Document:

Pathmark Stores, Inc. Form 10-K For the fiscal year ended February 3, 2007; Exhibit 10.54

Exhibit 10.54

SUPPLEMENTAL RETIREMENT AGREEMENT

AGREEMENT, made and entered into as of the 25th day of March, 2004, by and between PATHMARK STORES, INC., a Delaware corporation (the “Company”), and John Derderian (the “Executive”), residing at 8 Nottingham Drive, East Brunswick, New Jersey 08816.

WHEREAS, to induce the Executive to continue employment with the Company, the Company desires to provide a minimum retirement income for the Executive on the terms hereinafter set forth;

WHEREAS, the Company considers the Executive as one of a select group of management or highly compensated employees of the Company, to be of unique value to the Company.

NOW, THEREFORE, the Company and the Executive agree as follows:

	
             
 	
            1.
 	
            Definitions
 

The following terms whenever used in this Agreement shall have the meanings set forth in this Section 1.  Each capitalized term used in this Agreement and not defined in this Section 1 shall be deemed to have such meaning as in the Pathmark Stores, Inc. Pension Plan (as defined below).

	
             
 	
            1.1
 	
            “Actuarial Equivalent” means a benefit of equivalent value to the benefit that would otherwise be payable when computed on the basis of the rate of interest specified by the Pension Benefit Guaranty Corporation for the period after payment begins for purposes of determining the value of lump sum payments as of the date of the Executive’s termination of employment and using the 1983 Basic Group Annuity Mortality Table projected to 1988 with Scale H.  For purposes of determining Actuarial Equivalent, male mortality shall be used for the Executive and female mortality shall be used for any Beneficiary.
 

	
             
 	
            1.2
 	
            “Agreement” means this Supplemental Retirement Agreement by and between the Company and the Executive dated as of the 25th day of March, 2004.
 

	
             
 	
            1.3
 	
            “Average Final Compensation” shall mean the highest average annual Compensation (whether or not consecutive) paid to the Executive for the five (5) full calendar years within the most recent ten (10) consecutive calendar years during which the Executive received Compensation, ending with the December 31 coincident with or next preceding the date of Termination of Employment, Retirement, date of death or Disability, whichever is applicable, provided, however, that an Executive whose 
 

Retirement or death occurs on or after December 1 of his final Plan Year shall be deemed to have a full calendar year of Compensation.  Notwithstanding the foregoing, if an Executive is employed less than 12 full months in his final calendar year of employment, Compensation earned in such year shall, if higher than the lowest year’s Compensation used in determining Average Final Compensation, be substituted for such lowest year’s Compensation and the determination of Average Final Compensation shall be made based on the most recent eleven (11) consecutive calendar years during which the Executive received Compensation.

	
             
 	
            1.4
 	
            “Beneficiary” means the Executive’s surviving spouse to whom the Executive was married for the six-month period immediately preceding the earlier of the date of commencement of the Executive’s Supplemental Retirement Benefit or the date of the Executive’s death.
 

	
             
 	
            1.5
 	
            “Board of Directors” means the Board of Directors of the Company as constituted from time to time.
 

	
             
 	
            1.6
 	
            “Change of Control” means a Change of Control as defined in the Pathmark Stores, Inc. 2000 Employee Equity Plan as amended as of June 13, 2002.
 

	
             
 	
            1.7
 	
            “Code” means the Internal Revenue Code of 1986, as may be amended from time to time.
 

	
             
 	
            1.8
 	
            “Company” means Pathmark Stores, Inc., or any successor thereto.
 

	
             
 	
            1.9
 	
            “Compensation” means Compensation as defined under the Pathmark Stores, Inc. Pension Plan as in effect on the date of this Agreement, determined, however, without regard to any dollar limitation imposed by Section 401(a)(17) of the Code on the amount of compensation which may be taken into account under such Plan.
 

	
             
 	
            1.10
 	
            “Disability” means “Disability” as defined under the Pathmark Stores, Inc. Pension Plan.
 

	
             
 	
            1.11
 	
            “Disability Retirement” means the termination of the Executive’s employment with the Company by reason of Disability.
 

	
             
 	
            1.12
 	
            “Pathmark Stores, Inc. Pension Plan” means the Pathmark Stores, Inc. Pension Plan, as amended and restated effective January 1, 2001, and as amended from time to time thereafter.
 

	
             
 	
            1.13
 	
            “Pathmark Stores, Inc. Savings Plan” means the Pathmark Stores, Inc. Savings Plan, as amended and restated effective January 1, 2001, and as amended from time to time thereafter.
 

	
             
 	
            1.14
 	
            “Pension Plan Benefit” means the annual retirement benefit payable to or on account of the Executive pursuant to the Pathmark Stores, Inc. Pension Plan.
 

	
             
 	
            1.15
 	
            “SGC Profit Sharing Plan” means the SGC Profit Sharing Plan as in effect immediately prior to April 1, 1983.
 

	
             
 	
            1.16
 	
            “Supplemental Retirement Benefit” means the Executive’s benefit under this Agreement.
 

	
             
 	
            2.
 	
            Vesting of Supplemental Retirement Benefit
 

The Executive shall become vested in his Supplemental Retirement Benefit upon the earliest to occur of:  (i) completion of 5 years of Vesting Service following January 1, 2004; (ii) death; (iii) Disability; or (iv) a Change of Control (the “Vesting Date”).  Notwithstanding any provision herein to the contrary, neither Executive nor his Beneficiary shall be entitled to receive any benefits hereunder if Executive’s Termination of Employment with the Company (including by Retirement) occurs prior to hisVesting Date.

	
             
 	
            3.
 	
            Amount of Supplemental Retirement Benefit; Termination Of Employment After Age 60
 

Except as provided in Sections 4 and 5 of this Agreement, the annual amount of the Executive’s Supplemental Retirement Benefit shall be equal to the excess, if any, of the amount of the Executive’s “Unreduced Supplemental Retirement Benefit” as described in subparagraph (a) over the Executive’s “Other Company Plan Benefits” as described in subparagraph (b), where

a.            “Unreduced Supplemental Retirement Benefit” is equal to the sum of 30% of the Executive’s Average Final Compensation after completion of 10 years of Vesting Service, plus 1% of the Executive’s Average Final Compensation multiplied by each additional year of Vesting Service in excess of 10; provided, however, that in no event shall the Executive’s Unreduced Supplemental Retirement Benefit exceed the lesser of (i) 40% of his Average Final Compensation, or (ii) $250,000; and

b.            “Other Company Plan Benefits” are the amounts payable under the Pathmark Stores, Inc. Pension Plan, the SGC Profit Sharing Plan, the Company’s Excess Benefit Plan and the Company’s disability income plan (other than (i) amounts payable under group life insurance, Retirement and Survivor’s Insurance under the Federal Social Security Act, Worker’s Compensation and other Company plans required by any governmental authority, (ii) amounts payable under the Pathmark Stores, Inc. Savings Plan to the extent attributed to amounts paid or contributed by the Company or any predecessor thereto, and (iii) any amounts payable after termination of employment as retirement, death or disability benefits (other than severance benefits) under a contract between the
Company and the Executive).

If the Executive has a Beneficiary on the date Supplemental Retirement Benefits commence under this Agreement, Other Company Plan Benefits shall be determined, on a joint and two-thirds survivor annuity basis, except as otherwise provided in this Agreement, as of such date, with the Executive’s Beneficiary as joint annuitant.  The adjustment to the amount otherwise payable under the applicable Company plan for the applicable joint survivor annuity form of payment shall be made on the basis of the factors specified in such Company plan or, if no such factors are set forth in such Company plan, on an Actuarial Equivalent basis.  If the Executive does not have a Beneficiary on the date Supplemental Retirement Benefits are to commence under this Agreement, Other Company Plan Benefits shall be determined on a single life annuity basis.

The Executive’s Supplemental Retirement Benefit under this Section 3, if vested, shall be payable monthly for life commencing on the first day of the month following the Executive’s termination of employment after attainment of age 60.

	
             
 	
            4.
 	
            Termination of Employment Prior to Age 60
 

In the case of the Executive’s termination of employment with the Company prior to attaining age 60 (other than by reason of the Executive’s death or Disability) but after completing 10 years of Vesting Service, the amount of the Executive’s Supplemental Retirement Benefit shall be equal to the Executive’s Unreduced Supplemental Retirement Benefit (computed on the basis of the Vesting Service which the Executive would have completed had the Executive remained in the employ of the Company until attainment of age 60), multiplied by a fraction, the numerator of which is the number of the Executive’s years of Vesting Service at termination of employment (up to a maximum of 20) and the denominator of which is the number of years of Vesting Service (up to a maximum of 20) which the Executive would have completed had the Executive remained in the employ of the Company
until attainment of age 60, offset by the amount of the Executive’s Other Company Plan Benefits; provided that Other Company Plan Benefits shall be assumed to commence on the first day of the month after the Executive’s attainment of age 60 and to be paid in the form of a joint and two-thirds survivor annuity unless Executive does not have a Beneficiary in which case benefits shall be assumed paid in the form of a life annuity.  The Executive’s Supplemental Retirement Benefit under this Section 4, if vested, shall be payable monthly for life commencing on the first day of the month following the Executive’s attainment of age 60.

	
             
 	
            5.
 	
            Disability Retirement
 

In the case of the Executive’s Disability Retirement, the amount of the Executive’s Supplemental Retirement Benefit shall be the amount determined under Section 3 of this Agreement; provided, however, that the Executive’s Unreduced Supplemental Retirement Benefit shall be computed on the basis of the Vesting Service which the Executive would have completed had the Executive remained in the employ of the Company until attainment of age 60, and the Executive’s Unreduced Supplemental Retirement Benefit shall not be offset by Other Company Plan Benefits prior to the date on which payment of such Other Company Plan Benefits commence.  The Executive’s 

Supplemental Retirement Benefit under this Section 5, if vested, shall be payable monthly for life commencing on the first day of the month following the Executive’s Disability Retirement.

	
             
 	
            6.
 	
            Death Prior to Retirement
 

a.            In the event that the Executive dies while in the employ of the Company after his Supplemental Retirement Benefit has vested and has a Beneficiary on the date of his death, the Executive’s Beneficiary shall receive, beginning with the first day of the month following the Executive’s death and payable monthly, an annual amount equal to two-thirds of the Executive’s Unreduced Supplemental Retirement Benefit (computed on the basis of the Vesting Service which the Executive would have completed had the Executive remained in the employ of the Company until attainment of age 60) offset by the Other Company Plan Benefits; provided, however, that such offset shall be made at such time as Other Company Plan Benefits are payable (whether or not the Beneficiary has elected
to defer payment to a later date) and in an amount equal to (i) a life annuity payable to the Executive’s Beneficiary that is equal to the Actuarial Equivalent of the SGC Profit Sharing Plan balance, and (ii) the survivor annuity actually payable to Executive’s Beneficiary pursuant to any Other Company Plan, each determined as of the earliest date on which payments of Other Company Plan Benefits are payable to the Beneficiary.

b.            In the event that the Executive dies after termination of employment with the Company and after his Supplemental Retirement Benefit has vested but prior to commencement of Supplemental Retirement Benefit payments under this Agreement, and has a Beneficiary on the date of his death, the Executive’s Beneficiary shall receive, beginning with the first day of the month following the Executive’s death and payable monthly, an annual amount equal to two-thirds of the Executive’s Unreduced Supplemental Retirement Benefit offset by the amount of Other Company Plan Benefits; provided, however, that such offset shall be made at such time as Other Company Plan Benefits are payable (whether or not the Beneficiary has elected to defer payment to a later date) and in an amount
equal to the benefit that would have been payable to Executive’s Beneficiary had Executive retired on the date of his death and commenced benefit payments in the form of a joint and two-thirds annuity on such date.

	
             
 	
            7.
 	
            Death After Retirement
 

In the event of the Executive’s death after commencement of the Executive’s Supplemental Retirement Benefit, the Executive’s Beneficiary shall receive, beginning with the first day of the month following the Executive’s death and payable monthly, an annual amount equal to two-thirds of the Supplemental Retirement Benefit that was being paid to the Executive prior to the Executive’s death.

	
             
 	
            8.
 	
            Limitation on Spouse’s Benefits
 

Payment of Supplemental Retirement Benefits to the Executive’s Beneficiary under Sections 6 or 7 hereof shall terminate on the earlier of the date of death or remarriage of such Beneficiary.

	
             
 	
            9.
 	
            Benefits Payable by Company
 

All benefits payable under this Agreement shall constitute an unfunded obligation of the Company.  Payments shall be made, as due, from the general funds of the Company.  The Company may, in its sole and absolute discretion, establish one or more accounts, funds or trusts to reflect its obligations under this Agreement and may make such investments as it may deem desirable to assist it in meeting such obligations.  Any assets held in such accounts, funds or trusts shall remain assets of the Company subject to claims of its creditors.  No person eligible for a benefit under this Agreement shall have any right, title or interest in any such assets.  This Agreement shall constitute solely an unsecured promise by the Company to pay supplemental retirement benefits to the extent provided herein.

	
             
 	
            10.
 	
            Inalienability of Benefits
 

The right of any person to any benefit or payment under this Agreement shall not be subject to voluntary or involuntary transfer, alienation or assignment, and, to the fullest extent permitted by law, shall not be subject to attachment, execution, garnishment, sequestration or other legal or equitable process or be transferable by operation of law in the event of bankruptcy or insolvency of the Executive or any Beneficiary.  In the event a person who is receiving or is entitled to receive benefits under the Agreement attempts to assign, transfer or dispose of such right, or if an attempt is made to subject said right to such process, such assignment, transfer or disposition shall be null and void.

	
             
 	
            11.
 	
            Forfeiture of Benefits
 

The Executive shall forfeit his Supplemental Retirement Benefit in the event of the Executive’s conviction of a felony relating to the conduct of the business of the Company or willful unauthorized disclosure of a trade secret of the Company.

	
             
 	
            12.
 	
            Payments to Minors and Incompetents
 

If the Executive or Beneficiary entitled to receive any benefits hereunder is a minor or is deemed by the Company or is adjudged to be legally incapable of giving valid receipt and discharge for such benefits, payment of benefits will be made to the duly appointed guardian or legal representative of such minor or incompetent or to such other legally appointed person as the Company may designate.  Such payment shall, to the extent made, be deemed a complete discharge of any liability for such payment under this Agreement.

	
             
 	
            13.
 	
            Withholding
 

The Company shall have the right to deduct from any payments due under this Agreement any taxes required to be withheld with respect to such payments.

	
             
 	
            14.
 	
            Merger, Consolidation or Sale of Assets
 

In the event the Company shall, at any time, be merged or consolidated with or into any corporation or corporations, or in the event that all or substantially all of the assets of the Company shall be sold or otherwise transferred to another corporation, the provisions of this Agreement, including the provisions of this Section, shall be binding upon and inure to the benefit of the successor of the Company resulting from such merger, consolidation or sale of assets.

	
             
 	
            15.
 	
            Governing Law
 

Except to the extent pre-empted by federal law, the provisions of this Agreement will be construed according to the laws of the State of Delaware (without giving effect to the provisions thereof relating to conflicts of law).

 

IN WITNESS WHEREOF, the Company and the Executive have caused this Agreement to be executed effective as of the 25th day of March, 2004.

 

	
            ATTEST:
 	
             
 	
            PATHMARK STORES, INC.
 
	
            /s/ Marc A. Strassler
 	
             
 	
            By:
 	
            /s/ Eileen R. Scott
 
	
            Marc A. Strassler
 	
             
 	
             
 	
            Eileen R. Scott
 
	
             
 	
             
 	
             
 	
            Chief Executive Officer
 
	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
            /s/ John T. Derderian
 
	
             
 	
             
 	
             
 	
            ExecutiveS-8

Exhibit 4.1  

2003-04-09

POINTSEC MOBILE TECHNOLOGIES INC.

2003 STOCK OPTION PLAN

S E T T E R W A L L S

S T O C K H O L M

	
   

  	
   

  
	
   

  	
  POINTSEC MOBILE TECHNOLOGIES INC.,
  2003 STOCK OPTION PLAN

  

                    Pointsec
Mobile Technologies Inc., a California corporation (the “Company”), hereby adopts the Pointsec Mobile Technologies
Inc., 2003
Stock Option Plan (the “Plan”);

                    WHEREAS,
Pointsec Mobile Technologies AB, company registration No. 556575-7415, (the “Parent”), a Swedish limited liability
company, owns all of the issued and outstanding stock in the Company;

                    WHEREAS,
Protect Data AB (publ), company registration No. 556315-8541, (“PDAB”), a Swedish limited liability
company which is quoted on the Stockholm Stock Exchange, owns all of the issued
and outstanding stock in the Parent;

                    WHEREAS,
a general meeting of PDAB has resolved to implement an incentive program which,
inter alia, covers employees and
other service providers connected with the Company;

                    WHEREAS,
in order to attract and retain qualified officers, directors, employees,
consultants and other service providers in the USA (the “Service Providers”) - each of whom, at the
time an Option is granted, does not own stock representing more than fifty
percent of the total combined voting power of all classes of stock of the
Company, or of its Parent, or of PDAB, or of a subsidiary of the foregoing as
of the time the Option is granted (a “Major
Shareholder”) - PDAB, the Parent and the Company have determined that
it is necessary to adopt a compensatory stock option plan; and

2

                    WHEREAS,
in order to adopt the equivalent of a stock option plan under Swedish law, the
Company has entered into a contract with PDAB whereby the Company will acquire
options to be issued by PDAB (the “Options”) to acquire 300,000 shares of PDAB and has
agreed to adopt the Plan and grant the Options, which may be treated as
incentive stock options or nonqualified stock options, to Service Providers of
the Company thereunder (the General Agreement relating to the Options
hereinafter the “General Agreement”).

3

                    NOW,
THEREFORE, the terms and conditions of the Plan shall be as follows:

                    1.
Purpose of Plan. The purpose of the Plan is to advance the interests of
the Company, the Parent, PDAB and the shareholders of PDAB by enabling the
Company to attract and retain qualified directors, officers, employees,
consultants and other service providers by providing them with an opportunity for
investment in shares of PDAB through the granting of Options (incentive stock
options or nonqualified stock options). The Options that may be granted
hereunder represent the right by the grantee thereof (each an “Optionee”) to acquire shares of PDAB (the
“Shares”) always subject to the terms and conditions of this Plan and the terms
of the Options as set out in “Conditions for Protect Data AB’s (publ) Options
2003/2008” (the “Option Conditions” which
are set out in free translation from the original Swedish language in an
exhibit annexed hereto) as well as a written stock option agreement between the
Company and the Optionee setting forth certain special conditions for the
Optionees (a “Stock Option Agreement”). 

                    2.
Duration of Plan. This Plan shall commence on the date the Plan is
approved by the Company and its shareholders (the Parent), and PDAB and its
shareholders. This Plan shall remain in effect to and including 31 December
2012 or such earlier day as the Company decides in accordance with Section 12
of the Plan. However, no Options shall be granted after 31 December 2012. All
Options subject to this Plan must be purchased or acquired pursuant to the
provisions of this Plan and the Stock Option Agreement.

4

                    3.
Eligibility. The Company may, always subject to PDAB’s approval as set
out in the General Agreement grant Options (incentive stock options or
nonqualified stock options) under this Plan only to (i) persons who, at the
time of such grant, are directors, officers, or employees of the Company and
(ii) persons who at the time of such grant, are independent contractors,
consultants or advisers of the Company (which persons shall not already be,
direct or indirect, Major Shareholders) (hereinafter collectively, “Eligible Participants”). No person or
entity will be an Eligible Participant following his, her or its Termination of
Eligibility Status (as defined in Section 13 below), no Option may be granted
to any person or entity other than an Eligible Participant and no incentive
stock option may be granted to a person who is not an employee.

                    4.
Option Pool. In no event will the Company grant Options entitling the
Eligible Participants to purchase, in the aggregate, more than 300,000 Shares,
which correspond to the maximum number of Options to be acquired by the Company
from PDAB under its issue in accordance with the Option Conditions and the
General Agreement, provided that PDAB shall have the right to increase the
number to a total of 450,000 Shares, provided such increase is resolved upon or
approved by the Company and its shareholders (the Parent) and the Parent’s
shareholders (PDAB). The Options to purchase Shares may represent options which
have not been issued heretofore or may be reacquired options. However, Shares
that have actually been issued under the Plan, upon exercise of an Option,
shall not be returned to the Plan and shall not become available for future
distribution under the Plan, except that if the Shares are repurchased by the
Company or by a third party designated by the Company at their original
purchase price, such Shares shall become available for future grant under the
Plan.

                    If
an Option expires or becomes unexercisable without having been exercised in
full, or is surrendered pursuant to an option exchange program adopted by the
Administrator, the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated).

5

                    5.
Administration. (a) General. This Plan and Options granted pursuant to
the Plan will be administered and interpreted by the Company’s Board of
Directors (the “Board”), or by a committee consisting of two or
more members of the Board, appointed by the Board for such purpose (the Board,
or such committee, referred to herein as the “Administrator”).
Subject to the expressed terms and conditions
hereof and of
the General Agreement (which conditions, inter
alia, provide that PDAB shall have the right to approve a granting
of Options), the Administrator is authorized to (i) select the Eligible
Participants to whom Options will be granted from time to time hereunder,
including the number and type (i.e., incentive
stock options and non-qualified options), (ii) determine the strike price for
acquiring Shares under the Options (the “Strike
Price”) etc. for Options to be granted to each Eligible Participant,
(iii) determine the dates on, or as the case may be the periods during which
Option Exercise Subscriptions (as defined in Section 7 hereof) will be remitted
to the appropriate government offices in Sweden for compliance with the
administrative registration procedures of the Swedish Patent and Registration
Office, which dates (periods) are expected to be determined to four times each
year, (iv) determine acceptable forms of payment, (v) determine the procedures
for the Company’s (or, for this purpose, a designated third party’s) repurchase
of unvested Shares upon termination of employment etc, (vi) approve forms of
agreement for use under the Plan, (vii) reduce the Strike Price of any Option
to the then current Fair Market Value if the Fair Market Value of the Shares
covered by such Option has declined since the date the Option was granted,
(viii) initiate an option exchange program whereby outstanding Options are
exchanged for options with a lower strike price, (ix) prescribe, amend and
rescind rules and regulations relating to the Plan, including rules and
regulations relating to sub-plans established for the purpose of qualifying for
preferred tax treatment under foreign tax laws. PDAB shall be informed of, from
time to time, the name of those selected and the number of Options granted to
each person and Options that have been returned to the Company due to events
under Section 13.

                    (b)
Effects of Administrator’s Decision. Subject to the terms and conditions
of the General Agreement, all decisions, determinations and interpretations of
the Administrator shall be final and binding on all Optionees.

6

                    (c)
Exercisability of Options. The Administrator is authorized to specify
the extent to which any Option will be “Exercisable” (i.e., meaning that
the right to exercise the Option has commenced) and the conditions (e.g., the passage of time or the
occurrence of events) that must be satisfied prior to such Option becoming
Exercisable. Non-Exercisable Options may not be exercised by an Optionee. No
Options, which are intended to be treated as incentive stock options, shall be Exercisable
after the expiration of ten years from the date such options are granted.
Furthermore, no Options, which are intended to be treated as incentive stock
options, shall be Exercisable a) after the expiration of five years from the
date such options are granted or b) at a Strike Price of less than 110% as
specified in Section 6(b), should the Optionee own more than ten percent of the
total combined voting power of all classes of stock of the Company, or of its
Parent, or of PDAB, or of a subsidiary of the foregoing as of the time the
option is granted (a “Ten Percent
Shareholder”).

                    If
the aggregate fair market value for the Shares (which shall be deemed equal to
the closing price of the Shares on the Stockholm Stock Exchange (the “Fair Market Value”)), with respect to
which Options, intended to be treated as incentive stock options, are
Exercisable for the first time by an Optionee during any calendar year, exceeds
USD 100,000 (under all plans of the Company, or of its Parent, or of PDAB, or
of a subsidiary of the foregoing), a part of such Options will be treated as
nonqualified stock options, i.e., the
part that does not meet such USD 100,000 limit. For purposes of this Section
5(c), Incentive Stock Options shall be taken into account in the order in which
they were granted. The Fair Market Value of the Shares shall be determined as
of the time of grant of the Option and in USD at the applicable exchange rate
on said grant date.

                    (d)
Vesting of Shares. In addition, the Administrator is authorized, by way
of contract between the Company and the Optionee, to provide for vesting
restrictions regarding Shares acquired pursuant to exercise of Options (i.e., confer
upon the Company, or a third party designated by the Company, a right to
repurchase certain Shares), as provided for in Section 6(e) below.

7

                    6.
Terms and Conditions of Stock Option Agreements. In addition to the
terms set out in the Option Conditions, the following terms and conditions will
be deemed to apply to each Option as if expressly set forth in the Option
Conditions, unless otherwise expressly provided in a Stock Option Agreement (i.e., the following terms and conditions
may be changed in individual cases) based on the Administrator’s determination
pursuant to Sections 5 and 12 of this Plan.

                    (a)
ISOs. No Option will be treated as an incentive stock option (an “ISO”)
for United States income tax purposes unless treatment as an ISO is expressly
provided for in a Stock Option Agreement and such Option satisfies the
conditions of Section 422 (b) of the U.S. Internal Revenue Code. 

                    (b)
ISO Strike Price. For Options intended to be treated as ISO’s, the
Strike Price shall, upon granting of Options, be assessed in Swedish Kronor to
the greater of the following:

	
   

  	
   

  
	
   

  	
            (i)
  10:45 Swedish Kronor; or

  
	
   

  	
   

  
	
   

  	
            (ii)
  the Fair Market Value of the Shares on the day the Option is granted (or in
  the case of a Ten Percent Shareholder, 110% of such Fair Market Value).

  

                    (c)
Non-ISO Strike Price. For Options not intended to be treated as an ISO,
the Strike Price shall, upon granting of Options, be assessed in Swedish Kronor
to the greater of the following:

	
   

  	
   

  
	
   

  	
            (i)
  10:45 Swedish Kronor; or

  

8

	
   

  	
   

  
	
   

  	
            (ii)
  a minimum of 85% of the Fair Market Value of the Shares on the day the Option
  is granted (or in the case of a Ten Percent Shareholder, 110% of such Fair
  Market Value).

  

                    (d)
Exercisability of Options. Initially the Options will not be Exercisable
(i.e., meaning that the right to
exercise the Option is not presently allowed). Parts of the Options granted
will, subject to Section 5(c) above, become Exercisable, giving the Optionee
the right to acquire Shares under the Option Conditions, the Stock Option
Agreement and this Plan, according to the following:

	
   

  	
   

  
	
   

  	
            (i)
  subject PDAB and the Parent and its respective subsidiaries make a profit
  according to a consolidated income statement (the details of which will be
  provided for in the individual Stock Option Agreement); and

  
	
   

  	
   

  
	
   

  	
            (ii)
  subject the Optionee meets certain requirements (the details of which will be
  provided for in the individual Stock Option Agreement), provided, however,
  that, except in the case of Options granted to officers and directors and
  consultants, Options shall become exercisable at a rate of no less than 20%
  per year over five (5) years from the date the Options are granted.

  

only on a pro rata basis
upon the close of each full calendar month over the next 36 full calendar
months following the date the Administrator has decided to grant Options to an
Eligible Participant (i.e., l/36th
upon the close of each full calendar month). Options that are not Exercisable
upon a Termination of Eligibility Status or, upon termination of this Plan,
cannot be exercised and will, therefore, be forfeited by the Optionee and
automatically become the property of the Company. However, the Administrator in
its sole and absolute discretion, pursuant to Section 5, shall have the
authority in individual cases to provide for the immediate or alternative
Exercisability of all, or any part of, Options granted. Additional Exercisability of the Options granted will also be
suspended or postponed during any period while the Optionee is on leave or
absent from the Company, as determined by the Administrator. The Company will
after each twelve months period deliver certificates regarding Options which
have become Exercisable during the foregoing twelve months period in accordance
with the Exercisability provisions set forth in this Plan and the Stock Option
Agreement.

9

                    (e)
Company’s Right to Repurchase Shares Acquired under Options. Upon
Termination of Eligibility Status, the Company may provide for, in a Stock
Option Agreement, a right to repurchase Shares (for itself or a third party as
designated by the Company), acquired pursuant to exercise of Options, as
follows (subject always to Swedish law, according to which such repurchase of
Shares is allowed only in certain cases):

                    If
the Optionee’s Termination of Eligibility Status is the result of a Termination
for Cause, the Company (or a third party as designated by the Company) shall
have a right to repurchase Shares for a consideration corresponding to the
Strike Price paid for the Shares.

                    (f)
Grace Periods. Regardless of what has been stated in the Option
Conditions regarding the exercise period, following a Termination of
Eligibility Status (i) the grace period, i.e.,
the maximum period following any Termination of Eligibility Status
during which Options, which are Exercisable, may be exercised by an Optionee
(“Grace Period”), will be 30 days, unless the Termination of Eligibility Status
is a result of the death (in which case the option may be exercised by the
Optionee’s estate or by a person who acquires the right to exercise the Option
by bequest or inheritance) or Disability of the Optionee; (ii) the Grace Period
will be six months if the Termination of Eligibility Status is the result of
the death or Disability of the Optionee; and (iii) there will be no Grace
Period, if the Termination of Eligibility Status is the result of a Termination
for Cause (as defined in Section 13, below) of an Optionee. For purposes of
this Plan, “Disability” shall
have the same meaning as defined in Section 22(e)(3) of the Internal Revenue
Code of 1986.

10

                    (g)
Compliance with Law. Notwithstanding any other provision of this Plan,
Options may be granted pursuant to this Plan only after and on the condition
that there has been compliance with all applicable federal and state securities
laws. The Company, the Parent or PDAB will not be required to list, register or
qualify any Shares upon any securities exchange, under any applicable state,
federal or foreign law or regulation, or with the USA Securities and Exchange
Commission or any state agency, or secure the consent or approval of any
governmental regulatory authority.

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

                    (h)
Share Certificates. Certificates representing the Shares acquired
pursuant to an Option will not be issued, but record of ownership will be kept
by VPC AB (a Swedish limited liability company which is authorized as a
Securities Register Center) in accordance with the procedures applicable from
time to time for all Shares of PDAB. The Company undertakes to inform a
subscriber of Shares in writing upon registration of the Shares in VPC AB’s
register.

                    (i)
Expiration. Unless the Administrator provides to the contrary at the
time of grant, Options that are Exercisable according to this Plan and the
Stock Option Agreement will expire at the earlier of (i) February 28, 2008, or
(ii) at the end of the Grace Period set out in Section 6(f) following a
Termination of Eligibility Status.

11

                    7.
Exercise Procedures. (a) Options that comprise Exercisable Options may
be exercised by the Optionee in accordance with the procedures established in
the Option Conditions and this Section 7; provided, however, that the Company
and PDAB will consider such option exercises an “Option Exercise Subscription”
until remitted to, accepted and effected by the appropriate government offices
in Sweden for compliance with the administrative registration procedures of the
Swedish Patent and Registration Office or in accordance with the powers granted
to the Administrator under Section 5(iii) of this Plan. Such procedures may be
satisfied by the Optionee providing written notice of intention to exercise
(the “Notice of Exercise”) to the Company in such form as may be specified by
the Administrator and along with such other representations and agreements as
may be required by the Company, but in any event stating: (i) the Optionee’s
intention to exercise the Options and to subscribe for the Shares; (ii) the
date of exercise; (iii) the number of full Shares to be subscribed for, which
number will not be less than 100 Shares (irrespective of any measures
enumerated in Section 8 below that may be taken regarding the Shares), or, if
less, all of the remaining Shares subject to the Options; and (iv) form of
payment of the Strike Price. The Notice of Exercise shall be signed by the
person or persons exercising the Option. In the event that the Option is being
exercised by the representative of the Optionee, the Notice of Exercise shall
be accompanied by proof satisfactory to the Company of the representative’s
right to exercise the Option. The Notice of Exercise shall be accompanied by
full payment of the Strike Price for the number of Shares to be purchased, in
Swedish Kronor, and in cash or by check made payable to the Company for
forwarding (in full or in part) to PDAB, or by delivery of such other form of
payment (if any) as approved by the Administrator at the time of grant or
exercise in a particular case.  

                    (b)
To the extent required by applicable federal, state, local or foreign law, and
as a condition to the exercise of Option(s), the Optionee will make
arrangements satisfactory to the Company and PDAB for the payment of any applicable tax withholding liability that may arise by
reason of or in connection with such exercise.

12

                    (c)
After receiving a proper Notice of Exercise and payment of the Strike Price,
assessed pursuant to Section 6(b) and Section 6(c) above, said Option Exercise
Subscription will be transferred by the Company to PDAB along with an amount in
Swedish Kronor corresponding to at least (i) the aggregate nominal value of the
Shares to be issued (expectedly four times each year, cp. Section 5(a)(iii)
above), and (ii) the subscription price according to the Option Conditions.
After receipt of such Notice of Exercise and such amount, PDAB will arrange for
the issuance of the Shares to the Optionee in the manner set forth in the
Option Conditions and subject to the administrative registration procedure
necessary with the Swedish Patent and Registration Office.

                    8.
Adjustments in Authorized Shares, Etc. Under the Option Conditions, the
number of Shares subject to the Options and/or the subscription price may be
adjusted as a result of a (i) bonus issue of shares, (ii) consolidation or
reclassification of shares, (iii) shares split, (iv) new preferential issue of
shares for cash, (v) preferential issue of convertible debt or of debentures
with attached warrants, (vi) directed offer to the shareholders, (vii)
extraordinary cash dividends, or (viii) reduction of the share capital. In
light of the above, the Strike Price and the number of Shares subject to the
Options shall be recalculated correspondingly hereto. The conversion of any
convertible securities of the Company or of its Parent or of PDAB shall not be
deemed to have been “effected without receipt of consideration” and, thus, does
not entail a recalculation according to the above. Adjustments or
recalculations according to the above shall be made, as the case may be, by the
Board of the Company or PDAB, whose determination in that respect shall be
final, binding and conclusive. Except as expressly provided herein, no issuance
by the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment or recalculation by reason thereof shall be made with
respect to, the number or price of the Shares subject to an Option.

13

                    9.
Transferability of Options. Unless determined otherwise by the
Administrator, Options may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or the laws of
descent and distribution, and may be exercised during the lifetime of the Optionee,
only by the Optionee. If the Administrator in its sole discretion makes an
Option transferable, such Option may only be transferred by (i) instrument to
an inter vivos or testamentary trust in which the Option is to be passed to
beneficiaries upon the death of the Optionee, or (ii) gift to a member of
Optionee’s immediate family (as such term is defined in Rule 16a-l (e) of the
Securities Exchange Act of 1934, as amended). In addition, any transferable
Option shall contain additional terms and conditions as the Administrator deems
appropriate. After exercise of the Options the Optionee undertakes not to
transfer the Shares acquired until after a period of one year and provided
always that the Company is satisfied that such transfer complies in all respects
with the requirements imposed by applicable USA state and federal securities
laws and regulations.

                    10.
Rights of Participants. Nothing in the Plan shall interfere with or
limit in any way the right of the Company, the Parent or PDAB to terminate any
Eligible Participant’s employment or service at any time, with or without
cause. No Eligible Participant shall have the right to be selected to receive
an award under this Plan, or, having been selected, to be selected to receive a
future award hereunder.

14

                    11.
No Shareholder Rights. No rights or privileges of a share­holder in PDAB
are conferred by reason of the granting of an Option. No Optionee will become a
shareholder in PDAB unless and until the Options have been properly exercised
and Shares issued. Once the Option is exercised, the purchaser shall have
rights equivalent to those of a shareholder and shall be a shareholder when his or her purchase is
entered upon the records of the VPC AB in accordance with the procedures
applicable from time to time for all Shares in PDAB. Adjustments for a dividend
or other rights afforded to the Shares shall be made in accordance with the
provisions contained in the Option Conditions.

                    12.
Amendment or Termination. The Board, in its sole discretion, may,
subject to the Parent’s and PDAB’s approval and if required by US or Swedish
laws, and subject to the approval of the Parent and PDAB, alter, amend or
terminate this Plan, or any part hereof, at any time and for any reason.
However, neither the amendment, suspension, nor termination of the Plan shall,
without the consent of the Eligible Participant, alter or impair any rights or
obligations under any award theretofore granted. Termination of the Plan shall
not affect the Administrator’s ability to exercise the powers granted to it
hereunder with respect to Options granted under the Plan prior to the date of
such termination.

15

                    13.
Termination of Eligibility Status. For purposes of this Plan, the phrase
“Termination of Eligibility Status” means
(i) in the case of any employee of the Company, a termination of his or her
employment, whether by the employee or employer, and whether voluntary or
involuntary, including without limitation as a result of the death or
disability of the employee, (ii) in the case of any advisor, consultant, or
independent contractor of the Company, the termination of the services
relationship pursuant to any contract between the parties, whether by such
service provider or the Company, and whether voluntary or involuntary,
including without limitation as a result of the death or disability of the
service provider, or otherwise under applicable law, and (iii) in the case of
any director of the Company, the death or resignation by the director or his or
her removal from the board in the manner provided by the articles of
incorporation, bylaws or other organic instruments of the Company or the Parent
or any subsidiaries of the foregoing or otherwise in accordance with applicable
law. For purposes of this Plan, the phrase “Termination
for Cause” means (i) in the case of an Optionee who is an employee
of the Company, a termination by the employer of the Optionee’s employment for “cause” as defined by applicable law, by any contract of
employment, or the Stock Option Agreement or if not defined therein, pursuant
to the “For Cause Standard” set
forth below, (ii) in the case of an Optionee who is an advisor, consultant or
independent contractor to the Company, a termination of the services
relationship by the hiring party for “cause” or breach of contract, as defined
by applicable law, by any contract between the parties or the Stock Option
Agreement, or if not defined therein, pursuant to the “For Cause Standard” set
forth below, and (iii) in the case of an Optionee who is a director of the
Company, removal of him or her from the board of directors by action of the
shareholders or, if permitted by applicable law and the articles, bylaws or
other organic documents of the Company or pursuant to applicable law, by the
other directors pursuant to the For Cause Standard. The “For Cause Standard”
shall mean a good faith determination of the board of directors (or of the
Company’s shareholders if so required, but in either case excluding the vote of
the subject individual if he or she is a director or a shareholder) that the
Optionee has engaged in any acts which breach any fiduciary duty to the
Company, the Parent, PDAB or their shareholders, or in any acts involving
dishonesty or moral turpitude or in any acts that materially and adversely
affect the business, affairs or reputation of the Company, the Parent or PDAB.

                    14.
Severability. In the event any provision of this Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of this Plan, and this Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.

                    15.
Governing Law and Jurisdiction. The Plan and all awards hereunder, shall
be construed in accordance with and governed by the laws of Sweden. Disputes
arising from these Options shall be finally settled by arbitration according to
the simplified rules of the Arbitration Institute of Stockholm Chamber of
Commerce, which means, inter alia, that
one (1) arbitrator shall settle the dispute. The arbitration shall take place in
Stockholm. The language before the arbitration tribunal shall be Swedish.

16

                    16.
Copies of Plan. A copy of this Plan will be delivered to each Optionee
at or before the time he, she or it executes a Stock Option Agreement.

                    17.
Exchange Rates. In the event that it is necessary or convenient for
Company or Optionee purposes to apply an exchange rate between different
currencies, the exchange rate shall be determined by the Administrator using
such publicly available indices as it shall select in its reasonable
discretion.

                    18.
Investment Representations. As a condition to the exercise of an Option,
the Administrator may require the person exercising such Option to represent
and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Company or PDAB,
such a representation is required. Optionee shall acknowledge that Optionee has
received, read and understood the Plan, the Stock Option Agreement and the
Option Conditions and shall agree to abide by and be bound by their terms and
conditions. Optionee shall acknowledge that the Company and PDAB are under no
obligation to register the Securities and that, accordingly, a prospectus (as
defined under the Securities Act of 1933, as amended) has not been and will not
be prepared and delivered to the Optionee.

17

                    19.
Information to Optionees and Purchasers. The Company or PDAB shall
provide to each individuals who acquired Shares pursuant to the Plan, not less
frequently than annually during the period such Optionee or purchaser has one
or more Options outstanding, and, in the case of an individual who acquires
Shares pursuant to the Plan, during the period such individual owns such
Shares, copies of annual financial statements for PDAB. The Company or PDAB
shall not be required to provide such statements to key employees whose duties
in connection with the Company assure their access to equivalent information.
The Company and PDAB shall not be required to provide any
reports or information, whether financial or otherwise, to the Optionees,
except as required by applicable laws.

This Plan has been adopted by the Company and its
shareholders (the Parent) on the 9 April, 2003, after approval by the Parent,
PDAB and its shareholders.

California, April 9th, 2003

POINTSEC
MOBILE TECHNOLOGIES INC.

	
   

  	
   

  	
   

  
	
  

  	
   

  	
  

  
	
  By: Peter Larsson

  	
   

  	
  By: Thomas Bill

  
	
   

  	
   

  	
   

  
	
  

  	
   

  	
  

  
	
  By: Douglas Chalmers

  	
   

  	
   

  

18

EXHIBIT A

2003 STOCK OPTION PLAN 

EXERCISE NOTICE

To be sent to Pointsec Mobile Technologies Inc., 1333 N.
California Blvd. Suite 445, Walnut Creek, CA 94596-4588. Attention: Financial
Manager.

          1.
Exercise of Option. Effective as of today, _____________, the undersigned
(“Optionee”) hereby elects to
exercise Optionee’s option (the “Option”)
to purchase (subscribe for) _____________ of the Common Shares (the “Shares”) of Protect Data AB
(“PDAB”) under and pursuant to the 2003
Stock Option Plan (the “Plan”) of
Pointsec Mobile Technologies, Inc. (the “Company”),
the Stock Option Agreement dated _______________ (the “Stock Option Agreement”) and the Option Conditions (as
referred to in the Plan). The Strike Price (as referred to in the Plan) payable
for the Shares, will be paid by ____________________________ (cash or check; if
by check it shall be payable to the Company).

Optionee hereby authorizes
PDAB’s Board of Directors, a Board Member appointed by the Board for such
purpose, or such securities firm that is designated by the Board, to subscribe
for the above stated number of Shares on behalf of the Optionee.

Optionee would like the
Shares subscribed for to be registered as follows:

Account number
__________________ with ___________________ (bank or securities firm).

          2.
Delivery of Payment and Issuance of Shares. Purchaser herewith delivers
to the Company the full purchase price of the Shares in Swedish Kronor
(referred in the Plan as the “Strike Price”), as set forth in the Stock Option
Agreement. Optionee understands that despite the fact that he elects to
exercise the Option, issuance and delivery of the Shares under the Option will
be effected without undue delay following the end of the first period stated in
Sub-Exhibit A (1), which occurs after this Exercise Notice has been submitted
to the Company. Following the end of said period, PDAB will apply for
registration of the increase in capital stock with the Swedish Patent and
Registration Office, and upon registration of the increase (which process
usually takes up to four weeks due to the Swedish Patent and Registration
Office’s handling of the matter) PDAB will be able to effect issuance and
delivery of the Shares according to the above. Accordingly, until such time
this Exercise Notice is remitted to PDAB for filing with the appropriate
government offices in Sweden in compliance with the administrative registration
procedures of the Swedish Patent and Registration Office, and until said filing
is accepted and effected, Optionee understands that this Exercise Notice will
be considered an Option Exercise Subscription as defined in the Plan.

          3.
Representations of Optionee. Optionee acknowledges that Optionee has
received, read and understood the Plan, the Stock Option Agreement and the
Option Conditions (as referred to in the Plan) and agrees to abide by and be
bound by their terms and conditions. Optionee further acknowledges and
understands that the Company and PDAB are under no obligation to register the
Securities and that, accordingly, a prospectus (as defined under the Securities
Act of 1933, as amended) has not been and will not be prepared and delivered to
the Optionee.

          4. Rights as Shareholder.
Until the issuance of the Shares (as evidenced by the appropriate entry on the
books of PDAB and, as the case may be, compliance with the administrative
registration procedure necessary with the Swedish Patent- and Registration
Office with respect to PDAB), no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the optioned stock,
notwithstanding the exercise of the Option. The Shares shall be issued to the
Optionee in accordance with the terms and conditions of the Stock Option
Agreement, the Option Conditions (as referred to in the Plan) and the Plan. The
rights of an Optionee to receive a dividend or other right may be effected in
accordance with the Option Conditions (as referred to in the Plan).

          5.
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, PDAB
or any of their subsidiaries for any tax advice.

          6.
Successors and Assigns. The Company or PDAB may assign any of its rights
under this Exercise Notice to single or multiple assignees, and the terms and
conditions of this Exercise Notice shall inure to the benefit of the successors
and assigns of the Company or PDAB. The terms and conditions of this Exercise
Notice shall be binding upon Optionee and his or her heirs, executors,
administrators, successors and assigns.

          7.
Interpretation. Any dispute regarding the interpretation of this
Exercise Notice shall be submitted by Optionee or by the Company or PDAB
forthwith to the Administrator which shall review such dispute at its next
regular meeting. The resolution of such a dispute by the Administrator shall be
final and binding on all parties.

          8.
Governing Law; Severability. This Exercise Notice is governed by the
internal substantive laws, but not the choice of law rules, of California. If
one or more provisions of this Exercise Notice are held to be unenforceable
under applicable law, such provision(s) shall be excluded from this Exercise
Notice and the balance of the Exercise Notice shall be interpreted as if such
provision(s) were so excluded and shall be enforceable in accordance with its
terms.

          9.
Financial Information. Optionee agrees that the Company, PDAB or any of
their subsidiaries shall not be required to provide any reports or information,
whether financial or otherwise, to Optionee except as required under Section 19
of the Plan or under applicable laws.

          10.
Entire Agreement. The Plan, the Stock Option Agreement and the Option
Conditions (as referred to in the Plan) are incorporated herein by reference.
This Exercise Notice, the Plan, the Stock Option Agreement, the Option
Conditions (as referred to in the Plan), the Investment Representation
Statement and any other agreements approved by the Administrator at the time of
exercise shall constitute the entire agreement of the parties with respect to
the subject matter hereof and supersede in their entirety all prior undertakings
and agreements of the Company, PDAB and Optionee with respect to the subject
matter hereof, and may not be modified adversely to the Optionee’s interest
except by means of a writing signed by the Company, the Optionee and, if
applicable, PDAB.

	
   

  	
   

  	
   

  
	
  Submitted by:

  	
   

  	
  Accepted by:

  
	
   

  	
   

  	
   

  
	
  OPTIONEE:

  	
   

  	
  POINTSEC
  MOBILE TECHNOLOGIES, INC.

  
	
   

  	
   

  	
   

  
	
  

  	
   

  	
  

  
	
  Signature

  	
   

  	
  By

  
	
   

  	
   

  	
   

  
	
  

  	
   

  	
  

  
	
  Print Name

  	
   

  	
  Its

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
  

  	
   

  	
  

  
	
   

  	
   

  	
   

  
	
  

  	
   

  	
  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  

  
	
   

  	
   

  	
  Date Received

  

- 2 -

EXHIBIT B

INVESTMENT
REPRESENTATION STATEMENT

	
   

  	
   

  
	
  OPTIONEE:

  	
   

  
	
  PDAB:

  	
  PROTECT DATA AB (PUBL)

  
	
  COMPANY:

  	
  POINTSEC MOBILE TECHNOLOGIES INC

  
	
  SECURITY:

  	
  COMMON STOCK

  
	
  AMOUNT:

  	
   

  
	
   

  	
   

  
	
  DATE:

  	
   

  

          In
connection with the purchase of the above-listed Securities, the undersigned
Optionee represents to the Company and PDAB the following:

          a.    
Optionee is aware of the Company’s and PDAB’s business affairs and financial
condition and has acquired sufficient information about the Company and PDAB 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. In this connection, Optionee understands
that, in the view of the Securities and Exchange Commission, the statutory
basis for such exemption may be unavailable if Optionee’s representation was
predicated solely upon a present intention to hold these Securities for the
minimum capital gains period specified under tax statutes, for a deferred sale,
for or until an increase or decrease in the market price of the Securities, or
for a period of one year or any other fixed period in the future. Optionee
further 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 and PDAB are under no obligation to register the Securities.

          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 the Optionee, the exercise will
be exempt from registration under the Securities Act. In the event the Company
or PDAB becomes subject to the reporting requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, 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: (1) 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); and, in the case of an affiliate, (2) the availability of certain
public information about the Company or PDAB, (3) the amount of Securities
being sold during any three month period not exceeding the limitations
specified in Rule 144(e), and (4) the timely filing of a Form 144, if
applicable.

- 3 -

          In
the event that the Company or PDAB does not qualify under Rule 701 at the time
of grant of the Option, then the Securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires the resale
to occur not less than one year after the later of the date the Securities were
sold by the Company or the date the Securities were sold by an affiliate of the
Company or PDAB, within the meaning of Rule 144; and, in the case of
acquisition of the Securities by an affiliate, or by a non-affiliate who
subsequently holds the Securities less than two years, the satisfaction of the
conditions set forth in sections (1), (2), (3) and (4) of the paragraph
immediately above.

          d.    
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.

	
   

  	
   

  
	
   

  	
  Signature of Optionee:

  
	
   

  	
   

  
	
   

  	
  

  
	
   

  	
   

  
	
   

  	
  Date: ______________, _____

  

- 4 -

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