Document:

EXHIBIT 10

EXHIBIT 10.18

 

Doghouse Enterprises, Inc.

 

2000 Equity Incentive Plan

 

Adopted June 20, 2000

Approved By Shareholders June 20, 2000

Termination Date: June 19, 2010

 

Purposes.

 

Eligible Stock Award Recipients.  The persons eligible to receive Stock Awards

are the Employees, Directors and Consultants of the Company and its Affiliates.

 

Available Stock Awards.  The purpose of the Plan is to provide a

means by which eligible recipients of Stock Awards may be given an opportunity

to benefit from increases in value of the Common Stock through the granting of

the following Stock Awards:  (i)

Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) stock bonuses

and (iv) rights to acquire restricted stock.

 

General Purpose.  The Company, by means of the Plan, seeks to

retain the services of the group of persons eligible to receive Stock Awards,

to secure and retain the services of new members of this group and to provide

incentives for such persons to exert maximum efforts for the success of the

Company and its Affiliates.

 

Definitions.

 

“Affiliate”

means any parent corporation or subsidiary corporation of the Company, whether

now or hereafter existing, as those terms are defined in Sections 424(e) and

(f), respectively, of the Code.

 

“Board”

means the Board of Directors of the Company.

 

“Code”

means the Internal Revenue Code of 1986, as amended.

 

“Committee”

means a committee of one or more members of the Board appointed by the Board in

accordance with subsection 3(c).

 

“Common Stock”

means the common stock of the Company.

 

“Company”

means Doghouse Enterprises, Inc., a Delaware corporation.

 

“Consultant”

means any person, including an advisor, (i) engaged by the Company or an

Affiliate to render consulting or advisory services and who is compensated for

such services or (ii) who is a member of the Board of Directors of an

Affiliate.  However, the term

“Consultant” shall not include either Directors who are not compensated by the

Company for their services as Directors or Directors who are merely paid a

director’s fee by the Company for their services as Directors.

 

“Continuous Service”

means that the Participant’s service with the Company or an Affiliate, whether

as an Employee, Director or Consultant, is not interrupted or terminated.  The Participant’s Continuous Service shall

not be deemed to have terminated merely because of a change in the capacity in

which the Participant renders service to the Company or an Affiliate as an

Employee, Consultant or Director or a change in the entity for which the

Participant renders such service, provided that there is no interruption or

termination of the Participant’s Continuous Service.  For example, a change in status from

 

 

an Employee of the Company

to a Consultant of an Affiliate or a Director will not constitute an interruption

of Continuous Service.  The Board or the

chief executive officer of the Company, in that party’s sole discretion, may

determine whether Continuous Service shall be considered interrupted in the

case of any leave of absence approved by that party, including sick leave,

military leave or any other personal leave.

 

“Covered Employee”

means the chief executive officer and the four (4) other highest compensated

officers of the Company for whom total compensation is required to be reported

to shareholders under the Exchange Act, as determined for purposes of Section

162(m) of the Code.

 

“Director”

means a member of the Board of Directors of the Company.

 

“Disability”

means (i) before the Listing Date, the inability of a person, in the opinion of

a qualified physician acceptable to the Company, to perform the major duties of

that person’s position with the Company or an Affiliate of the Company because

of the sickness or injury of the person and (ii) after the Listing Date, the

permanent and total disability of a person within the meaning of Section

22(e)(3) of the Code.

 

“Employee”

means any person employed by the Company or an Affiliate.  Mere service as a Director or payment of a

director’s fee by the Company or an Affiliate shall not be sufficient to constitute

“employment” by the Company or an Affiliate.

 

“Exchange Act”

means the Securities Exchange Act of 1934, as amended.

 

“Fair

Market Value” means, as of any date, the

value of the Common Stock determined as follows:

 

(i)            If the Common Stock is listed on any

established stock exchange or traded on the Nasdaq National Market or the

Nasdaq SmallCap Market, the Fair Market Value of a share of Common Stock shall

be the closing sales price for such stock (or the closing bid, if no sales were

reported) as quoted on such exchange or market (or the exchange or market with

the greatest volume of trading in the Common Stock) on the last market trading

day prior to the day of determination, as reported in The Wall Street Journal  or such other source as the Board deems reliable.

 

(ii)           In the absence of such markets for the Common

Stock, the Fair Market Value shall be determined in good faith by the Board.

 

(iii)         Prior to the Listing Date, the value of the

Common Stock shall be determined in a manner consistent with Section 260.140.50

of Title 10 of the California Code of Regulations.

 

“Incentive Stock

Option” means an Option intended to qualify as an

incentive stock option within the meaning of Section 422 of the Code and

the regulations promulgated thereunder.

 

(b)           “Involuntary Termination without Cause”

means (1) the involuntary termination, without Cause, of the Participant’s

Continuous Service by the Company within one (1) month prior to a Corporate

Transaction or (2) the involuntary termination, without Cause, of the

Participant’s Continuous Service by the surviving or acquiring corporation that

assumed the Participant’s Stock Award or substituted a similar Stock Award for

the Participant’s Stock Award within thirteen (13) months after a Corporate

Transaction.  “Cause” means any of

the following:

 

(i)            the Participant’s theft, dishonesty, or

falsification of documents or records;

 

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(ii)           the Participant’s improper use or disclosure

of the Company’s confidential or proprietary information;

 

(iii)         any action by the Participant which has a

detrimental effect on the Company’s reputation or business;

 

(iv)          the Participant’s failure or inability to

perform any reasonable assigned duties after written notice from the Company

of, and a reasonable opportunity to cure, such failure or inability;

 

(v)            any material breach by the Participant of any

employment or service agreement between the Participant and the Company which

breach is not cured pursuant to the terms of such agreement; or

 

(vi)          the Participant’s conviction (including any

plea of guilty or nolo contendere) of any criminal act which impairs the

Participant’s ability to perform his or her duties with the Company.

 

“Listing Date”

means the first date upon which any security of the Company is listed (or

approved for listing) upon notice of issuance on any securities exchange or

designated (or approved for designation) upon notice of issuance as a national

market security on an interdealer quotation system if such securities exchange

or interdealer quotation system has been certified in accordance with the

provisions of Section 25100(o) of the California Corporate Securities Law of

1968.

 

“Non-Employee

Director”  means a Director who either (i) is not a

current Employee or Officer of the Company or its parent or a subsidiary, does

not receive compensation (directly or indirectly) from the Company or its

parent or a subsidiary for services rendered as a consultant or in any capacity

other than as a Director (except for an amount as to which disclosure would not

be required under Item 404(a) of Regulation S-K promulgated pursuant to the

Securities Act (“Regulation S-K”)), does not possess an interest in any other

transaction as to which disclosure would be required under Item 404(a) of

Regulation S-K and is not engaged in a business relationship as to which

disclosure would be required under Item 404(b) of Regulation S-K; or (ii)

is otherwise considered a “non-employee director” for purposes of Rule 16b-3.

 

“Nonstatutory Stock

Option” means an Option not intended to qualify as

an Incentive Stock Option.

 

“Officer”

means (i) before the Listing Date, any person designated by the Company as an

officer and (ii) on and after the Listing Date, 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.

 

“Option”

means an Incentive Stock Option or a Nonstatutory Stock Option granted pursuant

to the Plan.

 

“Option Agreement”

means a written agreement between the Company and an Optionholder evidencing

the terms and conditions of an individual Option grant.  Each Option Agreement shall be subject to

the terms and conditions of the Plan.

 

“Optionholder”

means a person to whom an Option is granted pursuant to the Plan or, if

applicable, such other person who holds an outstanding Option.

 

“Outside Director”

means a Director who either (i) is not a current employee of the Company or an

“affiliated corporation” (within the meaning of Treasury Regulations promulgated

under Section

 

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162(m) of the Code), is not a

former employee of the Company or an “affiliated corporation” receiving

compensation for prior services (other than benefits under a tax qualified pension

plan), was not an officer of the Company or an “affiliated corporation” at any

time and is not currently receiving direct or indirect remuneration from the

Company or an “affiliated corporation” for services in any capacity other than

as a Director or (ii) is otherwise considered an “outside director” for

purposes of Section 162(m) of the Code.

 

“Participant”

means a person to whom a Stock Award is granted pursuant to the Plan or, if

applicable, such other person who holds an outstanding Stock Award.

 

“Plan”

means this Doghouse Enterprises, Inc. 2000 Equity Incentive Plan.

 

“Rule 16b-3”

means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule

16b-3, as in effect from time to time.

 

“Securities Act”

means the Securities Act of 1933, as amended.

 

“Stock Award”

means any right granted under the Plan, including an Option, a stock bonus and

a right to acquire restricted stock.

 

“Stock Award

Agreement” means a written agreement between the

Company and a holder of a Stock Award evidencing the terms and conditions of an

individual Stock Award grant.  Each

Stock Award Agreement shall be subject to the terms and conditions of the Plan.

 

“Ten Percent

Shareholder” means a person who owns (or is deemed

to own pursuant to Section 424(d) of the Code) stock possessing more than ten

percent (10%) of the total combined voting power of all classes of stock of the

Company or of any of its Affiliates.

 

(c)           “Voluntary Termination with Good Reason”

means (1) the Participant’s resignation, with Good Reason, as an Employee,

Director or Consultant of the Company within one (1) month prior to the

Corporate Transaction or (2) the Participant’s resignation, with Good Reason,

as an Employee, Director or Consultant of the surviving or acquiring

corporation which assumed the Participant’s Stock Award or substituted a

similar Stock Award for the Participant’s Stock Award within thirteen (13)

months after a Corporate Transaction.  “Good Reason” means

any of the following:

 

(i)            reduction of the Participant’s rate of compensation

as in effect immediately prior to the Corporate Transaction;

 

(ii)           failure to provide a package of welfare

benefit plans which, taken as a whole, provide substantially similar benefits

to those in which the Participant was entitled to participate immediately prior

to the Corporate Transaction (except that employee contributions may be raised

to the extent of any cost increases imposed by third parties);

 

(iii)         a change in the Participant’s

responsibilities, authority, title or office resulting in diminution of

position, excluding for this purpose an isolated, insubstantial and inadvertent

action not taken in bad faith which is remedied by the Company promptly after

notice thereof is given by the Participant;

 

(iv)          a request that the Participant relocate to a

worksite that is more than thirty-five (35) miles from the Participant’s prior

worksite, unless the Participant accept such relocation opportunity;

 

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(v)            failure or refusal of a successor to the Company

to assume the Company’s obligations under the Plan; or

 

(vi)          material breach by the Company or any

successor to the Company of any of the material provisions of the Participant’s

Stock Award Agreement.

 

Administration.

 

Administration by Board.  The Board shall administer the Plan unless

and until the Board delegates administration to a Committee, as provided in

subsection 3(c).

 

Powers of Board.  The Board shall have the power, subject to,

and within the limitations of, the express provisions of the Plan:

 

(vii)         To determine from time to time which of the

persons eligible under the Plan shall be granted Stock Awards; when and how

each Stock Award shall be granted; what type or combination of types of Stock

Award shall be granted; the provisions of each Stock Award granted (which need

not be identical), including the time or times when a person shall be permitted

to receive Common Stock pursuant to a Stock Award; and the number of shares of

Common Stock with respect to which a Stock Award shall be granted to each such

person.

 

(viii)        To construe and interpret the Plan and Stock

Awards granted under it, and to establish, amend and revoke rules and

regulations for its administration.  The

Board, in the exercise of this power, may correct any defect, omission or

inconsistency in the Plan or in any Stock Award Agreement, in a manner and to

the extent it shall deem necessary or expedient to make the Plan fully

effective.

 

(ix)          To amend the Plan or a Stock Award as

provided in Section 12.

 

(x)           Generally, to exercise such powers and to

perform such acts as the Board deems necessary or expedient to promote the best

interests of the Company which are not in conflict with the provisions of the

Plan.

 

Delegation to Committee.

 

(xi)          General.  The

Board may delegate administration of the Plan to a Committee or Committees of

one (1) 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

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. 

The Board may abolish the Committee at any time and revest in the Board

the administration of the Plan.

 

(xii)         Committee Composition when

Common Stock is Publicly Traded.  At such time as the Common

Stock is publicly traded, in the discretion of the Board, a Committee may

consist solely of two or more Outside Directors, in accordance with Section

162(m) of the Code, and/or solely of two or more Non-Employee Directors, in

accordance with Rule 16b-3.  Within the

scope of such authority, the Board or the Committee may (1) delegate to a

committee of one or more members of the Board who are 

 

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either (a) not then

Covered Employees and are not expected to be Covered Employees at this time of

recognition of income resulting from such Stock Award or (b) not persons with

respect to whom the Company wishes to comply with Section 162(m) of the Code

and/or) (2) delegate to a committee of one or more members of the Board who are

not Non-Employee Directors the authority to grant Stock Awards to eligible persons

who are not then subject to Section 16 of the Exchange Act.

 

Effect of Board's Decision. 

All determinations, interpretations and constructions made by the Board

in good faith shall not be subject to review by any person and shall be final,

binding and conclusive on all persons.

 

SHARES SUBJECT TO

THE PLAN.

 

Share Reserve. 

Subject to the provisions of Section 11 relating to adjustments upon

changes in Common Stock, the Common Stock that may be issued pursuant to Stock

Awards shall not exceed in the aggregate Seven Million Five Hundred Thousand

(7,500,000) shares of Common Stock.

 

Reversion of Shares to the Share Reserve. 

If any Stock Award shall for any reason expire or otherwise terminate,

in whole or in part, without having been exercised in full, the shares of

Common Stock not acquired under such Stock Award shall revert to and again

become available for issuance under the Plan. 

If the Company repurchases unvested shares acquired pursuant to a Stock

Award, the shares of Common Stock so repurchased shall revert to and again

become available for issuance under the Plan for all Stock Awards other than

Incentive Stock Options.

 

Source of Shares. 

The shares of Common Stock subject to the Plan may be unissued shares or

reacquired shares, bought on the market or otherwise.

 

Share Reserve Limitation. 

Prior to the Listing Date and to the extent then required by Section

260.140.45 of Title 10 of the California Code of Regulations, the total number

of shares of Common STock issuable upon exercise of all outstanding Options and

the total number of shares of Common Stock provided for under any stock bonus

or similar plan of the Company shall not exceed the applicable percentage as

calculated in accordance with the conditions and exclusions of Section

260.140.45 of Title 10 of the California Code of Regulations, based on the

shares of Common Stock of the Company that are outstanding at the time the

calculation is made.(1)

(1)           Section 260.140.45 generally provides

that the total number of shares issuable upon exercise of all outstanding

options (exclusive of certain rights) and the total number of shares called for

under any stock bonus or similar plan shall not exceed a number of shares which

is equal to 30% of the then outstanding shares of the issuer (convertible

preferred or convertible senior common shares counted on an as if converted

basis), exclusive of shares subject to promotional waivers under Section

260.141, unless a percentage higher than 30% is approved by at least two-thirds

of the outstanding shares entitled to vote.

 

ELIGIBILITY.

 

Eligibility for Specific Stock Awards. 

Incentive Stock Options may be granted only to Employees.  Stock Awards other than Incentive Stock

Options may be granted to Employees, Directors and Consultants.

 

Ten Percent Shareholders.

 

(xiii) 

A Ten Percent Shareholder shall not be granted an Incentive Stock Option

unless the exercise price of such Option is at least one hundred ten percent

(110%) of the Fair Market Value of

 

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the Common Stock at the date

of grant and the Option is not exercisable after the expiration of five (5)

years from the date of grant.

 

(xiv)        Prior to the Listing Date, a Ten Percent

Shareholder shall not be granted a Nonstatutory Stock Option unless the exercise

price of such Option is at least (i) one hundred ten percent (110%) of the Fair

Market Value of the Common Stock at the date of grant or (ii) such lower

percentage of the Far Market Value of the Common Stock at the date of grant as

is permitted by Section 260.140.41 of Title 10 of the California Code of

Regulations at the time of the grant of the Option.

 

(xv)          Prior to the Listing Date, a Ten Percent

Shareholder shall not be granted a restricted stock award unless the purchase

price of the restricted stock is at least (i) one hundred percent (100%) of the

Fair Market Value of the Common Stock at the date of grant or (ii) such lower

percentage of the Fair Market Value of the Common Stock at the date of grant as

is permitted by Section 260.140.41 of Title 10 of the California Code of

Regulations at the time of the grant of the Option.

 

Section 162(m) Limitation.  Subject to the provisions of Section 11

relating to adjustments upon changes in the shares of Common Stock, no Employee

shall be eligible to be granted Options covering more than Three Million

(3,000,000) shares of Common Stock during any calendar year.  This subsection 5(c) shall not apply prior

to the Listing Date and, following the Listing Date, this subsection 5(c) shall

not apply until (i) the earliest of: 

(1) the first material modification of the Plan (including any increase

in the number of shares of Common Stock reserved for issuance under the Plan in

accordance with Section 4); (2) the issuance of all of the shares of Common

Stock reserved for issuance under the Plan; (3) the expiration of the Plan; or

(4) the first meeting of shareholders at which Directors 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 under Section 12

of the Exchange Act; or (ii) such other date required by Section 162(m) of the

Code and the rules and regulations promulgated thereunder.

 

Consultants.

 

(xvi)        Prior to the Listing Date, a Consultant shall

not be eligible for the grant of a Stock Award if, at the time of grant, either

the offer or the sale of the Company’s securities to such Consultant is not

exempt under Rule 701 of the Securities Act (“Rule 701”) because of the nature

of the services that the Consultant is providing to the Company, or because the

Consultant is not a natural person, or as otherwise provided by Rule 701,

unless the Company determines that such grant need not comply with the

requirements of Rule 701 and will satisfy another exemption under the

Securities Act as well as comply with the securities laws of all other relevant

jurisdictions.

 

(xvii)       From and after the Listing Date, a Consultant

shall not be eligible for the grant of a Stock Award if, at the time of grant,

a Form S-8 Registration Statement under the Securities Act (“Form S-8”) is not

available to register either the offer or the sale of the Company’s securities

to such Consultant because of the nature of the services that the Consultant is

providing to the Company, or because the Consultant is not a natural person, or

as otherwise provided by the rules governing the use of Form S-8, unless the

Company determines both (i) that such grant (A) shall be registered in another

manner under the Securities Act (e.g.,

on a Form S-3 Registration Statement) or (B) does not require registration

under the Securities Act in order to comply with the requirements of the

Securities Act, if applicable, and (ii) that such grant complies with the

securities laws of all other relevant jurisdictions.

 

(xviii)      Rule 701 and Form S-8 generally are available

to consultants and advisors only if (i) they are natural persons; (ii) they

provide bona fide services to the issuer, its parents, its majority-owned

subsidiaries or majority-owned subsidiaries of the issuer’s parent; and (iii)

the services are not in 

 

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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 issuer’s securities.

 

Option Provisions.

 

Each Option shall be in such form and shall

contain such terms and conditions as the Board shall deem appropriate.  All Options shall be separately designated

Incentive Stock Options or Nonstatutory Stock Options at the time of grant,

and, if certificates are issued, a separate certificate or certificates will be

issued for shares of Common Stock purchased on exercise of each type of

Option.  The provisions of separate

Options need not be identical, but each Option shall include (through

incorporation of provisions hereof by reference in the Option or otherwise) the

substance of each of the following provisions:

 

Term.  Subject to the provisions of subsection 5(b)

regarding Ten Percent Shareholders, no Option granted prior to the Listing Date

shall be exercisable after the expiration of ten (10) years from the date it

was granted, and no Incentive Stock Option granted on or after the Listing Date

shall be exercisable after the expiration of ten (10) years from the date it

was granted.

 

Exercise Price of an Incentive Stock Option.  Subject to the provisions of subsection 5(b)

regarding Ten Percent Shareholders, the exercise price of each Incentive Stock

Option shall be not less than one hundred percent (100%) of the Fair Market

Value of the Common Stock subject to the Option on the date the Option is

granted.  Notwithstanding the foregoing,

an Incentive Stock Option may be granted with an exercise price lower than that

set forth in the preceding sentence if such Option is granted pursuant to an

assumption or substitution for another option in a manner satisfying the

provisions of Section 424(a) of the Code.

 

Exercise Price of a Nonstatutory Stock

Option. 

Subject to the provisions of subsection 5(b) regarding Ten Percent

Shareholders, the exercise price of each Nonstatutory Stock Option granted

prior to the Listing Date shall be not less than eighty-five percent (85%) of

the Fair Market Value of the Common Stock subject to the Option on the date the

Option is granted.  The Board shall

determine the exercise price of each Nonstatutory Stock Option granted on or

after the Listing Date.  Notwithstanding

the foregoing, a Nonstatutory Stock Option may be granted with an exercise

price lower than that set forth herein if such Option is granted pursuant to an

assumption or substitution for another option in a manner satisfying the

provisions of Section 424(a) of the Code.

 

Consideration.  The purchase price of Common Stock acquired

pursuant to an Option shall be paid, to the extent permitted by applicable

statutes and regulations, either (i) in cash at the time the Option is

exercised or (ii) at the discretion of the Board at the time of the grant of

the Option (or subsequently in the case of a Nonstatutory Stock Option) (1) by

delivery to the Company of other Common Stock, (2) according to a deferred

payment or other similar arrangement with the Optionholder or (3) in any other

form of legal consideration that may be acceptable to the Board.  Unless otherwise specifically provided in

the Option, the purchase price of Common Stock acquired pursuant to an Option

that is paid by delivery to the Company of other Common Stock acquired,

directly or indirectly from the Company, shall be paid only by shares of the

Common Stock of the Company that have been held for more than six (6) months

(or such longer or shorter period of time required to avoid a charge to

earnings for financial accounting purposes). 

At any time that the Company is incorporated in Delaware, payment of the

Common Stock’s “par value,” as defined in the Delaware General Corporation Law,

shall not be made by deferred payment.

 

In the case of any deferred payment

arrangement, interest shall be compounded at least annually and shall be

charged at the minimum rate of interest necessary to avoid the treatment as

interest, under

 

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any applicable

provisions of the Code, of any amounts other than amounts stated to be interest

under the deferred payment arrangement.

 

Transferability of an Incentive Stock Option.  An Incentive Stock Option shall not be

transferable except by will or by the laws of descent and distribution and

shall be exercisable during the lifetime of the Optionholder only by the

Optionholder.  Notwithstanding the

foregoing, the Optionholder may, by delivering written notice to the Company,

in a form satisfactory to the Company, designate a third party who, in the

event of the death of the Optionholder, shall thereafter be entitled to

exercise the Option.

 

Transferability of a Nonstatutory Stock

Option. A Nonstatutory Stock Option granted prior to

the Listing Date shall not be transferable except by will or by the laws of

descent and distribution and, to the extent provided in the Option Agreement,

to such further extent as permitted by Section 260.140.41(d) of Title 10 of the

California Code of Regulations at the time of the grant of the Option, and

shall be exercisable during the lifetime of the Optionholder only by the

Optionholder.  A Nonstatutory Stock Option

granted on or after the Listing Date shall be transferable to the extent

provided in the Option Agreement.  If

the Nonstatutory Stock Option does not provide for transferability, then the

Nonstatutory Stock Option shall not be transferable except by will or by the

laws of descent and distribution and shall be exercisable during the lifetime

of the Optionholder only by the Optionholder. 

Notwithstanding the foregoing, the Optionholder may, by delivering

written notice to the Company, in a form satisfactory to the Company, designate

a third party who, in the event of the death of the Optionholder, shall

thereafter be entitled to exercise the Option (to the extent the Option is

otherwise exercisable).

 

Vesting Generally.  The total number of shares of Common Stock

subject to an Option may, but need not, vest in periodic installments that may,

but need not, be equal.  The Option may

be subject to such other terms and conditions on the time or times when it may

be exercised (which may be based on performance or other criteria) as the Board

may deem appropriate, including without limitation the restrictions on exercise

prior to the Listing Date as set forth in subsection 6(j).  The vesting provisions of individual Options

may vary.  The provisions of this subsection

6(g) are subject to any Option provisions governing the minimum number of

shares of Common Stock as to which an Option may be exercised.

 

Minimum Vesting Prior to the Listing Date.  Notwithstanding the foregoing subsection

6(g), to the extent that the following restrictions on vesting are required by

Section 260.140.41(f) of Title 10 of the California Code of Regulations at the

time of the grant of the Option, then:

 

(xix)        Options granted prior to the Listing Date to

an Employee who is not an Officer, Director or Consultant shall provide for

vesting of the total number of shares of Common Stock at a rate of at least

twenty percent (20%) per year over five (5) years from the date the Option was

granted, subject to reasonable conditions such as continued employment;  and

 

(xx)         Options granted prior to the Listing Date to

Officers, Directors or Consultants may be made fully exercisable, subject to

reasonable conditions such as continued employment, at any time or during any

period established by the Company.

 

Termination of Continuous

Service.  In the

event an Optionholder’s Continuous Service terminates (other than upon the

Optionholder’s death or Disability), the Optionholder may exercise his or her

Option (to the extent that the Optionholder was entitled to exercise such

Option as of the date of termination) but only within such period of time

ending on the earlier of (i) the date three (3) months following the

termination of the Optionholder’s Continuous Service (or such longer or shorter

period specified in the Option Agreement, which period shall not be less than

thirty (30) days for Options granted prior to the Listing Date unless such

termination is for cause), or (ii) the expiration of the term of

 

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the Option as set forth in the

Option Agreement.  If, after

termination, the Optionholder does not exercise his or her Option within the

time specified in the Option Agreement, the Option shall terminate.

 

Exercise of Options Prior to Listing Date.  Notwithstanding anything to the contrary in

this Plan, unless specifically provided for in Optionholder’s Option Agreement,

Optionholder may not exercise any portion of any Option, whether or not vested,

prior to the Listing Date.

 

Disability of Optionholder.  In the event that an Optionholder’s

Continuous Service terminates as a result of the Optionholder’s Disability, the

Optionholder may exercise his or her Option (to the extent that the

Optionholder was entitled to exercise such Option as of the date of termination),

but only within such period of time ending on the earlier of (i) the date

twelve (12) months following such termination (or such longer or shorter period

specified in the Option Agreement, which period shall not be less than six (6)

months for Options granted prior to the Listing Date) or (ii) the expiration of

the term of the Option as set forth in the Option Agreement.  If, after termination, the Optionholder does

not exercise his or her Option within the time specified herein, the Option

shall terminate.

 

Death of Optionholder.  In the event (i) an Optionholder’s

Continuous Service terminates as a result of the Optionholder’s death or (ii)

the Optionholder dies within the period (if any) specified in the Option

Agreement after the termination of the Optionholder’s Continuous Service for a

reason other than death, then the Option may be exercised (to the extent the

Optionholder was entitled to exercise such Option as of the date of death) by

the Optionholder’s estate, by a person who acquired the right to exercise the

Option by bequest or inheritance or by a person designated to exercise the

option upon the Optionholder’s death pursuant to subsection 6(e) or 6(f), but

only within the period ending on the earlier of (1) the date eighteen (18)

months following the date of death (or such longer or shorter period specified

in the Option Agreement, which period shall not be less than six (6) months for

Options granted prior to the Listing Date) or (2) the expiration of the term of

such Option as set forth in the Option Agreement.  If, after death, the Option is not exercised within the time

specified herein, the Option shall terminate.

 

Early Exercise.  The Option may, but need not, include a

provision whereby the Optionholder may elect at any time before the

Optionholder’s Continuous Service terminates to exercise the Option as to any

part or all of the shares of Common Stock subject to the Option prior to the

full vesting of the Option.  Subject to

the “Repurchase Limitation” in subsection 10(h), any unvested shares of Common

Stock so purchased may be subject to a repurchase option in favor of the

Company or to any other restriction the Board determines to be appropriate.

 

Right of Repurchase.  Subject to the “Repurchase Limitation” in

subsection 10(h), the Option may, but need not, include a provision whereby the

Company may elect, prior to the Listing Date, to repurchase all or any part of

the vested shares of Common Stock acquired by the Optionholder pursuant to the

exercise of the Option.

 

Right of First Refusal.  The Option may, but need not, include a

provision whereby the Company may elect, prior to the Listing Date, to exercise

a right of first refusal following receipt of notice from the Optionholder of

the intent to transfer all or any part of the shares of Common Stock received

upon the exercise of the Option.  Except

as expressly provided in this subsection 6(o), such right of first refusal

shall otherwise comply with any applicable provisions of the Bylaws of the

Company.

 

Provisions of Stock

Awards other than Options.

 

Stock Bonus Awards.  Each stock bonus agreement shall be in such

form and shall contain such terms and conditions as the Board shall deem

appropriate.  The terms and conditions

of stock bonus agreements may change from time to time, and the terms and

conditions of separate stock bonus 

 

10

 

agreements need not be identical, but each stock bonus agreement shall

include (through incorporation of provisions hereof by reference in the agreement

or otherwise) the substance of each of the following provisions:

 

(xxi)        Consideration.  A

stock bonus may be awarded in consideration for past services actually rendered

to the Company or an Affiliate for its benefit.

 

(xxii)       Vesting. 

Subject to the “Repurchase Limitation” in subsection 10(h), shares of

Common Stock awarded under the stock bonus agreement may, but need not, be

subject to a share repurchase option in favor of the Company in accordance with

a vesting schedule to be determined by the Board.

 

(xxiii)     Termination of Participant’s

Continuous Service.  Subject to the “Repurchase Limitation” in

subsection 10(h), in the event a Participant’s Continuous Service terminates, the Company may

reacquire any or all of the shares of Common Stock held by the Participant

which have not vested as of the date of termination under the terms of the

stock bonus agreement.

 

(xxiv)      Transferability.  For

a stock bonus award made before the Listing Date, rights to acquire shares of

Common Stock under the stock bonus

agreement shall not be transferable except by will or by the laws of descent

and distribution and shall be exercisable during the lifetime of the

Participant only by the Participant. 

For a stock bonus award made on or after the Listing Date, rights to

acquire shares of Common Stock under the stock bonus agreement shall be

transferable by the Participant only upon such terms and conditions as are set

forth in the stock bonus agreement, as the Board shall determine in its

discretion, so long as Common Stock awarded under the stock bonus agreement

remains subject to the terms of the stock bonus agreement.

 

Restricted Stock Awards.  Each restricted stock purchase agreement

shall be in such form and shall contain such terms and conditions as the Board

shall deem appropriate.  The terms and

conditions of the restricted stock purchase agreements may change from time to

time, and the terms and conditions of separate restricted stock purchase

agreements need not be identical, but each restricted stock purchase agreement

shall include (through incorporation of provisions hereof by reference in the

agreement or otherwise) the substance of each of the following provisions:

 

(xxv)        Purchase Price. 

Subject to the provisions of subsection 5(b) regarding Ten Percent Shareholders,

the purchase price under each restricted stock purchase agreement shall be such

amount as the Board shall determine and designate in such restricted stock

purchase agreement.  For restricted

stock awards made prior to the Listing Date, the purchase price shall not be

less than eighty-five percent (85%) of the Common Stock’s Fair Market Value on

the date such award is made or at the time the purchase is consummated.  For restricted stock awards made on or after

the Listing Date, the Board shall determine the purchase price.

 

(xxvi)      Consideration.  The

purchase price of Common Stock acquired pursuant to the restricted stock

purchase agreement shall be paid either: 

(i) in cash at the time of purchase; (ii) at the discretion of the

Board, according to a deferred payment or other similar arrangement with the

Participant; or (iii) in any other form of legal consideration that may be

acceptable to the Board in its discretion; provided, however, that at any time

that the Company is incorporated in Delaware, then payment of the Common

Stock’s “par value,” as defined in the Delaware General Corporation Law, shall

not be made by deferred payment.

 

(xxvii)     Vesting. 

Subject to the “Repurchase Limitation” in subsection 10(h), shares of

Common Stock acquired under the restricted stock purchase agreement may, but need not, be subject to a

 

11

share repurchase option in favor of the Company in accordance with a

vesting schedule to be determined by the Board.

 

(xxviii)    Termination of Participant’s

Continuous Service.  Subject to the “Repurchase Limitation” in

subsection 10(h), in the event a Participant’s Continuous Service terminates, the Company may repurchase or otherwise

reacquire any or all of the shares of Common Stock held by the Participant

which have not vested as of the date of termination under the terms of the

restricted stock purchase agreement.

 

(xxix)      Transferability.  For

a restricted stock award made before the Listing Date, rights to acquire shares

of Common Stock under the restricted stock purchase agreement shall not be

transferable except by will or by the laws of descent and distribution and

shall be exercisable during the lifetime of the Participant only by the Participant.  For a restricted stock award made on or

after the Listing Date, rights to acquire shares of Common Stock under the

restricted stock purchase agreement shall be transferable by the Participant

only upon such terms and conditions as are set forth in the restricted stock

purchase agreement, as the Board shall determine in its discretion, so long as

Common Stock awarded under the restricted stock purchase agreement remains

subject to the terms of the restricted stock purchase agreement.

 

Covenants of the

Company.

 

Availability of Shares.  During the terms of the Stock Awards, the

Company shall keep available at all times the number of shares of Common Stock

required to satisfy such Stock Awards.

 

Securities Law Compliance.  The Company shall seek to obtain from each

regulatory commission or agency having jurisdiction over the Plan such

authority as may be required to grant Stock Awards and to issue and sell shares

of Common Stock upon exercise of the Stock Awards; provided, however, that this

undertaking shall not require the Company to register under the Securities Act

the Plan, any Stock Award or any Common Stock issued or issuable pursuant to

any such Stock Award.  If, after

reasonable efforts, the Company is unable to obtain from any such regulatory

commission or agency the authority which counsel for the Company deems

necessary for the lawful issuance and sale of Common Stock under the Plan, the

Company shall be relieved from any liability for failure to issue and sell

Common Stock upon exercise of such Stock Awards unless and until such authority

is obtained.

 

Use of Proceeds from

Stock.

 

Proceeds from the sale of Common Stock

pursuant to Stock Awards shall constitute general funds of the Company.

 

Miscellaneous.

 

Acceleration of Exercisability and Vesting.  The Board shall have the power to accelerate

the time at which a Stock Award may first be exercised or the time during which

a Stock Award or any part thereof will vest in accordance with the Plan,

notwithstanding the provisions in the Stock Award stating the time at which it

may first be exercised or the time during which it will vest.

 

Shareholder Rights.  No Participant shall be deemed to be the

holder of, or to have any of the rights of a holder with respect to, any shares

of Common Stock subject to such Stock Award unless and until such Participant

has satisfied all requirements for exercise of the Stock Award pursuant to its

terms.

 

12

 

No Employment or other Service Rights.  Nothing in the Plan or any instrument

executed or Stock Award granted pursuant thereto shall confer upon any

Participant any right to continue to serve the Company or an Affiliate in the

capacity in effect at the time the Stock Award was granted or shall affect the

right of the Company or an Affiliate to terminate (i) the employment of an

Employee with or without notice and with or without cause, (ii) the service of

a Consultant pursuant to the terms of such Consultant’s agreement with the

Company or an Affiliate or (iii) the service of a Director pursuant to the

Bylaws of the Company or an Affiliate, and any applicable provisions of the

corporate law of the state in which the Company or the Affiliate is

incorporated, as the case may be.

 

Incentive Stock Option $100,000 Limitation.  To the extent that the aggregate Fair Market

Value (determined at the time of grant) of Common Stock with respect to which

Incentive Stock Options are exercisable for the first time by any Optionholder

during any calendar year (under all plans of the Company and its Affiliates) exceeds

one hundred thousand dollars ($100,000), the Options or portions thereof which

exceed such limit (according to the order in which they were granted) shall be

treated as Nonstatutory Stock Options.

 

Investment Assurances.  The Company may require a Participant, as a

condition of exercising or acquiring Common Stock under any Stock Award, (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 Stock Award; and (ii) to

give written assurances satisfactory to the Company stating that the

Participant is acquiring Common Stock subject to the Stock Award for the

Participant’s own account and not with any present intention of selling or otherwise

distributing the Common Stock.  The

foregoing requirements, and any assurances given pursuant to such requirements,

shall be inoperative if (1) the issuance of the shares of Common Stock upon the

exercise or acquisition of Common Stock under the Stock Award has been

registered under a then currently effective registration statement under the

Securities Act or (2) 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 Common Stock.

 

Withholding Obligations.  To the extent provided by the terms of a

Stock Award Agreement, the Participant may satisfy any federal, state or local

tax withholding obligation relating to the exercise or acquisition of Common

Stock under a Stock Award by any of the following means (in addition to the

Company’s right to withhold from any compensation paid to the Participant by

the Company) or by a combination of such means:  (i) tendering a cash payment; (ii) authorizing the Company to

withhold shares of Common Stock from the shares of Common Stock otherwise

issuable to the Participant as a result of the exercise or acquisition of Common

Stock under the Stock Award, provided, however, that no shares of Common Stock

are withheld with a value exceeding the minimum amount of tax required to be

withheld by law; or (iii) delivering to the Company owned and unencumbered

shares of Common Stock.

 

Information Obligation.  Prior to the Listing Date, to the extent

required by Section 260.140.46 of Title 10 of the California Code of

Regulations, the Company shall deliver financial statements to Participants at

least annually.  This subsection 10(g)

shall not apply to key Employees whose duties in connection with the Company

assure them access to equivalent information.

 

Repurchase Limitation.  The terms of any repurchase option shall be

specified in the Stock Award and may be either at Fair Market Value at the time

of repurchase or at not less than the original

 

13

 

purchase price.  To the extent

required by Section 260.140.41 and Section 260.140.42 of Title 10 of the

California Code of Regulations at the time a Stock Award is made, any repurchase

option contained in a Stock Award granted prior to the Listing Date to a person

who is not an Officer, Director or Consultant shall be upon the terms described

below:

 

(xxx)       Fair Market Value.  If

the repurchase option gives the Company the right to repurchase the shares of

Common Stock upon termination of employment at not less than the Fair Market

Value of the shares of Common Stock to be purchased on the date of termination

of Continuous Service, then (i) the right to repurchase shall be exercised for

cash or cancellation of purchase money indebtedness for the shares of Common

Stock within ninety (90) days of termination of Continuous Service (or in the

case of shares of Common Stock issued upon exercise of Stock Awards 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 Participant (for

example, for purposes of satisfying the requirements of Section 1202(c)(3) of

the Code regarding “qualified small business stock”) and (ii) the right

terminates when the shares of Common Stock become publicly traded.

 

(xxxi)      Original Purchase Price.  If

the repurchase option gives the Company the right to repurchase the shares of

Common Stock upon termination of Continuous Service at the original purchase

price, then (i) the right to repurchase at the original purchase price shall

lapse at the rate of at least twenty percent (20%) of the shares of Common

Stock per year over five (5) years from the date the Stock Award is granted

(without respect to the date the Stock Award was exercised or became

exercisable) and (ii) the right to repurchase shall be exercised for cash or

cancellation of purchase money indebtedness for the shares of Common Stock

within  ninety (90) days of termination

of Continuous Service (or in the case of shares of Common Stock issued upon

exercise of Options 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 Participant (for example, for purposes of satisfying the

requirements of Section 1202(c)(3) of the Code regarding “qualified small

business stock”).

 

ADJUSTMENTS

UPON CHANGES IN STOCK.

 

Capitalization Adjustments.  If any change is made in the Common Stock

subject to the Plan, or subject to any Stock Award, without the receipt of

consideration by the Company (through merger, consolidation, reorganization,

recapitalization, reincorporation, stock dividend, dividend in property other

than cash, stock split, liquidating dividend, combination of shares, exchange

of shares, change in corporate structure or other transaction not involving the

receipt of consideration by the Company), the Plan will be appropriately

adjusted in the class(es) and maximum number of securities subject to the Plan

pursuant to subsection 4(a) and the maximum number of securities subject to

award to any person pursuant to subsection 5(c), and the outstanding Stock

Awards will be appropriately adjusted in the class(es) and number of securities

and price per share of Common Stock subject to such outstanding Stock

Awards.  The Board shall make such

adjustments, and its determination shall be final, binding and conclusive.  (The conversion of any convertible

securities of the Company shall not be treated as a transaction “without

receipt of consideration” by the Company.)

 

Dissolution or Liquidation.  In the event of a dissolution or liquidation

of the Company, then all outstanding Stock Awards shall terminate immediately

prior to such event.

 

(d)           Asset Sale, Merger, Consolidation or Reverse Merger.

 

(i)            In the event of (1) a sale,

lease or other disposition of all or substantially all of the assets of the

Company, (2) a merger or

consolidation in which the Company is not the surviving corporation or (3) a

reverse merger in which the Company is the surviving corporation but the shares

of

 

14

 

Common

Stock outstanding immediately preceding the merger are converted by virtue of

the merger into other property, whether in the form of securities, cash or

otherwise (individually, a “Corporate Transaction”), then any surviving

corporation or acquiring corporation shall assume any Stock Awards outstanding

under the Plan or shall substitute similar stock awards (including an award to

acquire the same consideration paid to the shareholders in the Corporate

Transaction for those outstanding under the Plan).

 

(ii)           In the event any surviving corporation or

acquiring corporation refuses to assume such Stock Awards or to substitute

similar stock awards for those

outstanding under the Plan, then with respect to Stock Awards held by

Participants whose Continuous Service has not terminated, the vesting of such

Stock Awards (and, if applicable, the time during which such Stock Awards may

be exercised) shall be accelerated in full, and the Stock Awards shall

terminate if not exercised (if applicable) at or prior to the Corporate

Transaction.

 

(iii)         With respect to any other Stock Awards

outstanding under the Plan, such Stock Awards shall terminate if not exercised

(if applicable) prior to the Corporate Transaction.

 

(iv)          In the event any surviving or acquiring

corporation does assume such Stock Awards or substitute similar Stock Awards

for those outstanding under the Plan, then upon the Participant’s Voluntary

Termination with Good Reason or the Participant’s Involuntary Termination

without Cause, the vesting of such Stock Awards and the time during which such

Stock Awards may be exercised shall be accelerated upon the occurrence of such

event; provided, however, that no

such acceleration shall occur in the event the Participant’s Continuous Service

terminates due to the Participant’s death or Disability.

 

FCG Transactions.  Notwithstanding anything to the contrary in

this Section 11, any transaction involving only entities controlling,

controlled by or under common control with the Company shall not be deemed a

“Corporate Transaction” subject to this Section 11 unless otherwise approved by

the Company’s Board of Directors.

 

Amendment of the Plan

and Stock Awards.

 

Amendment of Plan.  The Board at any time, and from time to

time, may amend the Plan.  However,

except as provided in Section 11 relating to adjustments upon changes in Common

Stock, no amendment shall be effective unless approved by the shareholders of

the Company to the extent shareholder approval is necessary to satisfy the

requirements of Section 422 of the Code, Rule 16b-3 or any Nasdaq or securities

exchange listing requirements.

 

Shareholder Approval. The Board may, in its sole discretion,

submit any other amendment to the Plan for shareholder approval, including, but

not limited to, amendments to the Plan intended to satisfy the requirements of

Section 162(m) of the Code and the regulations thereunder regarding the

exclusion of performance-based compensation from the limit on corporate

deductibility of compensation paid to certain executive officers.

 

Contemplated Amendments.  It is expressly contemplated that the Board

may amend the Plan in any respect the Board deems necessary or advisable to

provide eligible Employees with the maximum benefits provided or to be provided

under the provisions of the Code and the regulations promulgated thereunder

relating to Incentive Stock Options and/or to bring the Plan and/or Incentive

Stock Options granted under it into compliance therewith.

 

15

 

No Impairment of Rights.  Rights under any Stock Award granted before

amendment of the Plan shall not be impaired by any amendment of the Plan unless

(i) the Company requests the consent of the Participant and (ii) the

Participant consents in writing.

 

Amendment of Stock Awards.  The Board at any time, and from time to

time, may amend the terms of any one or more Stock Awards; provided, however,

that the rights under any Stock Award shall not be impaired by any such

amendment unless (i) the Company requests the consent of the Participant and

(ii) the Participant consents in writing.

 

Termination or

Suspension of the Plan.

 

Plan Term.  The Board may suspend or terminate the Plan

at any time.  Unless sooner terminated,

the Plan shall terminate on the day before the tenth (10th) anniversary of the

date the Plan is adopted by the Board or approved by the shareholders of the

Company, whichever is earlier.  No Stock

Awards may be granted under the Plan while the Plan is suspended or after it is

terminated.

 

No Impairment of Rights.  Suspension or termination of the Plan shall

not impair rights and obligations under any Stock Award granted while the Plan

is in effect except with the written consent of the Participant.

 

Effective Date of

Plan.

 

The Plan shall become effective upon adoption by the Board, but no

Stock Award shall be exercised (or, in the case of a stock bonus, shall be granted)

unless and until the Plan has been approved by the shareholders of the Company,

which approval shall be within twelve (12) months before or after the date the

Plan is adopted by the Board.

 

Choice of Law.

 

The law of the State of Delaware shall govern all questions concerning

the construction, validity and interpretation of this Plan, without regard to

such state’s conflict of laws rules.

 

16Exhibit 10

Exhibit 10.18.1

 

Doghouse

Enterprises, Inc.

2000 Equity

Incentive Plan

 

Stock Option

Agreement

(Incentive

Stock Option or Nonstatutory Stock Option)

 

Pursuant to your Notice of Grant of Stock

Option (“Grant Notice”) and this Stock Option Agreement, Doghouse Enterprises,

Inc. (the “Company”) has granted you an option under its 2000 Equity Incentive

Plan (the “Plan”) to purchase the number of shares of the Company’s Common

Stock set forth in your Grant Notice at the exercise price set forth in your

Grant Notice.  Defined terms not

explicitly defined in this Stock Option Agreement but defined in the Plan shall

have the same definitions as in the Plan.

The details of your option are as follows:

 

1.             Vesting.  Subject to the limitations contained herein,

your option will vest as provided in your Grant Notice, provided that vesting

will cease upon the termination of your Continuous Service.

 

2.             Number of Shares and Exercise Price.  The

number of shares of Common Stock subject to your option and your exercise price

per share referenced in your Grant Notice may be adjusted from time to time for

Capitalization Adjustments, as provided in the Plan.

 

3.             Prohibition on Exercise prior to Initial Public

Offering. 

Notwithstanding anything to the contrary in this Agreement, unless

approved by the Company’s Board of Directors, you may not exercise any portion

of this option, whether or not vested, prior to the Listing Date.

 

4.             Method of Payment.  Payment of the exercise price is due in full upon exercise of all or any

part of your option.  You may elect to

make payment of the exercise price in cash or by check or in any other manner permitted by the Company,

which may include one or more of the following:

 

(a)                                                     In

the Company’s sole discretion at the time your option is exercised and provided

that at the time of exercise the Common Stock is publicly traded and quoted

regularly in The Wall Street Journal,

pursuant to a program developed under Regulation T as promulgated by the

Federal Reserve Board that, prior to the issuance of Common Stock, results in

either the receipt of cash (or check) by the Company or the receipt of

irrevocable instructions to pay the aggregate exercise price to the Company

from the sales proceeds.

 

(b)                                                     Provided

that at the time of exercise the Common Stock is publicly traded and quoted

regularly in The Wall Street Journal,

by delivery of already-owned shares of Common Stock either that you have held

for the period required to avoid a charge to the Company’s reported earnings

(generally six months) or that you did not acquire, directly or indirectly from

the Company, that are owned free and clear of any liens, claims, encumbrances

or security interests, and that are valued at Fair Market Value on the date of

exercise.  “Delivery” for these

purposes, in the sole discretion of the Company at the time you exercise your

option, shall include delivery to the Company of your attestation of ownership

of such shares of Common Stock in a form approved by the Company.  Notwithstanding the foregoing, you may not

exercise your option by tender to the Company of Common Stock to the extent

such tender would violate the provisions of any law, regulation or agreement

restricting the redemption of the Company’s stock.

 

5.             Whole Shares.  You may exercise your option

only for whole shares of Common Stock.

 

 

6.             Securities Law Compliance.  Notwithstanding

anything to the contrary contained herein, following the Listing Date you may

not exercise your option unless the shares of Common Stock issuable upon such

exercise are then registered under the Securities Act or, if such shares of

Common Stock are not then so registered, the Company has determined that such

exercise and issuance would be exempt from the registration requirements of the

Securities Act.  The exercise of your option

must also comply with other applicable laws and regulations governing your

option, and you may not exercise your option if the Company determines that

such exercise would not be in material compliance with such laws and

regulations.

 

7.             Term. 

The term of your option commences on the Date of

Grant and expires upon the earliest

of the following:

 

(a)                                                     three

(3) months after the termination of your Continuous Service for any reason

other than your Disability or death, provided that if your termination occurs

following the Listing Date and during any part of the three (3) month period

following your termination your option is not exercisable solely because of the

condition set forth in the preceding paragraph relating to “Securities Law

Compliance,” your option shall not expire until the earlier of the Expiration

Date or until it shall have been exercisable for an aggregate period of three

(3) months after the termination of your Continuous Service;

 

(b)                                                     twelve

(12) months after the termination of your Continuous Service due to your

Disability;

 

(c)                                                     eighteen

(18) months after your death if you die either during your Continuous Service

or within three (3) months after your Continuous Service terminates;

 

(d)                                                     the

Expiration Date indicated in your Grant Notice; or

 

(e)                                                     the

day before the tenth (10th) anniversary of the Date of Grant.

 

If

your option is an incentive stock option, note that, to obtain the federal income tax advantages associated with

an “incentive stock option,” the Code requires that at all times beginning on

the date of grant of your option and ending on the day three (3) months before

the date of your option’s exercise, you must be an employee of the Company or

an Affiliate, except in the event of your death or Disability.  The Company has provided for extended

exercisability of your option under certain circumstances for your benefit but

cannot guarantee that your option will necessarily be treated as an “incentive

stock option” if you continue to provide services to the Company or an

Affiliate as a Consultant or Director after your employment terminates or if

you otherwise exercise your option more than three (3) months after the date

your employment terminates.

 

8.             Exercise.

 

(a)                                                     Unless

otherwise prohibited under Section 3 above, you may exercise the vested portion

of your option during its term by delivering a Notice of Exercise (in a form

designated by the Company) together with the exercise price to the Secretary of

the Company, or to such other person as the Company may designate, during

regular business hours, together with such additional documents as the Company

may then require.

 

(b)                                                     By

exercising your option you agree that, as a condition to any exercise of your

option, the Company may require you to enter into an arrangement providing for

the  payment by  you  to the Company of any tax withholding obligation of the Company arising

by reason of (1) the

 

2

 

exercise of your

option, (2) the lapse of any substantial risk of forfeiture to which the shares

of Common Stock are subject at the time of exercise, or (3) the disposition of

shares of Common Stock acquired upon such exercise.

 

(c)                                                     If

your option is an incentive stock option, by exercising your option you agree

that you will notify the Company in writing within fifteen (15) days after the

date of any disposition of any of the shares of the Common Stock issued upon

exercise of your option that occurs within two (2) years after the date of your

option grant or within one (1) year after such shares of Common Stock are

transferred upon exercise of your option.

 

(d)                                                     By

exercising your option you agree that the Company (or a representative of the

underwriter(s)) may, in connection with the first underwritten registration of

the offering of any securities of the Company under the Securities Act, require

that you not sell, dispose of, transfer, make any short sale of, grant any

option for the purchase of, or enter into any hedging or similar transaction

with the same economic effect as a sale, any shares of Common Stock or other

securities of the Company held by you, for a period of time specified by the

underwriter(s) (not to exceed one hundred eighty (180) days) following the

effective date of the registration statement of the Company filed under the

Securities Act.  You further agree to

execute and deliver such other agreements as may be reasonably requested by the

Company and/or the underwriter(s) that are consistent with the foregoing or

that are necessary to give further effect thereto.  In order to enforce the foregoing covenant, the Company may

impose stop-transfer instructions with respect to your shares of Common Stock

until the end of such period.

 

9.             Transferability.  Your

option is not transferable, except by will or by the laws of descent and

distribution, and is exercisable during your life only by you.  Notwithstanding the foregoing, by delivering

written notice to the Company, in a form satisfactory to the Company, you may

designate a third party who, in the event of your death, shall thereafter be

entitled to exercise your option.

 

10.          Right of First Refusal.  Shares

of Common Stock that you acquire upon exercise of your option are subject to

any right of first refusal that may be described in the Company’s bylaws in

effect at such time the Company elects to exercise its right.  The Company’s right of first refusal shall

expire on the Listing Date.

 

11.          Right of Repurchase.  To the extent provided in the Company’s bylaws as amended from time to

time, the Company shall have the right to repurchase all or any part of the

shares of Common Stock you acquire pursuant to the exercise of your option.

 

12.          Option not a Service Contract.  Your option is not an employment or service contract, and nothing in your

option shall be deemed to create in any way whatsoever any obligation on your

part to continue in the employ of the Company or an Affiliate, or of the

Company or an Affiliate to continue your employment.  In addition, nothing in your option shall obligate the Company or

an Affiliate, their respective shareholders, Boards of Directors, Officers or

Employees to continue any relationship that you might have as a Director or

Consultant for the Company or an Affiliate.

 

13.          Withholding Obligations.

 

(a)                                                     At

the time you exercise your option, in whole or in part, or at any time

thereafter as requested by the Company, you hereby authorize withholding from

payroll and any other amounts payable to you, and otherwise agree to make

adequate provision for (including by means of a “cashless exercise” pursuant to

a program developed under Regulation T as promulgated by the Federal Reserve

Board to the extent permitted by the Company), any sums required to satisfy the

 

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federal,

state, local and foreign tax withholding obligations of the Company or an

Affiliate, if any, which arise in connection with your option.

 

(b)                                                     Upon

your request and subject to approval by the Company, in its sole discretion,

and compliance with any applicable conditions or restrictions of law, the

Company may withhold from fully vested shares of Common Stock otherwise

issuable to you upon the exercise of your option a number of whole shares of

Common Stock having a Fair Market Value, determined by the Company as of the

date of exercise, not in excess of the minimum amount of tax required to be

withheld by law.  If the date of

determination of any tax withholding obligation is deferred to a date later

than the date of exercise of your option, share withholding pursuant to the

preceding sentence shall not be permitted unless you make a proper and timely

election under Section 83(b) of the Code, covering the aggregate number of

shares of Common Stock acquired upon such exercise with respect to which such

determination is otherwise deferred, to accelerate the determination of such

tax withholding obligation to the date of exercise of your option.  Notwithstanding the filing of such election,

shares of Common Stock shall be withheld solely from fully vested shares of

Common Stock determined as of the date of exercise of your option that are

otherwise issuable to you upon such exercise. 

Any adverse consequences to you arising in connection with such share

withholding procedure shall be your sole responsibility.

 

(c)                                                     You may not exercise your option unless the tax withholding obligations

of the Company and/or any Affiliate are satisfied.  Accordingly, you may not be able to exercise your option when

desired even though your option is vested, and the Company shall have no

obligation to issue a certificate for such shares of Common Stock or release

such shares of Common Stock from any escrow provided for herein.

 

14.          Notices.  Any notices provided for in your option or

the Plan shall be given in writing and shall be deemed effectively given upon

receipt or, in the case of notices delivered by mail by the Company to you,

five (5) days after deposit in the United States mail, postage prepaid,

addressed to you at the last address you provided to the Company.

 

15.          Governing Plan Document.  Your

option is subject to all the provisions of the Plan, the provisions of which

are hereby made a part of your option, and is further subject to all

interpretations, amendments, rules and regulations, which may from time to time

be promulgated and adopted pursuant to the Plan.  In the event of any conflict between the provisions of your

option and those of the Plan, the provisions of the Plan shall control.

 

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