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EXHIBIT 10.2  

 
 

PAYPAL, INC.
  
    2001 EQUITY INCENTIVE PLAN    
  

 
 
 

TABLE OF CONTENTS    
  

	 
	 	 
	 	Page

	1.	 	PURPOSES OF THE PLAN	 	1
	2.	 	DEFINITIONS	 	1
	3.	 	STOCK SUBJECT TO THE PLAN	 	3
	4.	 	ADMINISTRATION OF THE PLAN	 	3
	5.	 	ELIGIBILITY	 	5
	6.	 	LIMITATIONS	 	5
	7.	 	TERM OF PLAN	 	6
	8.	 	TERM OF OPTION	 	6
	9.	 	OPTION EXERCISE PRICE AND CONSIDERATION	 	6
	10	 	EXERCISE OF OPTION	 	7
	11	 	NON-TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS	 	10
	12	 	STOCK PURCHASE RIGHTS	 	10
	13	 	ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER OR ASSET SALE	 	10
	14	 	TIME OF GRANTING OPTIONS AND STOCK PURCHASE RIGHTS	 	14
	15	 	AMENDMENT AND TERMINATION OF THE PLAN	 	12
	16	 	STOCKHOLDER APPROVAL	 	12
	17	 	INABILITY TO OBTAIN AUTHORITY	 	13
	18	 	RESERVATION OF SHARES	 	13
	19	 	INFORMATION TO HOLDERS AND PURCHASERS	 	13
	20	 	REPURCHASE PROVISIONS	 	13
	21	 	INVESTMENT INTENT	 	14
	22	 	GOVERNING LAW	 	14

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PAYPAL, INC.
  
    2001 EQUITY INCENTIVE PLAN    
  

    1.
Purposes of the Plan.  The purposes of the PayPal, Inc. 2001 Equity Incentive Plan are to attract and retain the best available personnel for positions of
substantial responsibility, to provide additional incentive to Employees, Directors and Consultants and to promote the success of the Company's business. Options granted under the Plan may be
Incentive Stock Options or Non-Qualified Stock Options, as determined by the Administrator at the time of grant. Stock Purchase Rights may also be granted under the Plan. 

    2.
Definitions.  As used herein, the following definitions shall apply: 

    (a) "Acquisition"
means (i) any consolidation or merger of the Company with or into any other corporation or other entity or person in which the stockholders of
the Company prior to such consolidation or merger own less than fifty percent (50%) of the Company's voting power immediately after such consolidation or merger, excluding any consolidation or merger
effected exclusively to change the domicile of the Company; or (ii) a sale of all or substantially all of the assets of the Company. 

    (b) "Administrator"
means the Board or the Committee responsible for conducting the general administration of the Plan, as applicable, in accordance with Section 4
hereof. 

    (c) "Applicable
Laws" means the requirements relating to the administration of stock option plans under U.S. state corporate laws, U.S. federal and state securities
laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Options or Stock Purchase
Rights are granted under the Plan. 

    (d) "Board"
means the Board of Directors of the Company. 

    (e) "Code"
means the Internal Revenue Code of 1986, as amended, or any successor statute or statutes thereto. Reference to any particular Code section shall include any
successor section. 

    (f)  "Committee"
means a committee appointed by the Board in accordance with Section 4 hereof. 

    (g) "Common
Stock" means the common stock of the Company. 

    (h) "Company"
means PayPal, Inc., a Delaware corporation. 

    (i)  "Consultant"
means any consultant or adviser if: (i) the consultant or adviser renders bona fide services to the Company or any Parent or Subsidiary of the
Company; (ii) the services rendered by the consultant or adviser are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly
promote or maintain a market for the Company's securities; and (iii) the consultant or adviser is a natural person who has contracted directly with the Company or any Parent or Subsidiary of
the Company to render such services. 

    (j)  "Director"
means a member of the Board. 

    (k) "Employee"
means any person, including an Officer or Director, who is an employee (as defined in accordance with Section 3401(c) of the Code) of the Company
or any Parent or Subsidiary of the Company. A Service Provider shall not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between
locations of the Company or between the Company, its Parent, any Subsidiary, or any successor. For purposes of Incentive Stock Options, no such leave may exceed ninety (90) days, unless reemployment
upon expiration of such leave is guaranteed by statute or contract. Neither service as a Director nor payment of a director's fee by the Company shall be sufficient, by itself, to constitute
"employment" by the Company. 

 

    (l)  "Exchange Act" means the Securities Exchange Act of 1934, as amended, or any successor statute or statutes thereto. Reference to any particular Exchange Act
section shall include any successor section. 

    (m) "Fair
Market Value" means, as of any date, the value of a share of Common Stock determined as follows: 

     (i) If
the Common Stock is listed on any established stock exchange or a national market system, including, without limitation, the Nasdaq National Market or The Nasdaq
SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for a share of such stock (or the closing bid, if no sales were reported) as quoted on such exchange
or system for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; 

    (ii) If
the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the
high bid and low asked prices for a share of the Common Stock on the last market trading day prior to the day of determination; or 

    (iii) In
the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator. 

    (n) "Holder"
means a person who has been granted or awarded an Option or Stock Purchase Right or who holds Shares acquired pursuant to the exercise of an Option or
Stock Purchase Right. 

    (o) "Incentive
Stock Option" means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and which is designated as
an Incentive Stock Option by the Administrator. 

    (p) "Independent
Director" means a Director who is not an Employee of the Company. 

    (q) "Non-Qualified
Stock Option" means an Option (or portion thereof) that is not designated as an Incentive Stock Option by the Administrator, or which is designated
as an Incentive Stock Option by the Administrator but fails to qualify as an incentive stock option within the meaning of Section 422 of the Code. 

    (r) "Officer"
means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder. 

    (s) "Option"
means a stock option granted pursuant to the Plan. 

    (t)  "Option
Agreement" means a written agreement between the Company and a Holder evidencing the terms and conditions of an individual Option grant. The Option
Agreement is subject to the terms and conditions of the Plan. 

    (u) "Parent"
means any corporation, whether now or hereafter existing (other than the Company), in an unbroken chain of corporations ending with the Company if each of
the corporations other than the last corporation in the unbroken chain owns stock possessing more than fifty percent of the total combined voting power of all classes of stock in one of the other
corporations in such chain. 

    (v) "Plan"
means the PayPal, Inc. 2001 Equity Incentive Plan. 

    (w) "Public
Trading Date" means the first date upon which Common Stock of the Company is listed (or approved for listing) upon notice of issuance on any securities
exchange or designated 

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(or approved for designation) upon notice of issuance as a national market security on an interdealer quotation system. 

    (x) "Restricted
Stock" means Shares acquired pursuant to the exercise of an unvested Option in accordance with Section 10(h) below or pursuant to a Stock
Purchase Right granted under Section 12 below. 

    (y) "Rule 16b-3"
means that certain Rule 16b-3 under the Exchange Act, as such Rule may be amended from time to time. 

    (z) "Section
16(b)" means Section 16(b) of the Exchange Act, as such Section may be amended from time to time. 

    (aa) "Securities
Act" means the Securities Act of 1933, as amended, or any successor statute or statutes thereto. Reference to any particular Securities Act section
shall include any successor section. 

    (bb) "Service
Provider" means an Employee, Director or Consultant. 

    (cc) "Share"
means a share of Common Stock, as adjusted in accordance with Section 13 below. 

    (dd) "Stock
Purchase Right" means a right to purchase Common Stock pursuant to Section 12 below. 

    (ee) "Subsidiary"
means any corporation, whether now or hereafter existing (other than the Company), in an unbroken chain of corporations beginning with the Company if
each of the corporations other than the last corporation in the unbroken chain owns stock possessing more than fifty percent of the total combined voting power of all classes of stock in one of the
other corporations in such chain. 

    3.
Stock Subject to the Plan.  Subject to the provisions of Section 13 of the Plan, the shares of stock subject to Options or Stock Purchase Rights shall be
Common Stock, initially shares of the Company's Common Stock. Subject to the provisions of Section 13 of the Plan, the maximum aggregate number of Shares which may be issued upon exercise of such
Options or Stock Purchase Rights is 38,000,000 Shares. Shares issued upon exercise of Options or Stock Purchase Rights may be authorized but unissued, or reacquired Common Stock. If an Option or Stock
Purchase Right expires or becomes unexercisable without having been exercised in full, the unpurchased Shares which were subject thereto shall become available for future grant or sale under the Plan
(unless the Plan has terminated). Shares which are delivered by the Holder or withheld by the Company upon the exercise of an Option or Stock Purchase Right under the Plan, in payment of the exercise
price thereof or tax withholding thereon, may again be optioned, granted or awarded hereunder, subject to the limitations of this Section 3. If Shares of Restricted Stock are repurchased by the
Company at their original purchase price, such Shares shall become available for future grant under the Plan. Notwithstanding the provisions of this Section 3, no Shares may again be optioned,
granted or awarded if such action would cause an Incentive Stock Option to fail to qualify as an Incentive Stock Option under Code Section 422. 

    4.
Administration of the Plan.  

    (a) Administrator.
Unless and until the Board delegates administration to a Committee as set forth below, the Plan shall be administered by the Board. The Board may
delegate administration of the Plan to a Committee or Committees of one or more members of the Board, and the term "Committee" shall apply to any person or persons to whom such authority has been
delegated. If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board, including the
power to 

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delegate to a subcommittee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board shall thereafter be to the Committee or subcommittee),
subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. Notwithstanding the foregoing, however, from and after the
Public Trading Date, a Committee of the Board shall administer the Plan and the Committee shall consist solely of two or more Independent Directors each of whom is both an "outside director," within
the meaning of Section 162(m) of the Code, and a "non-employee director" within the meaning of Rule 16b-3. Within the scope of such authority, the Board or the Committee may (i) delegate
to a committee of one or more members of the Board who are not Independent Directors the authority to grant awards under the Plan to eligible persons who are either (1) not then "covered
employees," within the meaning of Section 162(m) of the Code and are not expected to be "covered employees" at the time of recognition of income resulting from such award or (2) not persons
with respect to whom the Company wishes to comply with Section 162(m) of the Code and/or (ii) delegate to a committee of one or more members of the Board who are not "non-employee directors,"
within the meaning of Rule 16b-3, the authority to grant awards under the Plan to eligible persons who are not then subject to Section 16 of the Exchange Act. The Board may abolish the
Committee at any time and revest in the Board the administration of the Plan. Appointment of Committee members shall be effective upon acceptance of appointment. Committee members may resign at any
time by delivering written notice to the Board. Vacancies in the Committee may only be filled by the Board. 

    (b) Powers
of the Administrator. Subject to the provisions of the Plan and the specific duties delegated by the Board to such Committee, and subject to the approval of
any relevant authorities, the Administrator shall have the authority in its sole discretion: 

     (i) to
determine the Fair Market Value; 

    (ii) to
select the Service Providers to whom Options and Stock Purchase Rights may from time to time be granted hereunder; 

    (iii) to
determine the number of Shares to be covered by each such award granted hereunder; 

    (iv) to
approve forms of agreement for use under the Plan; 

    (v) to
determine the terms and conditions of any Option or Stock Purchase Right granted hereunder (such terms and conditions include, but are not limited to, the
exercise price, the time or times when Options or Stock Purchase Rights may vest or be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture
restrictions, and any restriction or limitation regarding any Option or Stock Purchase Right or the Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole
discretion, shall determine); 

    (vi) to
determine whether to offer to buyout a previously granted Option as provided in subsection 10(i) and to determine the terms and conditions of such offer
and buyout (including whether payment is to be made in cash or Shares); 

   (vii) to
prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for
the purpose of qualifying for preferred tax treatment under foreign tax laws; 

   (viii) to
allow Holders to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued upon exercise of an Option or Stock
Purchase Right that number of Shares having a Fair Market Value equal to the minimum amount required to be withheld based on the statutory withholding rates for federal and state 

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tax purposes that apply to supplemental taxable income. The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined.
All elections by Holders to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable; 

    (ix) to
amend the Plan or any Option or Stock Purchase Right granted under the Plan as provided in Section 15; and 

    (x) to
construe and interpret the terms of the Plan and awards granted pursuant to the Plan and to exercise such powers and perform such acts as the Administrator deems
necessary or desirable to promote the best interests of the Company which are not in conflict with the provisions of the Plan. 

    (c) Effect
of Administrator's Decision. All decisions, determinations and interpretations of the Administrator shall be final and binding on all Holders. 

    5.
Eligibility.  Non-Qualified Stock Options and Stock Purchase Rights may be granted to Service Providers. Incentive Stock Options may be granted only to Employees. If
otherwise eligible, an Employee or Consultant who has been granted an Option or Stock Purchase Right may be granted additional Options or Stock Purchase Rights. 

    6.
Limitations.  

    (a) Each
Option shall be designated by the Administrator in the Option Agreement as either an Incentive Stock Option or a Non-Qualified Stock Option. However,
notwithstanding such designations,
to the extent that the aggregate Fair Market Value of Shares subject to a Holder's Incentive Stock Options and other incentive stock options granted by the Company, any Parent or Subsidiary, which
become exercisable for the first time during any calendar year (under all plans of the Company or any Parent or Subsidiary) exceeds $100,000, such excess Options or other options shall be treated as
Non-Qualified Stock Options. 

    For
purposes of this Section 6(a), Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the Shares shall be
determined as of the time of grant. 

    (b) Neither
the Plan, any Option nor any Stock Purchase Right shall confer upon a Holder any right with respect to continuing the Holder's employment or consulting
relationship with the Company, nor shall they interfere in any way with the Holder's right or the Company's right to terminate such employment or consulting relationship at any time, with or without
cause. 

    (c) No
Service Provider shall be granted, in any calendar year, Options or Stock Purchase Rights to purchase more than 10,000,000 Shares;  provided, however, that the foregoing limitation shall not apply prior
to the Public Trading Date and, following the Public Trading Date, the foregoing
limitation shall not apply until the earliest of: (i) the first material modification of the Plan (including any increase in the number of shares reserved for issuance under the Plan in
accordance with Section 3); (ii) the issuance of all of the shares of Common Stock reserved for issuance under the Plan; (iii) the expiration of the Plan; (iv) the first
meeting of stockholders at which Directors of the Company are to be elected that occurs after the close of the third calendar year following the calendar year in which occurred the first registration
of an equity security of the Company under Section 12 of the Exchange Act; or (v) such other date required by Section 162(m) of the Code and the rules and regulations
promulgated thereunder. The foregoing limitation shall be adjusted proportionately in connection with any change in the Company's capitalization as described in Section 13. For purposes of this
Section 6(c), if an Option is canceled in the same calendar year it was granted (other than in connection with a transaction described in 

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Section 15), the canceled Option will be counted against the limit set forth in this Section 6(c). For this purpose, if the exercise price of an Option is reduced, the transaction shall
be treated as a cancellation of the Option and the grant of a new Option. 

    7.
Term of Plan.  The Plan shall become effective upon its initial adoption by the Board and shall continue in effect until it is terminated under Section 17 of the
Plan. No Options or Stock Purchase Rights may be issued under the Plan after the tenth (10th) anniversary of the earlier of (i) the date upon which the Plan is adopted by the Board or
(ii) the date the Plan is approved by the stockholders. 

    8.
Term of Option.  The term of each Option shall be stated in the Option Agreement; provided, however, that the term
shall be no more than ten (10) years from the date of grant thereof. In the case of an Incentive Stock Option granted to a Holder who, at the time the Option is granted, owns (or is treated as
owning under Code Section 424) stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Option
shall be five (5) years from the date of grant or such shorter term as may be provided in the Option Agreement. 

    9.
Option Exercise Price and Consideration.  

    (a) Except
as provided in Section 13, the per share exercise price for the Shares to be issued upon exercise of an Option shall be such price as is determined by the
Administrator, but shall be subject to the following: 

     (i) In
the case of an Incentive Stock Option 

    (A) granted
to an Employee who, at the time of grant of such Option, owns (or is treated as owning under Code Section 424) stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than one hundred ten percent (110%) of the Fair Market Value
per Share on the date of grant. 

    (B) granted
to any other Employee, the per Share exercise price shall be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of
grant. 

    (ii) In
the case of a Non-Qualified Stock Option 

    (A) granted
to a Service Provider who, at the time of grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the exercise price shall be no less than one hundred ten percent (110%) of the Fair Market Value per Share on the date of the grant. 

    (B) granted
to any other Service Provider, the per Share exercise price shall be no less than eighty-five percent (85%) of the Fair Market Value per Share on the date
of grant. 

    (iii) Notwithstanding
the foregoing, Options may be granted with a per Share exercise price other than as required above pursuant to a merger or other corporate
transaction. 

    (b) The
consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator (and,
in the case of an Incentive Stock Option, shall be determined at the time of grant). Such consideration may consist of (1) cash, (2) check, (3) with the consent of the
Administrator, a full recourse promissory note bearing interest (at a market rate of interest) and payable upon such terms as may be prescribed by the Administrator, (4) with the consent of the
Administrator, other Shares which (x) in the case of Shares acquired from the Company, have been owned by the Holder for more than six 

6

 

(6) months on the date of surrender, and (y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option shall be exercised,
(5) with the consent of the Administrator, surrendered Shares then issuable upon exercise of the Option having a Fair Market Value on the date of exercise equal to the aggregate exercise price
of the Option or exercised portion thereof, (6) property of any kind which constitutes good and valuable consideration, (7) with the consent of the Administrator, delivery of a notice
that the Holder has placed a market sell order with a broker with respect to Shares then issuable upon exercise of the Options and that the broker has been directed to pay a sufficient portion of the
net proceeds of the sale to the Company in satisfaction of the Option exercise price, provided, that payment of such proceeds is then made to the
Company upon settlement of such sale, or (8) with the consent of the Administrator, any combination of the foregoing methods of payment. 

    10.
Exercise of Option.  

    (a) Vesting;
Fractional Exercises. Except as provided in Section 13, Options granted hereunder shall be vested and exercisable according to the terms hereof at such
times and under such conditions as determined by the Administrator and set forth in the Option Agreement; provided, however, that, prior to the Public
Trading Date, except with regard to Options granted to Officers, Directors or Consultants, in no event shall an Option granted hereunder become vested and exercisable at a rate of less than twenty
percent (20%) per year over five (5) years from the date the Option is granted, subject to reasonable conditions, such as continuing to be a Service Provider. An Option may not be exercised for
a fraction of a Share. 

    (b) Deliveries
upon Exercise. All or a portion of an exercisable Option shall be deemed exercised upon delivery of all of the following to the Secretary of the Company
or his or her office: 

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     (i) A
written or electronic notice complying with the applicable rules established by the Administrator stating that the Option, or a portion thereof, is exercised. The
notice shall be signed by the Holder or other person then entitled to exercise the Option or such portion of the Option; 

    (ii) Such
representations and documents as the Administrator, in its sole discretion, deems necessary or advisable to effect compliance with Applicable Laws. The
Administrator may, in its sole discretion, also take whatever additional actions it deems appropriate to effect such compliance, including, without limitation, placing legends on share certificates
and issuing stop transfer notices to agents and registrars; 

    (iii) Upon
the exercise of all or a portion of an unvested Option pursuant to Section 10(h), a Restricted Stock purchase agreement in a form determined by the
Administrator and signed by the Holder or other person then entitled to exercise the Option or such portion of the Option; and 

    (iv) In
the event that the Option shall be exercised pursuant to Section 10(f) by any person or persons other than the Holder, appropriate proof of the right of
such person or persons to exercise the Option. 

    (c) Conditions
to Delivery of Share Certificates. The Company shall not be required to issue or deliver any certificate or certificates for Shares purchased upon the
exercise of any Option or portion thereof prior to fulfillment of all of the following conditions: 

     (i) The
admission of such Shares to listing on all stock exchanges on which such class of stock is then listed; 

    (ii) The
completion of any registration or other qualification of such Shares under any state or federal law, or under the rulings or regulations of the Securities and
Exchange Commission or any other governmental regulatory body which the Administrator shall, in its sole discretion, deem necessary or advisable; 

    (iii) The
obtaining of any approval or other clearance from any state or federal governmental agency which the Administrator shall, in its sole discretion, determine to
be necessary or advisable; 

    (iv) The
lapse of such reasonable period of time following the exercise of the Option as the Administrator may establish from time to time for reasons of administrative
convenience; and 

    (v) The
receipt by the Company of full payment for such Shares, including payment of any applicable withholding tax, which in the sole discretion of the Administrator
may be in the form of consideration used by the Holder to pay for such Shares under Section 9(b). 

    (d) Termination
of Relationship as a Service Provider. If a Holder ceases to be a Service Provider other than by reason of the Holder's disability or death, such Holder
may exercise his or her Option within such period of time as is specified in the Option Agreement to the extent that the Option is vested on the date of termination; provided,
however, that prior to the Public Trading Date, such period of time shall not be less than thirty (30) days (but in no event later than the expiration of the term of the Option
as set forth in the Option Agreement). In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for three (3) months following the Holder's termination.
If, on the date of termination, the Holder is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option immediately cease to be issuable under the Option and
shall again become available for issuance under the Plan. If, after termination, the Holder does not exercise his or her Option within the time period 

8

 

specified herein, the Option shall terminate, and the Shares covered by such Option shall again become available for issuance under the Plan. 

    (e) Disability
of Holder. If a Holder ceases to be a Service Provider as a result of the Holder's disability, the Holder may exercise his or her Option within such
period of time as is specified in the Option Agreement to the extent the Option is vested on the date of termination; provided, however, that prior to
the Public Trading Date, such period of time shall not be less than six (6) months (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement).
In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following the Holder's termination. If such disability is not a "disability" as
such term is defined in Section 22(e)(3) of the Code, in the case of an Incentive Stock Option such Incentive Stock Option shall automatically cease to be treated as an Incentive Stock Option
and shall be treated for tax purposes as a Non-Qualified Stock Option from and after the day which is three (3) months and one (1) day following such termination. If, on the date of
termination, the Holder is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall immediately cease to be issuable under the Option and shall again
become available for issuance under the Plan. If, after termination, the Holder does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered
by such Option shall again become available for issuance under the Plan. 

    (f)  Death
of Holder. If a Holder dies while a Service Provider, the Option may be exercised within such period of time as is specified in the Option Agreement  provided, however, that prior to the Public Trading
Date, such period of time shall not be less than six (6) months (but in no event later than the
expiration of the term of such Option as set forth in the Notice of Grant), by the Holder's estate or by a person who acquires the right to exercise the Option by bequest or inheritance, but only to
the extent that the Option is vested on the date of death. In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following the Holder's
termination. If, at the time of death, the Holder is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall immediately cease to be issuable under
the Option and shall again become available for issuance under the Plan. The Option may be exercised by the executor or administrator of the Holder's estate or, if none, by the person(s) entitled to
exercise the Option under the Holder's will or the laws of descent or distribution. If the Option is not so exercised within the time specified herein, the Option shall terminate, and the Shares
covered by such Option shall again become available for issuance under the Plan. 

    (g) Regulatory
Extension. A Holder's Option Agreement may provide that if the exercise of the Option following the termination of the Holder's status as a Service
Provider (other than upon the Holder's death or Disability) would be prohibited at any time solely because the issuance of shares would violate the registration requirements under the Securities Act,
then the Option shall terminate on the earlier of (i) the expiration of the term of the Option set forth in Section 8 or (ii) the expiration of a period of three (3) months after
the termination of the Holder's status as a Service Provider during which the exercise of the Option would not be in violation of such registration requirements. 

    (h) Early
Exercisability. The Administrator may provide in the terms of a Holder's Option Agreement that the Holder may, at any time before the Holder's status as a
Service Provider terminates, exercise the Option in whole or in part prior to the full vesting of the Option; provided, however, that subject to Section
22, Shares acquired upon exercise of an Option which has not fully vested may be subject to any forfeiture, transfer or other restrictions as the Administrator may determine in its sole discretion. 

9

 

    (i)  Buyout Provisions. The Administrator may at any time offer to buyout for a payment in cash or Shares, an Option previously granted, based on such terms and
conditions as the Administrator shall establish and communicate to the Holder at the time that such offer is made. 

    11.
Non-Transferability of Options and Stock Purchase Rights.  Options and Stock Purchase Rights may not be sold, pledged, assigned, hypothecated, transferred, or
disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Holder, only by the Holder. 

    12.
Stock Purchase Rights.  

    (a) Rights
to Purchase. Stock Purchase Rights may be issued either alone, in addition to, or in tandem with Options granted under the Plan and/or cash awards made
outside of the Plan. After the Administrator determines that it will offer Stock Purchase Rights under the Plan, it shall advise the offeree in writing of the terms, conditions and restrictions
related to the offer, including the number of Shares that such person shall be entitled to purchase, the price to be paid, and the time within which such person must accept such offer;  provided, however,
 that to the extent required to comply with applicable securities laws, the purchase price of such Shares shall not be less than the
purchase price requirements set forth in Section 260.140.42 of Title 10 of the California Code of Regulations. The offer shall be accepted by execution of a Restricted Stock purchase agreement in the
form determined by the Administrator. 

    (b) Repurchase
Right. Unless the Administrator determines otherwise, the Restricted Stock purchase agreement shall grant the Company the right to repurchase Shares
acquired upon exercise of a Stock Purchase Right upon the termination of the purchaser's status as a Service Provider for any reason. Subject to Section 22, the purchase price for Shares repurchased
by the Company pursuant to such repurchase right and the rate at which such repurchase right shall lapse shall be determined by the Administrator in its sole discretion, and shall be set forth in the
Restricted Stock purchase agreement. 

    (c) Other
Provisions. The Restricted Stock purchase agreement shall contain such other terms, provisions and conditions not inconsistent with the Plan as may be
determined by the Administrator in its sole discretion. 

    (d) Rights
as a Shareholder. Once the Stock Purchase Right is exercised, the purchaser shall have rights equivalent to those of a shareholder and shall be a shareholder
when his or her purchase is entered upon the records of the duly authorized transfer agent of the Company. No adjustment shall be made for a dividend or other right for which the record date is prior
to the date the Stock Purchase Right is exercised, except as provided in Section 15 of the Plan. 

    13.
Adjustments upon Changes in Capitalization, Merger or Asset Sale.  

    (a) In
the event that the Administrator determines that any dividend or other distribution (whether in the form of cash, Common Stock, other securities, or other
property), recapitalization, reclassification, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, liquidation, dissolution, or sale,
transfer, exchange or other disposition of all or substantially all of the assets of the Company, or exchange of Common Stock or other securities of the Company, issuance of warrants or other rights
to purchase Common Stock or other securities of the Company, or other similar corporate transaction or event, in the Administrator's sole discretion, affects the Common Stock such that an adjustment
is determined by the Administrator to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended by the Company to be made available under the Plan or
with respect to any Option, Stock Purchase Right or Restricted Stock, then the Administrator shall, in such manner as it may deem equitable, adjust any or all of: 

10

 

     (i) the
number and kind of shares of Common Stock (or other securities or property) with respect to which Options or Stock Purchase Rights may be granted or awarded
(including, but not limited to, adjustments of the limitations in Section 3 on the maximum number and kind of shares which may be issued and adjustments of the maximum number of Shares that may be
purchased by any Holder in any calendar year pursuant to Section 6(c)); 

    (ii) the
number and kind of shares of Common Stock (or other securities or property) subject to outstanding Options, Stock Purchase Rights or Restricted Stock; and 

    (iii) the
grant or exercise price with respect to any Option or Stock Purchase Right. 

    (b) In
the event of any transaction or event described in Section 15(a), the Administrator, in its sole discretion, and on such terms and conditions as it deems
appropriate, either by the terms of the Option, Stock Purchase Right or Restricted Stock or by action taken prior to the occurrence of such transaction or event and either automatically or upon the
Holder's request, is hereby authorized to take any one or more of the following actions whenever the Administrator determines that such action is appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended by the Company to be made available under the Plan or with respect to any Option, Stock Purchase Right or Restricted Stock granted or issued
under the Plan or to facilitate such transaction or event: 

     (i) To
provide for either the purchase of any such Option, Stock Purchase Right or Restricted Stock for an amount of cash equal to the amount that could have been
obtained upon the exercise of such Option or Stock Purchase Right or realization of the Holder's rights had such Option, Stock Purchase Right or Restricted Stock been currently exercisable or payable
or fully vested or the replacement of such Option, Stock Purchase Right or Restricted Stock with other rights or property selected by the Administrator in its sole discretion; 

    (ii) To
provide that such Option or Stock Purchase Right shall be exercisable as to all shares covered thereby, notwithstanding anything to the contrary in the Plan or
the provisions of such Option or Stock Purchase Right; 

    (iii) To
provide that such Option, Stock Purchase Right or Restricted Stock be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or
shall be substituted for by similar options, rights or awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the
number and kind of shares and prices; 

    (iv) To
make adjustments in the number and type of shares of Common Stock (or other securities or property) subject to outstanding Options and Stock Purchase Rights,
and/or in the terms and conditions of (including the grant or exercise price), and the criteria included in, outstanding Options, Stock Purchase Rights or Restricted Stock or Options, Stock Purchase
Rights or Restricted Stock which may be granted in the future; and 

    (v) To
provide that immediately upon the consummation of such event, such Option or Stock Purchase Right shall not be exercisable and shall terminate;  provided, that for a specified period of time prior to
such event, such Option or Stock Purchase Right shall be exercisable as to all Shares covered
thereby, and the restrictions imposed under an Option Agreement or Restricted Stock purchase agreement upon some or all Shares may be terminated and, in the case of Restricted Stock, some or all
shares of such Restricted Stock may cease to be subject to repurchase, notwithstanding anything to the contrary in the Plan or the provisions of such Option, Stock Purchase Right or Restricted Stock
purchase agreement. 

11

 

    (c) Subject
to Section 3, the Administrator may, in its sole discretion, include such further provisions and limitations in any Option, Stock Purchase Right, Restricted
Stock agreement or certificate, as it may deem equitable and in the best interests of the Company. 

    (d) If
the Company undergoes an Acquisition, then any surviving corporation or entity or acquiring corporation or entity, or affiliate of such corporation or entity,
may assume any Options, Stock Purchase Rights or Restricted Stock outstanding under the Plan or may substitute similar stock awards (including an award to acquire the same consideration paid to the
stockholders in the transaction described in this subsection 15(d)) for those outstanding under the Plan. In the event any surviving corporation or entity or acquiring corporation or entity in an
Acquisition, or affiliate of such corporation or entity, does not assume such Options, Stock Purchase Rights or Restricted Stock or does not substitute similar stock awards for those outstanding under
the Plan, then with respect to (i) Options, Stock Purchase Rights or Restricted Stock held by participants in the Plan whose status as a Service Provider has not terminated prior to such event,
the vesting of such Options, Stock Purchase Rights or Restricted Stock (and, if applicable, the time during which such awards may be exercised) shall be accelerated and made fully exercisable and all
restrictions thereon shall lapse at least ten (10) days prior to the closing of the Acquisition (and the Options or Stock Purchase Rights terminated if not exercised prior to the closing of
such Acquisition), and (ii) any other Options or Stock Purchase Rights outstanding under the Plan, such Options or Stock Purchase rights shall be terminated if not exercised prior to the
closing of the Acquisition. 

    (e) The
existence of the Plan, any Option Agreement or Restricted Stock purchase agreement and the Options or Stock Purchase Rights granted hereunder shall not affect
or restrict in any way the right or power of the Company or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company's
capital structure or its business, any
merger or consolidation of the Company, any issue of stock or of options, warrants or rights to purchase stock or of bonds, debentures, preferred or prior preference stocks whose rights are superior
to or affect the Common Stock or the rights thereof or which are convertible into or exchangeable for Common Stock, or the dissolution or liquidation of the Company, or any sale or transfer of all or
any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise. 

    14.
Time of Granting Options and Stock Purchase Rights.  The date of grant of an Option or Stock Purchase Right shall, for all purposes, be the date on which the
Administrator makes the determination granting such Option or Stock Purchase Right, or such other date as is determined by the Administrator. Notice of the determination shall be given to each
Employee or Consultant to whom an Option or Stock Purchase Right is so granted within a reasonable time after the date of such grant. 

    15.
Amendment and Termination of the Plan.  

    (a) Amendment
and Termination. The Board may at any time wholly or partially amend, alter, suspend or terminate the Plan. However, without approval of the Company's
stockholders given within twelve (12) months before or after the action by the Board, no action of the Board may, except as provided in Section 15, increase the limits imposed in
Section 3 on the maximum number of Shares which may be issued under the Plan or extend the term of the Plan under Section 7. 

    (b) Stockholder
Approval. The Board shall obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws. 

    (c) Effect
of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Holder, unless mutually agreed
otherwise between the Holder and the Administrator, which agreement must be in writing and signed by the Holder and the Company. Termination of the Plan shall not affect the Administrator's ability to 

12

 

exercise the powers granted to it hereunder with respect to Options, Stock Purchase Rights or Restricted Stock granted or awarded under the Plan prior to the date of such termination. 

    16.
Stockholder Approval.  The Plan will be submitted for the approval of the Company's stockholders within twelve (12) months after the date of the Board's initial
adoption of the Plan. Options, Stock Purchase Rights or Restricted Stock may be granted or awarded prior to such stockholder approval, provided that such Options, Stock Purchase Rights and Restricted
Stock shall not be exercisable, shall not vest and the restrictions thereon shall not lapse prior to the time when the Plan is approved by the
stockholders, and provided further that if such approval has not been obtained at the end of said twelve-month period, all Options, Stock Purchase Rights and Restricted Stock previously granted or
awarded under the Plan shall thereupon be canceled and become null and void. 

    17.
Inability to Obtain Authority.  The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the
Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained. 

    18.
Reservation of Shares.  The Company, during the term of this Plan, shall at all times reserve and keep available such number of Shares as shall be sufficient to
satisfy the requirements of the Plan. 

    19.
Information to Holders and Purchasers.  Prior to the Public Trading Date and to the extent required by Section 260.140.46 of Title 10 of the
California Code of Regulations, the Company shall provide to each Holder and to each individual who acquires Shares pursuant to the Plan, not less frequently than annually during the period such
Holder or purchaser has one or more Options or Stock Purchase Rights outstanding, and, in the case of an individual who acquires Shares pursuant to the Plan, during the period such individual owns
such Shares, copies of annual financial statements. Notwithstanding the preceding sentence, the Company shall not be required to provide such statements to key employees whose duties in connection
with the Company assure their access to equivalent information. 

    20.
Repurchase Provisions.  The Administrator in its sole discretion may provide that the Company may repurchase Shares acquired upon exercise of an Option or Stock
Purchase Right upon the occurrence of certain specified events, including, without limitation, a Holder's termination as a Service Provider, divorce, bankruptcy or insolvency;  provided, however, that
any such repurchase right shall be set forth in the applicable Option Agreement or Restricted Stock purchase agreement or in
another agreement referred to in such agreement and, provided further, that to the extent required by Section 260.140.41 and Section 260.140.42 of Title 10 of the California Code of
Regulations, any such repurchase right set forth in an Option or Stock Purchase Right granted prior to the Public Trading Date to a person who is not an Officer, Director or Consultant shall be upon
the following terms: (i) if the repurchase option gives the Company the right to repurchase the shares upon termination as a Service Provider at not less than the Fair Market Value of the
shares to be purchased on the date of termination of status as a Service Provider, then (A) the right to repurchase shall be exercised for cash or cancellation of purchase money indebtedness
for the shares within ninety (90) days of termination of status as a Service Provider (or in the case of shares issued upon exercise of Options or Stock Purchase Rights after such date of termination,
within ninety (90) days after the date of the exercise) or such longer period as may be agreed to by the Administrator and the Plan participant and (B) the right terminates when the shares
become publicly traded; and (ii) if the repurchase option gives the Company the right to repurchase the Shares upon termination as a Service Provider at the original purchase price for such
Shares, then (A) the right to repurchase at the original purchase price shall lapse at the rate of at least twenty percent (20%) of the shares per year over five (5) years from the date the
Option or Stock Purchase Right is granted (without respect to the date the Option or Stock Purchase Right was exercised or became exercisable) and (B) the right to repurchase shall be exercised 

13

 

for cash or cancellation of purchase money indebtedness for the shares within ninety (90) days of termination of status as a Service Provider (or, in the case of shares issued upon exercise of Options
or Stock Purchase Rights, after such date of termination, within ninety (90) days after the date of the exercise) or such longer period as may be agreed to by the Company and the Plan participant. 

    21.
Investment Intent.  The Company may require a Plan participant, as a condition of exercising or acquiring stock under any Option or Stock Purchase Right,
(i) to give written assurances satisfactory to the Company as to the participant's knowledge and experience in financial and business matters and/or to employ a purchaser representative
reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters and that he or she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Option or Stock Purchase Right; and (ii) to give written assurances satisfactory to the Company stating that the participant is acquiring
the stock subject to the Option or Stock Purchase Right for the participant's own account and not with any present intention of selling or otherwise distributing the stock. The foregoing requirements,
and any assurances given pursuant to such requirements, shall be inoperative if (A) the issuance of the shares upon the exercise or acquisition of stock under the applicable Option or Stock
Purchase Right has been registered under a then currently effective registration statement under the Securities Act or (B) as to any particular requirement, a determination is made by counsel
for the Company that such requirement need not be met in the circumstances under the then applicable securities laws. The Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of
the stock. 

    22.
Governing Law.  The validity and enforceability of this Plan shall be governed by and construed in accordance with the laws of the State of Delaware without regard
to otherwise governing principles of conflicts of law. 

*
* * * * * * 

    I
hereby certify that the Plan was duly adopted by the Board of Directors of PayPal, Inc. on                    
    , 2001. 

    Executed
at Palo Alto, California on this      day of                    , 2001. 

By: 

Name: 

Title: 

*
* * * * * * 

    I
hereby certify that the foregoing Plan was approved by the stockholders of PayPal, Inc. on                    
    , 200    . 

    Executed
at Palo Alto, California on this      day of                    ,
200    . 

	 	 	
 Secretary

14

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PAYPAL, INC. 2001 EQUITY INCENTIVE PLAN

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PAYPAL, INC. 2001 EQUITY INCENTIVE PLANPrepared by MERRILL CORPORATION

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EXHIBIT 10.4  

 
 

X.COM CORPORATION
  
    1999 STOCK PLAN    
  

    1.  Purposes of the Plan.  The purposes of this 1999 Stock Plan are to attract and retain the best
available personnel for positions of substantial responsibility, to provide additional incentive to Employees and Consultants of the Company and its Subsidiaries and to promote the success of the
Company's business. Options granted under the Plan may be Incentive Stock Options (as defined under Section 422 of the Code) or Nonstatutory Stock Options, as determined by the Administrator at
the time of grant of an Option and subject to the applicable provisions of Section 422 of the Code, as amended, and the regulations promulgated thereunder. Stock Purchase Rights may also be
granted under the Plan. 

    2.  Definitions.  As used herein, the following definitions shall apply: 

    (a)  "Administrator"  means the Board or its Committee
appointed pursuant to Section 4 of the Plan. 

    (b)  "Affiliate"  means an entity other than a Subsidiary
in which the Company owns an equity interest or which, together with the Company, is under common control of a third person or entity. 

    (c)  "Applicable Laws"  means the legal requirements
relating to the administration of stock option plans under applicable U.S. state corporate laws, U.S. federal and applicable state securities laws, the Code, any Stock Exchange rules or regulations
and the applicable laws of any other country or jurisdiction where Options or Stock Purchase Rights are granted under the Plan, as such laws, rules, regulations and requirements shall be in place from
time to time. 

    (d)  "Board"  means the Board of Directors of the
Company. 

    (e)  "Change of Control"  means a sale of all or
substantially all of the Company's assets, or any merger or consolidation of the Company with or into another corporation; other than a merger or consolidation in which the holders of more than 50% of
the shares of capital stock of the Company outstanding immediately prior to such transaction continue to hold (either by the voting securities remaining outstanding or by their being converted into
voting securities of the surviving entity) more than 50% of the total voting power represented by the voting securities of the Company, or such surviving entity, outstanding immediately after such
transaction. 

    (f)  "Code"  means the Internal Revenue Code of 1986, as
amended. 

    (g)  "Committee"  means one or more committees or
subcommittees of the Board appointed by the Board to administer the Plan in accordance with Section 4 below. 

    (h)  "Common Stock"  means the Common Stock of the
Company. 

    (i)  "Company"  means X.com Corporation, a Delaware
corporation. 

    (j)  "Consultant"  means any person, including an
advisor, who renders services to the Company, or any Parent, Subsidiary or Affiliate, and is compensated for such services, and any director of the Company whether compensated for such services or
not. 

    (k)  "Continuous Service Status"  means the absence of
any interruption or termination of service as an Employee or Consultant to the Company or a Parent, Subsidiary or Affiliate. Continuous Service Status shall not be considered interrupted in the case
of: (i) sick leave; (ii) military leave; (iii) any other leave of absence approved by the Administrator, provided that such leave is for a period of not more than 90 days,
unless reemployment upon the expiration of such leave is guaranteed by contract or statute, or unless provided otherwise pursuant to Company policy adopted from time to time; or (iv) in the
case of transfers between locations of the 

 

Company or between the Company, its Parents, Subsidiaries or Affiliates or their respective successors. Unless otherwise determined by the Administrator, a change in status from an Employee to a
Consultant or from a Consultant to an Employee will not constitute an interruption of Continuous Service Status. 

    (l)  "Corporate Transaction"  means a sale of all or
substantially all of the Company's assets, or a merger, consolidation or other capital reorganization of the Company with or into another corporation. 

    (m)  "Director"  means a member of the Board. 

    (n)  "Employee"  means any person, including officers and
Directors, employed by the Company or any Parent, Subsidiary or Affiliate of the Company. The payment by the Company of a director's fee to a Director shall not be sufficient to constitute
"employment" of such Director by the Company. 

    (o)  "Exchange Act"  means the Securities Exchange Act of
1934, as amended. 

    (p)  "Fair Market Value"  means, as of any date, the fair
market value of Common Stock determined as follows: 

     (i) If
the Common Stock is listed on any established stock exchange or a national market system including without limitation the National Market of the National
Association of Securities Dealers, Inc. Automated Quotation ("Nasdaq") System, its Fair Market Value shall be the closing sales price for such
stock (or the closing bid, if no sales were reported), as quoted on such system or exchange on the date of determination, or if no trading occurred on the date of determination, on the last market
trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; 

    (ii) If
the Common Stock is quoted on the Nasdaq System (but not on the National Market thereof) or regularly quoted by a recognized securities dealer but selling
prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Common Stock for the last market trading day prior to the time of determination, as
reported in The Wall Street Journal or such other source as the Administrator deems reliable; or 

    (iii) In
the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator. 

    (q)  "Incentive Stock Option"  means an Option intended
to qualify as an incentive stock option within the meaning of Section 422 of the Code, as designated in the applicable Option Agreement. 

    (r)  "Listed Security"  means any security of the Company
that is listed or approved for listing on a national securities exchange or designated or approved for designation as a national market system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc. 

    (s)  "Nonstatutory Stock Option"  means an Option not
intended to qualify as an Incentive Stock Option, as designated in the applicable Option Agreement. 

    (t)  "Option"  means a stock option granted pursuant to
the Plan. 

    (u)  "Option Agreement"  means a written document, the
form(s) of which shall be approved from time to time by the Administrator, reflecting the terms of an Option granted under the Plan 

2

 

and includes any documents attached to or incorporated into such Option Agreement, including, but not limited to, a notice of stock option grant and a form of exercise notice. 

    (v)  "Option Exchange Program"  means a program approved
by the Administrator whereby outstanding Options are exchanged for Options with a lower exercise price. 

    (w)  "Optioned Stock"  means the Common Stock subject to
an Option or a Stock Purchase Right. 

    (x)  "Optionee"  means an Employee or Consultant who
receives an Option. 

    (y)  "Parent"  means a "parent corporation," whether now
or hereafter existing, as defined in Section 424(e) of the Code, or any successor provision. 

    (z)  "Participant"  means any holder of one or more
Options or Stock Purchase Rights, or of the Shares issuable or issued upon exercise of such awards, under the Plan. 

    (aa)  "Plan"  means this 1999 Stock Plan. 

    (bb)  "Reporting Person"  means an officer, Director, or
greater than 10% stockholder of the Company within the meaning of Rule 16a-2 under the Exchange Act, who is required to file reports pursuant to Rule 16a-3 under
the Exchange Act. 

    (cc)  "Restricted Stock"  means shares of Common Stock
acquired pursuant to a grant of a Stock Purchase Right under Section 10 below. 

    (dd)  "Restricted Stock Purchase Agreement"  means a
written document, the form(s) of which shall be approved from time to time by the Administrator, reflecting the terms of a Stock Purchase Right granted under the Plan and includes any documents
attached to such agreement. 

    (ee)  "Rule 16b-3"  means
Rule 16b-3 promulgated under the Exchange Act, as the same may be amended from time to time, or any successor provision. 

    (ff)  "Share"  means a share of the Common Stock, as
adjusted in accordance with Section 12 of the Plan. 

    (gg)  "Stock Exchange"  means any stock exchange or
consolidated stock price reporting system on which prices for the Common Stock are quoted at any given time. 

    (hh)  "Stock Purchase Right"  means the right to purchase
Common Stock pursuant to Section 10 below. 

    (ii)  "Subsidiary"  means a "subsidiary corporation,"
whether now or hereafter existing, as defined in Section 424(f) of the Code, or any successor provision. 

    (jj)  "Ten Percent Holder"  means a person who owns stock
representing more than 10% of the voting power of all classes of stock of the Company or any Parent or Subsidiary. 

    3.  Stock Subject to the Plan.  Subject to the provisions of Section 13 of the Plan, the maximum
aggregate number of Shares that may be sold under the Plan is 2,000,000 Shares of Common Stock. The Shares may be authorized, but unissued, or reacquired Common Stock. If an Option expires or becomes
unexercisable for any reason without having been exercised in full, or is surrendered pursuant to an Option Exchange Program, the unpurchased Shares that were subject thereto shall, unless the Plan
shall have been terminated, become available for future grant under the Plan. In addition, any Shares of Common Stock that are retained by the Company upon exercise of an Option or Stock Purchase
Right in order to satisfy the exercise or purchase price for such Option or Stock Purchase Right or any withholding taxes due with respect to such exercise shall be treated as not issued and shall
continue to be available under the Plan. Shares issued under the Plan and later repurchased by the 

3

 

Company pursuant to any repurchase right that the Company may have shall not be available for future grant under the Plan. 

    4.  Administration of the Plan.  

    (a)  General.  The Plan shall be administered by the Board or a Committee, or a
combination thereof, as determined by the Board. The Plan may be administered by different administrative bodies with respect to different classes of Optionees and, if permitted by the Applicable
Laws, the Board may authorize one or more officers to grant Options or Stock Purchase Rights under the Plan. 

    (b)  Administration with Respect to Reporting Persons.  With respect to Options
granted to Reporting Persons and Named Executives, the Plan may (but need not) be administered so as to permit such Options to qualify for the exemption set forth in Rule 16b-3 and
to qualify as performance-based compensation under Section 162(m) of the Code. 

    (c)  Committee Composition.  If a Committee has been appointed pursuant to this
Section 4, such Committee shall continue to serve in its designated capacity until otherwise directed by the Board. From time to time the Board may increase the size of any Committee and
appoint additional members thereof, remove members (with or without cause) and appoint new members in substitution therefor, fill vacancies (however caused) and remove all members of a Committee and
thereafter directly administer the Plan, all to the extent permitted by the Applicable Laws and, in the case of a Committee administering the Plan pursuant to Section 4(b) above, to the extent
permitted or required by Rule 16b-3 and Section 162(m) of the Code. 

    (d)  Powers of the Administrator.  Subject to the provisions of the Plan and in
the case of a Committee, the specific duties delegated by the Board to such Committee, and subject to the approval of any relevant authorities, including the approval, if required, of any Stock
Exchange, the Administrator shall have the authority, in its discretion: 

     (i) to
determine the Fair Market Value of the Common Stock, in accordance with Section 2 (p) of the Plan; 

    (ii) to
select the Consultants and Employees to whom Options and Stock Purchase Rights or any combination thereof may from time to time be granted; 

    (iii) to
determine whether and to what extent Options and Stock Purchase Rights or any combination thereof are granted; 

    (iv) to
determine the number of Shares of Common Stock to be covered by each such award granted hereunder; 

    (v) to
approve forms of agreement for use under the Plan; 

    (vi) to
determine the terms and conditions, not inconsistent with the terms of the Plan, of any award granted hereunder, which terms and conditions include but are not
limited to the exercise or purchase price, the time or times when Options or Stock Purchase Rights may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of
forfeiture restrictions, and any restriction or limitation regarding any Option, Optioned Stock, Stock Purchase Right or Restricted Stock, based in each case on such factors as the Administrator, in
its sole discretion, shall determine; 

   (vii) to
determine whether and under what circumstances an Option may be settled in cash under Section 9(f) instead of Common Stock; 

   (viii) to
reduce the exercise price of any Option to the then current Fair Market Value if the Fair Market Value of the Common Stock covered by such Option shall have
declined since 

4

 

the date the Option was granted and to make any other amendments or adjustments to any Option that the Administrator determines, in its discretion and under the authority granted to it under the Plan,
to be necessary or advisable, provided however that no amendment or adjustment to an Option that would materially and adversely affect the rights of any Optionee shall be made without the prior
written consent of the Optionee; 

    (ix) to
determine the terms and restrictions applicable to Stock Purchase Rights and the Restricted Stock purchased by exercising such Stock Purchase Rights; 

    (x) to
initiate an Option Exchange Program; 

    (xi) to
construe and interpret the terms of the Plan and awards granted under the Plan; and 

   (xii) in
order to fulfill the purposes of the Plan and without amending the Plan, to modify grants of Options or Stock Purchase Rights to Participants who are foreign
nationals or employed outside of the United States in order to recognize differences in local law, tax policies or customs. 

    (e)  Effect of Administrator's Decision.  All decisions, determinations and
interpretations of the Administrator shall be final and binding on all Participants. 

    5.  Eligibility.  

    (a)  Recipients of Grants.  Nonstatutory Stock Options and Stock Purchase Rights
may be granted to Employees and Consultants. Incentive Stock Options may be granted only to Employees; provided however that Employees of Affiliates shall not be eligible to receive Incentive Stock
Options. An Employee or Consultant who has been granted an Option or Stock Purchase Right may, if he or she is otherwise eligible, be granted additional Options or Stock Purchase Rights. 

    (b)  Type of Option.  Each Option shall be designated in the Option Agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designations, to the extent that the aggregate Fair Market Value of Shares with respect to which Options
designated as Incentive Stock Options are exercisable for the first time by any Optionee during any calendar year (under all plans of the Company or any Parent or Subsidiary) exceeds $100,000, such
excess Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 5(b), Incentive Stock Options shall be taken into account in the order in which they were granted,
and the Fair Market Value of the Shares subject to an Incentive Stock Option shall be determined as of the date of grant of such Option. 

    (c)  At-Will Relationship.  The Plan shall not confer upon any
Participant any right with respect to continuation of employment or consulting relationship with the Company, nor shall it interfere in any way with such holder's right or the Company's right to
terminate his or her employment or consulting relationship at any time, with or without cause. 

    6.  Term of Plan.  The Plan shall become effective upon its adoption by the Board. It shall continue in
effect for a term of ten years unless sooner terminated under Section 15 of the Plan. 

    7.  Term of Option.  The term of each Option shall be the term stated in the Option Agreement; provided,
however, that the term shall be no more than ten years from the date of grant thereof or such shorter term as may be provided in the Option Agreement. However, in the case of an Incentive Stock Option
granted to an Optionee who, at the time the Option is granted, is a Ten Percent Holder, the term of such Option shall be five years from the date of grant thereof or such shorter term as may be
provided in the Option Agreement. 

5

 

    8.  Option Exercise Price and Consideration.  

    (a) The
per Share exercise price for the Shares to be issued pursuant to exercise of an Option shall be such price as is determined by the Administrator and set forth
in the Option Agreement, but shall be subject to the following: 

     (i) In
the case of an Incentive Stock Option that is: 

    (A) granted
to an Employee who at the time of grant is a Ten Percent Holder, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share
on the date of grant. 

    (B) granted
to any other Employee, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant. 

    (ii) In
the case of a Nonstatutory Stock Option that is: 

    (A) granted
prior to the date, if any, on which the Common Stock becomes a Listed Security to a person who at the time of grant is a Ten Percent Holder, the per Share
exercise price shall be no less than 110% of the Fair Market Value per Share on the date of the grant if required by the Applicable Laws and, if not so required, shall be such price as is determined
by the Administrator. 

    (B) granted
prior to the date, if any, on which the Common Stock becomes a Listed Security to any other eligible person, the per Share exercise price shall be no less
than 85% of the Fair Market Value
per Share on the date of grant if required by the Applicable Laws and, if not so required, shall be such price as is determined by the Administrator. 

    (iii) Notwithstanding
the foregoing, Options may be granted with a per Share exercise price other than as required above pursuant to a merger or other corporate
transaction. 

    (b) The
consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator (and,
in the case of an Incentive Stock Option, shall be determined at the time of grant) and may consist entirely of (1) cash; (2) check; (3) delivery of Optionee's promissory note
with such recourse, interest, security and redemption provisions as the Administrator determines to be appropriate (subject to the provisions of Section 153 of the Delaware General Corporation
Law); (4) cancellation of indebtedness; (5) other Shares that (x) in the case of Shares acquired upon exercise of an Option, either have been owned by the Optionee for more than
six months on the date of surrender or such other period as may be required to avoid a charge to the Company's earnings or were not acquired, directly or indirectly, from the Company, and
(y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option shall be exercised; (6) authorization for the Company to
retain from the total number of Shares as to which the Option is exercised that number of Shares having a Fair Market Value on the date of exercise equal to the exercise price for the total number of
Shares as to which the Option is exercised; (7) delivery of a properly executed exercise notice together with such other documentation as the Administrator and the broker, if applicable, shall
require to effect exercise of the Option and prompt delivery to the Company of the sale or loan proceeds required to pay the exercise price and any applicable withholding taxes; (8) any
combination of the foregoing methods of payment; or (9) such other consideration and method of payment for the issuance of Shares to the extent permitted under the Applicable Laws. In making
its determination as to the type of consideration to accept, the Administrator shall consider if acceptance of such consideration may be reasonably expected to benefit the Company, and the
Administrator may refuse to accept a particular form of consideration at the time of any Option exercise if, in its sole discretion, acceptance of such form of consideration is not in the best
interests of the Company at such time. 

6

 

    9.  Exercise of Option.  

    (a)  Procedure for Exercise; Rights as a Stockholder.  Any Option granted
hereunder shall be exercisable at such times and under such conditions as determined by the Administrator, consistent with the term of the Plan and reflected in the Option Agreement, including vesting
requirements and/or performance criteria with respect to the Company and/or the Optionee; provided however, that, if required by the Applicable Laws, any Option granted prior to the date, if any, upon
which the Common Stock becomes a Listed Security shall become exercisable at the rate of at least 20% per year over five years from the date the Option is granted. In the event that any of the Shares
issued upon exercise of an Option (which exercise occurs prior to the date, if any, upon which the Common Stock becomes a Listed Security) should be subject to a right of repurchase in the Company's
favor, such repurchase right shall,
if required by the Applicable Laws, lapse at the rate of at least 20% per year over five years from the date the Option is granted. Notwithstanding the above, in the case of an Option granted to an
officer, Director or Consultant of the Company or any Parent, Subsidiary or Affiliate of the Company, the Option may become fully exercisable, or a repurchase right, if any, in favor of the Company
shall lapse, at any time or during any period established by the Administrator. The Administrator shall have the discretion to determine whether and to what extent the vesting of Options shall cease
or continue during any unpaid leave of absence; provided however that in the absence of such determination, vesting of Options shall cease during any such leave. 

    An
Option may not be exercised for a fraction of a Share. 

    An
Option shall be deemed exercised when written notice of such exercise has been given to the Company in accordance with the terms of the Option by the person entitled to exercise
the Option and the Company has received full payment for the Shares with respect to which the Option is exercised. Full payment may, as authorized by the Administrator, consist of any consideration
and method of payment allowable under Section 8(b) of the Plan. Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of
the Company) of the stock certificate evidencing such Shares, no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Optioned Stock, not
withstanding the exercise of the Option. The Company shall issue (or cause to be issued) such stock certificate promptly upon exercise of the Option. No adjustment will be made for a dividend or other
right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 12 of the Plan. 

    Exercise
of an Option in any manner shall result in a decrease in the number of Shares that thereafter may be available, both for purposes of the Plan and for sale under the Option,
by the number of Shares as to which the Option is exercised. 

    (b)  Termination of Employment or Consulting Relationship.  In the event of
termination of an Optionee's Continuous Service Status with the Company, such Optionee may, but only within three months (or such other period of time, not less than 30 days, as is determined
by the Administrator, with such determination in the case of an Incentive Stock Option being made at the time of grant of the Option) after the date of such termination (but in no event later than the
expiration date of the term of such Option as set forth in the Option Agreement), exercise his or her Option to the extent that the Optionee was entitled to exercise it at the date of such
termination. To the extent that the Optionee was not entitled to exercise the Option at the date of such termination, or if the Optionee does not exercise the Option to the extent so entitled within
the time specified above, the Option shall terminate and the Optioned Stock underlying the unexercised portion of the Option shall revert to the Plan. Unless otherwise determined by the Administrator,
no termination shall be deemed to occur and this Section 9(b) shall not apply if (i) the Optionee is a Consultant who becomes an Employee, or (ii) the Optionee is an Employee who
becomes a Consultant. 

7

 

    (c)  Disability of Optionee.  

     (i) Notwithstanding
Section 9(b) above, in the event of termination of an Optionee's Continuous Service Status as a result of his or her total and permanent
disability (within the meaning of Section 22(e)(3) of the Code), such Optionee may, but only within twelve months (or such other period of time as is determined by the Administrator, with such
determination in the case of an Incentive Stock Option made at the time of grant of the Option) from the date of such termination (but in no event later than the expiration date of the term of such
Option as set forth in the Option Agreement), exercise the Option to the extent otherwise entitled to exercise it at the date of such termination. To the extent that the Optionee was not entitled to
exercise the Option at the date of termination, or if the Optionee does not exercise such Option to the extent so entitled within the time specified above, the Option shall terminate and the Optioned
Stock underlying the unexercised portion of the Option shall revert to the Plan. 

    (ii) In
the event of termination of an Optionee's Continuous Service Status as a result of a disability which does not fall within the meaning of total and permanent
disability (as set forth in Section 22(e)(3) of the Code), such Optionee may, but only within twelve months (or such other period of time as is determined by the Administrator, with such
determination in the case of an Incentive Stock Option made at the time of grant of the Option) from the date of such termination (but in no event later than the expiration date of the term of such
Option as set forth in the Option Agreement), exercise the Option to the extent otherwise entitled to exercise it at the date of such termination. However, to the extent that such Optionee fails to
exercise an Option that is an Incentive Stock Option (within the meaning of Section 422 of the Code) within three months of the date of such termination, the Option will not qualify for
Incentive Stock Option treatment under the Code. To the extent that the Optionee was not entitled to exercise the Option at the date of termination, or if the Optionee does not exercise such Option to
the extent so entitled within the time period specified above, the Option shall terminate and the Optioned Stock underlying the unexercised portion of the Option shall revert to the Plan. 

    (d)  Death of Optionee.  In the event of the death of an Optionee during the
period of Continuous Service Status since the date of grant of the Option, or within 30 days following termination of the Optionee's Continuous Service Status, the Option may be exercised, at
any time within twelve months following the date of death (but in no event later than the expiration date of the term of such Option as set forth in the Option Agreement), by such Optionee's estate or
by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent of the right to exercise that had accrued at the date of death or, if earlier, the date of
termination of the Optionee's Continuous Service Status. To the extent that the Optionee was not entitled to exercise the Option at the date of death or termination, as the case may be, or if the
Optionee does not exercise such Option to the extent so entitled within the time specified above, the Option shall terminate and the Optioned Stock underlying the unexercised portion of the Option
shall revert to the Plan. 

    (e)  Extension of Exercise Period.  The Administrator shall have full power and
authority to extend the period of time for which an Option is to remain exercisable following termination of an Optionee's Continuous Status as an Employee or Consultant from the periods set forth in
Sections 9(b), 9(c) and 9(d) above or in the Option Agreement to such greater time as the Board shall deem appropriate,
provided, that in no event shall such Option be exercisable later than the date of expiration of the term of such Option as set forth in the Option Agreement. 

    (f)  Buy-Out Provisions.  The Administrator may at any time offer to
buy out for a payment in cash or Shares an Option previously granted under the Plan based on such terms and conditions as the Administrator shall establish and communicate to the Optionee at the time
such offer is made. 

8

 

    10.  Stock Purchase Rights.  

    (a)  Rights to Purchase.  Stock Purchase Rights may be issued either alone, in
addition to, or in tandem with other awards granted under the Plan and/or cash awards made outside of the Plan. After the Administrator determines that it will offer Stock Purchase Rights under the
Plan, it shall advise the offeree in writing of the terms, conditions and restrictions related to the offer, including the number of Shares that such person shall be entitled to purchase, the price to
be paid, and the time within which such person must accept such offer, which shall in no event exceed 30 days from the date upon which the Administrator made the determination to grant the
Stock Purchase Right. If required by the Applicable Laws, the purchase price of Shares subject to Stock Purchase Rights shall not be less than 85% of the Fair Market Value of the Shares as of the date
of the offer, or, in the case of a person owning stock representing more than 10% of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the price shall
not be less than 100% of the Fair Market Value of the Shares as of the date of the offer. If the Applicable Laws do not impose restrictions on the purchase price, the purchase price of Shares subject
to Stock Purchase Rights shall be as determined by the Administrator. The offer to purchase Shares subject to Stock Purchase Rights shall be accepted by execution of a Restricted Stock Purchase
Agreement in the form determined by the Administrator. 

    (b)  Repurchase Option.  Unless the Administrator determines otherwise, the
Restricted Stock Purchase Agreement shall grant the Company a repurchase option exercisable upon the voluntary or involuntary termination of the purchaser's employment with the Company for any reason
(including death or disability). The purchase price for Shares repurchased pursuant to the Restricted Stock Purchase Agreement shall be the original purchase price paid by the purchaser and may be
paid by cancellation of any indebtedness of the purchaser to the Company. The repurchase option shall lapse at such rate as the Administrator may determine; provided, however, that with respect to a
purchaser who is not an officer, Director or Consultant of the Company or of any Parent or Subsidiary of the Company, it shall lapse at a minimum rate of 20% per year if required by the Applicable
Laws. 

    (c)  Other Provisions.  The Restricted Stock Purchase Agreement shall contain
such other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Administrator in
its sole discretion. In addition, the provisions of Restricted Stock Purchase Agreements need not be the same with respect to each purchaser. 

    (d)  Rights as a Stockholder.  Once the Stock Purchase Right is exercised, the
purchaser shall have the rights equivalent to those of a stockholder, and shall be a stockholder when his or her purchase is entered upon the records of the duly authorized transfer agent of the
Company. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Stock Purchase Right is exercised, except as provided in Section 12 of the
Plan. 

    11.  Taxes.  

    (a) As
a condition of the exercise of an Option or Stock Purchase Right granted under the Plan, the Participant (or in the case of the Participant's death, the person
exercising the Option) shall make such arrangements as the Administrator may require for the satisfaction of any applicable federal, state, local or foreign withholding tax obligations that may arise
in connection with the exercise of an Option or Stock Purchase Right and the issuance of Shares. The Company shall not be required to issue any Shares under the Plan until such obligations are
satisfied. 

    (b) In
the case of an Employee and in the absence of any other arrangement, the Employee shall be deemed to have directed the Company to withhold or collect from his or
her compensation an amount sufficient to satisfy such tax obligations from the next payroll payment otherwise payable after the date of an exercise of the Option. 

9

 

    (c) This Section 11(c) shall apply only after the date, if any, upon which the Common Stock becomes a Listed Security. In the case of a Participant other than an
Employee (or in the case of an Employee where the next payroll payment is not sufficient to satisfy such tax obligations, with respect to any remaining tax obligations), in the absence of any other
arrangement and to the extent permitted under the Applicable Laws, the Participant shall be deemed to have elected to have the Company withhold from the Shares to be issued upon exercise of the Option
or Stock Purchase Right that number of Shares having a Fair Market Value determined as of the applicable Tax Date (as defined below) equal to the amount required to be withheld. For purposes of this
Section 11, the Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined under the Applicable Laws (the
"Tax Date"). 

    (d) If
permitted by the Administrator, in its discretion, a Participant may satisfy his or her tax withholding obligations upon exercise of an Option or Stock Purchase
Right by surrendering to the Company Shares that (i) in the case of Shares previously acquired from the Company, have been owned
by the Participant for more than six months on the date of surrender, and (ii) have a Fair Market Value determined as of the applicable Tax Date equal to the amount required to be withheld. 

    (e) Any
election or deemed election by a Participant to have Shares withheld to satisfy tax withholding obligations under Section 11(c) or (d) above shall
be irrevocable as to the particular Shares as to which the election is made and shall be subject to the consent or disapproval of the Administrator. Any election by a Participant under
Section 11(d) above must be made on or prior to the applicable Tax Date. 

    (f)  In
the event an election to have Shares withheld is made by a Participant and the Tax Date is deferred under Section 83 of the Code because no election is
filed under Section 83(b) of the Code, the Participant shall receive the full number of Shares with respect to which the Option or Stock Purchase Right is exercised but such Participant shall
be unconditionally obligated to tender back to the Company the proper number of Shares on the Tax Date. 

    12.  Non-Transferability of Options and Stock Purchase Rights.  Options and Stock Purchase
Rights may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent or distribution; provided however that, after the date,
if any, upon which the Common Stock becomes a Listed Security, the Administrator may in its discretion grant transferable Nonstatutory Stock Options pursuant to Option Agreements specifying
(i) the manner in which such Nonstatutory Stock Options are transferable and (ii) that any such transfer shall be subject to the Applicable Laws. The designation of a beneficiary by an
Optionee will not constitute a transfer. An Option or Stock Purchase Right may be exercised, during the lifetime of the holder of the Option or Stock Purchase Right, only by such holder or a
transferee permitted by this Section 12. 

    13.  Adjustments Upon Changes in Capitalization, Corporate Transactions and Certain Other Transactions.

    (a)  Changes in Capitalization.  Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock covered by each outstanding Option or Stock Purchase Right, and the number of shares of Common Stock that have been authorized for
issuance under the Plan but as to which no Options or Stock Purchase Rights have yet been granted or that have been returned to the Plan upon cancellation or expiration of an Option or Stock Purchase
Right, as well as the price per Share of Common Stock covered by each such outstanding Option or Stock Purchase Right, shall be proportionately adjusted for any increase or decrease in the number of
issued Shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination, recapitalization or reclassification of the Common Stock (including any change in the
number of Shares of Common Stock effected in connection with a change of domicile of the Company), or any other increase or decrease in the number of issued shares of Common Stock effected without
receipt of consideration by the Company; provided, 

10

 

however, that conversion of any convertible securities of the Company shall not be deemed to have been "effected without receipt of consideration." Such adjustment shall be made by the Administrator,
whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible
into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an Option or Stock Purchase
Right. 

    (b)  Dissolution or Liquidation.  In the event of the dissolution or liquidation
of the Company, each outstanding Option or Stock Purchase Right shall terminate immediately prior to the consummation of such action, unless otherwise provided by the Administrator. 

    (c)  Corporate Transactions; Change of Control.  In the event of a Corporate
Transaction, each outstanding Option and Stock Purchase Right shall be assumed or an equivalent option or right shall be substituted by the successor corporation or a Parent or Subsidiary of such
successor corporation, unless such successor corporation does not agree to assume the outstanding Options or Stock Purchase Rights or to substitute equivalent options or rights, in which case such
Options or Stock Purchase Rights shall terminate upon the consummation of the transaction; provided however that in the event of a Change of Control, the Administrator shall, as to outstanding
Options, either (i) provide that such Options shall be assumed by the successor corporation or a Parent or Subsidiary of the successor corporation (such entity, the
"Successor Corporation") or that the Successor Corporation shall substitute with respect to such Options equivalent options; (ii) provide upon
notice to Optionees that all Options, to the extent then exercisable or to be exercisable as a result of the Change of Control, must be exercised on or before a specified date (which date shall be at
least five (5) days from the date of the notice), after which the Options shall terminate; or (iii) terminate each Option in its entirety in exchange for a payment of cash, securities
and/or other property equal to the excess of the Fair Market Value of the portion of the Optioned Stock that is vested and exercisable immediately prior to the consummation of the transaction over the
aggregate exercise price thereof. 

    For
purposes of this Section 13(c), an Option or a Stock Purchase Right shall be considered assumed, without limitation, if, at the time of issuance of the stock or other
consideration upon a Corporate Transaction or a Change of Control, as the case may be, each holder of an Option or Stock Purchase Right would be entitled to receive upon exercise of the Option or
Stock Purchase Right the same number and kind of shares of stock or the same amount of property, cash or securities as such holder would have been entitled to receive upon the occurrence of the
transaction if the holder had been, immediately prior to such transaction, the holder of the number of Shares of Common Stock covered by the Option or the Stock Purchase Right at such time (after
giving effect to any adjustments in the number of Shares covered by the Option or Stock Purchase Right as provided for in this Section 13); provided however that if such consideration received
in the transaction is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be
received upon exercise of the Option or Stock Purchase Right to be solely common stock of the successor corporation or its Parent equal to the Fair Market Value of the per Share consideration received
by holders of Common Stock in the transaction. 

    (d)  Certain Distributions.  In the event of any distribution to the Company's
stockholders of securities of any other entity or other assets (other than dividends payable in cash or stock of the Company) without receipt of consideration by the Company, the Administrator may, in
its discretion, appropriately adjust the price per Share of Common Stock covered by each outstanding Option or Stock Purchase Right to reflect the effect of such distribution. 

    14.  Time of Granting Options and Stock Purchase Rights.  The date of grant of an Option or Stock
Purchase Right shall, for all purposes, be the date on which the Administrator makes the 

11

 

determination granting such Option or Stock Purchase Right, or such other date as is determined by the Administrator; provided, however, that in the case of any Incentive Stock Option, the grant date
shall be the later of the date on which the Administrator makes the determination granting such Incentive Stock Option or the date of commencement of the Optionee's employment relationship with the
Company. Notice of the determination shall be given to each Employee or Consultant to whom an Option or Stock Purchase Right is so granted within a reasonable time after the date of such grant. 

    15.  Amendment and Termination of the Plan.  

    (a)  Authority to Amend or Terminate.  The Board may at any time amend, alter,
suspend, discontinue or terminate the Plan, but no amendment, alteration, suspension, discontinuation or termination (other than an adjustment made pursuant to Section 13 above) shall be made
that would materially and adversely affect the rights of any Optionee or holder of Stock Purchase Rights under any outstanding grant, without his or her consent. In addition, to the extent necessary
and desirable to comply with the Applicable Laws, the Company shall obtain stockholder approval of any Plan amendment in such a manner and to such a degree as required. 

    (b)  Effect of Amendment or Termination.  No amendment or termination of the Plan
shall materially and adversely affect Options already granted, unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in writing and signed by the
Optionee and the Company. 

    16.  Conditions Upon Issuance of Shares.  Notwithstanding any other provision of the Plan or any
agreement entered into by the Company pursuant to the Plan, the Company shall not be obligated, and shall have no liability for, failure to issue or deliver any Shares under the Plan unless such
issuance or delivery would comply with the Applicable Laws, with such compliance determined by the Company in consultation with its legal counsel. 

    As
a condition to the exercise of an Option or Stock Purchase Right, the Company may require the person exercising such Option or Stock Purchase Right to represent and warrant at the
time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company,
such a representation is required by law. 

    17.  Reservation of Shares.  The Company, during the term of this Plan, will at all times reserve and
keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan. 

    18.  Agreements.  Options and Stock Purchase Rights shall be evidenced by Option Agreements and
Restricted Stock Purchase Agreements, respectively, in such form(s) as the Administrator shall from time to time approve. 

    19.  Stockholder Approval.  If required by the Applicable Laws, continuance of the Plan shall be subject
to approval by the stockholders of the Company within twelve months before or after the date the Plan is adopted. Such stockholder approval shall be obtained in the degree and manner required under
the Applicable Laws. 

    20.  Information and Documents to Optionees and Purchasers.  Prior to the date, if any, upon which the
Common Stock becomes a Listed Security and if required by the Applicable Laws, the Company shall provide financial statements at least annually to each Optionee and to each individual who acquired
Shares pursuant to the Plan, during the period such Optionee or purchaser has one or more Options or Stock Purchase Rights outstanding, and in the case of an individual who acquired Shares pursuant to
the Plan, during the period such individual owns such Shares. The Company shall not be required to provide such information if the issuance of Options or Stock Purchase Rights under the Plan is
limited to key employees whose duties in connection with the Company assure their access to equivalent information. In addition, at the time of issuance of any securities under the Plan, the Company
shall provide to the Optionee or the purchaser a copy of the Plan and any agreement(s) pursuant to which securities granted under the Plan are issued. 

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X.COM CORPORATION 1999 STOCK PLAN

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