant), other than termination for Cause, death or Disability for which there are special rules in Paragraphs 20, 21, and 22 below, before all forfeiture provisions or Company rights of repurchase shall have lapsed, then the Company shall have the right to cancel or repurchase that number of Shares subject to a Stock Grant or Stock-Based Award as to which the Company’s forfeiture or repurchase rights have not lapsed.
		
	20.
	EFFECT ON STOCK GRANTS AND STOCK-BASED AWARDS OF TERMINATION OF SERVICE FOR CAUSE.

Except as otherwise provided in a Participant’s Agreement, the following rules apply if the Participant’s service (whether as an Employee, director or Consultant) with the Company or an Affiliate is terminated for Cause:
(a)    All Shares subject to any Stock Grant or Stock-Based Award that remain subject to forfeiture provisions or as to which the Company shall have a repurchase right shall be immediately forfeited to the Company as of the time the Participant is notified his or her service is terminated for Cause.
(b)    Cause is not limited to events which have occurred prior to a Participant’s termination of service, nor is it necessary that the Administrator’s finding of Cause occur prior to termination.  If the Administrator determines, subsequent to a Participant’s termination of service, that either prior or subsequent to the Participant’s termination the Participant engaged in conduct which would constitute Cause, then all Shares subject to any Stock Grant or Stock-Based Award that remained 

15

subject to forfeiture provisions or as to which the Company had a repurchase right on the date of termination shall be immediately forfeited to the Company.
		
	21.
	EFFECT ON STOCK GRANTS AND STOCK-BASED AWARDS OF TERMINATION OF SERVICE FOR DISABILITY.

Except as otherwise provided in a Participant’s Agreement, the following rules apply if a Participant ceases to be an Employee, director or Consultant of the Company or of an Affiliate by reason of Disability:  to the extent the forfeiture provisions or the Company’s rights of repurchase have not lapsed on the date of Disability, they shall be exercisable; provided, however, that in the event such forfeiture provisions or rights of repurchase lapse periodically, such provisions or rights shall lapse to the extent of a pro rata portion of the Shares subject to such Stock Grant or Stock-Based Award through the date of Disability as would have lapsed had the Participant not become Disabled.  The proration shall be based upon the number of days accrued prior to the date of Disability.
The Administrator shall make the determination both as to whether Disability has occurred and the date of its occurrence (unless a procedure for such determination is set forth in another agreement between the Company and such Participant, in which case such procedure shall be used for such determination).  If requested, the Participant shall be examined by a physician selected or approved by the Administrator, the cost of which examination shall be paid for by the Company.
		
	22.
	EFFECT ON STOCK GRANTS AND STOCK-BASED AWARDS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.

Except as otherwise provided in a Participant’s Agreement, the following rules apply in the event of the death of a Participant while the Participant is an Employee, director or Consultant of the Company or of an Affiliate:  to the extent the forfeiture provisions or the Company’s rights of repurchase have not lapsed on the date of death, they shall be exercisable; provided, however, that in the event such forfeiture provisions or rights of repurchase lapse periodically, such provisions or rights shall lapse to the extent of a pro rata portion of the Shares subject to such Stock Grant or Stock-Based Award through the date of death as would have lapsed had the Participant not died.  The proration shall be based upon the number of days accrued prior to the Participant’s date of death.
		
	23.
	PURCHASE FOR INVESTMENT.

Unless the offering and sale of the Shares shall have been effectively registered under the Securities Act, the Company shall be under no obligation to issue Shares under the Plan unless and until the following conditions have been fulfilled:
(a)    The person who receives a Stock Right shall warrant to the Company, prior to the receipt of Shares, that such person is acquiring such Shares for his or her own account, for investment, and not with a view to, or for sale in connection with, the distribution of any such Shares, in which event the person acquiring such Shares shall be bound by the provisions of the following legend (or a legend in substantially similar form) which shall be endorsed upon the certificate evidencing the Shares issued pursuant to such exercise or such grant of a Stock Right:

16

“The shares represented by this certificate have been taken for investment and they may not be sold or otherwise transferred by any person, including a pledgee, unless (1) either (a) a Registration Statement with respect to such shares shall be effective under the Securities Act of 1933, as amended, or (b) the Company shall have received an opinion of counsel satisfactory to it that an exemption from registration under such Act is then available, and (2) there shall have been compliance with all applicable state securities laws.”
(b)    At the discretion of the Administrator, the Company shall have received an opinion of its counsel that the Shares may be issued in compliance with the Securities Act without registration thereunder.
		
	24.
	DISSOLUTION OR LIQUIDATION OF THE COMPANY.

Upon the dissolution or liquidation of the Company, all Options granted under this Plan which as of such date shall not have been exercised and all Stock Grants and Stock-Based Awards which have not been accepted, to the extent required under the applicable Agreement, will terminate and become null and void; provided, however, that if the rights of a Participant or a Participant’s Survivors have not otherwise terminated and expired, the Participant or the Participant’s Survivors will have the right immediately prior to such dissolution or liquidation to exercise or accept any Stock Right to the extent that the Stock Right is exercisable or subject to acceptance as of the date immediately prior to such dissolution or liquidation.  Upon the dissolution or liquidation of the Company, any outstanding Stock-Based Awards shall immediately terminate unless otherwise determined by the Administrator or specifically provided in the applicable Agreement.
		
	25.
	ADJUSTMENTS.

Upon the occurrence of any of the following events, a Participant’s rights with respect to any Stock Right granted to him or her hereunder shall be adjusted as hereinafter provided, unless otherwise specifically provided in a Participant’s Agreement.
(a)    Stock Dividends and Stock Splits.  If (i) the shares of Common Stock shall be subdivided or combined into a greater or smaller number of shares or if the Company shall issue any shares of Common Stock as a stock dividend on its outstanding Common Stock, or (ii) additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such shares of Common Stock, each Stock Right and the number of shares of Common Stock deliverable thereunder shall be appropriately increased or decreased proportionately, and appropriate adjustments shall be made including, in the exercise, base or purchase price per share and in the Performance Goals applicable to outstanding Performance-Based Awards to reflect such events.  The number of Shares subject to the limitations in Paragraph 3 and 4(c) shall also be proportionately adjusted upon the occurrence of such events.
(b)    Corporate Transactions.  If the Company is to be consolidated with or acquired by another entity in a Corporate Transaction, the Administrator or the board of directors of any entity assuming the obligations of the Company hereunder (the “Successor Board”), shall, as to outstanding Options, either: (i) make appropriate provision for the continuation of such Options by substituting on an equitable basis for the Shares then subject to such Options either the consideration payable 

17

with respect to the outstanding shares of Common Stock in connection with the Corporate Transaction or securities of any successor or acquiring entity; or (ii) upon written notice to the Participants, provide that such Options must be exercised (either (A) to the extent then exercisable or (B) at the discretion of the Administrator, any such Options being made partially or fully exercisable for purposes of this Subparagraph), within a specified number of days of the date of such notice, at the end of which period such Options which have not been exercised shall terminate; or (iii) terminate such Options in exchange for payment of an amount equal to the consideration payable upon consummation of such Corporate Transaction to a holder of the number of shares of Common Stock into which such Option would have been exercisable (either (A) to the extent then exercisable or, (B) at the discretion of the Administrator, any such Options being made partially or fully exercisable for purposes of this Subparagraph) less the aggregate exercise price thereof.  For purposes of determining the payments to be made pursuant to Subclause (iii) above, in the case of a Corporate Transaction the consideration for which, in whole or in part, is other than cash, the consideration other than cash shall be valued at the fair value thereof as determined in good faith by the Board of Directors.
With respect to outstanding Stock Grants, the Administrator or the Successor Board, shall make appropriate provision for the continuation of such Stock Grants on the same terms and conditions by substituting on an equitable basis for the Shares then subject to such Stock Grants either the consideration payable with respect to the outstanding Shares of Common Stock in connection with the Corporate Transaction or securities of any successor or acquiring entity.  In lieu of the foregoing, in connection with any Corporate Transaction, the Administrator may provide that, upon consummation of the Corporate Transaction, each outstanding Stock Grant shall be terminated in exchange for payment of an amount equal to the consideration payable upon consummation of such Corporate Transaction to a holder of the number of shares of Common Stock comprising such Stock Grant (to the extent such Stock Grant is no longer subject to any forfeiture or repurchase rights then in effect or, at the discretion of the Administrator, all forfeiture and repurchase rights being waived upon such Corporate Transaction).
In taking any of the actions permitted under this Paragraph 25(b), the Administrator shall not be obligated by the Plan to treat all Stock Rights, all Stock Rights held by a Participant, or all Stock Rights of the same type, identically.
Notwithstanding the foregoing, in the event the Corporate Transaction also constitutes a Change of Control, then all Stock Rights outstanding on the date of the Corporate Transaction shall vest in full immediately prior to the occurrence of the Change of Control, unless such Stock Rights are to be assumed or continued by the acquiring or surviving entity in the Corporate Transaction as provided above, in which case such Stock Rights shall vest in full in the event the Participant is terminated without cause within 12 months following the occurrence of the Change of Control.
A Stock Right may be subject to additional acceleration of vesting and exercisability upon or after a Change of Control as may be provided in the Agreement for such Stock Right, in any other written agreement between the Company or any Affiliate and the Participant or in any director compensation policy of the Company. 

18

(c)    Recapitalization or Reorganization.  In the event of a recapitalization or reorganization of the Company other than a Corporate Transaction pursuant to which securities of the Company or of another corporation are issued with respect to the outstanding shares of Common Stock, a Participant upon exercising an Option or accepting a Stock Grant after the recapitalization or reorganization shall be entitled to receive for the price paid upon such exercise or acceptance if any, the number of replacement securities which would have been received if such Option had been exercised or Stock Grant accepted prior to such recapitalization or reorganization.
(d)    Adjustments to Stock-Based Awards.  Upon the happening of any of the events described in Subparagraphs (a), (b) or (c) above, any outstanding Stock-Based Award shall be appropriately adjusted to reflect the events described in such Subparagraphs.  The Administrator or the Successor Board shall determine the specific adjustments to be made under this Paragraph 25, including, but not limited to the effect of any, Corporate Transaction and Change of Control and, subject to Paragraph 4, its determination shall be conclusive.
(e)    Modification of Options.  Notwithstanding the foregoing, any adjustments made pursuant to Subparagraph (a), (b) or (c) above with respect to Options shall be made only after the Administrator determines whether such adjustments would (i) constitute a “modification” of any ISOs (as that term is defined in Section 424(h) of the Code) or (ii) cause any adverse tax consequences for the holders of Options, including, but not limited to, pursuant to Section 409A of the Code.  If the Administrator determines that such adjustments made with respect to Options would constitute a modification or other adverse tax consequence, it may in its discretion refrain from making such adjustments, unless the holder of an Option specifically agrees in writing that such adjustment be made and such writing indicates that the holder has full knowledge of the consequences of such “modification” on his or her income tax treatment with respect to the Option.  This paragraph shall not apply to the acceleration of the vesting of any ISO that would cause any portion of the ISO to violate the annual vesting limitation contained in Section 422(d) of the Code, as described in Paragraph 6(b)(iv).
		
	26.
	ISSUANCES OF SECURITIES.

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 subject to Stock Rights.  Except as expressly provided herein, no adjustments shall be made for dividends paid in cash or in property (including without limitation, securities) of the Company prior to any issuance of Shares pursuant to a Stock Right.
		
	27.
	FRACTIONAL SHARES.

No fractional shares shall be issued under the Plan and the person exercising a Stock Right shall receive from the Company cash in lieu of such fractional shares equal to the Fair Market Value thereof.
		
	28.
	WITHHOLDING.

19

In the event that any federal, state, or local income taxes, employment taxes, Federal Insurance Contributions Act withholdings or other amounts are required by applicable law or governmental regulation to be withheld from the Participant’s salary, wages or other remuneration in connection with the issuance of a Stock Right or Shares under the Plan or for any other reason required by law, the Company may withhold from the Participant’s compensation, if any, or may require that the Participant advance in cash to the Company, or to any Affiliate of the Company which employs or employed the Participant, the statutory minimum amount of such withholdings unless a different withholding arrangement, including the use of shares of the Company’s Common Stock or a promissory note, is authorized by the Administrator (and permitted by law).  For purposes hereof, the fair market value of the shares withheld for purposes of payroll withholding shall be determined in the manner set forth under the definition of Fair Market Value provided in Paragraph 1 above, as of the most recent practicable date prior to the date of exercise.  If the Fair Market Value of the shares withheld is less than the amount of payroll withholdings required, the Participant may be required to advance the difference in cash to the Company or the Affiliate employer.  
		
	29.
	NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.

Each Employee who receives an ISO must agree to notify the Company in writing immediately after the Employee makes a Disqualifying Disposition of any Shares acquired pursuant to the exercise of an ISO.  A Disqualifying Disposition is defined in Section 424(c) of the Code and includes any disposition (including any sale or gift) of such Shares before the later of (a) two years after the date the Employee was granted the ISO, or (b) one year after the date the Employee acquired Shares by exercising the ISO, except as otherwise provided in Section 424(c) of the Code.  If the Employee has died before such Shares are sold, these holding period requirements do not apply and no Disqualifying Disposition can occur thereafter.
		
	30.
	TERMINATION OF THE PLAN.

The Plan will terminate on July 26, 2029, the date which is ten years from the earlier of the date of its adoption by the Board of Directors and the date of its approval by the shareholders of the Company.  The Plan may be terminated at an earlier date by vote of the shareholders or the Board of Directors of the Company; provided, however, that any such earlier termination shall not affect any Agreements executed prior to the effective date of such termination.  Termination of the Plan shall not affect any Stock Rights theretofore granted.
		
	31.
	AMENDMENT OF THE PLAN AND AGREEMENTS.

The Plan may be amended by the shareholders of the Company.  The Plan may also be amended by the Administrator; provided that any amendment approved by the Administrator which the Administrator determines is of a scope that requires shareholder approval shall be subject to obtaining such shareholder approval including, without limitation, to the extent necessary to qualify any or all outstanding Stock Rights granted under the Plan or Stock Rights to be granted under the Plan for favorable federal income tax treatment as may be afforded ISOs under Section 422 of the Code and to the extent necessary to qualify the Shares issuable under the Plan for listing on any national securities exchange or quotation in any national automated quotation system of securities dealers.  Other than as set forth in Paragraph 25 of the Plan, the Administrator may not, without 

20

shareholder approval, reduce the exercise price of an Option or take any other action that is considered a direct or indirect “repricing” for purposes of the shareholder approval rules of the applicable securities exchange or inter-dealer quotation system on which the Shares are listed, including any other action that is treated as a repricing under generally accepted accounting principles.  Any modification or amendment of the Plan shall not, without the consent of a Participant, adversely affect his or her rights under a Stock Right previously granted to him or her, unless such amendment is required by applicable law or necessary to preserve the economic value of such Stock Right.  With the consent of the Participant affected, the Administrator may amend outstanding Agreements in a manner which may be adverse to the Participant but which is not inconsistent with the Plan.  In the discretion of the Administrator, outstanding Agreements may be amended by the Administrator in a manner which is not adverse to the Participant.  Nothing in this Paragraph 31 shall limit the Administrator’s authority to take any action permitted pursuant to Paragraph 25.

		
	32.
	EMPLOYMENT OR OTHER RELATIONSHIP.

Nothing in this Plan or any Agreement shall be deemed to prevent the Company or an Affiliate from terminating the employment, consultancy or director status of a Participant, nor to prevent a Participant from terminating his or her own employment, consultancy or director status or to give any Participant a right to be retained in employment or other service by the Company or any Affiliate for any period of time.
		
	33.
	SECTION 409A.

If a Participant is a “specified employee” as defined in Section 409A of the Code (and as applied according to procedures of the Company and its Affiliates) as of his separation from service, to the extent any payment under this Plan or pursuant to the grant of a Stock-Based Award constitutes deferred compensation (after taking into account any applicable exemptions from Section 409A of the Code), and to the extent required by Section 409A of the Code, no payments due under this Plan or pursuant to a Stock-Based Award may be made until the earlier of: (i) the first day of the seventh month following the Participant’s separation from service, or (ii) the Participant’s date of death; provided, however, that any payments delayed during this six-month period shall be paid in the aggregate in a lump sum, without interest, on the first day of the seventh month following the Participant’s separation from service.
The Administrator shall administer the Plan with a view toward ensuring that Stock Rights under the Plan that are subject to Section 409A of the Code comply with the requirements thereof and that Options under the Plan be exempt from the requirements of Section 409A of the Code, but neither the Administrator nor any member of the Board of Directors, nor the Company nor any of its Affiliates, nor any other person acting hereunder on behalf of the Company, the Administrator or the Board of Directors shall be liable to a Participant or any Survivor by reason of the acceleration of any income, or the imposition of any additional tax or penalty, with respect to a Stock Right, whether by reason of a failure to satisfy the requirements of Section 409A of the Code or otherwise.
		
	34.
	INDEMNITY.

21

Neither the Board of Directors nor the Administrator, nor any members of either, nor any employees of the Company or any parent, subsidiary, or other Affiliate, shall be liable for any act, omission, interpretation, construction or determination made in good faith in connection with their responsibilities with respect to this Plan, and the Company hereby agrees to indemnify the members of the Board of Directors, the members of the Committee, and the employees of the Company and its parent or subsidiaries in respect of any claim, loss, damage, or expense (including reasonable counsel fees) arising from any such act, omission, interpretation, construction or determination to the full extent permitted by law.
		
	35.
	CLAWBACK.

Notwithstanding anything to the contrary contained in this Plan, the Company may recover from a Participant any compensation received from any Stock Right (whether or not settled) or cause a Participant to forfeit any Stock Right (whether or not vested) in the event that the Company’s Clawback Policy as then in effect is triggered.
		
	36.
	GOVERNING LAW.

This Plan shall be construed and enforced in accordance with the law of the State of Delaware.

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