Document:

Filed by Bowne Pure Compliance

 

Exhibit 10.7

PARTHUSCEVA, INC.

(subsequently known as CEVA, INC.)

2002 STOCK INCENTIVE PLAN

(amended and restated on May 15, 2007)

1. Purpose

The purpose of this 2002 Stock Incentive Plan (the “Plan”) of ParthusCeva, Inc. a Delaware
corporation (the “Company,” including any successor to the Company), is to advance the interests of
the Company’s stockholders by enhancing the Company’s ability to attract, retain and motivate
persons who make (or are expected to make) important contributions to the Company by providing such
persons with equity ownership opportunities and performance-based incentives and thereby better
aligning the interests of such persons with those of the Company’s stockholders. Except where the
context otherwise requires, the term “Company” shall include any of the Company’s present or future
parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Internal Revenue Code
of 1986, as amended, and any regulations promulgated thereunder (the “Code”) and any other business
venture (including, without limitation, joint venture or limited liability company) in which the
Company has a controlling interest, as determined by the Board of Directors of the Company (the
“Board”).

2. Eligibility

All of the Company’s employees, officers, directors, consultants and advisors are eligible to
be granted options or restricted stock awards (each, an “Award”) under the Plan. Each person who
has been granted an Award under the Plan shall be deemed a “Participant.”

3. Administration and Delegation

(a) Administration by Board of Directors. The Plan will be administered by the Board. The
Board shall have authority to grant Awards and to adopt, amend and repeal such administrative
rules, guidelines and practices relating to the Plan as it shall deem advisable. The Board may
correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in
the manner and to the extent it shall deem expedient to carry the Plan into effect and it shall be
the sole and final judge of such expediency. All decisions by the Board shall be made in the
Board’s sole discretion and shall be final and binding on all persons having or claiming any
interest in the Plan or in any Award. No director or person acting pursuant to the authority
delegated by the Board shall be liable for any action or determination relating to or under the
Plan made in good faith.

(b) Appointment of Committees. To the extent permitted by applicable law, the Board may
delegate any or all of its powers under the Plan to one or more committees or subcommittees of the
Board (a “Committee”). All references in the Plan to the “Board” shall mean the Board or a
Committee of the Board or the executive officers referred to in Section 3(c) to the extent that the
Board’s powers or authority under the Plan have been delegated to such Committee or executive
officers.

 

1

 

(c) Delegation to Executive Officers. To the extent permitted by applicable law, the Board
may delegate to one or more executive officers of the Company the power to grant Awards to
employees or officers of the Company or any of its present or future subsidiary corporations and to
exercise such other powers under the Plan as the Board may determine, provided that the Board shall
fix the terms of the Awards to be granted by such executive officers (including the exercise price
of such Awards, which may include a formula by which the exercise price will be determined) and the
maximum number of shares subject to Awards that the executive officers may grant; provided further,
however, that no executive officer shall be authorized to grant Awards to any “executive officer”
of the Company (as defined by Rule 3b-7 under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) or to any “officer” of the Company (as defined by Rule 16a-1 under the Exchange
Act).

4. Stock Available for Awards

Subject
to adjustment under Section 7, Awards may be made under the Plan
for up to 3,300,000
shares (all share numbers in this Plan reflect the adjustments from actions taken in connection
with the spin-off of the Company from DSP Group, Inc.) of common stock, $.001 par value per share,
of the Company (the “Common Stock”). If any Award expires or is terminated, surrendered or
canceled without having been fully exercised or is forfeited in whole or in part (including as the
result of shares of Common Stock subject to such Award being repurchased by the Company at the
original issuance price pursuant to a contractual repurchase right) or results in any Common Stock
not being issued, the unused Common Stock covered by such Award shall again be available for the
grant of Awards under the Plan, subject, however, in the case of Incentive Stock Options (as
hereinafter defined), to any limitations under the Code. Shares issued under the Plan may consist
in whole or in part of authorized but unissued shares or treasury shares.

5. Stock Options

(a) General. The Board may grant options to purchase Common Stock (each, an “Option”) and
determine the number of shares of Common Stock to be covered by each Option, the exercise price of
each Option and the conditions and limitations applicable to the exercise of each Option, including
conditions relating to applicable federal or state securities laws, as it considers necessary or
advisable. An Option which is not intended to be an Incentive Stock Option (as hereinafter
defined) shall be designated a “Nonstatutory Stock Option.”

(b) Incentive Stock Options. An Option that the Board intends to be an “incentive stock
option” as defined in Section 422 of the Code (an “Incentive Stock Option”) shall only be granted
to employees of the Company or its parent or subsidiary corporations and shall be subject to and
shall be construed consistently with the requirements of Section 422 of the Code. The Company
shall have no liability to a Participant, or any other party, if an Option (or any part thereof)
which is intended to be an Incentive Stock Option is not an Incentive Stock Option.

(c) Exercise Price. The Board shall establish the exercise price at the time each Option is
granted and specify it in the applicable option agreement.

 

2

 

(d) Duration of Options. Each Option shall be exercisable at such times and subject to such
terms and conditions as the Board may specify in the applicable option agreement.

(e) Exercise of Option. Options may be exercised by delivery to the Company of a written
notice of exercise signed by the proper person or by any other form of notice (including electronic
notice) approved by the Board together with payment in full as specified in Section 5(f) for the
number of shares for which the Option is exercised.

(f) Payment Upon Exercise. Common Stock purchased upon the exercise of an Option granted
under the Plan shall be paid for as follows:

(1) in cash or by check, payable to the order of the Company;

(2) except as the Board may, in its sole discretion, otherwise provide in an option agreement,
by (i) delivery of an irrevocable and unconditional undertaking by a creditworthy broker to deliver
promptly to the Company sufficient funds to pay the exercise price and any required tax withholding
or (ii) delivery by the Participant to the Company of a copy of irrevocable and unconditional
instructions to a creditworthy broker to deliver promptly to the Company cash or a check sufficient
to pay the exercise price and any required tax withholding;

(3) when the Common Stock is registered under the Securities Exchange Act of 1934 (the
“Exchange Act”), by delivery of shares of Common Stock owned by the Participant valued at their
fair market value as determined by (or in a manner approved by) the Board in good faith (“Fair
Market Value”), provided (i) such method of payment is then permitted under applicable law and (ii)
such Common Stock, if acquired directly from the Company was owned by the Participant at least six
months prior to such delivery;

(4) to the extent permitted by the Board, in its sole discretion by (i) delivery of a
promissory note of the Participant to the Company on terms determined by the Board, or (ii) payment
of such other lawful consideration as the Board may determine; or

(5) by any combination of the above permitted forms of payment.

(g) Substitute Options. In connection with a merger or consolidation of an entity with the
Company or the acquisition by the Company of property or stock of an entity, the Board may grant
Options in substitution for any options or other stock or stock-based awards granted by such entity
or an affiliate thereof. Substitute Options may be granted on such terms as the Board deems
appropriate in the circumstances, notwithstanding any limitations on Options contained in the other
sections of this Section 5 or in Section 2.

6. Restricted Stock.

(a) Grants. The Board may grant Awards entitling recipients to acquire shares of Common
Stock, subject to the right of the Company to repurchase all or part of such shares at their issue
price or other stated or formula price (or to require forfeiture of such shares if issued at no
cost) from the recipient in the event that conditions specified by the Board in the applicable
Award are not satisfied prior to the end of the applicable restriction period or periods
established by the Board for such Award (each, a “Restricted Stock Award”).

 

3

 

(b) Terms and Conditions. The Board shall determine the terms and conditions of any such
Restricted Stock Award, including the conditions for repurchase (or forfeiture) and the issue
price, if any.

(c) Stock Certificates. Any stock certificates issued in respect of a Restricted Stock Award
shall be registered in the name of the Participant and, unless otherwise determined by the Board,
deposited by the Participant, together with a stock power endorsed in blank, with the Company (or
its designee). At the expiration of the applicable restriction periods, the Company (or such
designee) shall deliver the certificates no longer subject to such restrictions to the Participant
or if the Participant has died, to the beneficiary designated, in a manner determined by the Board,
by a Participant to receive amounts due or exercise rights of the Participant in the event of the
Participant’s death (the “Designated Beneficiary”). In the absence of an effective designation by
a Participant, Designated Beneficiary shall mean the Participant’s estate.

7. Adjustments for Changes in Common Stock and Certain Other Events

(a) Changes in Capitalization. In the event of any stock split, reverse stock split, stock
dividend, recapitalization, combination of shares, reclassification of shares, spin-off or other
similar change in capitalization or event, or any distribution to holders of Common Stock other
than a normal cash dividend, (i) the number and class of securities available under this Plan, (ii)
the number and class of securities and exercise price per share subject to each outstanding Option,
and (iii) the repurchase price per share subject to each outstanding Restricted Stock Award shall
be appropriately adjusted by the Company (or substituted Awards may be made, if applicable) to the
extent the Board shall determine, in good faith, that such an adjustment (or substitution) is
necessary and appropriate. If this Section 7(a) applies and Section 7(c) also applies to any
event, Section 7(c) shall be applicable to such event, and this Section 7(a) shall not be
applicable.

(b) Liquidation or Dissolution. In the event of a proposed liquidation or dissolution of the
Company, all then outstanding Awards will (i) become fully vested and exercisable in full
immediately prior to the effective date of such liquidation or dissolution and (ii) terminate
effective upon such liquidation or dissolution, except to the extent exercised before such
effective date.

(c) Reorganization Events

(1) Definition. A “Reorganization Event” shall mean: (a) any merger or consolidation of the
Company with or into another entity as a result of which all of the Common Stock of the Company is
converted into or exchanged for the right to receive cash, securities or other property or (b) any
exchange of all of the Common Stock of the Company for cash, securities or other property pursuant
to a share exchange transaction.

 

4

 

(2) Consequences of a Reorganization Event on Awards. Upon the occurrence of a Reorganization
Event, or the execution by the Company of any agreement with respect to a Reorganization Event, all
outstanding Awards shall be Assumed, or equivalent
awards shall be substituted, by the acquiring or succeeding corporation (or an affiliate
thereof). For purposes hereof, an Award shall be considered to be “Assumed” if, following
consummation of the Reorganization Event, either (i) the Award is expressly affirmed by the Company
or (ii) the contractual obligations represented by the Award are expressly assumed (and not simply
by operation of law) by the acquiring or succeeding corporation (or an affiliate thereof) in
connection with such Reorganization Event with appropriate adjustments to the number and type of
securities of the acquiring or succeeding corporation (or an affiliate thereof) subject to the
Award and the exercise or purchase price thereof which at least preserves the compensation element
of the Award existing at the time of such Reorganization Event as determined in accordance with the
instruments evidencing the agreement to assume the Awards.

Notwithstanding the foregoing, if the acquiring or succeeding corporation (or an affiliate
thereof) does not agree to Assume or substitute for the outstanding Awards, then all Awards under
the Plan will become fully vested and exercisable in full immediately prior to the effective time
of the Reorganization Event and will terminate immediately upon the consummation of such
Reorganization Event unless Assumed; provided, however, that in the event of a Reorganization Event
under the terms of which holders of Common Stock will receive upon consummation thereof a cash
payment for each share of Common Stock surrendered pursuant to such Reorganization Event (the
“Acquisition Price”), then the Board may instead provide that all outstanding Awards shall
terminate upon consummation of such Reorganization Event and that each Participant shall receive,
in exchange therefor, a cash payment equal to: (i) in the case of Options, the amount (if any) by
which (A) the Acquisition Price multiplied by the number of shares of Common Stock subject to such
outstanding Options (whether or not then exercisable), exceeds (B) the aggregate exercise price of
such Options; or (ii) in the case of Restricted Stock Awards, the Acquisition Price multiplied by
the number of shares of Common Stock subject to such Restricted Stock Awards.

8. General Provisions Applicable to Awards

(a) Transferability of Awards. Except as the Board may otherwise determine or provide in an
Award, Awards shall not be sold, assigned, transferred, pledged or otherwise encumbered by the
person to whom they are granted, either voluntarily or by operation of law, except by will or the
laws of descent and distribution, and, during the life of the Participant, shall be exercisable
only by the Participant. References to a Participant, to the extent relevant in the context, shall
include references to authorized transferees.

(b) Documentation. Each Award shall be evidenced in such form (written, electronic or
otherwise) as the Board shall determine. Each Award may contain terms and conditions in addition
to those set forth in the Plan.

(c) Board Discretion. Except as otherwise provided by the Plan, each Award may be made alone
or in addition or in relation to any other Award. The terms of each Award need not be identical,
and the Board need not treat Participants uniformly.

(d) Termination of Status. The Board shall determine the effect on an Award of the
disability, death, retirement, authorized leave of absence or other change in the employment or
other status of a Participant and the extent to which, and the period during which, the
Participant,
the Participant’s legal representative, conservator, guardian or Designated Beneficiary may
exercise rights under the Award.

 

5

 

(e) Withholding. Each Participant shall pay to the Company, or make provision satisfactory to
the Board for payment of, any taxes required by law to be withheld in connection with Awards to
such Participant no later than the date of the event creating the tax liability. Except as the
Board may otherwise provide in an Award, when the Common Stock is registered under the Exchange
Act, Participants may satisfy such tax obligations in whole or in part by delivery of shares of
Common Stock, including shares retained from the Award creating the tax obligation, valued at their
Fair Market Value; provided, however, that the total tax withholding where stock is being used to
satisfy such tax obligations cannot exceed the Company’s minimum statutory withholding obligations
(based on minimum statutory withholding rates for federal and state tax purposes, including payroll
taxes, that are applicable to such supplemental taxable income). The Company may, to the extent
permitted by law, deduct any such tax obligations from any payment of any kind otherwise due to a
Participant.

(f) Amendment of Award. The Board may amend, modify or terminate any outstanding Award,
including but not limited to, substituting therefor another Award of the same or a different type,
changing the date of exercise or realization, and converting an Incentive Stock Option to a
Nonstatutory Stock Option, provided that the Participant’s consent to such action shall be required
unless the Board determines that the action, taking into account any related action, would not
materially and adversely affect the Participant.

(g) Conditions on Delivery of Stock. The Company will not be obligated to deliver any shares
of Common Stock pursuant to the Plan or to remove restrictions from shares previously delivered
under the Plan until (i) all conditions of the Award have been met or removed to the satisfaction
of the Company, (ii) in the opinion of the Company’s counsel, all other legal matters in connection
with the issuance and delivery of such shares have been satisfied, including any applicable
securities laws and any applicable stock exchange or stock market rules and regulations, and (iii)
the Participant has executed and delivered to the Company such representations or agreements as the
Company may consider appropriate to satisfy the requirements of any applicable laws, rules or
regulations.

(h) Acceleration. The Board may at any time provide that any Award shall become immediately
exercisable in full or in part, free of some or all restrictions or conditions, or otherwise
realizable in full or in part, as the case may be.

9. Miscellaneous

(a) No Right To Employment or Other Status. No person shall have any claim or right to be
granted an Award, and the grant of an Award shall not be construed as giving a Participant the
right to continued employment or any other relationship with the Company. The Company expressly
reserves the right at any time to dismiss or otherwise terminate its relationship with a
Participant free from any liability or claim under the Plan, except as expressly provided in the
applicable Award.

 

6

 

(b) No Rights As Stockholder. Subject to the provisions of the applicable Award, no
Participant or Designated Beneficiary shall have any rights as a stockholder with respect to any
shares of Common Stock to be distributed with respect to an Award until becoming the record holder
of such shares. Notwithstanding the foregoing, in the event the Company effects a split of the
Common Stock by means of a stock dividend and the exercise price of and the number of shares
subject to such Option are adjusted as of the date of the distribution of the dividend (rather than
as of the record date for such dividend), then an optionee who exercises an Option between the
record date and the distribution date for such stock dividend shall be entitled to receive, on the
distribution date, the stock dividend with respect to the shares of Common Stock acquired upon such
Option exercise, notwithstanding the fact that such shares were not outstanding as of the close of
business on the record date for such stock dividend.

(c) Effective Date and Term of Plan. The Plan shall become effective on the date on which it
is adopted by the Board, but no Award granted to a Participant that is intended to comply with
Section 162(m) shall become exercisable, vested or realizable, as applicable to such Award, unless
and until the Plan has been approved by the Company’s stockholders to the extent stockholder
approval is required by Section 162(m) in the manner required under Section 162(m) (including the
vote required under Section 162(m)). No Awards shall be granted under the Plan after the
completion of ten years from the earlier of (i) the date on which the Plan was adopted by the Board
or (ii) the date the Plan was approved by the Company’s stockholders, but Awards previously granted
may extend beyond that date.

(d) Amendment of Plan. The Board may amend, suspend or terminate the Plan or any portion
thereof at any time.

(e) Authorization of Sub-Plans. The Board may from time to time establish one or more
sub-plans under the Plan for purposes of satisfying applicable blue sky, securities or tax laws of
various jurisdictions. The Board shall establish such sub-plans by adopting supplements to this
Plan containing (i) such limitations on the Board’s discretion under the Plan as the Board deems
necessary or desirable or (ii) such additional terms and conditions not otherwise inconsistent with
the Plan as the Board shall deem necessary or desirable. All supplements adopted by the Board
shall be deemed to be part of the Plan, but each supplement shall apply only to Participants within
the affected jurisdiction and the Company shall not be required to provide copies of any supplement
to Participants in any jurisdiction which is not the subject of such supplement.

(f) Governing Law. The provisions of the Plan and all Awards made hereunder shall be governed
by and interpreted in accordance with the laws of the State of Delaware, without regard to any
applicable conflicts of law.

 

7Filed by Bowne Pure Compliance

 

Exhibit 10.9

PARTHUSCEVA, INC.

(subsequently known as CEVA, INC.)

2003 DIRECTOR STOCK OPTION PLAN

(amended and restated on May 15, 2007)

1. Purpose

The purpose of this 2003 Director Stock Option Plan (the “Plan”) of ParthusCeva, Inc. (the
“Company,” including any successor to the Company) is to encourage ownership in the Company by
non-employee directors of the Company whose continued services are considered essential to the
Company’s future progress and to provide them with a further incentive to remain as directors of
the Company.

2. Administration

The Board of Directors (the “Board”) shall supervise and administer the Plan. All questions
concerning interpretation of the Plan or any options granted under it shall be resolved by the
Board and such resolution shall be final and binding upon all persons having an interest in the
Plan. The Board may, to the full extent permitted by or consistent with applicable laws or
regulations, delegate any or all of its powers under the Plan to a committee appointed by the
Board, and if a committee is so appointed, all references to the Board in the Plan shall mean and
relate to such committee.

3. Participation in the Plan

Each director of the Company who is not an employee of the Company or any parent or subsidiary
of the Company (“Non-Employee Director”) shall be eligible to receive options under the Plan (the
“Optionee”).

4. Stock Subject to the Plan

(a) The maximum number of shares of the Company’s common stock, par value $.001 per share
(“Common Stock”), which may be issued under the Plan shall be 700,000 shares, subject to adjustment
as provided in Section 7.

(b) If any outstanding option under the Plan for any reason expires or is terminated without
having been exercised in full, the shares covered by the unexercised portion of such option shall
again become available for issuance pursuant to the Plan.

(c) All options granted under the Plan shall be non-statutory options not entitled to special
tax treatment under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).

(d) Shares issued under the Plan may consist in whole or in part of authorized but unissued
shares or treasury shares.

 

1

 

5. Terms, Conditions and Form of Options

Each option granted under the Plan shall be evidenced by a written agreement in such form as
the Board shall from time to time approve, which agreements shall comply with and be subject to the
following terms and conditions:

(a) Option Grants.

(i) Each person who is a Non-Employee Director on the Effective Date and each person who
subsequently becomes a Non-Employee Director shall be automatically granted an option to purchase
38,000 shares of Common Stock on the date of which the later of the following events occurs: (A)
the Effective Date; or (B) the date on which such person first becomes a Non-Employee Director,
whether through election by the stockholders of the Company or appointment by the Board to fill a
vacancy.

(ii) On the Effective Date, each Non-Employee Director shall be automatically granted (A) an
option to purchase 13,000 shares of Common Stock, if on such date he or she shall have served on
the Board for at least six (6) months, and (B) an option to purchase 13,000 shares of Common Stock
for each committee of the Board on which he or she shall have served as chairperson for at least
six (6) months on such date. Beginning on June 30, 2004, on June 30 of each year, each
Non-Employee Director shall be automatically granted (A) an option to purchase 13,000 shares of
Common Stock, if on such date he or she shall have served on the Board for at least six (6) months,
and (B) an option to purchase 13,000 shares of Common Stock for each committee of the Board on
which he or she shall have served as chairperson for at least six (6) months on such date.

(iii) Subject to the execution by the Optionee of an appropriate option agreement, the Board
may grant additional options to purchase a number of shares to be determined by the Board in
recognition of services provided by an Optionee in his or her capacity as a director, provided that
such grants are in compliance with the requirements of Rule 16b-3, as promulgated under the
Securities Exchange Act of 1934, as amended.

Each date of grant of an option pursuant to this Section 5(a) is hereinafter referred to as an
“Option Grant Date.”

(b) Option Exercise Price. The option exercise price per share for each option granted under
the Plan shall equal (i) the closing price of the Common Stock on The NASDAQ Global Market, (ii)
the closing price of the Common Stock on The NASDAQ Capital Market or any national securities
exchange on which the Common Stock is listed or (iii) the average of the closing bid and asked
prices of the Common Stock in the over-the-counter market, whichever is applicable, as published in
The Wall Street Journal, on the last trading day immediately preceding the Option Grant Date. If
no sales of Common Stock were made on the last trading day immediately preceding the Option Grant
Date, the price of the Common Stock for purposes of Section 5(a) above shall be the reported price
for the next preceding day on which such sales were made.

 

2

 

(c) Transferability of Options. Except as the Board may otherwise determine or provide in an
option granted under the Plan, any option granted under the Plan shall not be sold,
assigned, transferred, pledged or otherwise encumbered by the Optionee, either voluntarily or
by operation of law, except by will or the laws of descent and distribution, and, during the life
of the Optionee, shall be exercisable only by the Optionee. References to an Optionee, to the
extent relevant in the context, shall include references to authorized transferees.

(d) Vesting Period. Each option granted pursuant to Section 5(a)(i) or Section 5(a)(ii) above
shall vest and become exercisable as to 25% of the shares of Common Stock subject to the option on
the first anniversary of the Option Grant Date, and shall vest and become exercisable as to 25% of
the shares of Common Stock subject to the option at the end of each twelve-month period thereafter,
subject to the provisions of Section 7. Each option granted under the Plan pursuant to Section
5(a)(iii) above shall become exercisable on such terms as shall be determined by the Board and set
forth in the option agreement with the respective Optionee, subject to the provisions of Section 7.

(e) Termination. Each option shall terminate, and may no longer be exercised, on the earlier
of (i) the date ten years after the Option Grant Date of such option or (ii) the date which is 90
days after the date on which the Optionee ceases to serve as a Non-Employee Director.

(f) Exercise of Option. An option may be exercised only by written notice to the Company at
its principal office accompanied by (i) payment in cash or by certified or bank check of the full
consideration for the shares as to which they are exercised or (ii) an irrevocable undertaking by a
creditworthy broker to deliver promptly to the Company sufficient funds to pay the exercise price
or delivery of irrevocable instructions to a creditworthy broker to deliver promptly to the Company
cash or a check sufficient to pay the exercise price.

6. Limitation of Rights

(a) No Right to Continue as a Director. Neither the Plan, nor the granting of an option nor
any other action taken pursuant to the Plan, shall constitute or be evidence of any agreement or
understanding, express or implied, that the Company will retain the Optionee as a Non-Employee
Director for any period of time.

(b) No Stockholder’s Rights for Options. An Optionee shall have no rights as a stockholder
with respect to the shares covered by his or her option until the date of the issuance to him or
her of a stock certificate therefor, and no adjustment will be made for dividends or other rights
(except as provided in Section 7) for which the record date is prior to the date such certificate
is issued.

(c) Compliance with Securities Laws. Each option shall be subject to the requirement that if,
at any time, counsel to the Company shall determine that the listing, registration or qualification
of the shares subject to such option upon any securities exchange or under any state or federal
law, or the consent or approval of any governmental or regulatory body, or the disclosure of
non-public information or the satisfaction of any other condition is necessary as a condition of,
or in connection with, the issuance or purchase of shares thereunder, such option may not be
exercised, in whole or in part, unless such listing, registration, qualification, consent or
approval, or satisfaction of such condition shall have been effected or
obtained on conditions acceptable to the Board. Nothing herein shall be deemed to require the
Company to apply for or to obtain such listing, registration or qualification, or to satisfy such
condition.

 

3

 

7. Adjustments for Changes in Common Stock and Certain Other Events.

(a) Changes in Capitalization. In the event of any stock split, reverse stock split, stock
dividend, recapitalization, combination of shares, reclassification of shares, spin-off or other
similar change in capitalization or event, or any distribution to holders of Common Stock other
than a normal cash dividend, (i) the number and class of securities available under this Plan and
(ii) the number and class of securities and exercise price per share subject to each outstanding
option under the Plan shall be appropriately adjusted by the Company (or substituted options may be
made, if applicable) to the extent the Board shall determine, in good faith, that such an
adjustment (or substitution) is necessary and appropriate. If this Section 7(a) applies and
Section 7(c) or Section 7(d) also applies to any event, Section 7(c) or Section 7(d), as
applicable, shall be applicable to such event, and this Section 7(a) shall not be applicable.

(b) Liquidation or Dissolution. In the event of a proposed liquidation or dissolution of the
Company, all then unexercised options under the Plan will (i) become exercisable in full as of a
specified time at least 10 business days prior to the effective date of such liquidation or
dissolution and (ii) terminate effective upon such liquidation or dissolution, except to the extent
exercised before such effective date.

(c) Reorganization Events.

(i) Definition. A “Reorganization Event” shall mean: (a) any merger or consolidation of the
Company with or into another entity as a result of which all of the Common Stock is converted into
or exchanged for the right to receive cash, securities or other property or (b) any exchange of all
of the Common Stock for cash, securities or other property pursuant to a share exchange
transaction, in each case other than an Acquisition Event (as defined below).

(ii) Consequences of a Reorganization Event on Options. Upon the occurrence of a
Reorganization Event, or the execution by the Company of any agreement with respect to a
Reorganization Event, all outstanding options under the Plan shall be Assumed, or equivalent
options shall be substituted, by the surviving or acquiring entity (or an affiliate thereof). For
purposes hereof, an option shall be considered to be “Assumed” if, either (i) the option is
expressly affirmed by the Company or (ii) the contractual obligations represented by the option are
expressly assumed (and not simply by operation of law) by the surviving or acquiring entity (or an
affiliate thereof) in connection with the Reorganization Event with appropriate adjustments to the
number and type of securities of the surviving or acquiring entity (or an affiliate thereof)
subject to the option and the exercise price thereof which at least preserves the compensation
element of the option existing at the time of such Reorganization Event as determined in accordance
with the instruments evidencing the agreement to assume the option.

 

4

 

Notwithstanding the foregoing, if the surviving or acquiring entity (or an affiliate thereof)
does not agree to Assume, or substitute for, the outstanding options, then all then unexercised
options under the Plan will become fully vested and exercisable in full immediately prior to
the effective time of the Reorganization Event and will terminate upon the consummation of such
Reorganization Event, except to the extent exercised by the Participants before the consummation of
such Reorganization Event; provided, however, that in the event of a Reorganization Event under the
terms of which holders of Common Stock will receive upon consummation thereof a cash payment for
each share of Common Stock surrendered pursuant to such Reorganization Event (the “Reorganization
Price”), then the Board may instead provide that all outstanding options under the Plan shall
terminate upon consummation of such Reorganization Event and that each Participant shall receive,
in exchange therefor, a cash payment equal to the amount (if any) by which (A) the Reorganization
Price multiplied by the number of shares of Common Stock subject to such outstanding options
(whether or not then exercisable), exceeds (B) the aggregate exercise price of such options.

(d) Acquisition Events.

(i) Definition. An “Acquisition Event” shall mean (a) any merger or consolidation which
results in the voting securities of the Company outstanding immediately prior thereto representing
immediately thereafter (either by remaining outstanding or by being converted into voting
securities of the surviving or acquiring entity) less than 50% of the combined voting power of the
voting securities of the Company or such surviving or acquiring entity outstanding immediately
after such merger or consolidation, or (b) any sale of all or substantially all of the assets of
the Company.

(ii) Consequences of an Acquisition Event on Options. Upon the occurrence of an Acquisition
Event, or the execution by the Company of any agreement with respect to an Acquisition Event, all
outstanding options under the Plan shall be Assumed, or equivalent options shall be substituted, by
the surviving or acquiring entity (or an affiliate thereof).

Notwithstanding the foregoing, if the surviving or acquiring entity (or an affiliate thereof)
does not agree to Assume, or substitute for, the outstanding options, then all then unexercised
options under the Plan will become fully vested and exercisable in full immediately prior to the
effective time of the Acquisition Event and will terminate upon the consummation of such
Acquisition Event, except to the extent exercised by the Participants before the consummation of
such Acquisition Event; provided, however, that in the event of an Acquisition Event under the
terms of which holders of Common Stock will receive upon consummation thereof a cash payment for
each share of Common Stock surrendered pursuant to such Acquisition Event (the “Acquisition
Price”), then the Board may instead provide that all outstanding options under the Plan shall
terminate upon consummation of such Acquisition Event and that each Participant shall receive, in
exchange therefor, a cash payment equal to the amount (if any) by which (A) the Acquisition Price
multiplied by the number of shares of Common Stock subject to such outstanding options (whether or
not then exercisable), exceeds (B) the aggregate exercise price of such options.

8. Termination and Amendment of the Plan

The Board may suspend or terminate the Plan or amend it in any respect whatsoever.

 

5

 

9. Notice

Any written notice to the Company required by any of the provisions of the Plan shall be
addressed to the Treasurer of the Company and shall become effective when it is received.

10. Governing Law

The Plan and all determinations made and actions taken pursuant hereto shall be governed by
the internal laws of the State of Delaware (without regard to any applicable conflicts of laws or
principles).

11. Effective Date

The Plan shall take effect upon its adoption by the Board and receipt of stockholder approval
at the Company’s 2003 Annual Meeting of Stockholders (the “Effective Date”).

Adopted by the Board of Directors on April 25, 2003.

Adopted by the Stockholders on June 18, 2003.

 

6

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00138-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00138-of-00352.parquet"}]]