Document:

EX-10.1 2004 Stock Incentive Plan

 

EXHIBIT 10.1

AUTHENTEC, INC.

2004 STOCK INCENTIVE PLAN

(as amended)

1. Establishment, Purpose and Types of Awards

     AUTHENTEC, INC., a Delaware corporation (the “Company”), hereby establishes the AUTHENTEC,
INC. 2004 STOCK INCENTIVE PLAN (the “Plan”). The purpose of the Plan is to promote the long-term
growth and profitability of the Company by (i) providing key people with incentives to improve
stockholder value and to contribute to the growth and financial success of the Company through
their future services, and (ii) enabling the Company to attract, retain and reward the
best-available persons. This Plan is a continuation, and amendment and restatement, of the
Company’s 1998 Stock Option Plan (the “1998 Plan”), the provisions of which shall continue to
control with respect to any options or stock awards outstanding thereunder to the extent necessary
to (x) avoid establishment of a new measurement date for financial accounting purposes, (y)
preserve the status of any options that are intended to qualify as “incentive stock options” within
the meaning of Section 422 of the Internal Revenue Code, or (z) implement and interpret the terms
of outstanding stock options granted under the 1998 Plan in such cases in which terms of the 1998
Plan are referenced or incorporated therein.

     The Plan permits the granting of stock options (including incentive stock options qualifying
under Code section 422 and nonstatutory stock options), stock appreciation rights, restricted or
unrestricted stock awards, phantom stock, performance awards, other stock-based awards, or any
combination of the foregoing.

2. Definitions

     Under this Plan, except where the context otherwise indicates, the following definitions
apply:

     (a) “Administrator” means the Board or the committee(s) or officer(s) appointed by the
Board that have authority to administer the Plan as provided in Section 3 hereof.

     (b) “Affiliate” means any entity, whether now or hereafter existing, which controls, is
controlled by, or is under common control with, the Company (including, but not limited to,
joint ventures, limited liability companies, and partnerships). For this purpose, “control”
shall mean ownership of 50% or more of the total combined voting power or value of all
classes of stock or interests of the entity.

     (c) “Award” means any stock option, stock appreciation right, stock award, phantom
stock award, performance award, or other stock-based award.

     (d) “Board” means the Board of Directors of the Company.

     (e) “Change in Control” means: the earliest to occur of (i) a merger or consolidation
to which the Company is a party and which results in, or is effected in connection with, a
change in ownership of a majority of the outstanding shares of voting stock of the Company,
(ii) any sale or transfer of all or substantially all of the assets of the Company to an
unaffiliated third party, (iii) the sale by the stockholders of the Company of a majority of
the voting stock of the Company to an unaffiliated third party or (iv) a liquidation or
dissolution of the Company.

     (f) “Code” means the Internal Revenue Code of 1986, as amended, and any regulations
promulgated thereunder.

     (g) “Common Stock” means shares of common stock of the Company, par value of one cent
($0.01) per share.

     (h) “Fair Market Value” of a share of Common Stock shall be determined in good faith by
the Board in accordance with the following provisions: (A) if the shares of Common Stock are
listed for trading on the American Stock Exchange or the New York Stock Exchange or included
in the NASDAQ National Market, the fair market value shall be the
closing sales price of the
shares on the American

 

 

Stock Exchange or the New York Stock Exchange or as reported on the NASDAQ National
Market (as applicable) on the date immediately preceding the date the Option is granted, or,
if there is no transaction on such date, then on the trading date nearest preceding the date
the Option is granted for which closing price information is available; (B) if the shares of
Common Stock are publicly traded but not listed for trading on the New York Stock Exchange
or American Stock Exchange or included in the NASDAQ National Market, the average of the
closing bid and asked prices on the date immediately preceding the date the Option is
granted; or (C) if the shares of Common Stock are not listed or reported in any of the
foregoing, then fair market value shall be determined by the Board in good faith in
accordance with the applicable provisions of Section 20.2031-2 of the Federal Estate Tax
Regulations, or in any other manner consistent with the Code and accompanying regulations.

     (i) “Grant Agreement” means a written document memorializing the terms and conditions
of an Award granted pursuant to the Plan and which shall incorporate the terms of the Plan.

     (j) “Termination for Cause” means Optionee’s termination if such termination results
from any one or more of the following events, circumstances or occurrences: (A) the
Optionee’s material breach of any written employment, consulting, advisory, proprietary
information, nondisclosure or other agreement with the Company and his or her subsequent
failure to cure such breach to the satisfaction of the Board within thirty (30) days
following written notice of such breach to the Optionee by the Company; (B) the Optionee’s
conviction of, or entry of a plea of guilty or nolo contendere to, a felony or any
misdemeanor involving moral turpitude if the Board reasonably determines that such
conviction or plea materially adversely affects the Company; (C) the commission of an act of
fraud or dishonesty by the Optionee if the Board reasonably determines that such act
materially adversely affects the Company; or (D) Optionee’s intentional damage or
destruction of substantial property of the Company. The determination of “cause” shall be
made by the Board and its determination shall be final and conclusive.

3. Administration

     (a) Administration of the Plan. The Plan shall be administered by the Board or by such
committee or committees as may be appointed by the Board from time to time. To the extent
allowed by applicable state law, the Board by resolution may authorize an officer or
officers to grant Awards (other than Stock Awards) to other officers and employees of the
Company and its Affiliates, and, to the extent of such authorization, such officer or
officers shall be the Administrator.

     (b) Powers of the Administrator. The Administrator shall have all the powers vested in
it by the terms of the Plan, such powers to include authority, in its sole and absolute
discretion, to grant Awards under the Plan, prescribe Grant Agreements evidencing such
Awards and establish programs for granting Awards.

     The Administrator shall have full power and authority to take all other actions
necessary to carry out the purpose and intent of the Plan, including, but not limited to,
the authority to: (i) determine the eligible persons to whom, and the time or times at
which Awards shall be granted; (ii) determine the types of Awards to be granted; (iii)
determine the number of shares to be covered by or used for reference purposes for each
Award; (iv) impose such terms, limitations, restrictions and conditions upon any such Award
as the Administrator shall deem appropriate; (v) modify, amend, extend or renew outstanding
Awards, or accept the surrender of outstanding Awards and substitute new Awards (provided
however, that, except as provided in Section 6 or 7(d) of the Plan, any modification that
would materially adversely affect any outstanding Award shall not be made without the
consent of the holder); (vi) accelerate or otherwise change the time in which an Award may
be exercised or becomes payable and to waive or accelerate the lapse, in whole or in part,
of any restriction or condition with respect to such Award, including, but not limited to,
any restriction or condition with respect to the vesting or exercisability of an Award
following termination of any grantee’s employment or other relationship with the Company;
(vii) establish objectives and conditions, if any, for earning Awards and determining
whether Awards will be paid after the end of a performance period; and (viii) for any
purpose, including but not limited to, qualifying for preferred tax treatment under foreign
tax laws or otherwise complying

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with the regulatory requirements of local or foreign jurisdictions, to establish,
amend, modify, administer or terminate sub-plans, and prescribe, amend and rescind rules and
regulations relating to such sub-plans.

     The Administrator shall have full power and authority, in its sole and absolute
discretion, to administer, construe and interpret the Plan, Grant Agreements and all other
documents relevant to the Plan and Awards issued thereunder, to establish, amend, rescind
and interpret such rules, regulations, agreements, guidelines and instruments for the
administration of the Plan and for the conduct of its business as the Administrator deems
necessary or advisable, and to correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent the Administrator
shall deem it desirable to carry it into effect.

     (c) Non-Uniform Determinations. The Administrator’s determinations under the Plan
(including without limitation, determinations of the persons to receive Awards, the form,
amount and timing of such Awards, the terms and provisions of such Awards and the Grant
Agreements evidencing such Awards) need not be uniform and may be made by the Administrator
selectively among persons who receive, or are eligible to receive, Awards under the Plan,
whether or not such persons are similarly situated.

     (d) Limited Liability. To the maximum extent permitted by law, no member of the
Administrator shall be liable for any action taken or decision made in good faith relating
to the Plan or any Award thereunder.

     (e) Indemnification. To the maximum extent permitted by law and by the Company’s
charter and by-laws, the members of the Administrator shall be indemnified by the Company in
respect of all their activities under the Plan.

     (f) Effect of Administrator’s Decision. All actions taken and decisions and
determinations made by the Administrator on all matters relating to the Plan pursuant to the
powers vested in it hereunder shall be in the Administrator’s sole and absolute discretion
and shall be conclusive and binding on all parties concerned, including the Company, its
stockholders, any participants in the Plan and any other employee, consultant, or director
of the Company, and their respective successors in interest.

4. Shares Available for the Plan; Maximum Awards

     Subject to adjustments as provided in Section 7(d) of the Plan, the shares of Common Stock
that may be issued with respect to Awards granted under the Plan shall not exceed an aggregate of
18,880,195 shares of Common Stock. All shares of Common Stock issued or issuable pursuant to
Options (as defined in the 1998 Plan) issued under the 1998 Plan shall be considered issued with
respect to Awards granted under this Plan for purposes of this Section 4. The Company shall
reserve such number of shares for Awards under the Plan, subject to adjustments as provided in
Section 7(d) of the Plan. If any Award, or portion of an Award, under the Plan expires or
terminates unexercised, becomes unexercisable, is settled in cash without delivery of shares of
Common Stock, or is forfeited or otherwise terminated, surrendered or canceled as to any shares, or
if any shares of Common Stock are repurchased by or surrendered to the Company in connection with
any Award (whether or not such surrendered shares were acquired pursuant to any Award), or if any
shares are withheld by the Company, the shares subject to such Award and the repurchased,
surrendered and withheld shares shall thereafter be available for further Awards under the Plan;
provided, however, that any such shares that are surrendered to or repurchased or withheld by the
Company in connection with any Award or that are otherwise forfeited after issuance shall not be
available for purchase pursuant to incentive stock options intended to qualify under Code section
422.

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     Subject to adjustments as provided in Section 7(d) of the Plan, the maximum number of shares
of Common Stock subject to Awards of any combination that may be granted during any one fiscal year
of the Company to any one individual under this Plan shall be limited to 3,000,000 shares. Such
per-individual limit
shall not be adjusted to effect a restoration of shares of Common Stock with respect to which the
related Award is terminated, surrendered or canceled.

5. Participation

     Participation in the Plan shall be open to all employees, officers, and directors of, and
other individuals providing bona fide services to or for, the Company, or of any Affiliate of the
Company, as may be selected by the Administrator from time to time. The Administrator may also
grant Awards to individuals in connection with hiring, retention or otherwise, prior to the date
the individual first performs services for the Company or an Affiliate, provided that such Awards
shall not become vested or exercisable prior to the date the individual first commences performance
of such services.

6. Awards

     The Administrator, in its sole discretion, establishes the terms of all Awards granted under
the Plan. Awards may be granted individually or in tandem with other types of Awards, concurrently
with or with respect to outstanding Awards. All Awards are subject to the terms and conditions
provided in the Grant Agreement. The Administrator may permit or require a recipient of an Award
to defer such individual’s receipt of the payment of cash or the delivery of Common Stock that
would otherwise be due to such individual by virtue of the exercise of, payment of, or lapse or
waiver of restrictions respecting, any Award. If any such payment deferral is required or
permitted, the Administrator shall, in its sole discretion, establish rules and procedures for such
payment deferrals.

     (a) Stock Options. The Administrator may from time to time grant to eligible
participants Awards of incentive stock options as that term is defined in Code section 422
or nonstatutory stock options; provided, however, that Awards of incentive
stock options shall be limited to employees of the Company or of any current or hereafter
existing “parent corporation” or “subsidiary corporation,” as defined in Code sections
424(e) and (f), respectively, of the Company and any other individuals who are eligible to
receive incentive stock options under the provisions of Code section 422. Options intended
to qualify as incentive stock options under Code section 422 must have an exercise price at
least equal to Fair Market Value as of the date of grant, but nonstatutory stock options may
be granted with an exercise price less than Fair Market Value. No stock option shall be an
incentive stock option unless so designated by the Administrator at the time of grant or in
the Grant Agreement evidencing such stock option.

     (b) Stock Appreciation Rights. The Administrator may from time to time grant to
eligible participants Awards of Stock Appreciation Rights (“SAR”). An SAR entitles the
grantee to receive, subject to the provisions of the Plan and the Grant Agreement, a payment
having an aggregate value equal to the product of (i) the excess of (A) the Fair Market
Value on the exercise date of one share of Common Stock over (B) the base price per share
specified in the Grant Agreement, times (ii) the number of shares specified by the SAR, or
portion thereof, which is exercised. Payment by the Company of the amount receivable upon
any exercise of an SAR may be made by the delivery of Common Stock or cash, or any
combination of Common Stock and cash, as determined in the sole discretion of the
Administrator. If upon settlement of the exercise of an SAR a grantee is to receive a
portion of such payment in shares of Common Stock, the number of shares shall be determined
by dividing such portion by the Fair Market Value of a share of Common Stock on the exercise
date. No fractional shares shall be used for such payment and the Administrator shall
determine whether cash shall be given in lieu of such fractional shares or whether such
fractional shares shall be eliminated.

     (c) Stock Awards. The Administrator may from time to time grant restricted or
unrestricted stock Awards to eligible participants in such amounts, on such terms and
conditions, and for such consideration, including no consideration or such minimum
consideration as may be required by law, as it shall determine. A stock Award may be paid
in Common Stock, in cash, or in a combination of Common Stock and cash, as determined in the
sole discretion of the Administrator.

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     (d) Phantom Stock. The Administrator may from time to time grant Awards to eligible
participants denominated in stock-equivalent units (“phantom stock”) in such amounts and on
such terms and conditions as it shall determine. Phantom stock units granted to a
participant shall be credited to a bookkeeping reserve account solely for accounting
purposes and shall not require a segregation of any of the Company’s assets. An Award of
phantom stock may be settled in Common Stock, in cash, or in a combination of Common Stock
and cash, as determined in the sole discretion of the Administrator. Except as otherwise
provided in the applicable Grant Agreement, the grantee shall not have the rights of a
stockholder with respect to any shares of Common Stock represented by a phantom stock unit
solely as a result of the grant of a phantom stock unit to the grantee.

     (e) Performance Awards. The Administrator may, in its discretion, grant performance
awards which become payable on account of attainment of one or more performance goals
established by the Administrator. Performance awards may be paid by the delivery of Common
Stock or cash, or any combination of Common Stock and cash, as determined in the sole
discretion of the Administrator. Performance goals established by the Administrator may be
based on the Company’s or an Affiliate’s operating income or one or more other business
criteria selected by the Administrator that apply to an individual or group of individuals,
a business unit, or the Company or an Affiliate as a whole, over such performance period as
the Administrator may designate.

     (f) Other Stock-Based Awards. The Administrator may from time to time grant other
stock-based awards to eligible participants in such amounts, on such terms and conditions,
and for such consideration, including no consideration or such minimum consideration as may
be required by law, as it shall determine. Other stock-based awards may be denominated in
cash, in Common Stock or other securities, in stock-equivalent units, in stock appreciation
units, in securities or debentures convertible into Common Stock, or in any combination of
the foregoing and may be paid in Common Stock or other securities, in cash, or in a
combination of Common Stock or other securities and cash, all as determined in the sole
discretion of the Administrator.

7. Miscellaneous

     (a) Withholding of Taxes. Grantees and holders of Awards shall pay to the Company or
its Affiliate, or make provision satisfactory to the Administrator for payment of, any taxes
required to be withheld in respect of Awards under the Plan no later than the date of the
event creating the tax liability. The Company or its Affiliate may, to the extent permitted
by law, deduct any such tax obligations from any payment of any kind otherwise due to the
grantee or holder of an Award. In the event that payment to the Company or its Affiliate of
such tax obligations is made in shares of Common Stock, such shares shall be valued at Fair
Market Value on the applicable date for such purposes and shall not exceed in amount the
minimum statutory tax withholding obligation.

     (b) Loans. To the extent otherwise permitted by law, and subject to the approval of
the Board, the Company or its Affiliate may make or guarantee loans to grantees to assist
grantees in exercising Awards and satisfying any withholding tax obligations.

     (c) Transferability. Except as otherwise determined by the Administrator, and in any
event in the case of an incentive stock option or a stock appreciation right granted with
respect to an incentive stock option, no Award granted under the Plan shall be transferable
by a grantee otherwise than by will or the laws of descent and distribution. Unless
otherwise determined by the Administrator in accord with the provisions of the immediately
preceding sentence, an Award may be exercised during the lifetime of the grantee, only by
the grantee or, during the period the grantee is under a legal disability, by the grantee’s
guardian or legal representative.

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     (d) Adjustments for Corporate Transactions and Other Events.

	 	(i)	 	Stock Dividend, Stock Split and Reverse Stock
Split. In the event of a stock dividend of, or stock split or reverse
stock split affecting, the Common Stock, (A) the maximum number of shares
of such Common Stock as to which Awards
may be granted under this Plan and the maximum number of shares with
respect to which Awards may be granted during any one fiscal year of
the Company to any individual, as provided in Section 4 of the Plan,
and (B) the number of shares covered by and the exercise price and
other terms of outstanding Awards, shall, without further action of the
Board, be adjusted to reflect such event unless the Board determines,
at the time it approves such stock dividend, stock split or reverse
stock split, that no such adjustment shall be made. The Administrator
may make adjustments, in its discretion, to address the treatment of
fractional shares and fractional cents that arise with respect to
outstanding Awards as a result of the stock dividend, stock split or
reverse stock split.
	 
	 	(ii)	 	Non-Change in Control Transactions. Except with
respect to the transactions set forth in Section 7(d)(i), in the event of
any change affecting the Common Stock, the Company or its capitalization,
by reason of a spin-off, split-up, dividend, recapitalization, merger,
consolidation or share exchange, other than any such change that is part
of a transaction resulting in a Change in Control of the Company, the
Administrator, in its discretion and without the consent of the holders
of the Awards, may make (A) appropriate adjustments to the maximum number
and kind of shares reserved for issuance or with respect to which Awards
may be granted under the Plan, in the aggregate and with respect to any
individual during any one fiscal year of the Company, as provided in
Section 4 of the Plan; and (B) any adjustments in outstanding Awards,
including but not limited to modifying the number, kind and price of
securities subject to Awards.
	 
	 	(iii)	 	Change in Control Transactions. In the event of
any transaction resulting in a Change in Control of the Company,
outstanding stock options and other Awards that are payable in or
convertible into Common Stock under this Plan will terminate upon the
effective time of such Change in Control unless provision is made in
connection with the transaction for the continuation or assumption of
such Awards by, or for the substitution of the equivalent awards of, the
surviving or successor entity or a parent thereof. In the event of such
termination, (A) the outstanding stock options and other Awards that will
terminate upon the effective time of the Change in Control shall become
fully vested immediately before the effective time of the Change in
Control, and (B) the holders of stock options and other Awards under the
Plan will be permitted, immediately before the Change in Control, to
exercise or convert all portions of such stock options or other Awards
under the Plan that are then exercisable or convertible or which become
exercisable or convertible upon or prior to the effective time of the
Change in Control. If, immediately before the Change in Control, no
stock of the Company is readily tradeable on an established securities
market or otherwise, and the vesting of an Award or Awards pursuant to
this Section 7(d)(iii) would be treated as a “parachute payment” (as
defined in section 280G of the Code), then such Award or Awards shall not
vest unless the requirements of the shareholder approval exemption of
section 280G(b)(5) of the Code have been satisfied with respect to such
Award or Awards.
	 
	 	(iv)	 	Unusual or Nonrecurring Events. The Administrator
is authorized to make, in its discretion and without the consent of
holders of Awards, adjustments in the terms and conditions of, and the
criteria included in, Awards in recognition of unusual or nonrecurring
events affecting the Company, or the financial statements of the Company
or any Affiliate, or of changes in applicable laws, regulations, or
accounting principles, whenever the Administrator determines that such
adjustments are appropriate in order to prevent dilution or enlargement
of the benefits or potential benefits intended to be made available under
the Plan.

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     (e) Substitution of Awards in Mergers and Acquisitions. Awards may be granted under
the Plan from time to time in substitution for awards held by employees, officers,
consultants or directors of entities who become or are about to become employees, officers,
consultants or directors of the Company or an Affiliate as the result of a merger or
consolidation of the employing entity with the Company or an Affiliate, or the acquisition
by the Company or an Affiliate of the assets or stock of the employing entity. The terms
and conditions of any substitute Awards so granted may vary from the terms and conditions
set forth herein to the extent that the Administrator deems appropriate at the time of grant
to conform the substitute Awards to the provisions of the awards for which they are
substituted.

     (f) Other Agreements. As a condition precedent to the grant of any Award under the
Plan, the exercise pursuant to such an Award, or to the delivery of certificates for shares
issued pursuant to any Award, the Administrator may require the grantee or the grantee’s
successor or permitted transferee, as the case may be, to become a party to a stock
restriction agreement, shareholders’ agreement, voting trust agreement or other agreements
regarding the Common Stock of the Company in such form(s) as the Administrator may determine
from time to time.

     (g) Termination, Amendment and Modification of the Plan. The Board may terminate,
amend or modify the Plan or any portion thereof at any time. Except as otherwise determined
by the Board, termination of the Plan shall not affect the Administrator’s ability to
exercise the powers granted to it hereunder with respect to Awards granted under the Plan
prior to the date of such termination.

     (h) Non-Guarantee of Employment or Service. Nothing in the Plan or in any Grant
Agreement thereunder shall confer any right on an individual to continue in the service of
the Company or shall interfere in any way with the right of the Company to terminate such
service at any time with or without cause or notice and whether or not such termination
results in (i) the failure of any Award to vest; (ii) the forfeiture of any unvested or
vested portion of any Award; and/or (iii) any other adverse effect on the individual’s
interests under the Plan.

     (i) Compliance with Securities Laws; Listing and Registration. If at any time the
Administrator determines that the delivery of Common Stock under the Plan is or may be
unlawful under the laws of any applicable jurisdiction, or Federal, state or foreign
securities laws, the right to exercise an Award or receive shares of Common Stock pursuant
to an Award shall be suspended until the Administrator determines that such delivery is
lawful. The Company shall have no obligation to effect any registration or qualification of
the Common Stock under Federal, state or foreign laws.

     The Company may require that a grantee, as a condition to exercise of an Award, and as
a condition to the delivery of any share certificate, make such written representations
(including representations to the effect that such person will not dispose of the Common
Stock so acquired in violation of Federal, state or foreign securities laws) and furnish
such information as may, in the opinion of counsel for the Company, be appropriate to permit
the Company to issue the Common Stock in compliance with applicable Federal, state or
foreign securities laws. The stock certificates for any shares of Common Stock issued
pursuant to this Plan may bear a legend restricting transferability of the shares of Common
Stock unless such shares are registered or an exemption from registration is available under
the Securities Act of 1933, as amended, and applicable state or foreign securities laws.

     (j) No Trust or Fund Created. Neither the Plan nor any Award shall create or be
construed to create a trust or separate fund of any kind or a fiduciary relationship between
the Company and a grantee or any other person. To the extent that any grantee or other
person acquires a right to receive payments from the Company pursuant to an Award, such
right shall be no greater than the right of any unsecured general creditor of the Company.

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     (k) Governing Law. The validity, construction and effect of the Plan, of Grant
Agreements entered into pursuant to the Plan, and of any rules, regulations, determinations
or decisions made by the Administrator relating to the Plan or such Grant Agreements, and
the rights of any and all persons having or claiming to have any interest therein or
thereunder, shall be determined exclusively in
accordance with applicable federal laws and the laws of the State of Delaware without
regard to its conflict of laws principles.

     (l) Effective Date; Termination Date. The Plan is effective as of the date on which
the Plan is adopted by the Board as an amendment and restatement of the 1998 Plan, subject
to approval of the stockholders within twelve months before or after such date. No Award
shall be granted under the Plan after the close of business on the day immediately preceding
the tenth anniversary of the effective date of the Plan, or if earlier, the tenth
anniversary of the date this Plan is approved by the stockholders. Subject to other
applicable provisions of the Plan, all Awards made under the Plan prior to such termination
of the Plan shall remain in effect until such Awards have been satisfied or terminated in
accordance with the Plan and the terms of such Awards.

PLAN APPROVAL

Date Approved by the Board: June 14, 2004                    

Date Approved by the Stockholders: June 14, 2004                    

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APPENDIX A

PROVISIONS FOR CALIFORNIA RESIDENTS

     With respect to Awards granted to California residents prior to a public offering of capital
stock of the Company that is effected pursuant to a registration statement filed with, and declared
effective by, the Securities and Exchange Commission under the Securities Act of 1933, as amended,
and only to the extent required by applicable law, the following provisions shall apply
notwithstanding anything in the Plan or a Grant Agreement to the contrary:

	1.	 	Stock appreciation rights Awards under Section 6(b) of the Plan or phantom stock Awards under
Section 6(d) of the Plan, which may be settled in shares of Company stock, shall not be issued to
California residents.
	 
	2.	 	With respect to any Award granted in the form of a stock option pursuant to Section 6(a) of the
Plan:

	 	(a)	 	The Award shall provide an exercise price which is not less than 85% of the Fair Market
Value of the underlying security at the time the option is granted, except that the price
shall be not less than 110% of the Fair Market Value in the case of any person who owns
securities possessing more than 10% of the total combined voting power (as defined in
Section 194.5 of the California Corporations Code) of all classes of securities of the
issuer or its parent or subsidiaries possessing voting power.
	 
	 	(b)	 	The exercise period shall be no more than 120 months from the date the option is
granted.
	 
	 	(c)	 	The options shall be non-transferable other than by will, by the laws of descent and
distribution, or, if and to the extent permitted under the Grant Agreement, as permitted by
Rule 701 of the Securities Act of 1933, as amended (17 C.F.R. 230.701).
	 
	 	(d)	 	The Award recipient shall have the right to exercise at the rate of at least 20% per
year over 5 years from the date the option is granted, subject to reasonable conditions such
as continued employment. However, in the case of an option granted to officers, directors,
managers or consultants of the Company or the issuer of the underlying security or any of
its affiliates, the option may become fully exercisable, subject to reasonable conditions
such as continued employment, at any time or during any period established by the issuer of
the option or the issuer of the underlying security or any of its affiliates.
	 
	 	(e)	 	Unless employment is terminated for “cause” as defined in Section 2(j) of the Plan , the
right to exercise the option in the event of termination of employment, to the extent that
the Award recipient is entitled to exercise on the date employment terminates, will be as
follows:

	 	(1)	 	At least 6 months from the date of termination if termination was caused by death
or disability.
	 
	 	(2)	 	At least 30 days from the date of termination if termination was caused by other
than death or disability.

	3.	 	With respect to an Award, granted pursuant to Section 6(c) of the Plan, that provides the Award
recipient the right to purchase stock:

	 	(a)	 	The Award shall provide a purchase price which is not less than 85% of the Fair Market
Value of the security at the time the Award recipient is granted the right to purchase
securities under the Grant Agreement, or at the time the purchase is consummated; or, not
less than 100% of the Fair Market Value of the security either at the time the Award
recipient is granted the right to purchase securities under the Grant Agreement, or at the
time the purchase is consummated, in the case of any person who owns securities possessing
more than 10% of the total combined voting power (as defined in Section 194.5 of the
California Corporations Code) of all classes of securities of the issuer or its parent or
subsidiaries possessing voting power.

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	 	(b)	 	The Award shall be non-transferable other than by will, by the laws of descent and
distribution, or, if and to the extent permitted under the Grant Agreement, as permitted by
Rule 701 of the Securities Act of 1933, as amended (17 C.F.R. 230.701).

	4.	 	The Plan shall have a termination date of not more than 10 years from the date the Plan is
adopted by the Board or the date the Plan is approved by the security holders, whichever is
earlier.
	 
	5.	 	Security holders representing a majority of the Company’s outstanding securities entitled to
vote must approve the Plan within 12 months before or after the date the Plan is adopted. Any
option exercised or any securities purchased before security holder approval is obtained must be
rescinded if security holder approval is not obtained within 12 months before or after the Plan is
adopted. Such securities shall not be counted in determining whether such approval is obtained.
	 
	6.	 	At the discretion of the Administrator, the Company may reserve to itself and/or its assignee(s)
in the Grant Agreement or any applicable stock restriction agreement a right to repurchase
securities held by an Award recipient upon such Award recipient’s termination of employment at any
time within 90 days after such Award recipient’s termination date (or in the case of securities
issued upon exercise of an option after the termination date, within 90 days after the date of such
exercise) for cash or cancellation of purchase money indebtedness, at:

	 	(A)	 	no less than the Fair Market Value of such securities as of the date of the Award
recipient’s termination of employment, provided, that such right to repurchase
securities terminates when the Company’s securities have become publicly traded; or
	 
	 	(B)	 	the Award recipient’s original purchase price, provided, that such right to
repurchase securities at the original purchase price lapses at the rate of at least 20% of
the securities per year over 5 years from the date the option is granted (without respect to
the date the option was exercised or became exercisable).

     The securities held by an officer, director, manager or consultant of the Company or an
affiliate may be subject to additional or greater restrictions.

	7.	 	The Company will provide financial statements to each Award recipient annually during the period
such individual has Awards outstanding, or as otherwise required under Section 260.140.46 of Title
10 of the California Code of Regulations. Notwithstanding the foregoing, the Company will not be
required to provide such financial statements to Award recipients when issuance is limited to key
employees whose services in connection with the Company assure them access to equivalent
information.
	 
	8.	 	The Company will comply with Section 260.140.1 of Title 10 of the California Code of Regulations
with respect to the voting rights of Common Stock and similar equity securities.
	 
	9.	 	The Plan is intended to comply with Section 25102(o) of the California Corporations Code. Any
provision of this Plan which is inconsistent with Section 25102(o), including without limitation
any provision of this Plan that is more restrictive than would be permitted by Section 25102(o) as
amended from time to time, shall, without further act or amendment by the Board, be reformed to
comply with the provisions of Section 25102(o). If at any time the Administrator determines that
the delivery of Common Stock under the Plan is or may be unlawful under the laws of any applicable
jurisdiction, or federal or state securities laws, the right to exercise an Award or receive shares
of Common Stock pursuant to an Award shall be suspended until the Administrator determines that
such delivery is lawful. The Company shall have no obligation to effect any registration or
qualification of the Common Stock under federal or state laws.

A-2EX-10.4 Form of directors' and officers' Indemnity

 

Exhibit 10.4

INDEMNITY AGREEMENT

     This
Indemnity Agreement, dated as of ___________________, 2007, is made by and between
AuthenTec, Inc., a Delaware corporation (the
“Company”), and ___________________ (the
“Indemnitee”).

RECITALS

     A. The Company is aware that competent and experienced persons are increasingly reluctant to
serve as directors, officers or agents of corporations unless they are protected by comprehensive
liability insurance or indemnification, due to increased exposure to litigation costs and risks
resulting from their service to such corporations, and due to the fact that the exposure frequently
bears no reasonable relationship to the compensation of such directors, officers and other agents.

     B. The statutes and judicial decisions regarding the duties of directors and officers are
often difficult to apply, ambiguous, or conflicting, and therefore fail to provide such directors,
officers and agents with adequate, reliable knowledge of legal risks to which they are exposed or
information regarding the proper course of action to take.

     C. Plaintiffs often seek damages in such large amounts and the costs of litigation may be so
enormous (whether or not the case is meritorious), that the defense and/or settlement of such
litigation is often beyond the personal resources of directors, officers and other agents.

     D. The Company believes that it is unfair for its directors, officers and agents and the
directors, officers and agents of its subsidiaries to assume the risk of huge judgments and other
expenses which may occur in cases in which the director, officer or agent received no personal
profit and in cases where the director, officer or agent was not culpable.

     E. The Company recognizes that the issues in controversy in litigation against a director,
officer or agent of a corporation such as the Company or its subsidiaries are often related to the
knowledge, motives and intent of such director, officer or agent, that he is usually the only
witness with knowledge of the essential facts and exculpating circumstances regarding such matters,
and that the long period of time which usually elapses before the trial or other disposition of
such litigation often extends beyond the time that the director, officer or agent can reasonably
recall such matters and may extend beyond the normal time for retirement for such director, officer
or agent with the result that he, after retirement or in the event of his death, his spouse, heirs,
executors or administrators, may be faced with limited ability and undue hardship in maintaining an
adequate defense, which may discourage such a director, officer or agent from serving in that
position.

     F. Based upon their experience as business managers, the Board of Directors of the Company
(the “Board”) has concluded that, to retain and attract talented and experienced
individuals to serve as directors, officers and agents of the Company and its subsidiaries and to
encourage such individuals to take the business risks necessary for the success of the Company and
its subsidiaries, it is necessary for the Company to contractually indemnify its directors,
officers and agents and the directors, officers and agents of its subsidiaries, and to assume for

1

 

itself maximum liability for expenses and damages in connection with claims against such
directors, officers and agents in connection with their service to the Company and its
subsidiaries, and has further concluded that the failure to provide such contractual
indemnification could result in great harm to the Company and its subsidiaries and the Company’s
stockholders.

     G. Section 145 of the General Corporation Law of Delaware, under which the Company is
organized (“Section 145”), empowers the Company to indemnify its directors, officers,
employees and agents by agreement and to indemnify persons who serve, at the request of the
Company, as the directors, officers, employees or agents of other corporations or enterprises, and
expressly provides that the indemnification provided by Section 145 is not exclusive.

     H. The Company desires and has requested the Indemnitee to serve or continue to serve as a
director, officer or agent of the Company and/or one or more subsidiaries of the Company free from
undue concern for claims for damages arising out of or related to such services to the Company
and/or one or more subsidiaries of the Company.

     I. Indemnitee is willing to serve, or to continue to serve, the Company and/or one or more
subsidiaries of the Company, provided that he is furnished the indemnity provided for herein.

AGREEMENT

     NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:

     1. Definitions.

          (a) Agent. For the purposes of this Agreement, “agent” of the Company means any
person who is or was a director, officer, employee or other agent of the Company or a subsidiary of
the Company; or is or was serving at the request of, for the convenience of, or to represent the
interests of the Company or a subsidiary of the Company as a director, officer, employee or agent
of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise;
or was a director, officer, employee or agent of a foreign or domestic corporation which was a
predecessor corporation of the Company or a subsidiary of the Company, or was a director, officer,
employee or agent of another enterprise at the request of, for the convenience of, or to represent
the interests of such predecessor corporation.

          (b) Expenses. For purposes of this Agreement, “expenses” include all out-of-pocket
costs of any type or nature whatsoever (including, without limitation, all attorneys’ fees and
related disbursements), actually and reasonably incurred by the Indemnitee in connection with
either the investigation, defense or appeal of a proceeding or establishing or enforcing a right to
indemnification under this Agreement or Section 145 or otherwise; provided, however, that
“expenses” shall not include any judgments, fines, ERISA excise taxes or penalties, or amounts paid
in settlement of a proceeding.

2

 

          (c) Proceeding. For the purposes of this Agreement, “proceeding” means any
threatened, pending, or completed action, suit, investigation, arbitration, alternative dispute
resolution mechanism, hearing, or proceeding, and any appeal thereof, whether civil, criminal,
administrative or investigative and/or any inquiry or investigation, whether conducted by the
Company or any other party, that the Indemnitee in good faith believes might lead to the
institution of any such action.

          (d) Subsidiary. For purposes of this Agreement, “subsidiary” means any corporation of
which more than 50% of the outstanding voting securities is owned directly or indirectly by the
Company, by the Company and one or more other subsidiaries, or by one or more other subsidiaries.

     2. Agreement to Serve. The Indemnitee agrees to serve and/or continue to serve as
agent of the Company, at its will (or under separate agreement, if such agreement exists), in the
capacity Indemnitee currently serves as an agent of the Company, so long as he is duly appointed or
elected and qualified in accordance with the applicable provisions of the Bylaws of the Company or
any subsidiary of the Company or until such time as he tenders his resignation in writing;
provided, however, that nothing contained in this Agreement is intended to create any right to
continued employment by Indemnitee.

     3. Liability Insurance.

          (a) Maintenance of D&O Insurance. The Company hereby covenants and agrees that, so
long as the Indemnitee shall continue to serve as an agent of the Company and thereafter so long as
the Indemnitee shall be subject to any possible proceeding by reason of the fact that the
Indemnitee was an agent of the Company, the Company, subject to Section 3(c), shall promptly obtain
and maintain in full force and effect directors’ and officers’ liability insurance (“D&O
Insurance”) in reasonable amounts from established and reputable insurers.

          (b) Rights and Benefits. In all policies of D&O Insurance, the Indemnitee shall be
named as an insured in such a manner as to provide the Indemnitee the same rights and benefits as
are accorded to the most favorably insured of the Company’s directors, if the Indemnitee is a
director; or of the Company’s officers, if the Indemnitee is not a director of the Company but is
an officer; or of the Company’s key employees, if the Indemnitee is not a director or officer but
is a key employee.

          (c) Limitation on Required Maintenance of D&O Insurance. Notwithstanding the
foregoing, the Company shall have no obligation to obtain or maintain D&O Insurance if the Company
determines in good faith that such insurance is not reasonably available, the premium costs for
such insurance are disproportionate to the amount of coverage provided, the coverage provided by
such insurance is limited by exclusions so as to provide an insufficient benefit, or the Indemnitee
is covered by similar insurance maintained by a subsidiary of the Company.

     4. Mandatory Indemnification. Subject to Section 9 below, the Company shall indemnify
the Indemnitee as follows:

          (a) Third Party Actions. If the Indemnitee is a person who was or is a party or is
threatened to be made a party to any proceeding (other than an action by or in the right of the

3

 

Company) by reason of the fact that he is or was an agent of the Company, or by reason of
anything done or not done by him in any such capacity, the Company shall indemnify the Indemnitee
against any and all expenses and liabilities of any type whatsoever (including, but not limited to,
judgments, fines, ERISA excise taxes and penalties, and amounts paid in settlement) actually and
reasonably incurred by him in connection with the investigation, defense, settlement or appeal of
such proceeding, provided it shall not have been determined (as provided in Section 8(c) or, if
sought by the Indemnitee, by final, non-appealable judgment of a court of competent jurisdiction as
provided for in Sections 8(e) or 11) that such indemnification is not permitted under applicable
law.

          (b) Derivative Actions. If the Indemnitee is a person who was or is a party or is
threatened to be made a party to any proceeding by or in the right of the Company by reason of the
fact that he is or was an agent of the Company, or by reason of anything done or not done by him in
any such capacity, the Company shall indemnify the Indemnitee against all expenses actually and
reasonably incurred by him in connection with the investigation, defense, settlement, or appeal of
such proceeding, provided it shall not have been determined (as provided in Section 8(c) or, if
sought by the Indemnitee, by final, non-appealable judgment of a court of competent jurisdiction as
provided for in Sections 8(e) or 11) that such indemnification is not permitted under applicable
law.

          (c) Actions where Indemnitee is Deceased. If the Indemnitee is a person who was or is
a party or is threatened to be made a party to any proceeding by reason of the fact that he is or
was an agent of the Company, or by reason of anything done or not done by him in any such capacity,
and if prior to, during the pendency of after completion of such proceeding Indemnitee becomes
deceased, the Company shall indemnify the Indemnitee’s heirs, executors and administrators against
any and all expenses and liabilities of any type whatsoever (including, but not limited to,
judgments, fines, ERISA excise taxes and penalties, and amounts paid in settlement) actually and
reasonably incurred to the extent Indemnitee would have been entitled to indemnification pursuant
to Sections 4(a) or 4(b) above were Indemnitee still alive.

          (d) Limitations. Notwithstanding the foregoing, the Company shall not be obligated to
indemnify the Indemnitee for expenses or liabilities of any type whatsoever (including, but not
limited to, judgments, fines, ERISA excise taxes and penalties, and amounts paid in settlement) for
which payment is actually made to or on behalf of Indemnitee under a valid and collectible
insurance policy of D&O Insurance, or under a valid and enforceable indemnity clause, by-law or
agreement.

     5. Partial Indemnification. If the Indemnitee is entitled under any provision of this
Agreement to indemnification by the Company for some or a portion of any expenses or liabilities of
any type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes and
penalties, and amounts paid in settlement) incurred by him in the investigation, defense,
settlement or appeal of a proceeding, but not entitled, however, to indemnification for all of the
total amount hereof, the Company shall nevertheless indemnify the Indemnitee for such total amount
except as to the portion hereof to which the Indemnitee is not entitled.

4

 

     6. Mandatory Advancement of Expenses. Subject to Section 9(a) below, the Company
shall advance all expenses incurred by the Indemnitee in connection with the
investigation, defense, settlement or appeal of any proceeding to which the Indemnitee is a
party or is threatened to be made a party by reason of the fact that the Indemnitee is or was an
agent of the Company. Indemnitee hereby undertakes to repay such amounts advanced only if, and to
the extent that, it shall be determined (as provided in Section 8(c) or, if sought by the
Indemnitee, by final, non-appealable judgment of a court of competent jurisdiction as provided for
in Sections 8(e) or 11) that the Indemnitee is not entitled to be indemnified by the Company as
authorized hereby. The Indemnitee’s obligation to reimburse the Company pursuant to this Section 6
shall be unsecured and no interest shall be charged thereon. The advances to be made hereunder
shall be paid by the Company to the Indemnitee within twenty (20) days following delivery of a
written request therefor by the Indemnitee to the Company.

     7. Notice and Other Indemnification Procedures.

          (a) Notice by Indemnitee. Promptly after receipt by the Indemnitee of notice of the
commencement of or the threat of commencement of any proceeding, the Indemnitee shall, if the
Indemnitee believes that indemnification with respect thereto may be sought from the Company under
this Agreement, notify the Company of the commencement or threat of commencement thereof. The
failure of Indemnitee to so notify the Company shall not relieve the Company of any obligation
which it may have to Indemnitee under this Agreement or otherwise except to the extent that the
Company is materially prejudiced thereby.

          (b) Notice by Company. If, at the time of the receipt of a notice of the commencement
of a proceeding pursuant to Section 7(a) hereof, the Company has D&O Insurance in effect, the
Company shall give prompt notice of the commencement of such proceeding to the insurers in
accordance with the procedures set forth in the respective policies. The Company shall thereafter
take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee,
all amounts payable as a result of such proceeding in accordance with the terms of such policies.

          (c) Defense. In the event the Company shall be obligated to pay the expenses of any
proceeding against the Indemnitee, the Company, if appropriate, shall be entitled to assume the
defense of such proceeding, with counsel approved by the Indemnitee, upon the delivery to the
Indemnitee of written notice of its election so to do. After delivery of such notice, approval of
such counsel by the Indemnitee and the retention of such counsel by the Company, the Company will
not be liable to the Indemnitee under this Agreement for any fees of counsel subsequently incurred
by the Indemnitee with respect to the same proceeding, provided that (i) the Indemnitee shall have
the right to employ his counsel in any such proceeding at the Indemnitee’s expense; and (ii) if (A)
the employment of counsel by the Indemnitee has been previously authorized by the Company, (B) the
Indemnitee shall have reasonably concluded that there may be a conflict of interest between the
Company and the Indemnitee in the conduct of any such defense, or (C) the Company shall not, in
fact, have employed counsel to assume the defense of such proceeding, then the fees and expenses of
Indemnitee’s counsel shall be at the expense of the Company.

5

 

     8. Determination of Right to Indemnification.

          (a) Successful Defense. To the extent the Indemnitee has been successful on the
merits or otherwise in defense of any proceeding (including, without limitation, an action by or in
the right of the Company) to which the Indemnitee was a party by reason of the fact that he is or
was an agent of the Company at any time, the Company shall indemnify the Indemnitee against all
expenses of any type whatsoever actually and reasonably incurred by him in connection with the
investigation, defense or appeal of such proceeding.

          (b) Other Situations. In the event that Section 8(a) is inapplicable, the Company
shall also indemnify the Indemnitee unless, and except to the extent that, the Company shall prove
by clear and convincing evidence in a forum listed in Section 8(c) below that the Indemnitee has
not met the applicable standard of conduct required to entitle the Indemnitee to such
indemnification.

          (c) Selection of Forum. The Indemnitee shall be entitled to select the forum in which
the validity of the Company’s claim under Section 8(b) hereof that the Indemnitee is not entitled
to indemnification will be heard from among the following:

               (i) A quorum of the Board consisting of directors who are not parties to the proceeding for
which indemnification is being sought;

               (ii) The stockholders of the Company;

               (iii) Legal counsel selected by the Indemnitee, and reasonably approved by the Board, which
counsel shall make such determination in a written opinion; or

               (iv) A panel of three arbitrators, one of whom is selected by the Company, another of whom is
selected by the Indemnitee and the last of whom is selected by the first two arbitrators so
selected.

          (d) Submission to Forum. As soon as practicable, and in no event later than thirty
(30) days after written notice of the Indemnitee’s choice of forum pursuant to Section 8(c) above,
the Company shall, at its own expense, submit to the selected forum in such manner as the
Indemnitee or the Indemnitee’s counsel may reasonably request, its claim that the Indemnitee is not
entitled to indemnification; and the Company shall act in the utmost good faith to assure the
Indemnitee a complete opportunity to defend against such claim. In connection with any such
determination as to whether Indemnitee is entitled to be indemnified pursuant to this Agreement or
any proceeding seeking enforcement of Indemnitee’s rights to indemnification or advancement
pursuant to this Agreement or otherwise, the burden of proof shall be on the Company to establish
that Indemnitee is not so entitled.

          (e) Application to Court of Chancery. Notwithstanding a determination by any forum
listed in Section 8(c) hereof that Indemnitee is not entitled to indemnification with respect to a
specific proceeding, the Indemnitee shall have the right to apply to the Court of Chancery of
Delaware, the court in which that proceeding is or was pending or any other court of competent
jurisdiction, for the purpose of enforcing the Indemnitee’s right to indemnification pursuant to
this Agreement. In connection with any such determination as to whether

6

 

Indemnitee is entitled to be indemnified pursuant to this Agreement or any proceeding seeking
enforcement of Indemnitee’s rights to indemnification or advancement pursuant to this Agreement or
otherwise, the burden of proof shall be on the Company to establish that Indemnitee is not so
entitled. Neither the failure of the Company (including its Board of Directors or its
stockholders) to have made a determination prior to the commencement of such enforcement action
that indemnification of Indemnitee is proper in the circumstances, nor an actual determination by
the Company (including its Board of Directors or its stockholders) that such indemnification is
improper, shall be a defense to the action or create a presumption that Indemnitee is not entitled
to indemnification under this Agreement or otherwise.

          (f) Expenses Related to this Agreement. Notwithstanding any other provision in this
Agreement to the contrary, the Company shall indemnify the Indemnitee against all expenses incurred
by the Indemnitee in connection with any hearing or proceeding under this Section 8 involving the
Indemnitee and against all expenses incurred by the Indemnitee in connection with any other
proceeding between the Company and the Indemnitee involving the interpretation or enforcement of
the rights of the Indemnitee under this Agreement unless a court of competent jurisdiction finds
that each of the claims and/or defenses of the Indemnitee in any such proceeding was frivolous or
made in bad faith.

     9. Exceptions. Any other provision herein to the contrary notwithstanding, the
Company shall not be obligated pursuant to the terms of this Agreement:

          (a) Claims Initiated by Indemnitee. To indemnify or advance expenses to the
Indemnitee with respect to proceedings or claims initiated or brought voluntarily by the Indemnitee
and not by way of defense, unless (i) such indemnification is expressly required to be made by law,
(ii) the proceeding was authorized by the Board, (iii) such indemnification is provided by the
Company, in its sole discretion, pursuant to the powers vested in the Company under the General
Corporation Law of Delaware or (iv) the proceeding is brought to establish or enforce a right to
indemnification under this Agreement, the Company’s Certificate of Incorporation or Bylaws, or any
other statute or law or otherwise as required under Section 145;

          (b) Lack of Good Faith. To indemnify the Indemnitee for any expenses incurred by the
Indemnitee with respect to any proceeding instituted by the Indemnitee to enforce or interpret this
Agreement, if a court of competent jurisdiction determines that each of the material assertions
made by the Indemnitee in such proceeding was not made in good faith or was frivolous; or

          (c) Unauthorized Settlements. To indemnify the Indemnitee under this Agreement for
any amounts paid in settlement of a proceeding unless the Company consents to such settlement,
which consent shall not be unreasonably withheld.

     10. Non-exclusivity. The provisions for indemnification and advancement of expenses
set forth in this Agreement shall not be deemed exclusive of any other rights which the Indemnitee
may have under any provision of law, the Company’s Certificate of Incorporation or Bylaws, the vote
of the Company’s stockholders or disinterested directors, other agreements, or otherwise, both as
to action in his official capacity and to action in another capacity while occupying his position
as an agent of the Company, and the Indemnitee’s rights hereunder shall

7

 

continue after the Indemnitee has ceased acting as an agent of the Company and shall inure to
the benefit of the heirs, executors and administrators of the Indemnitee.

     11. Enforcement. Any right to indemnification or advances granted by this Agreement
to Indemnitee shall be enforceable by or on behalf of Indemnitee in any court of competent
jurisdiction if (i) the claim for indemnification or advances is denied, in whole or in part, or
(ii) no disposition of such claim is made within sixty (60) days of request therefor. Indemnitee,
in such enforcement action, if successful in whole or in part, shall be entitled to be paid also
the expense of prosecuting his claim. It shall be a defense to any action for which a claim for
indemnification is made under this Agreement (other than an action brought to enforce a claim for
expenses pursuant to Section 6 hereof, provided that the required undertaking has been tendered to
the Company) that Indemnitee is not entitled to indemnification because of the limitations set
forth in Sections 4 and 9 hereof. Neither the failure of the Company (including its Board of
Directors or its stockholders) to have made a determination prior to the commencement of such
enforcement action that indemnification of Indemnitee is proper in the circumstances, nor an actual
determination by the Company (including its Board of Directors or its stockholders) that such
indemnification is improper, shall be a defense to the action or create a presumption that
Indemnitee is not entitled to indemnification under this Agreement or otherwise.

     12. Subrogation. In the event the Company is obligated to make a payment under this
Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of
recovery under an insurance policy or any other indemnity agreement covering the Indemnitee, who
shall execute all documents required and shall do all acts that may be necessary to secure such
rights and to enable the Company effectively to bring suit to enforce such rights.

     13. Survival of Rights.

          (a) All agreements and obligations of the Company contained herein shall continue during the
period Indemnitee is an agent of the Company and shall continue thereafter so long as Indemnitee
shall be subject to any possible claim or threatened, pending or completed action, suit or
proceeding, whether civil, criminal, arbitrational, administrative or investigative, by reason of
the fact that Indemnitee was serving in the capacity referred to herein.

          (b) The Company shall require any successor to the Company (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets
of the Company, expressly to assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform if no such succession had taken
place.

     14. Interpretation of Agreement. It is understood that the parties hereto intend this
Agreement to be interpreted and enforced so as to provide indemnification to the Indemnitee to the
fullest extent permitted by law including those circumstances in which indemnification would
otherwise be discretionary. No amendment, alteration or repeal of this Agreement or of any
provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of
any action taken or omitted by such Indemnitee in his or her corporate status prior to such
amendment, alteration or repeal. To the extent that a change in applicable law, whether by

8

 

statute or judicial decision, permits greater indemnification or advancement of expenses than
would be afforded currently under the Company’s Certificate of Incorporation, Bylaws and this
Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the
greater benefits so afforded by such change.

     15. Severability. If any provision or provisions of this Agreement shall be held to
be invalid, illegal or unenforceable for any reason whatsoever, (i) the validity, legality and
enforceability of the remaining provisions of the Agreement (including without limitation, all
portions of any paragraphs of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall not in
any way be affected or impaired thereby, and (ii) to the fullest extent possible, the provisions of
this Agreement (including, without limitation, all portions of any paragraph of this Agreement
containing any such provision held to be invalid, illegal or unenforceable, that are not themselves
invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested
by the provision held invalid, illegal or unenforceable and to give effect to Section 14 hereof.

     16. Modification and Waiver. No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of
any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

     17. Notice. All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed duly given (i) if delivered by hand and receipted
for by the party addressee or (ii) if mailed by certified or registered mail with postage prepaid,
on the third business day after the mailing date. Addresses for notice to either party are as
shown on the signature page of this Agreement, or as subsequently modified by written notice.

     18. Governing Law. This Agreement shall be governed exclusively by and construed
according to the laws of the State of Delaware as applied to contracts between Delaware residents
entered into and to be performed entirely within Delaware.

     The parties hereto have entered into this Indemnity Agreement effective as of the date first
above written.

	 	 	 	 	 
	 	THE COMPANY:

AUTHENTEC, INC.

 	 
	 	By  	 	 
	 	
Title 	 	 
	 	 	 	 
	 

	 	 	 	 	 
	 

	 	Address	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	INDEMNITEE:	 	 
	 
	 	 	 	 
	 

	 	[Name]
	 
	 	 	 	 
	 

	 	Address	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 

9

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