Document:

Exhibit 10.8

 

RISKMETRICS GROUP, INC.

 

2004 STOCK OPTION PLAN

 

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I

  	
   

  	
  PURPOSE

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  	
  DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  	
  ADMINISTRATION

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  	
  SHARE AND
  OTHER LIMITATIONS

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  	
  ELIGIBILITY

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
   

  	
  STOCK
  OPTIONS

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
   

  	
  NON
  TRANSFERABILITY AND TERMINATION

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
   

  	
  CHANGE IN
  CONTROL PROVISIONS

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
   

  	
  TERMINATION
  OR AMENDMENT OF PLAN

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
   

  	
  RIGHTS OF
  FIRST OFFER AND REPURCHASE

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI

  	
   

  	
  UNFUNDED
  PLAN

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII

  	
   

  	
  GENERAL
  PROVISIONS

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIII

  	
   

  	
  EFFECTIVE
  DATE OF PLAN

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIV

  	
   

  	
  TERM OF PLAN

  	
   

  	
  27

  

 

 

RiskMetrics Group, Inc.

 

 

2004 STOCK
OPTION PLAN

 

 

ARTICLE I

 

PURPOSE

 

The
purpose of RiskMetrics Group, Inc. 2004 Stock Option Plan is to enhance the
profitability and value of the Company by retaining and attracting employees,
consultants and directors of outstanding talent and ability and to raise the
level of equity ownership by such individuals in order to strengthen the
mutuality of interests between such individuals and the Company’s stockholders.

 

ARTICLE II

 

DEFINITIONS

 

When used in
this Plan, the following terms shall have the designated meanings, unless a
different meaning is clearly required by the context:

 

2.1           “Affiliate” means each of the following: (a) any Subsidiary;
(b) any Parent; (c) any corporation, trade or business (including, without
limitation, a partnership or limited liability company) which is directly or
indirectly controlled 50% or more (whether by ownership of stock, assets or an
equivalent ownership interest or voting interest) by the Company or any Parent
or Subsidiary; and (d) any other entity in which the Company or any Parent or Subsidiary
has a majority equity interest and which is designated as an “Affiliate” by
resolution of the Committee.

 

2.2           “Board” means the Board of Directors of the Company.

 

2.3           “Cause” means, with respect to a Participant’s Termination
(other than a Participant that is an Investor Designee):  (a) in the case where there is an employment,
severance or other agreement governing the relationship between the Participant
and the Company or Affiliate that includes a definition of “cause,” “cause” as
defined in such agreement; or (b) in the case where there is no such agreement
that defines “cause,” (i) any action by such individual which constitutes
dishonesty relating to the Company, a willful violation of law (other than
minor traffic offenses and similar 

 

1

 

minor offenses) or a
fraud against the Company; (ii) the individual is charged by indictment for, is
convicted of or pleads guilty to, a felony or other crime; (iii) gross
negligence or willful misconduct by the individual relating to the Company or
his or her services to the Company; (iv) any violation by the individual of his
or her fiduciary obligations to the Company; or (v) in the case of an employee
of the Company, willful failure to comply with any material instruction of the
Board or any senior executive of the Company who supervises such employee.
Notwithstanding the foregoing, in determining whether a Participant’s
Termination is for Cause pursuant to this Section 2.3, for the purposes of
Article VIII (relating to a Participant’s Termination following a Change in
Control), clause (v), above, shall be excluded.

 

2.4           “Change in Control” has the meaning set forth in Article
VIII.

 

2.5           “Change in Control Price” has the meaning set forth in
Section 8.1(b).

 

2.6           “Code” means the Internal Revenue Code of 1986, as amended. Any
reference to any section of the Code shall also be a reference to any successor
provision and any Treasury Regulation promulgated thereunder.

 

2.7           “Committee” means: (a) with respect to the application of
this Plan to Eligible Employees and Consultants, a committee or subcommittee of
the Board appointed from time to time by the Board, except that on or after a
Public Offering, the Committee shall be a committee or subcommittee of the Board
appointed from time to time which shall consist solely of two or more
non-employee directors, each of whom is intended to be, to the extent required
by Rule 16b-3, a “non-employee director” as defined in Rule 16b-3 and (b) with
respect to the application of this Plan to Non-Employee Directors, the Board
shall be the Committee. If for any reason the appointed Committee does not meet
the requirements of Rule 16b-3, such noncompliance shall not affect the
validity of grants, interpretations or other actions of the Committee. If the
Committee does not exist, or for any other reason determined by the Board, the
Board may take any action under the Plan that would otherwise be the
responsibility of the Committee and, in such a case, all references herein to
the Committee shall refer to the Board.

 

2.8           “Common Stock” means the shares of common stock, par value
$.01 per share, of the Company.

 

2.9           “Company” means RiskMetrics Group, Inc., a Delaware
corporation, and its successors by operation of law.

 

2

 

2.10         “Consultant” means, solely to the extent provided for in
Rule 701 under the Securities Act or, following the filing of a Securities Act
Form S-8 with respect to the Plan, solely to the extent provided for in
Securities Act Form S-8, any Person who is an advisor or consultant to the
Company or its Affiliates.

 

2.11         “Detrimental Activity” means: (a) the disclosure to anyone
outside the Company or its Affiliates, or the use in any manner other than in
the furtherance of the Company’s or its Affiliate’s business, without written
authorization from the Company, of any confidential information or proprietary
information relating to the business of the Company or its Affiliates that is
acquired by a Participant prior to the Participant’s Termination; (b) activity
while employed or performing services that results, or if known could result,
in the Participant’s Termination that is classified by the Company as a
Termination for Cause; (c) any attempt, directly or indirectly, to solicit,
induce or hire (or the identification for solicitation, inducement or hire) any
non-clerical employee of the Company or its Affiliates to be employed by, or to
perform services for, the Participant or any Person with which the Participant
is associated (including, but not limited to, employers, creditors, persons for
whom the Participant performs consulting work, and entities in which the
Participant is a partner or equity owner) or any Person from which the
Participant receives direct or indirect compensation or fees as a result of
such solicitation, inducement or hire (or the identification for solicitation,
inducement or hire) without, in all cases, written authorization from the
Company; (d) any attempt, directly or indirectly, to solicit in a competitive
manner any current or prospective customer of the Company or its Affiliates
without, in all cases, written authorization from the Company; (e) the
Participant’s Disparagement, or inducement of others to do so, of the Company
or its Affiliates or their past and present officers, directors, employees or
products;  (f) without written
authorization from the Company, the rendering of services for any organization,
or engaging, directly or indirectly, in any business, which is competitive with
the Company or its Affiliates, or the rendering of services to such
organization or business if such organization or business is otherwise
prejudicial to or in conflict with the interests of the Company or its
Affiliates; or (g) breach of any agreement between the Participant and the
Company or an Affiliate (including, without limitation, any employment
agreement or non-competition or non-solicitation agreement). Unless otherwise
determined by the Committee at grant, Detrimental Activity shall not be deemed
to occur after the end of the one year period following the Participant’s
Termination. For purposes of sub-sections (a), (c), (d) and (f) above, the
Committee shall have authority to provide the Participant with written
authorization to engage in the activities contemplated thereby and no other
person shall have authority to provide the Participant with such authorization.

 

3

 

2.12         “Disability” means, with respect to a Participant’s
Termination, the inability of an employee or member of the Board to perform all
or a substantial part of his or her services, or in the case of a Board member,
any of his or her material duties, as a result of mental or physical defect or
illness for a period of 90 consecutive days or 120 non-consecutive days during
any 12 month period, as determined by the Board in good faith, which
determination shall be made by the members of the Board who are not the subject
of such determination.

 

2.13         “Disparagement” means making comments or statements to the
press, the Company’s or its Affiliates’ employees, consultants or any
individual or entity with whom the Company or its Affiliates has a business
relationship which could reasonably be expected to adversely affect in any
manner: (a) the conduct of the business of the Company or its Affiliates
(including, without limitation, any products or business plans or prospects);
or (b) the business reputation of the Company or its Affiliates, or any of
their products, or their past or present officers, directors or employees.

 

2.14         “Effective Date” means the effective date of this Plan as
defined in Article XIII.

 

2.15         “Eligible Employee” means each employee of the Company or an
Affiliate. For purposes of this Plan, references to an employee of the Company
or an Affiliate shall include an individual who is not classified by the
Company or Affiliate, as applicable, as an employee but who provides services
to the Company or Affiliate through another entity.

 

2.16         “Exchange Act” means the Securities Exchange Act of 1934, as
amended. Any references to any section of the Exchange Act shall also be a
reference to any successor provision.

 

2.17         “Fair Market Value” means, for purposes of this Plan, unless
otherwise required by any applicable provision of the Code or any regulations
issued thereunder, as of any date, the last sales price reported for the Common
Stock on the applicable date: (a) as reported on the principal national
securities exchange in the United States on which it is then traded or The
Nasdaq Stock Market; or (b) if not traded on any such national securities
exchange or The Nasdaq Stock Market, as quoted on an automated quotation system
sponsored by the National Association of Securities Dealers, Inc. or if the
Common Stock shall not have been reported or quoted on such date, on the first
day prior thereto on which the Common Stock was reported or quoted; provided,
that the Committee may modify the definition of Fair Market Value to reflect
any changes in the trading practices of any exchange on which the Common Stock
is listed or traded. If the Common Stock is not readily tradable on a national
securities exchange, The Nasdaq Stock Market or any automated quotation system
sponsored by the National Association of Securities Dealers, Inc., its Fair 

 

4

 

Market Value shall
be set in good faith by the Committee. Notwithstanding anything herein to the
contrary, for purposes of granting Incentive Stock Options, “Fair Market Value”
means the price for Common Stock set in good faith by the Committee based on
reasonable methods set forth under Section 422 of the Code and the regulations
thereunder including, without limitation, a method utilizing the average of
prices of the Common Stock reported on the principal national securities
exchange on which it is then traded during a reasonable period designated by
the Committee.

 

2.18         “Family Member” means, solely to the extent provided for in
Rule 701 under the Securities Act or, following the filing of a Securities Act
Form S-8 with respect to the Plan, solely to the extent provided for in
Securities Act Form S-8, any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law,
including adoptive relationships, any person sharing the Participant’s
household (other than a tenant or employee), a trust in which these persons
have more than 50% of the beneficial interest, a foundation in which these
persons (or the Participant) control the management of assets, and any other
entity in which these persons (or the Participant) own more than 50% of the
voting interests or as otherwise defined in Rule 701 under the Securities Act
or Securities Act Form S-8, as applicable.

 

2.19         “Incentive Stock Option” means any Stock Option awarded to
an Eligible Employee under this Plan intended to be and designated as an “Incentive
Stock Option” within the meaning of Section 422 of the Code.

 

2.20         “Investor Designee” means each Non-Employee Director
appointed by the Investors (as defined in the Stockholders Agreement) as set
forth in Section 2.1(b) of the Investor Rights Agreement (as provided for in
the definition of Stockholders Agreement below).

 

2.21         “Non-Employee Director” means a member of the Board who is
not an employee of the Company or an Affiliate, or a member of a board of
directors of an Affiliate who is not an employee of the Company or an
Affiliate.

 

2.22         “Non-Qualified Stock Option” means any Stock Option awarded
under this Plan that is not an Incentive Stock Option.

 

2.23         “Parent” means any parent corporation of the Company within
the meaning of Section 424(e) of the Code.

 

2.24         “Participant” means any Eligible Employee, Non-Employee
Director or Consultant to whom a Stock Option has been granted under this Plan.

 

5

 

2.25         “Person” means any individual, corporation, partnership,
limited liability company, firm, joint venture, association, joint-stock
company, trust, incorporated organization, governmental or regulatory or other
entity.

 

2.26         “Plan” means this RiskMetrics Group, Inc. 2004 Stock Option
Plan, as amended from time to time.

 

2.27         “Public Offering” means the Company’s sale of shares of Common
Stock in a bona fide, firm commitment underwriting pursuant to a registration
statement on Form S-1 (or a successor or other applicable form) under the
Securities Act or other registration of shares of Common Stock under Section 12
of the Exchange Act.

 

2.28         “Rule 16b-3” means Rule 16b-3 under Section 16(b) of the
Exchange Act as then in effect or any successor provisions.

 

2.29         “Securities Act” means the Securities Act of 1933, as
amended and all rules and regulations promulgated thereunder. Any reference to
any section of the Securities Act shall also be a reference to any successor
provision.

 

2.30         “Stockholders Agreement” means the stockholders agreement,
as amended and restated, dated as of June 14, 2004, among the Company and the
stockholders of the Company, as the same may be amended from time to time, or
any successor agreement; and the Investor Rights Agreement dated as of June 14,
2004, among the Company and the stockholders of the Company identified therein,
as the same may be amended from time to time, or any successor agreement, to
the extent by the terms of such agreement the Participant is required to sign
the Investor Rights Agreement.

 

2.31         “Stock Option” or “Option” means any option to purchase
shares of Common Stock granted to Eligible Employees, Non-Employee Directors or
Consultants under Article VI.

 

2.32         “Subsidiary” means any subsidiary corporation of the Company
within the meaning of Section 424(f) of the Code.

 

2.33         “Ten Percent Stockholder” means a person owning stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company, its Subsidiaries or its Parent.

 

2.34         “Termination” means a Termination of Consultancy,
Termination of Directorship or Termination of Employment, as applicable.

 

6

 

2.35         “Termination of Consultancy” means: (a) that the Consultant
is no longer acting as a consultant to the Company or an Affiliate; or (b) when
an entity which is retaining a Participant as a Consultant ceases to be an
Affiliate unless the Participant otherwise is, or thereupon becomes, a
Consultant to the Company or another Affiliate at the time the entity ceases to
be an Affiliate. In the event that a Consultant becomes an Eligible Employee or
a Non-Employee Director upon the termination of his or her consultancy, unless
otherwise determined by the Committee, in its sole discretion, no Termination
of Consultancy shall be deemed to occur until such time as such Consultant is
no longer a Consultant, an Eligible Employee or a Non-Employee Director. The
Committee may otherwise define Termination of Consultancy in the Stock Option
agreement or, if no rights of a Participant are reduced, may otherwise define
Termination of Consultancy thereafter.

 

2.36         “Termination of Directorship” means that the Non-Employee
Director has ceased to be a director of the Company or a member of a board of
directors of an Affiliate; except that if a Non-Employee Director becomes an
Eligible Employee or a Consultant upon the termination of his or her
directorship, the date he or she ceased to be a director of the Company or a
member of a board of directors of an Affiliate and becomes an Eligible Employee
or Consultant shall not be treated as a Termination of Directorship unless and
until the Participant has a Termination of Employment or Termination of
Consultancy, as the case may be.

 

2.37         “Termination of Employment” means: (a) a termination of
employment (for reasons other than a military or personal leave of absence
granted by the Company) of a Participant from the Company and its Affiliates;
or (b) when an entity which is employing a Participant ceases to be an
Affiliate, unless the Participant otherwise is, or thereupon becomes, employed
by the Company or another Affiliate at the time the entity ceases to be an
Affiliate. In the event that an Eligible Employee becomes a Consultant or a
Non-Employee Director upon the termination of his or her employment, unless
otherwise determined by the Committee, in its sole discretion, no Termination
of Employment shall be deemed to occur until such time as such Eligible
Employee is no longer an Eligible Employee, a Consultant or a Non-Employee
Director. The Committee may otherwise define Termination of Employment in the
Stock Option agreement or, if no rights of a Participant are reduced, may
otherwise define Termination of Employment thereafter.

 

2.38         “Transfer” means (a) when used as a noun, any direct or
indirect transfer, sale, assignment, pledge, hypothecation, encumbrance or
other disposition (including the issuance of equity in a Person), whether for
value or no value and whether voluntary or involuntary (including by operation
of law), and (b) when used as a verb, to directly or indirectly transfer, sell,
assign, pledge, encumber, charge, hypothecate or otherwise dispose of 

 

7

 

(including the
issuance of equity in a Person) whether for value or for no value and whether
voluntarily or involuntarily (including by operation of law). “Transferred”, “Transferable”
and” Transferability” shall have a correlative meaning.

 

ARTICLE III

 

ADMINISTRATION

 

3.1           The Committee. The Plan shall be administered
and interpreted by the Committee.

 

3.2           Grants of Stock Options. The Committee shall have full
authority to grant Stock Options to Eligible Employees and Consultants and the
Board shall have the full authority to grant Stock Options to Non-Employee
Directors pursuant to the terms of this Plan. All Stock Options shall be
evidenced by and subject to the terms of a written agreement executed by the
Company and the Participant. In particular, the Committee (and, the Board, with
respect to Non-Employee Directors) shall have the authority:

 

(a)           to select the Eligible Employees, Consultants and
Non-Employee Directors to whom Stock Options shall from time to time be granted
hereunder;

 

(b)           to determine, in accordance with the terms of this Plan, the
number of shares of Common Stock to be covered by each Stock Option granted
hereunder;

 

(c)           to determine the terms and conditions, not inconsistent with
the terms of this Plan, of any Stock Option granted hereunder (including, but
not limited to, the purchase price, any restriction or limitation, any vesting
schedule or acceleration thereof and any forfeiture restrictions or waiver thereof,
regarding any Stock Option and the shares of Common Stock relating thereto,
based on such factors, if any, as the Committee shall determine, in its sole
discretion);

 

(d)           to determine whether and under what circumstances a Stock
Option may be settled in cash, Common Stock and/or restricted stock under
Section 6.3;

 

(e)           to determine whether, to what extent and under what
circumstances to provide loans (which shall be on a recourse basis and bear
interest at the rate the Committee shall provide) to Participants in order to
exercise Stock Options under this Plan;

 

8

 

(f)            to determine whether a Stock
Option is an Incentive Stock Option or Non-Qualified Stock Option;

 

(g)           to determine whether to require an Eligible Employee,
Consultant or Non-Employee Director, as a condition of the granting of any
Stock Option, not to sell or otherwise dispose of shares of Common Stock
acquired pursuant to the exercise of the Option for a period of time as
determined by the Committee in its sole discretion, following the date of the
acquisition of such Stock Option;

 

(h)           to modify, extend or renew a Stock Option, subject to
Article IX herein,  provided, however,
that if an Option is modified, extended or renewed and thereby deemed to be the
issuance of a new Option under the Code or the applicable accounting rules, the
exercise price of a Option may continue to be the original exercise price even
if less than the Fair Market Value of the Common Stock at the time of such modification,
extension or renewal; and

 

(i)            to offer to buy out an Option
previously granted, based on such terms and conditions as the Committee shall
establish and communicate to the Participant at the time such offer is made.

 

3.3           Guidelines. Subject to Article IX hereof,
the Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing this Plan and perform
all acts, including the delegation of its administrative responsibilities, as
it shall, from time to time, deem advisable; to construe and interpret the
terms and provisions of this Plan and any Stock Option issued under this Plan
(and any Stock Option agreements relating thereto); and to otherwise supervise
the administration of this Plan. The Committee may correct any defect, supply
any omission or reconcile any inconsistency in this Plan or in any Stock Option
agreement relating thereto in the manner and to the extent it shall deem
necessary to effectuate the purpose and intent of this Plan. The Committee may
adopt special guidelines and provisions for persons who are residing in or
employed in, or subject to the taxes of, any domestic or foreign jurisdictions
to comply with applicable tax and securities laws and may impose any
limitations and restrictions that it deems necessary to comply with the
applicable tax and securities laws of such domestic or foreign jurisdictions. To
the extent applicable, this Plan is intended to comply with the applicable
requirements of Rule 16b-3 and shall be limited, construed and interpreted in a
manner so as to comply therewith.

 

9

 

3.4           Decisions Final. Any decision, interpretation
or other action made or taken in good faith by or at the direction of the
Company, the Board or the Committee (or any of its members) arising out of or
in connection with this Plan shall be within the absolute discretion of all and
each of them, as the case may be, and shall be final, binding and conclusive on
the Company and all employees and Participants and their respective heirs,
executors, administrators, successors and assigns.

 

3.5           Procedures. If the Committee is appointed,
all determinations of the Committee shall be made by a majority of its members.
The Committee or the Board shall establish additional appropriate procedures
for the operation of the Committee.

 

3.6           Designation of
Consultants/Liability.

 

(a)           The Committee may designate employees of the Company and
professional advisors to assist the Committee in the administration of this
Plan and may grant authority to officers to execute Stock Option agreements or
other documents on behalf of the Committee.

 

(b)           The Committee may employ such legal counsel, consultants and
agents as it may deem desirable for the administration of this Plan and may
rely upon any opinion received from any such counsel or consultant and any
computation received from any such consultant or agent. Expenses incurred by
the Committee or the Board in the engagement of any such counsel, consultant or
agent shall be paid by the Company. The Committee, its members and any Person
designated pursuant to sub-section (a) above shall not be liable for any action
or determination made in good faith with respect to this Plan. To the maximum
extent permitted by applicable law, no officer or former officer of the Company
or member or former member of the Committee or of the Board shall be liable for
any action or determination made in good faith with respect to this Plan or any
Stock Option granted under it.

 

3.7           Indemnification. To the maximum extent
permitted by applicable law and the Certificate of Incorporation and by-laws of
the Company, each officer and former officer and member or former member of the
Committee or the Board shall be indemnified and held harmless by the Company
against any cost or expense (including reasonable fees of counsel reasonably
acceptable to the Company) or liability (including any sum paid in settlement
of a claim with the approval of the Company), and advanced amounts necessary to
pay the foregoing at the earliest time and to the fullest extent permitted,
arising out of any act or omission to act in connection with the administration
of this Plan, except to the extent arising out of such officer’s, former
officer’s, member’s or former member’s own 

 

10

 

fraud or bad faith. Such
indemnification shall be in addition to any rights of indemnification the
employees, officers, directors or members or former officers, directors or
members may have under applicable law or under the Certificate of Incorporation
or by-laws of the Company or any Affiliate. Notwithstanding anything else
herein, this indemnification will not apply to the actions or determinations
made by an individual in his individual capacity and not as an officer or
member of the Committee or Board with regard to Stock Options granted to him or
her under this Plan.

 

ARTICLE IV

 

SHARE AND
OTHER LIMITATIONS

 

4.1           Shares. The aggregate number of shares
of Common Stock which may be issued or used for reference purposes under this
Plan or with respect to which Stock Options may be granted under this Plan
shall not exceed 3,000,000 shares of Common Stock (subject to any increase or
decrease pursuant to Section 4.2). Such shares may be either authorized and
unissued Common Stock or Common Stock held in or acquired for the treasury of
the Company or both. If any Stock Option granted under this Plan expires,
terminates or is canceled for any reason without having been exercised in full,
the number of shares of Common Stock underlying such unexercised Stock Option
shall again be available for the purposes of Stock Options under this Plan.
Shares of Common Stock acquired through the exercise of a Stock Option and
tendered as full or partial payment of the exercise price in accordance with
the terms of a Stock Option grant shall again be available for issuance under
the Plan.

 

4.2           Changes.

 

(a)           The existence of this Plan and the Stock Options granted
hereunder shall not affect in any way the right or power of the Board or the
stockholders of the Company to make or authorize (i) any adjustment,
recapitalization, reorganization or other change in the Company’s capital
structure or business, (ii) any merger or consolidation of the Company or any
Affiliate, (iii) any issuance of bonds, debentures, preferred or prior
preference stock that affects the Common Stock, (iv) the dissolution or
liquidation of the Company or any Affiliate, (v) any sale or transfer of all or
part of the assets or business of the Company or any Affiliate or (vi) any
other corporate act or proceeding.

 

11

 

(b)           Subject to the provisions of Section 8.1, in the event of
any such change in the capital structure or business of the Company by reason
of any stock split, reverse stock split, stock dividend, cash dividend
determined by the Committee to be extraordinary and non-recurring, combination
or reclassification of shares, recapitalization, or other change in the capital
structure of the Company, merger, consolidation, spin-off, reorganization,
partial or complete liquidation, issuance of rights or warrants to purchase any
Common Stock or securities convertible into Common Stock, any sale or transfer
of all or a substantial part of the Company’s assets or business, or any other
corporate transaction or event having an effect similar to any of the
foregoing, the Committee may determine in good faith that an adjustment is
necessary or appropriate under the Plan to prevent dilution or enlargement of the
rights granted to, or available for, Participants under the Plan, and may then
adjust the aggregate number and kind of shares which thereafter may be issued
under this Plan, the number and kind of shares or other property (including
cash) to be issued upon exercise of an outstanding Stock Option or other Stock
Options granted under this Plan and the purchase price thereof, in such manner
as the Committee may deem equitable. Any such adjustment by the Committee shall
be final, binding and conclusive on the Company and all Participants and
employees and their respective heirs, executors, administrators, successors and
assigns. In connection with any event described in this paragraph, the
Committee may provide, in its sole discretion, for the cancellation of any
outstanding Stock Options and payment in cash or other property in exchange
therefor. Except as provided in this Section 4.2, a Participant shall have no
rights by reason of any issuance by the Company of any class or securities
convertible into stock of any class, any subdivision or consolidation of shares
of stock of any class, the payment of any stock dividend, any other increase or
decrease in the number of shares of stock of any class, any sale or transfer of
all or part of the Company’s assets or business or any other change affecting
the Company’s capital structure or business.

 

(c)           Fractional shares of Common Stock resulting from any
adjustment in Stock Options pursuant to Section 4.2(a) or (b) shall be
aggregated until, and eliminated at, the time of exercise by rounding-down for
fractions less than one-half and rounding-up for fractions equal to or greater
than one-half, provided that with respect to Incentive Stock Options all
fractional share amounts shall be rounded down to the nearest whole share and
all purchase price amounts shall be rounded up to the nearest whole cent. No
cash settlements shall be made with respect to fractional shares eliminated by
rounding. Notice of any adjustment shall be given by the Committee to each
Participant whose Stock Option has been 

 

12

 

adjusted and such
adjustment (whether or not such notice is given) shall be effective and binding
for all purposes of this Plan.

 

4.3           Minimum Purchase Price. Notwithstanding any provision
of this Plan to the contrary, if authorized but previously unissued shares of
Common Stock are issued under this Plan, such shares shall not be issued for a
consideration which is less than as permitted under applicable law.

 

ARTICLE V

 

ELIGIBILITY

 

5.1           Non-Qualified Stock Options. All Eligible Employees,
Consultants and Non-Employee Directors and prospective employees of and
Consultants to the Company and its Affiliates are eligible to be granted
Non-Qualified Stock Options. Actual grants of Stock Options shall be determined
by the Committee in its sole discretion.

 

5.2           Incentive Stock Options. All Eligible Employees of the
Company, its Subsidiaries and its Parent (if any) are eligible to be granted
Incentive Stock Options under this Plan, provided that Incentive Stock Options
may not be granted to an Eligible Employee who is not classified by the
Company, its Subsidiary or Parent, as applicable, as an employee but who
provides services to the Company, Subsidiary or Parent through another entity. Actual
grants of Incentive Stock Options shall be determined by the Committee in its
sole discretion.

 

5.3           General Requirement. The vesting and exercise of
Stock Options granted to a prospective employee or Consultant, and the grant of
Incentive Stock Options to a prospective employee, shall be conditioned upon
such individual actually becoming an Eligible Employee or Consultant. The grant
date any such Incentive Stock Option shall be deemed to be no earlier than the
date employment commences.

 

ARTICLE VI

 

STOCK OPTIONS

 

6.1           Stock Options. Each Stock Option granted
hereunder shall be one of two types: (a) an Incentive Stock Option intended to
satisfy the requirements of Section 422 of the Code; or (b) a Non-Qualified
Stock Option.

 

13

 

6.2           Grants. Subject to the provisions of
Article V, the Committee shall have the authority to grant to any Eligible
Employee one or more Incentive Stock Options, Non-Qualified Stock Options or
both types of Stock Options. Subject to the provisions of Section 6.3(e) below,
to the extent that any Stock Option intended to be an Incentive Stock Option
does not qualify as an Incentive Stock Option (whether because of its
provisions or the time or manner of its exercise or otherwise), such Stock
Option, or the portion thereof which does not qualify, shall constitute a
separate Non-Qualified Stock Option. The Committee shall have the authority to
grant any Consultant or Non-Employee Director one or more Non-Qualified Stock
Options. Notwithstanding any other provision of this Plan to the contrary or
any provision in a Stock Option agreement to the contrary, any Stock Option
granted to an Eligible Employee of an Affiliate (other than an Affiliate which
is a Parent or a Subsidiary) shall be a Non-Qualified Stock Option.

 

6.3           Terms of Stock Options. Stock Options granted under
this Plan shall be subject to the following terms and conditions, and shall be
in such form and contain such additional terms and conditions, not inconsistent
with the terms of this Plan, as the Committee shall deem desirable:

 

(a)           Exercise Price. The exercise price per share of Common Stock subject to a
Stock Option shall be determined by the Committee at the time of grant, but
shall not be less than 100% of the Fair Market Value of a share of Common Stock
at the time of grant; provided, however, that if an Incentive Stock Option is
granted to a Ten Percent Stockholder, the exercise price per share shall be no
less than 110% of the Fair Market Value of the Common Stock.

 

(b)           Stock Option Term. The term of each Stock Option
shall be fixed by the Committee; provided, however, that no Stock Option shall
be exercisable more than 10 years after the date such Stock Option is granted;
and further provided that the term of an Incentive Stock Option granted to a
Ten Percent Stockholder shall not exceed 5 years.

 

(c)           Exercisability. Unless the Committee provides otherwise, Stock Options
shall be exercisable as follows:  (i)
Stock Options granted to Eligible Employees in connection with their
commencement of employment shall become exercisable in four substantially equal
installments on each of the first four anniversaries of the date of grant; and
(ii) annual incentive grants shall become exercisable in 36 substantially equal
installments on the first day of each of the thirty-six (36) calendar months
subsequent to the date of grant. Unless otherwise determined by the Committee
at grant, (a) in the event that a Participant other than a Non-Employee
Director engages in Detrimental Activity, as determined by the Committee, 

 

14

 

prior to any
exercise of the Stock Option, all Stock Options held by such Participant shall
thereupon terminate and expire, (b) as a condition of the exercise of a Stock
Option, a Participant other than a Non-Employee Director shall be required to
certify (or shall be deemed to have certified) at the time of exercise in a
manner acceptable to the Company that such Participant is in compliance with
the terms and conditions of the Plan and that such Participant has not engaged
in, and does not intend to engage in, any Detrimental Activity, and (c) in the
event that a Participant other than a Non-Employee Director engages in
Detrimental Activity during the one year period commencing on the date the
Stock Option is exercised, the Company shall be entitled to recover from such
Participant at any time, and such Participant shall pay over to the Company, an
amount equal to any gain realized as a result of the exercise (whether at the
time of exercise or thereafter). The foregoing provisions relating to
Detrimental Activity shall cease to apply upon a Change in Control and shall be
in addition to any and all other remedies available to the Company or an
Affiliate.

 

(d)           Method of Exercise. Subject to whatever installment
exercise, waiting period and vesting provisions apply under sub-section (c)
above, a Stock Option may be exercised in whole or in part at any time and from
time to time during the Stock Option term by giving written notice of exercise
to the Committee specifying the number of shares to be purchased. Such notice
shall be accompanied by payment in full of the purchase price as follows: (i)
in cash or by check, bank draft or money order payable to the order of the Company;
(ii) if the Common Stock is traded on a national securities exchange, The
Nasdaq Stock Market, Inc. or quoted on a national quotation system sponsored by
the National Association of Securities Dealers, and the Committee authorizes,
through a “brokered cashless exercise” procedure approved by the Committee; or
(iii) on such other terms and conditions as may be acceptable to the Committee
(including, without limitation, the relinquishment of Stock Options or by
payment in full or in part in the form of Common Stock owned by the Participant
for a period of at least 6 months or such other period necessary to avoid a
charge, for accounting purposes, against the Company’s earnings as reported in
the Company’s financial statements (and for which the Participant has good
title free and clear of any liens and encumbrances) based on the Fair Market
Value of the Common Stock on the payment date as determined by the Committee). No
shares of Common Stock shall be issued until payment therefor, as provided
herein, has been made or provided for and the conditions of Section 12.6 are
satisfied.

 

15

 

(e)           Incentive Stock Option Limitations. To the extent that the aggregate
Fair Market Value (determined as of the time of grant) of the Common Stock with
respect to which Incentive Stock Options are exercisable for the first time by
an Eligible Employee during any calendar year under this Plan and/or any other
stock option plan of the Company, any Subsidiary or any Parent exceeds $100,000,
such Options shall be treated as Non-Qualified Stock Options. In addition, if
an Eligible Employee does not remain employed by the Company, any Subsidiary or
any Parent at all times from the time an Incentive Stock Option is granted
until 3 months prior to the date of exercise thereof (or such other period as
required by applicable law), such Stock Option shall be treated as a
Non-Qualified Stock Option.

 

(f)            Form, Modification, Extension and Renewal of Stock
Options.
Subject to the terms and conditions and within the limitations of this Plan,
Stock Options shall be evidenced by such form of agreement or grant as is
approved by the Committee, and the Committee may (i) modify, extend or renew
outstanding Stock Options granted under this Plan (provided that the rights of
a Participant are not reduced without the Participant’s consent), and (ii)
accept the surrender of outstanding Stock Options (up to the extent not
theretofore exercised) and authorize the granting of new Stock Options in
substitution therefor (to the extent not theretofore exercised). Notwithstanding
the foregoing, except as otherwise approved by the Company’s stockholders, an
outstanding Stock Option may not be modified to reduce the exercise price
thereof nor may a new Stock Option at a lower exercise price be substituted for
a surrendered Stock Option, provided that the foregoing shall not apply to
adjustments or substitutions made in accordance with Section 4.2 hereof.

 

(g)           Deferred Delivery of Common Shares. The Committee may in its
discretion permit Participants to defer delivery of Common Stock acquired
pursuant to a Participant’s exercise of an Option in accordance with the terms
and conditions established by the Committee.

 

(h)           Early Exercise. The Committee may provide that a Stock Option include a
provision whereby the Participant may elect at any time before the Participant’s
Termination to exercise the Stock Option as to any part or all of the shares of
Common Stock subject to the Stock Option prior to the full vesting of the Stock
Option. 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
Committee determines to be appropriate.

 

16

 

(i)            Other Terms and Conditions. Stock Options may contain such
other provisions, which shall not be inconsistent with any of the terms of this
Plan, as the Committee shall deem appropriate.

 

ARTICLE VII

 

NON-TRANSFERABILITY
AND TERMINATION

 

7.1           Non-Transferability.

 

(a)           Except as otherwise specifically provided herein, no Stock
Option or Common Stock acquired pursuant to the exercise of a Stock Option
shall be Transferable by the Participant otherwise than by will or by the laws
of descent and distribution. All Stock Options shall be exercisable, during the
Participant’s lifetime, only by the Participant. Any attempt to Transfer any
such Stock Option shall be void and immediately cancelled, and no such Stock
Option shall in any manner be liable for or subject to the debts, contracts,
liabilities, engagements or torts of any person who shall be entitled to such
Stock Option, nor shall it be subject to attachment or legal process for or
against such person.

 

(b)           Notwithstanding the foregoing, (i) the Committee may determine
at the time of grant or thereafter that a Non-Qualified Stock Option that is
otherwise not Transferable pursuant to this Section 7.1 is Transferable to a
Family Member in whole or in part and in such circumstances, and under such
conditions, as specified by the Committee and (ii) Common Stock acquired upon
exercise of a Stock Option is Transferable in accordance with the provisions of
Article X. A Non-Qualified Stock Option that is Transferred to a Family Member
pursuant to the preceding sentence (i) may not be subsequently Transferred
otherwise than by will or by the laws of descent and distribution and (ii)
remains subject to the terms of this Plan and the Stock Option agreement. Any
shares of Common Stock acquired upon the exercise of a Stock Option by a
permissible transferee of a Stock Option or a permissible transferee pursuant
to a Transfer after the exercise of the Stock Option shall be subject to the
terms of this Plan and the Stock Option agreement, including, without
limitation, the provisions of Article X hereof.

 

7.2           Termination. The following rules apply with
regard to the Termination of a Participant (other than a Participant who is an
Investor Designee). Unless otherwise determined by the Committee at grant or,
if no rights of the Participant are reduced, thereafter:

 

17

 

(a)           Termination Other than for Cause. If a Participant’s Termination
is for any reason other than for Cause, all Stock Options that are held by such
Participant that are vested and exercisable at the time of the Participant’s
Termination may be exercised by the Participant (or, in the case of death, by
the legal representative of the Participant’s estate) at any time within a
period of 30 days from the date of such Termination, but in no event beyond the
expiration of the stated terms of such Stock Options.

 

(b)           Termination for Cause. If a Participant’s Termination
is for Cause all Stock Options, whether vested or not vested, that are held by
such Participant shall be forfeited and shall thereupon terminate and expire
without consideration as of the date of such Termination. If it is discovered
that a Participant’s Termination could be, or could have been for Cause, the
Committee may deem such Participant’s Termination to have been a Termination
for Cause. A Participant’s Termination for Cause shall be effective as of the
date of the occurrence of the event giving rise to Cause, regardless of when
the determination of Cause is made.

 

(c)           Unvested Stock Options. Stock Options that are not
vested as of the date of a Participant’s Termination for any reason shall be
forfeited and shall terminate and expire without consideration as of the date
of such Termination.

 

ARTICLE VIII

 

CHANGE IN
CONTROL PROVISIONS

 

8.1           Benefits. Notwithstanding any provision
of this Plan to the contrary, in the event of a Change in Control of the
Company, except as otherwise provided by the Committee in a Stock Option
agreement, employment agreement or other written agreement approved by the
Committee, a Participant’s Stock Option may be treated in accordance with one
of the following methods as determined by the Committee, in its sole
discretion:

 

(a)           Stock Options, whether or not then vested, may be continued,
or be assumed, or have new rights substituted therefor or be treated in
accordance with Section 4.2 hereof.

 

(b)           The Committee may provide for the purchase of any Stock
Option, for an amount of cash equal to the excess of the Change in Control
Price of the shares of Common Stock covered by such Stock Options, over the
aggregate exercise price of such Stock Options. Change in Control Price shall
mean the highest price per share of 

 

18

 

Common Stock paid in
any transaction related to the applicable Change in Control of the Company.

 

(c)           The Committee may terminate all outstanding Stock Options,
effective as of the date of the Change in Control, by delivering notice of
termination to each Participant at least 20 days prior to the effective date of
the Change in Control (or in the case of 8.3(c), the date of the consummation
of such transaction), in which case during the period from the date on which
such notice of termination is delivered until the effective date of the Change
in Control (or in the case of 8.3(c), the date of the consummation of such
transaction), each such Participant shall have the right to exercise in full
all of his or her Stock Options that are then outstanding (without regard to
any limitations on exercisability otherwise contained in the Stock Option
agreements), but any such exercise shall be contingent upon and subject to the
occurrence of the Change in Control, and, provided that, if the Change in
Control does not take place within a specified period after giving such notice
for any reason whatsoever, the notice and exercise pursuant thereto shall be
null and void.

 

8.2           Notwithstanding anything else contained herein, the
Committee may, in its sole discretion, provide for accelerated vesting of a
Stock Option upon a Change in Control.

 

8.3           Change in Control. Unless otherwise determined by
the Committee in the applicable Stock Option agreement or other written
agreement approved by the Committee, a “Change in Control” shall be deemed to
have occurred:

 

(a)           upon any “person” as such term is used in Sections 13(d) and
14(d) of the Exchange Act (other than (i) any Person who is a beneficial owner
of Common Stock of the Company as of the date immediately following the
effective date hereof or any affiliates of such Person, (ii) the Company, (iii)
any trustee or other fiduciary holding securities under any employee benefit
plan of the Company, or (iv) any company owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of Common Stock of the Company), becoming the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing more than 50% of the combined voting
power of the Company’s then outstanding securities;

 

19

 

(b)           upon a merger or consolidation of the Company with any other
corporation or entity, other than a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 50% of the combined
voting power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation; provided, however,
that a merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no person (other than those covered
by the exceptions in (a) above) acquires more than 50% of the combined voting
power of the Company’s then outstanding securities shall not constitute a
Change in Control of the Company;

 

(c)           upon the stockholders of the Company approval of a plan of
complete liquidation of the Company or upon the consummation of the sale or
disposition by the Company of all or substantially all of the Company’s assets
other than the sale or disposition of all or substantially all of the assets of
the Company to a person or persons who beneficially own, directly or
indirectly, at least 50% or more of the combined voting power of the
outstanding voting securities of the Company at the time of the sale; or

 

(d)           upon a majority of directors being elected to the Board
without having previously been nominated and approved by a majority of the
members of the Board incumbent on the day immediately preceding such election,
it being understood that the inclusion of any person in a consent solicitation
or proxy statement approved by the Board shall constitute nomination and
approval by the Board.

 

8.4           Public Offering not a Change in
Control. For
purposes of the Plan, a Public Offering shall not be deemed to be a Change in
Control.

 

20

 

ARTICLE IX

 

TERMINATION OR
AMENDMENT OF PLAN

 

Notwithstanding
any other provision of this Plan, the Board or the Committee may at any time,
and from time to time, amend, in whole or in part, any or all of the provisions
of this Plan (including any amendment deemed necessary to ensure that the
Company may comply with any regulatory requirement referred to in Article XII),
or suspend or terminate it entirely, retroactively or otherwise; provided,
however, that, unless otherwise required by law or specifically provided
herein, the rights of a Participant with respect to Stock Options granted prior
to such amendment, suspension or termination, may not be impaired without the
consent of such Participant. Any amendment that is intended to preserve the
status of Stock Options as Incentive Stock Options or otherwise to obtain
favorable tax treatment for Stock Options shall not be considered an impairment
of the rights of a Participant. To the extent required by (i) the applicable
provisions of Rule 16b-3, (ii) Section 422 of the Code, as applicable, or (iii)
by the rules of any exchange on which the Company’s Common Stock is listed, no
material amendment may be made without stockholder approval, including
amendments which would increase the aggregate number of shares of Common Stock
that may be issued under this Plan; change the classification of employees,
Consultants or Non-Employee Directors eligible to receive Stock Options under
this Plan; decrease the minimum option price of any Stock Option; or extend the
maximum Stock Option period under Section 6.3.

 

The Committee
may amend the terms of any Stock Option theretofore granted, prospectively or
retroactively, but, subject to Article IV above or as otherwise specifically
provided herein, no such amendment or other action by the Committee shall
impair the rights of any holder without the holder’s consent.

 

ARTICLE X

 

RIGHTS OF
FIRST OFFER AND REPURCHASE; TRANSFERABILITY

 

To the extent
provided in the Stockholders Agreement, the shares of Common Stock acquired by
a Participant pursuant to the exercise of a Stock Option are subject to rights
of first offer and other Transfer restrictions, obligations and other
provisions contained in the Stockholders Agreement and the Company’s right or
obligation to repurchase all or a portion of the shares of Common Stock upon a
Participant’s Termination. Notwithstanding any provision of this Plan to the
contrary, this Plan shall not restrict or limit the Company’s obligation to
purchase Marc Ethan Berman’s shares of capital stock (including without
limitation vested Stock Options) pursuant to Section 7 of the Amended and
Restated Services Agreement dated as of June 14, 2004 between the Company and
Mr. Berman, as the same may be amended or supplemented from time to time, or a
similar provision in any successor agreement between the Company and Mr.
Berman.

 

21

 

ARTICLE XI

 

UNFUNDED PLAN

 

This Plan is
intended to constitute an “unfunded” plan for incentive and deferred
compensation. With respect to any payments as to which a Participant has a
fixed and vested interest but which are not yet made to a Participant by the
Company, nothing contained herein shall give any such Participant any rights
that are greater than those of a general unsecured creditor of the Company.

 

ARTICLE XII

 

GENERAL
PROVISIONS

 

12.1         Legend. The Committee may require each
person receiving shares pursuant to a Stock Option under this Plan to represent
to and agree with the Company in writing that the Participant is acquiring the
shares without a view to distribution thereof and such other securities law
related representations as the Committee shall request. In addition to any
legend required by this Plan, any certificate representing Common Stock
acquired upon exercise of a Stock Option may bear such legends as the Company
deems advisable to assure compliance with all applicable laws and regulations.

 

All
certificates for shares of Common Stock delivered under this Plan shall be
subject to such stock transfer orders and other restrictions as the Committee
may deem advisable under the rules, regulations and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Common
Stock is then listed or any national securities association system upon whose
system the Common Stock is then quoted, any applicable Federal or state
securities law, and any applicable corporate law, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.

 

12.2         Other Plans. Nothing contained in this Plan
shall prevent the Board from adopting other or additional compensation
arrangements, subject to stockholder approval if such approval is required; and
such arrangements may be either generally applicable or applicable only in
specific cases. In the event of any conflict between the provisions of this
Plan and any agreement (including any Stock Option agreement) approved by the
Board or the Committee, between the Company and any Eligible Employee,
Consultant or Non-Employee Director, the provisions of this Plan shall govern.

 

22

 

12.3         No Right to
Employment/Directorship/Consultancy. Neither this Plan nor the grant of any Stock Option
hereunder shall give any Participant or other employee, Consultant or
Non-Employee Director any right with respect to continuance of employment,
consultancy or directorship by the Company or any Affiliate, nor shall the Plan
or any Stock Option granted hereunder interfere in any way with the right of
the Company to terminate a person’s employment, consultancy, or directorship by
the Company or any Affiliate.

 

12.4         Withholding of Taxes. The Company shall have the
right to deduct from any payment to be made to a Participant, or to otherwise
require, prior to the issuance or delivery of any shares of Common Stock or the
payment of any cash hereunder, payment by the Participant of, any Federal,
state or local taxes required by law to be withheld.

 

Any
statutorily required withholding obligation with regard to any Eligible
Employee may be satisfied, subject to the consent of the Committee, by reducing
the number of shares of Common Stock otherwise deliverable or by delivering
shares of Common Stock already owned. Any fraction of a share of Common Stock
required to satisfy such tax obligations shall be disregarded and the amount
due shall be paid instead in cash by the Participant.

 

12.5         Listing and Other Conditions.

 

(a)           Unless otherwise determined by the Committee, at the point
and as long as the Common Stock is listed on a national securities exchange or
system sponsored by a national securities association, the issue of any shares
of Common Stock pursuant to a Stock Option shall be conditioned upon such
shares being listed on such exchange or system. The Company shall have no
obligation to issue such shares unless and until such shares are so listed, and
the right to exercise any Stock Option with respect to such shares shall be
suspended until such listing has been effected.

 

(b)           If at any time counsel to the Company shall advise that any
sale or delivery of shares of Common Stock pursuant to a Stock Option is or may
in the circumstances be unlawful or result in the imposition of excise taxes on
the Company under the statutes, rules or regulations of any applicable
jurisdiction, the Company shall have no obligation to make such sale or
delivery, or to make any application or to effect or to maintain any
qualification or registration under the Securities Act or otherwise with
respect to shares of Common Stock or Stock Options, and the right to exercise
any Stock Option shall be suspended until, in the opinion of said counsel, such
sale or delivery shall be lawful and will not result in the imposition of
excise taxes on the Company.

 

23

 

(c)           Upon termination of any period of suspension under this
Section 12.5, a Stock Option affected by such suspension which shall not then
have expired or terminated shall be reinstated as to all shares available
before such suspension and as to shares which would otherwise have become
available during the period of such suspension, but no such suspension shall
extend the term of any Stock Option.

 

(d)           A Participant shall be required to supply the Company with
any certificates, representations and information that the Company requests and
otherwise cooperate with the Company in obtaining any listing, registration,
qualification, exemption, consent or approval the Company deems necessary or
appropriate.

 

12.6         Stockholders Agreement and Other
Requirements. Notwithstanding
anything herein to the contrary, as a condition to the receipt of shares of
Common Stock pursuant to a Stock Option under this Plan, to the extent required
by the Committee, the Participant shall execute and deliver the Stockholders
Agreement or such other documentation which shall set forth certain
restrictions on Transferability of the shares of Common Stock acquired upon
exercise or purchase with respect to a Stock Option, a right of repurchase of
the Company with respect to shares and such other terms as the Board or
Committee shall from time to time establish. Such Stockholders Agreement shall
apply to all Common Stock acquired under the Plan and covered by such
Stockholders Agreement or other documentation. The Company may require, as a
condition of exercise, the Participant to become a party to any other existing
stockholder agreement.

 

12.7         Governing Law. This Plan shall be governed
and construed in accordance with the laws of the State of Delaware (regardless
of the law that might otherwise govern under applicable principles of conflict
of laws).

 

12.8         Construction. Wherever any words are used in
this Plan in the masculine gender they shall be construed as though they were
also used in the feminine gender, and wherever any words are used herein in the
singular form they shall be construed as though they were also used in the
plural form in all cases where they would so apply. To the extent applicable,
this Plan shall be limited, construed and interpreted in a manner so as to
comply with the applicable requirements of Rule 16b-3; however, noncompliance
with Rule 16b-3 shall have no impact on the effectiveness of a Stock Option
under this Plan.

 

24

 

12.9         Other Benefits. No Stock Option payment under
this Plan shall be deemed compensation for purposes of computing benefits under
any retirement plan of the Company or its subsidiaries nor affect any benefits
under any other benefit plan now or subsequently in effect under which the
availability or amount of benefits is related to the level of compensation.

 

12.10       Costs.
The Company shall bear all expenses included in administering  this Plan, including expenses of issuing
Common Stock pursuant to any Stock Options hereunder.

 

12.11       No Right to Same Benefits. The provisions of Stock Options need not be the same with
respect to each Participant, and such Stock Options to individual Participants
need not be the same in subsequent years.

 

12.12       Death/Disability. The Committee may in its discretion require the transferee
of a Participant to supply it with written notice of the Participant’s death or
Disability and to supply it with a copy of the will (in the case of the
Participant’s death) or such other evidence as the Committee deems necessary to
establish the validity of the Transfer of a Stock Option. The Committee may
also require that the agreement of the transferee to be bound by all of the
terms and conditions of this Plan and the Stockholders Agreement, including
executing the Stockholders Agreement or such other agreements as determined by
the Committee.

 

12.13       Section 16(b) of the Exchange Act. On and after a Public
Offering, all elections and transactions under this Plan by persons subject to
Section 16 of the Exchange Act involving shares of Common Stock are intended to
comply with any applicable exemption condition under Rule 16b-3. The Committee
may establish and adopt written administrative guidelines, designed to
facilitate compliance with Section 16(b) of the Exchange Act, as it may deem
necessary or proper for the administration and operation of this Plan and the
transaction of business thereunder.

 

12.14       Severability of Provisions. If any provision of this Plan shall be held invalid or
unenforceable, such invalidity or unenforceability shall not affect any other
provisions hereof, and this Plan shall be construed and enforced as if such
provisions had not been included; provided, however, that if the provisions set
forth in Article X shall be held invalid or unenforceable, the Stock Options
granted under the Plan shall be cancelled and terminated.

 

12.15       Headings and Captions. The headings and captions herein are provided for
reference and convenience only, shall not be considered part of this Plan, and
shall not be employed in the construction of this Plan.

 

25

 

12.16       Securities Act Compliance. Except as the Company or Committee shall otherwise
determine, this Plan is intended to comply with Section 4(2) or Rule 701 under
the Securities Act, and any provisions inconsistent with such Section or Rule
of the Securities Act shall be inoperative and shall not affect the validity of
the Plan.

 

12.17       Successors and Assigns. The Plan shall be binding on all successors and permitted
assigns of a Participant, including, without limitation, the estate of such
Participant and the executor, administrator or trustee of such estate.

 

12.18       Payment to Minors, Etc. Any benefit payable to or for the benefit of a minor, an
incompetent person or other person incapable of receipt thereof shall be deemed
paid when paid to such person’s guardian or to the party providing or
reasonably appearing to provide for the care of such person, and such payment
shall fully discharge the Committee, the Board, the Company, its Affiliates and
their employees, agents and representatives with respect thereto.

 

12.19       Agreement.
As a condition to the grant of a Stock Option, if requested by the Company and
the lead underwriter of any Public Offering of the Common Stock (the “Lead
Underwriter”), a Participant shall irrevocably agree not to sell, contract to
sell, grant any option to purchase, transfer the economic risk of ownership in,
make any short sale of, pledge or otherwise transfer or dispose of, any
interest in any Common Stock or any securities convertible into, derivative of,
or exchangeable or exercisable for, or any other rights to purchase or acquire
Common Stock  (except Common Stock  included in such Public Offering or acquired
on the public market after such offering) during such period of time following
the effective date of a registration statement of the Company filed under the
Securities Act that the Lead Underwriter shall specify (the “Lock-up Period”). The
Participant shall further agree to sign such documents as may be requested by
the Lead Underwriter to effect the foregoing and agree that the Company may
impose stop-transfer instructions with respect to Common Stock acquired
pursuant to a Stock Option until the end of such Lock-up Period.

 

ARTICLE XIII

 

EFFECTIVE DATE
OF PLAN

 

The Plan shall
become effective as of June 14, 2004, subject to the approval of this Plan by
the stockholders of the Company within 12 months before or after adoption of
the Plan by the Board in accordance with the requirements of the laws of the
State of Delaware.

 

26

 

ARTICLE XIV

 

TERM OF PLAN

 

No Stock
Option shall be granted pursuant to this Plan on or after the fifth anniversary
of the earlier of the date this Plan is adopted or the date of stockholder
approval, provided that, all such Stock Options awarded under the Plan prior to
its termination shall remain in effect until such Stock Options have been
satisfied or terminated in accordance with the terms and provisions of the Plan
and the applicable terms of such Stock Options. The Committee’s authority to
administer the terms of such Stock Options shall continue until all Stock
Options have expired.

 

27Exhibit 10.9

 

RISKMETRICS GROUP, INC.

 

2000 STOCK OPTION PLAN

 

 

TABLE OF CONTENTS

 

 

	
  ARTICLE I

  	
  PURPOSE

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  ADMINISTRATION

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  SHARE AND
  OTHER LIMITATIONS

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  ELIGIBILITY

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  STOCK
  OPTIONS

  	
  12

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  NON-TRANSFERABILITY
  AND TERMINATION

  	
  15

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
  CHANGE IN
  CONTROL PROVISIONS

  	
  16

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
  TERMINATION
  OR AMENDMENT OF PLAN

  	
  17

  
	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
  RIGHTS OF
  FIRST OFFER AND REPURCHASE

  	
  18

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI

  	
  UNFUNDED
  PLAN

  	
  18

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII

  	
  GENERAL
  PROVISIONS

  	
  18

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIII

  	
  EFFECTIVE
  DATE OF PLAN

  	
  22

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIV

  	
  TERM OF PLAN

  	
  22

  

 

 

RiskMetrics Group, Inc.

 

 

2000
STOCK OPTION PLAN

 

 

ARTICLE I

 

PURPOSE

 

The purpose of
RiskMetrics Group, Inc. 2000 Stock Option Plan is to enhance the profitability
and value of the Company for the benefit of its stockholders by enabling the
Company to offer Eligible Employees of, Consultants to, and Non-Employee
Directors of, the Company and its Affiliates stock-based incentives in the
Company, thereby creating a means to raise the level of equity ownership by
such individuals in order to attract, retain and reward such individuals and
strengthen the mutuality of interests between such individuals and the Company’s
stockholders.

 

ARTICLE II

 

DEFINITIONS

 

For purposes
of this Plan, the following terms shall have the following meanings:

 

2.1                             “Acquisition
Events” has the meaning set forth in Section 4.2(d).

 

2.2                             “Affiliate” means each of
the following: (a) any Subsidiary; (b) any Parent; (c) any corporation, trade
or business (including, without limitation, a partnership or limited liability
company) which is directly or indirectly controlled 50% or more (whether by
ownership of stock, assets or an equivalent ownership interest or voting
interest) by the Company or one of its Affiliates; and (d) any other entity in
which the Company or any of its Affiliates has a material equity interest and
which is designated as an “Affiliate” by resolution of the Committee.

 

2.3                             “Board”
means the Board of Directors of the Company.

 

2.4                             “Cause”
means, with respect to a Participant’s Termination, the following: (a) in the
case where there is no employment agreement, consulting agreement, change in
control agreement or similar agreement in effect between the Company or an
Affiliate and the Participant at the time of the grant of the Stock Option (or
where there is such an agreement but does not define “cause” (or words of like
import)) (i) any action by such individual which constitutes dishonesty
relating to the Company, a willful violation of law (other than traffic
offenses and similar minor offenses) or a fraud against the Company; (ii) the
individual is charged by indictment or information for, is convicted of or
pleads guilty to, a felony or other crime; (iii) gross negligence or willful
misconduct by the individual relating to the Company or his or her services to
the Company; (iv) any

 

1

 

violation by
the individual of his or her fiduciary obligations to the Company; (v) in the case
of an employee of the Company, willful failure to comply with any material
instruction of the Board or any senior executive of the Company who supervises
such employee; and (vi) in the case only of a member of the Board, the
Disability of such individual; or (b) in the case where there is an employment
agreement, consulting agreement, change in control agreement or similar
agreement in effect between the Company 
or an Affiliate and the Participant at the time of the grant of the
Stock Option that defines “cause” (or words of like import), “cause” as defined
under such agreement; provided, however, that with regard to any agreement that
conditions “cause” on occurrence of a change in control, such definition of “cause”
shall not apply until a change in control actually takes place and then only
with regard to a termination thereafter.

 

2.5                               “Change
in Control” has the meaning set forth in Article VIII.

 

2.6                               “Change
in Control Price” has the meaning set forth in Section 8.1(b).

 

2.7                               “Code”
means the Internal Revenue Code of 1986, as amended. Any reference to any
section of the Code shall also be a reference to any successor provision and
any Treasury Regulation promulgated thereunder.

 

2.8                               
“Committee” means: (a) with respect to the application of this Plan to Eligible
Employees and Consultants, a committee or subcommittee of the Board appointed
from time to time by the Board, except that on or after a Public Offering, the
Committee shall be a committee or subcommittee of the Board appointed from time
to time which shall consist solely of two or more non-employee directors, each
of whom is intended to be, to the extent required by Rule 16b-3, a “non-employee
director” as defined in Rule 16b-3; and (b) with respect to the application of
this Plan to Non-Employee Directors, the Board shall be the Committee. If for
any reason the appointed Committee does not meet the requirements of Rule
16b-3, such noncompliance with the requirements of Rule 16b-3 shall not affect
the validity of grants, interpretations or other actions of the Committee.
Notwithstanding the foregoing, if, and to the extent that no Committee exists
which has the authority to administer this Plan, the functions of the Committee
shall be exercised by the Board and all references herein to the Committee
shall be deemed to be references to the Board.

 

2.9                               “Common
Stock” means the shares of common stock, par value $.01 per share, of the
Company.

 

2.10                        “Company”
means RiskMetrics Group, Inc., a Delaware corporation, and its successors by
operation of law.

 

2.11                        “Consultant”
means any Person who is an advisor or consultant to the Company or its
Affiliates.

 

2.12                        “Detrimental
Activity” means: (a) the disclosure to anyone outside the Company or its
Affiliates, or the use in any manner other than in the furtherance of the
Company’s or its Affiliate’s business, without written authorization from the
Company, of any confidential information or proprietary information, relating
to the business of the Company or its Affiliates that is acquired by a
Participant prior to the Participant’s Termination; (b) activity while employed
or performing services that results, or if known 

 

2

 

could result,
in the Participant’s Termination that is classified by the Company as a
Termination for Cause; (c) any attempt, directly or indirectly, to solicit,
induce or hire (or the identification for solicitation, inducement or hire) any
non-clerical employee of the Company or its Affiliates to be employed by, or to
perform services for, the Participant or any Person with which the Participant
is associated (including, but not limited to, due to the Participant’s
employment by, consultancy for, equity interest in, or creditor relationship
with such Person) or any Person from which the Participant receives direct or
indirect compensation or fees as a result of such solicitation, inducement or
hire (or the identification for solicitation, inducement or hire) without, in
all cases, written authorization from the Company; (d) any attempt, directly or
indirectly, to solicit in a competitive manner any current or prospective
customer of the Company or its Affiliates without, in all cases, written
authorization from the Company; (e) the Participant’s Disparagement, or
inducement of others to do so, of the Company or its Affiliates or their past
and present officers, directors, employees or products; (f) without written
authorization from the Company, the rendering of services for any organization,
or engaging, directly or indirectly, in any business, which is competitive with
the Company or its Affiliates, or the rendering of services to such
organization or business if such organization or business is otherwise
prejudicial to or in conflict with the interests of the Company or its
Affiliates; or (g) breach of any agreement between the Participant and the
Company or an Affiliate (including, without limitation, any employment
agreement or non-competition or non-solicitation agreement). Unless otherwise
determined by the Committee at grant, Detrimental Activity shall not be deemed
to occur after the end of the one year period following the Participant’s
Termination. For purposes of sub-sections (a), (c), (d) and (f) above, the
Chief Executive Officer and the Executive Director of the Company shall each
have authority to provide the Participant with written authorization to engage
in the activities contemplated thereby and no other person shall have authority
to provide the Participant with such authorization.

 

2.13                      “Disability”
means, with respect to a Participant’s Termination, the inability of an
employee or member of the Board to perform all or a substantial part of his or
her services, or in the case of a Board member, any of his or her material
duties, as a result of mental or physical defect or illness for a period of 90
consecutive days or 120 non-consecutive days during any 12 month period as
determined by the Board in good faith, which determination shall be made by the
members of the Board who are not the subject of such determination.

 

2.14                      “Disparagement”
means making comments or statements to the press, the Company’s or its
Affiliates’ employees, consultants or any individual or entity with whom the
Company or its Affiliates has a business relationship which could reasonably be
expected to adversely affect in any manner: (a) the conduct of the business of
the Company or its Affiliates (including, without limitation, any products or
business plans or prospects); or (b) the business reputation of the Company or
its Affiliates, or any of their products, or their past or present officers,
directors or employees.

 

2.15                      “Effective
Date” means the effective date of this Plan as defined in Article XIII.

 

2.16                      “Eligible
Employee” means each employee of the Company or an Affiliate. An individual
classified by the Company or Affiliate, as applicable, at the time 

 

3

 

services are
provided as either an independent contractor or an individual who is not
classified by the Company or Affiliate, as applicable, as an employee but who
provides services to the Company or Affiliate through another entity shall not
be an Eligible Employee during the period that the individual is so initially
classified, even if such individual is later retroactively reclassified as an
employee during all or any part of such period pursuant to applicable law or
otherwise.

 

2.17                      “Exchange
Act” means the Securities Exchange Act of 1934, as amended. Any references to
any section of the Exchange Act shall also be a reference to any successor
provision.

 

2.18                      “Fair
Market Value” means, for purposes of this Plan, unless otherwise required by
any applicable provision of the Code or any regulations issued thereunder, as
of any date, the last sales price reported for the Common Stock on the
applicable date: (a) as reported on the principal national securities exchange
in the United States on which it is then traded or The Nasdaq Stock Market; or
(b) if not traded on any such national securities exchange or The Nasdaq Stock
Market, as quoted on an automated quotation system sponsored by the National
Association of Securities Dealers, Inc. or if the Common Stock shall not have
been reported or quoted on such date, on the first day prior thereto on which
the Common Stock was reported or quoted; provided, that the Committee may
modify the definition of Fair Market Value to reflect any changes in the
trading practices of any exchange on which the Common Stock is listed or traded.
If the Common Stock is not readily tradable on a national securities exchange,
The Nasdaq Stock Market or any automated quotation system sponsored by the
National Association of Securities Dealers, Inc., its Fair Market Value shall
be set in good faith by the Committee. Notwithstanding anything herein to the
contrary, for purposes of granting Incentive Stock Options, “Fair Market Value”
means the price for Common Stock set by in good faith by the Committee based on
reasonable methods set forth under Section 422 of the Code and the regulations
thereunder including, without limitation, a method utilizing the average of
prices of the Common Stock reported on the principal national securities
exchange on which it is then traded during a reasonable period designated by
the Committee. For purposes of the grant of any Stock Option, the applicable
date shall be the date for which the last sales price is available at the time
of grant.

 

2.19                      “Family
Member” means, solely to the extent provided for in Rule 701 under the
Securities Act or, following the filing of a Securities Act Form S-8 with
respect to the Plan, solely to the extent provided for in Securities Act Form
S-8, any child, stepchild, grandchild, parent, stepparent, grandparent, spouse,
former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including
adoptive relationships, any person sharing the employee’s household (other than
a tenant or employee), a trust in which these persons have more than 50% of the
beneficial interest, a foundation in which these persons (or the employee)
control the management of assets, and any other entity in which these persons
(or the employee) own more than 50% of the voting interests or as otherwise
defined in Rule 701 under the Securities Act or Securities Act Form S-8, as
applicable.

 

2.20                      “Incentive
Stock Option” means any Stock Option awarded to an Eligible Employee under this
Plan intended to be and designated as an “Incentive Stock Option” within the
meaning of Section 422 of the Code.

 

4

 

2.21                      “Non-Employee
Director” means a member of the Board who is not an active employee of the
Company or an Affiliate or a member of a board of directors of an Affiliate who
is not an active employee of the Company or an Affiliate.

 

2.22                      “Non-Qualified
Stock Option” means any Stock Option awarded under this Plan that is not an
Incentive Stock Option.

 

2.23                       “Parent” means any parent corporation of the
Company within the meaning of Section 424(e) of the Code.

 

2.24                      “Participant”
means any Eligible Employee, Non-Employee Director or Consultant to whom a
Stock Option has been granted under this Plan.

 

2.25                      “Person”
means any individual, corporation, partnership, limited liability company,
firm, joint venture, association, joint-stock company, trust, incorporated
organization, governmental or regulatory or other entity.

 

2.26                      “Plan”
means RiskMetrics Group, Inc. 2000 Stock Option Plan, as amended from time to
time.

 

2.27                      “Public
Offering” means the Company’s sale of Common Stock in a bona fide, firm
commitment underwriting pursuant to a registration statement on Form S-1 (or a
successor form) under the Securities Act or other registration of shares of
Common Stock under Section 12 of the Exchange Act.

 

2.28                      “Retirement”
means a Termination of a Participant’s employment or consultancy (other than a
Termination for Cause or a voluntary termination within 90  days after an event which would be grounds
for a Termination for Cause) on or after age 65 or such earlier date after age
50 as may be approved by the Committee with regard to such Participant. With
respect to a Participant’s Termination of Directorship, Retirement means the
failure to stand for reelection or the failure to be reelected on or after a
Participant has attained age 65 or, with the consent of the Board, before age
65 but after age 50.

 

2.29                      “Rule
16b-3” means Rule 16b-3 under Section 16(b) of the Exchange Act as then in
effect or any successor provisions.

 

2.30                        “Securities
Act” means the Securities Act of 1933, as amended and all rules and regulations
promulgated thereunder. Any reference to any section of the Securities Act
shall also be a reference to any successor provision.

 

2.31                      “Stockholders
Agreement” means the stockholders agreement dated August 24, 2000 among the
Company and the stockholders of the Company, as may be amended from time to
time.

 

2.32                      “Stock
Option” or “Option” means any option to purchase shares of Common Stock granted
to Eligible Employees, Non-Employee Directors or Consultants under Article VI.

 

2.33                      “Subsidiary”
means any subsidiary corporation of the Company within the meaning of Section
424(f) of the Code.

 

5

 

2.34                      “Ten
Percent Stockholder” means a person owning stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company, its
Subsidiaries or its Parent.

 

2.35                      “Termination”
means a Termination of Consultancy, Termination of Directorship or Termination
of Employment, as applicable.

 

2.36                      “Termination
of Consultancy” means: (a) that the Consultant is no longer acting as a
consultant to the Company or an Affiliate; or (b) when an entity which is
retaining a Participant as a Consultant ceases to be an Affiliate unless the
Participant otherwise is, or thereupon becomes, a Consultant to the Company or
another Affiliate at the time the entity ceases to be an Affiliate. In the
event that a Consultant becomes an Eligible Employee or a Non-Employee Director
upon the termination of his or her consultancy, unless otherwise determined by
the Committee, in its sole discretion, no Termination of Consultancy shall be
deemed to occur until such time as such Consultant is no longer a Consultant,
an Eligible Employee or a Non-Employee Director. The Committee may otherwise
define Termination of Consultancy in the Stock Option agreement or, if no
rights of a Participant are reduced, may otherwise define Termination of
Consultancy thereafter.

 

2.37                      “Termination
of Directorship” means that the Non-Employee Director has ceased to be a
director of the Company or a member of a board of directors of an Affiliate;
except that if a Non-Employee Director becomes an Eligible Employee or a
Consultant upon the termination of his or her directorship, the date he or she
ceased to be a director of the Company or a member of a board of directors of
an Affiliate and becomes an Eligible Employee or Consultant shall not be
treated as a Termination of Directorship unless and until the Participant has a
Termination of Employment or Termination of Consultancy, as the case may be.

 

2.38                      “Termination
of Employment” means: (a) a termination of employment (for reasons other than a
military or personal leave of absence granted by the Company) of a Participant
from the Company and its Affiliates; or (b) when an entity which is employing a
Participant ceases to be an Affiliate, unless the Participant otherwise is, or
thereupon becomes, employed by the Company or another Affiliate at the time the
entity ceases to be an Affiliate. In the event that an Eligible Employee
becomes a Consultant or a Non-Employee Director upon the termination of his or
her employment, unless otherwise determined by the Committee, in its sole
discretion, no Termination of Employment shall be deemed to occur until such
time as such Eligible Employee is no longer an Eligible Employee, a Consultant
or a Non-Employee Director. The Committee may otherwise define Termination of
Employment in the Stock Option agreement or, if no rights of a Participant are
reduced, may otherwise define Termination of Employment thereafter.

 

2.39                      “Transfer”
means (a) when used as a noun, any direct or indirect transfer, sale,
assignment, pledge, hypothecation, encumbrance or other disposition (including
the issuance of equity in a Person), whether for value or no value and whether
voluntary or involuntary (including by operation of law), and (b) when used as
a verb, to directly or indirectly transfer, sell, assign, pledge, encumber,
charge, hypothecate or otherwise dispose of (including the issuance of equity
in a Person) whether for value or for no value

 

6

 

and whether
voluntarily or involuntarily (including by operation of law). “Transferred”, “Transferable”
and” Transferability” shall have a correlative meaning.

 

ARTICLE III

 

ADMINISTRATION

 

3.1                               The
Committee. The Plan shall be administered and interpreted by the Committee.
If for any reason the appointed Committee does not meet the requirements of
Rule 16b-3 following a Public Offering, such noncompliance with the
requirements of Rule 16b-3 shall not affect the validity of Stock Options,
grants, interpretations or other actions of the Committee.

 

3.2                               Grants
of Stock Options. The Committee shall have full authority to grant Stock
Options to Eligible Employees and Consultants and the Board shall have the full
authority to grant Stock Options to Non-Employee Directors pursuant to the
terms of this Plan. All Stock Options shall be granted by, confirmed by, and
subject to the terms of, a written agreement executed by the Company and the
Participant. In particular, the Committee (and, the Board, with respect to
Non-Employee Directors) shall have the authority:

 

(a)                                 to
select the Eligible Employees, Consultants and Non-Employee Directors to whom
Stock Options may from time to time be granted hereunder;

 

(b)                                 to
determine whether and to what extent Stock Options, or any combination thereof,
are to be granted hereunder to one or more Eligible Employees, Consultants and
Non-Employee Directors;

 

(c)                                  to
determine, in accordance with the terms of this Plan, the number of shares of
Common Stock to be covered by each Stock Option granted hereunder;

 

(d)                                 to
determine the terms and conditions, not inconsistent with the terms of this
Plan, of any Stock Option granted hereunder (including, but not limited to, the
exercise or purchase price (if any), any restriction or limitation, any vesting
schedule or acceleration thereof and any forfeiture restrictions or waiver
thereof, regarding any Stock Option and the shares of Common Stock relating
thereto, based on such factors, if any, as the Committee shall determine, in
its sole discretion);

 

(e)                                  to
determine whether and under what circumstances a Stock Option may be settled in
cash, Common Stock and/or restricted stock under Section 6.3(d);

 

(f)                                   
to determine whether, to what extent and under what circumstances to provide
loans (which shall be on a recourse basis and bear interest at the rate the
Committee shall provide) to Participants in order to exercise Stock Options
under this Plan;

 

(g)                                  to
determine whether a Stock Option is an Incentive Stock Option or Non-Qualified
Stock Option;

 

7

 

(h)                                 
to determine whether to require an Eligible Employee, Consultant or
Non-Employee Director, as a condition of the granting of any Stock Option, not
to sell or otherwise dispose of shares of Common Stock acquired pursuant to the
exercise of an Option for a period of time as determined by the Committee, in
its sole discretion, following the date of the acquisition of such Stock
Option;

 

(i)                                    to modify, extend or renew a Stock Option,
subject to Article IX herein,  provided,
however, that if an Option is modified, extended or renewed and thereby deemed
to be the issuance of a new Option under the Code or the applicable accounting
rules, the exercise price of a Option may continue to be the original exercise
price even if less than the Fair Market Value of the Common Stock at the time
of such modification, extension or renewal; and

 

(j)                                    
to offer to buy out an Option previously granted, based on such terms and   conditions  
as   the   Committee  
shall   establish   and  
communicate   to   the Participant at the time such offer is
made.

 

3.3                               Guidelines.
Subject to Article IX hereof, the Committee shall have the authority to adopt,
alter and repeal such administrative rules, guidelines and practices governing
this Plan and perform all acts, including the delegation of its administrative
responsibilities, as it shall, from time to time, deem advisable; to construe
and interpret the terms and provisions of this Plan and any Stock Option issued
under this Plan (and any   Stock   Option  
agreements   relating   thereto);  
and   to   otherwise  
supervise   the administration of
this Plan. The Committee may correct any defect, supply any omission or
reconcile any inconsistency in this Plan or in any Stock Option agreement
relating thereto in the manner and to the extent it shall deem necessary to
effectuate the purpose and intent of this Plan. The Committee may adopt special
guidelines and provisions for persons who are residing in or employed in, or
subject to, the taxes of, any domestic or foreign jurisdictions to comply with
applicable tax and securities laws and may impose any limitations and
restrictions that it deems necessary to comply with the applicable tax and
securities laws of such domestic or foreign jurisdictions. To the extent
applicable, this Plan is intended to comply with the applicable requirements of
Rule 16b-3 and shall be limited, construed and interpreted in a manner so as to
comply therewith.

 

3.4                               Decisions
Final. Any decision, interpretation or other action made or taken in good
faith by or at the direction of the Company, the Board or the Committee (or any
of its members) arising out of or in connection with this Plan shall be within
the absolute discretion of all and each of them, as the case may be, and shall
be final, binding and conclusive on the Company and all employees and
Participants and their respective heirs, executors, administrators, successors
and assigns.

 

3.5                               Procedures.
If the Committee is appointed, the Board shall designate one of the members of
the Committee as chairman and the Committee shall hold meetings, subject to the
By-Laws of the Company, at such times and places as it shall deem advisable,
including, without limitation, by telephone conference or by written consent to
the extent permitted by applicable law. A majority of the Committee members
shall constitute a quorum. All determinations of the Committee shall be made by
a majority of its members. Any decision or determination reduced to writing and
signed by all the Committee members in accordance with the By-Laws of the
Company, shall be fully as 

 

8

 

effective as
if it had been made by a vote at a meeting duly called and held. The Committee
shall keep minutes of its meetings and shall make such rules and regulations
for the conduct of its business as it shall deem advisable.

 

3.6                               Designation
of Consultants/Liability.

 

(a)                                 The
Committee may designate employees of the Company and professional advisors to
assist the Committee in the administration of this Plan and may grant authority
to officers to execute Stock Option agreements or other documents on behalf of
the Committee.

 

(b)                                 The
Committee may employ such legal counsel, consultants and agents as it may deem
desirable for the administration of this Plan and may rely upon any opinion
received from any such counsel or consultant and any computation received from
any such consultant or agent. Expenses incurred by the Committee or the Board
in the engagement of any such counsel, consultant or agent shall be paid by the
Company. The Committee, its members and any person designated pursuant to
sub-section (a) above shall not be liable for any action or determination made
in good faith with respect to this Plan. To the maximum extent permitted by
applicable law, no officer of the Company or member or former member of the
Committee or of the Board shall be liable for any action or determination made
in good faith with respect to this Plan or any Stock Option granted under it.

 

3.7                               Indemnification.
To the maximum extent permitted by applicable law and the Certificate of
Incorporation and By-Laws of the Company and to the extent not covered by
insurance directly insuring such person, each officer and member or former
member of the Committee or the Board shall be indemnified and held harmless by
the Company against any cost or expense (including reasonable fees of counsel
reasonably acceptable to the Company) or liability (including any sum paid in
settlement of a claim with the approval of the Company), and advanced amounts
necessary to pay the foregoing at the earliest time and to the fullest extent
permitted, arising out of any act or omission to act in connection with the
administration of this Plan, except to the extent arising out of such officer’s,
member’s or former member’s own fraud or bad faith. Such indemnification shall
be in addition to any rights of indemnification the employees, officers,
directors or members or former officers, directors or members may have under
applicable law or under the Certificate of Incorporation or By-Laws of the
Company or any Affiliate. Notwithstanding anything else herein, this
indemnification will not apply to the actions or determinations made by an
individual with regard to Stock Options granted to him or her under this Plan.

 

ARTICLE IV

 

SHARE AND OTHER LIMITATIONS

 

4.1                               Shares.
The aggregate number of shares of Common Stock which may be issued or used for
reference purposes under this Plan or with respect to which Stock Options maybe
granted under this Plan shall not exceed 5,000,000 shares of Common Stock
(subject to any increase or decrease pursuant to Section 4.2), which may be
either 

 

9

 

authorized and
unissued Common Stock or Common Stock held in or acquired for the treasury of
the Company or both; provided, however, no more than 1,600,000 shares of Common
Stock can be issued or used for reference purposes under this Plan or with
respect to which Stock Options may be granted under this Plan in any calendar
year. If any Stock Option granted under this Plan expires, terminates or is
canceled for any reason without having been exercised in full, the number of
shares of Common Stock underlying such unexercised Stock Option shall again be
available for the purposes of Stock Options under this Plan.

 

4.2                               Changes.

 

(a)                                 The
existence of this Plan and the Stock Options granted hereunder shall not affect
in any way the right or power of the Board or the stockholders of the   Company  
to   make   or  
authorize   (i)   any  
adjustment,   recapitalization,
reorganization or other change in the Company’s capital structure or its
business, (ii) any merger or consolidation of the Company or any Affiliate,
(iii) any issuance of bonds, debentures, preferred or prior preference stock
ahead for affecting the Common Stock, (iv) the dissolution or liquidation of
the Company or any Affiliate, (v) any sale or transfer of all or part of the
assets or business of the Company or any Affiliate or (vi) any other corporate
act or proceeding.

 

(b)                                 Subject
to the provisions of Section 4.2(d), in the event of any such change in the
capital structure or business of the Company by reason of any stock split,
reverse stock split, stock dividend, combination or reclassification of shares,
recapitalization, or other change in the capital structure of the Company,
merger, consolidation, spin-off, reorganization, partial or complete
liquidation, issuance of rights or warrants to purchase any Common Stock or
securities convertible into Common Stock, any sale or transfer of all or part
of the Company’s assets or business, or any other corporate transaction or
event having an effect similar to any of the foregoing and the Committee
determines in good faith that an adjustment is necessary or appropriate under
the Plan to prevent substantial dilution or enlargement of the rights granted
to, or available for, Participants under the Plan, then the aggregate number
and kind of shares which thereafter may be issued under this Plan, the number
and kind of shares or other property (including cash) to be issued upon
exercise of an outstanding Stock Option or other Stock Options granted under
this Plan and the purchase price thereof shall be appropriately adjusted
consistent with such change in such manner as the Committee may deem equitable
to prevent substantial dilution or enlargement of the rights granted to, or
available for, Participants under this Plan, and any such adjustment determined
by the Committee in good faith shall be final, binding and conclusive   on  
the   Company   and  
all   Participants   and  
employees   and   their respective heirs, executors,
administrators, successors and assigns. In connection with any event described
in this paragraph, the Committee may provide, in its sole discretion, for the
cancellation of any outstanding Stock Options and payment in cash or other
property in exchange therefor. Except as provided in this Section 4.2, a
Participant shall have no rights by reason of any issuance by the Company of
any class or securities convertible into stock of any class, any subdivision or
consolidation of shares of stock of any class, the payment of any stock
dividend, 

 

10

 

any other
increase or decrease in the number of shares of stock of any class, any sale or
transfer of all or part of the Company’s assets or business or any other change
affecting the Company’s capital structure or business.

 

(c)                                  Fractional
shares of Common Stock resulting from any adjustment in Stock Options pursuant
to Section 4.2(a) or (b) shall be aggregated until, and eliminated at, the time
of exercise by rounding-down for fractions less than one-half and rounding-up
for fractions equal to or greater than one-half. No cash settlements shall be
made with respect to fractional shares eliminated by rounding. Notice of any
adjustment shall be given by the Committee to each Participant whose Stock
Option has been adjusted and such adjustment (whether or not such notice is
given) shall be effective and binding for all purposes of this Plan.

 

(d)                                 In
the event of a merger or consolidation in which the Company is not the
surviving entity or in the event of any transaction that results in the
acquisition of substantially all of the Company’s outstanding Common Stock by a
single person or entity or by a group of persons and/or entities acting in
concert, or in the event of the sale or transfer of all or substantially all of
the Company’s assets (all of the foregoing being referred to as “Acquisition
Events”), then the Committee may, in its sole discretion, terminate all
outstanding Stock Options, effective as of the date of the Acquisition Event,
by delivering notice of termination to each Participant at least 20 days prior
to the date of consummation of the Acquisition Event, in which case during the
period from the date on which such notice of termination is delivered to the
consummation of the Acquisition Event, each such Participant shall have the
right to exercise in full all of his or her Stock Options that are then
outstanding (without regard to any limitations on exercisability otherwise
contained in the Stock Option agreements), but any such exercise shall be
contingent upon and subject to the occurrence of the Acquisition Event, and,
provided that, if the Acquisition Event does not take place within a specified
period after giving such notice for any reason whatsoever, the notice and
exercise pursuant thereto shall be null and void.

 

If an
Acquisition Event occurs but the Committee does not terminate the outstanding
Stock Options pursuant to this Section 4.2(d), then the provisions of Section
4.2(b) and Article VIII shall apply.

 

4.3                               Minimum
Purchase Price. Notwithstanding any provision of this Plan to the contrary,
if authorized but previously unissued shares of Common Stock are issued under
this Plan, such shares shall not be issued for a consideration which is less than
as permitted under applicable law.

 

ARTICLE V

 

ELIGIBILITY

 

5.1                               Non-Qualified
Stock Options. All Eligible Employees, Consultants and Non-Employee
Directors and prospective employees of and Consultants to the Company and its
Affiliates are eligible to be granted Non-Qualified Stock Options. Eligibility
for

 

11

 

the grant of
Stock Options and actual participation in this Plan shall be determined by the
Committee in its sole discretion.

 

5.2                               Incentive
Stock Options. All Eligible Employees of the Company, its Subsidiaries and
its Parent (if any) are eligible to be granted Incentive Stock Options under
this Plan. Eligibility for the grant of an Incentive Stock Option and actual
participation in this Plan shall be determined by the Committee in its sole
discretion.

 

5.3                               General
Requirement. The vesting and exercise of Stock Options granted to a
prospective employee or Consultant are conditioned upon such individual
actually becoming an Eligible Employee or Consultant.

 

ARTICLE VI

 

STOCK OPTIONS

 

6.1                               Stock
Options. Each Stock Option granted hereunder shall be one of two types: (a)
an Incentive Stock Option intended to satisfy the requirements of Section 422
of the Code; or (b) a Non-Qualified Stock Option.

 

6.2                               Grants.
Subject to the provisions of Article V, the Committee shall have the authority
to grant to any Eligible Employee one or more Incentive Stock Options,
Non-Qualified Stock Options or both types of Stock Options. Subject to the
provisions of Section 6.3(e) below, to the extent that any Stock Option does
not qualify as an Incentive Stock Option (whether because of its provisions or
the time or manner of its exercise or otherwise), such Stock Option, or the
portion thereof which does not qualify, shall constitute a separate
Non-Qualified Stock Option. The Committee shall have the authority to grant any
Consultant or Non-Employee Director one or more Non-Qualified Stock Options. Notwithstanding
any other provision of this Plan to the contrary or any provision in a Stock
Option agreement to the contrary, any Stock Option granted to an Eligible
Employee of an Affiliate (other than an Affiliate which is a Parent or a
Subsidiary) shall be a Non-Qualified Stock Option.

 

6.3                               Terms
of Stock Options. Stock Options granted under this Plan shall be subject to
the following terms and conditions, and shall be in such form and contain such
additional terms and conditions, not inconsistent with the terms of this Plan,
as the Committee shall deem desirable:

 

(a)   Exercise Price.
The exercise price per share of Common Stock subject to a Stock Option shall be
determined by the Committee at the time of grant, but shall not be less than
100% of the Fair Market Value of a share of Common Stock at the time of grant;
provided, however, that if an Incentive Stock                                    Option is granted
to a Ten Percent Stockholder, the exercise price per share shall be no less
than 110% of the Fair Market Value of the Common Stock.

 

(b)   Stock Option
Term. The term of each Stock Option shall be fixed by the Committee;
provided, however, that no Stock Option shall be exercisable more than 10 years
after the date such Stock Option is granted; and further provided that the term
of an Incentive Stock Option granted to a Ten Percent Stockholder shall not
exceed 5 years.

 

12

 

(c)   Exercisability.
Stock Options shall be exercisable at such time or times and subject to such
terms and conditions as shall be determined by the Committee at grant. If the
Committee provides, in its discretion, that any Stock Option is exercisable
subject to certain limitations (including, without limitation, that such Stock
Option is exercisable only in installments or within certain time periods), the
Committee may waive such limitations on the exercisability at any time at or
after grant in whole or in part (including, without limitation, waiver of the
installment exercise provisions or acceleration of the time at which such Stock
Option may be exercised), based on such factors, if any, as the Committee shall
determine, in its sole discretion. Unless otherwise determined by the Committee
at grant, (i) in the event the Participant engages in Detrimental Activity
prior to any exercise of the Stock Option, all Stock Options held by the
Participant shall thereupon terminate and expire, (ii) as a condition of the
exercise of a Stock Option, the Participant shall be required to certify (or
shall be deemed to have certified) at the time of exercise in a manner
acceptable to the Company that the Participant is in compliance with the terms
and conditions of the Plan and that the Participant has not engaged in, and
does not intend to engage in, any Detrimental Activity, and (iii) in the event
the Participant engages in Detrimental Activity during the one year period
commencing on the date the Stock Option is exercised, the Company shall be
entitled to recover from the Participant at any time, and the Participant shall
pay over to the Company, an amount equal to any gain realized as a result of
the exercise (whether at the time of exercise or thereafter). The foregoing
provisions relating to Detrimental Activity shall cease to apply upon a Change
in Control.

 

(d)   Method of
Exercise. Subject to whatever installment exercise, waiting period
and vesting provisions apply under sub-section (c) above, a Stock Option may be
exercised in whole or in part at any time and from time to time during the
Stock Option term by giving written notice of exercise to the Committee
specifying the number of shares to be purchased. Such notice shall be
accompanied by payment in full of the purchase price as follows: (i) in cash or
by check, bank draft or money order payable to the order of the Company; (ii)
if the Common Stock is traded on a national securities exchange, The Nasdaq
Stock Market, Inc. or quoted on a national quotation system sponsored by the
National Association of Securities Dealers, and the Committee authorizes,
through a “cashless exercise” procedure whereby the Participant delivers
irrevocable instructions to a broker approved by the Committee to deliver
promptly to the Company an amount equal to the purchase price; or (iii) on such
other terms and conditions as may be acceptable to the Committee (including,
without limitation, the relinquishment of Stock Options or by payment in full
or in part in the form of Common Stock owned by the Participant for a period of
at least 6 months or such other period necessary to avoid a charge, for
accounting purposes, against the Company’s earnings as reported in the Company’s
financial statements (and for which the Participant has good title free and
clear of any liens and encumbrances) based on the Fair Market Value of the
Common Stock on the payment date as determined by the Committee). No shares of
Common Stock shall be issued until

 

13

 

payment
therefor, as provided herein, has been made or provided for and the conditions
of Section 12.6 are satisfied.

 

(e)   Incentive Stock
Option Limitations. To the extent that the aggregate Fair Market
Value (determined as of the time of grant) of the Common Stock with respect to
which Incentive Stock Options are exercisable for the first time by an Eligible
Employee during any calendar year under this Plan and/or any other stock option
plan of the Company, any Subsidiary or any Parent exceeds $100,000, such
Options shall be treated as Non-Qualified Stock Options. In addition, if an
Eligible Employee does not remain employed by the Company, any Subsidiary or
any Parent at all times from the time an Incentive Stock Option is granted
until 3 months prior to the date of exercise thereof (or such other period as
required by applicable law), such Stock Option shall be treated as a
Non-Qualified Stock Option. Should any provision of this Plan not be necessary
in order for the Stock Options to qualify as Incentive Stock Options, or should
any additional    provisions   be  
required,   the   Committee  
may   amend   this  
Plan accordingly, without the necessity of obtaining the approval of the
stockholders of the Company.

 

(f)   Form,
Modification, Extension and Renewal of Stock Options. Subject to the
terms and conditions and within the limitations of this Plan, Stock Options
shall be evidenced by such form of agreement or grant as is approved by the
Committee, and the Committee may (i) modify, extend or renew outstanding Stock
Options granted under this Plan (provided that the rights of a Participant are
not reduced without the Participant’s consent), and (ii) accept the surrender
of outstanding Stock Options (up to the extent not theretofore exercised) and
authorize the granting of new Stock Options in substitution therefor (to the
extent not theretofore exercised). Notwithstanding the foregoing, an
outstanding Stock Option may not be modified to reduce the exercise price
thereof nor may a new Stock Option at a lower exercise price be substituted for
a surrendered Stock Option, provided that the foregoing shall not apply to
adjustments or substitutions made in accordance with Section 4.2 hereof.

 

(g)   Deferred
Delivery of Common Shares. The Committee may in its discretion
permit Participants to defer delivery of Common Stock acquired pursuant to a
Participant’s exercise of an Option in accordance with the terms and conditions
established by the Committee.

 

(h)   Early Exercise.
The Committee may provide that a Stock Option include a provision whereby the
Participant may elect at any time before the Participant’s Termination to
exercise the Stock Option as to any part or all of the shares of Common Stock
subject to the Stock Option prior to the full vesting of the Stock Option. 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 Committee
determines to be appropriate.

 

(i)   Other Terms and
Conditions. Stock Options may contain such other provisions, which
shall not be inconsistent with any of the terms of this Plan, as the Committee
shall deem appropriate.

 

14

 

ARTICLE VII

 

NON-TRANSFERABILITY AND TERMINATION

 

7.1                               Non-Transferability.

 

(a)                                 
Except as otherwise specifically provided herein, no Stock Option or Common
Stock acquired pursuant to the exercise of a Stock Option shall be Transferable
by the Participant otherwise than by will or by the laws of descent and
distribution. All Stock Options shall be exercisable, during the Participant’s
lifetime, only by the Participant. Any attempt to Transfer any such Stock
Option shall be void and immediately cancelled, and no such Stock Option shall
in any manner be liable for or subject to the debts, contracts, liabilities,
engagements or torts of any person who shall be entitled to such Stock Option,
nor shall it be subject to attachment or legal process for or against such
person.

 

(b)                                 Notwithstanding
the foregoing, (i) the Committee may determine at the time of grant or
thereafter that a Non-Qualified Stock Option that is otherwise not Transferable
pursuant to this Section 7.1 is Transferable to a Family Member in whole or in
part and in such circumstances, and under such conditions, as specified by the
Committee and (ii) unless otherwise determined at the time of grant or
thereafter, Common Stock acquired upon exercise of a Non-Qualified Stock Option
is Transferable in accordance with the provisions of Article X. A Non-Qualified
Stock Option that is Transferred to a Family Member pursuant to the preceding
sentence (i) may not be subsequently Transferred otherwise than by will or by
the laws of descent and distribution and (ii) remains subject to the terms of
this Plan and the Stock Option agreement. Any shares of Common Stock acquired
upon the exercise of a Stock Option by a permissible transferee of a Stock
Option or a permissible transferee pursuant to a Transfer after the exercise of
the Stock Option shall be subject to the terms of this Plan and the Stock
Option agreement, including, without limitation, the provisions of Article X
hereof.

 

7.2                               Termination.
The following rules apply with regard to the Termination of a Participant. Unless
otherwise determined by the Committee at grant or, if no rights of the
Participant are reduced, thereafter:

 

(a)                               Termination Other than for Cause. If a
Participant’s Termination is for any reason other than for Cause, all Stock
Options that are held by such Participant that are vested and exercisable at
the time of the Participant’s Termination may be exercised by the Participant
(or, in the case of death, by the legal representative of the Participant’s
estate) at anytime within a period of 30 days from the date of such
Termination, but in no event beyond the expiration of the stated terms of such
Stock Options.

 

(b)                                Termination
for Cause. If a Participant’s Termination (x) is for Cause or (y) is
a voluntary Termination at any time within a period of 90 days after the
Company’s discovery of an event which would be grounds for a Termination for
Cause, all Stock Options, whether vested or not vested, that are

 

15

 

held by such
Participant shall be forfeited and shall thereupon terminate and expire as of
the date of such Termination.

 

(c)                                  Unvested Stock Options. Stock Options that
are not vested as of the date of a Participant’s Termination for any reason
shall be forfeited and shall terminate and expire as of the date of such
Termination.

 

ARTICLE VIII

 

CHANGE IN CONTROL PROVISIONS

 

8.1                               Benefits.
In the event of a Change in Control of the Company, except as otherwise
provided by the Committee in a Stock Option agreement, a Participant’s
employment agreement with the Company or an Affiliate, as approved by the
Committee, or other written agreement approved by the Committee (as such
agreement may be amended from time to time), a Participant’s unvested Stock
Options shall not vest and a Participant’s Stock Option shall be treated in
accordance with one of the following methods as determined by the Committee:

 

(a)                               Stock
Options, whether or not then vested, shall be continued, assumed, have new
rights substituted therefor or treated in accordance with Section 4.2 hereof,
as determined by the Committee.

 

(b)                               The
Committee, in its sole discretion, may provide for the purchase of any Stock
Option for an amount of cash equal to the excess of the Change in Control Price
(as defined below) of the shares of Common Stock covered by such Stock Options,
over the aggregate exercise price of such Stock Options. For purposes of this
Section 8.1, Change in Control Price shall mean the highest price per share of
Common Stock paid in any transaction related to the applicable Change in
Control of the Company.

 

(c)                                 Notwithstanding anything else herein, the
Committee may, in its sole discretion, provide for accelerated vesting of a
Stock Option at any time.

 

(d)                                 If
the Company and the other party to a transaction constituting a Change in
Control agree that such transaction shall be treated as a “pooling of interests”
for financial reporting purposes, and if the transaction is in fact so treated,
then the acceleration of exercisability, vesting or lapse of the vesting period
of a Stock Option or of the applicable Restriction Period shall not occur to
the extent that the Company’s independent public accountants determine in good
faith that such acceleration would preclude “pooling of interests” accounting.

 

8.2                               Change
in Control. Unless otherwise determined by the Committee in the applicable
Stock Option agreement or other written agreement approved by the Committee, a “Change
in Control” shall be deemed to have occurred:

 

(a)                                 upon
any “person” as such term is used in Sections 13(d) and 14(d) of the Exchange
Act (other than the Company, any trustee or other fiduciary holding securities
under any employee benefit plan of the Company, or any company owned, directly
or indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of Common Stock of the Company), 

 

16

 

becoming the
beneficial owner (as defined in Rule 13d-3under the Exchange Act), directly or
indirectly, of securities of the Company representing more than 50% of the
combined voting power of the Company’s then outstanding securities;

 

(b)                                 
a merger or consolidation of the Company with any other corporation, other than
a merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation; provided, however, that a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no person (other than those covered by the
exceptions in (a) above) acquires more than 50% of the combined voting power of
the Company’s then outstanding securities shall not constitute a Change in
Control of the Company; or

 

(c)                                  upon
the stockholders of the Company approval of a plan of complete liquidation of
the Company or an agreement for the sale or disposition by the Company of all
or substantially all of the Company’s assets other than the sale or disposition
of all or substantially all of the assets of the Company to a person or persons
who beneficially own, directly or indirectly, at least 50% or more of the
combined voting power of the outstanding voting securities of the Company at
the time of the sale.

 

8.3                               Public
Offering not a Change in Control. For purposes of the Plan, a Public
Offering shall not be deemed to be a Change in Control.

 

ARTICLE IX

 

TERMINATION OR AMENDMENT OF PLAN

 

Notwithstanding
any other provision of this Plan, the Board or the Committee may at any time,
and from time to time, amend, in whole or in part, any or all of the provisions
of this Plan (including any amendment deemed necessary to ensure that the
Company may comply with any regulatory requirement referred to in Article XII),
or suspend or terminate it entirely, retroactively or otherwise; provided,
however, that, unless otherwise required by law or specifically provided
herein, the rights of a Participant with respect to Stock Options granted prior
to such amendment, suspension or termination, may not be impaired without the
consent of such Participant and, provided further, without the approval of the
stockholders of the Company in accordance with the laws of the State of
Delaware, solely to the extent required by the applicable provisions of Rule
16b-3, or, solely to the extent applicable to Incentive Stock Options, Section
422 of the Code, no amendment may be made which would (i) increase the
aggregate number of shares of Common Stock that may be issued under this Plan;
(ii) change the classification of employees, Consultants or Non-Employee
Directors eligible to receive Stock Options under this Plan; (iii) decrease the
minimum option price of any Stock Option; or (iv) extend the maximum Stock
Option period under Section 6.3. In no event may this Plan be amended without
the approval of the stockholders of the Company in accordance with the
applicable laws of the State of Delaware to increase the aggregate number of
shares of Common 

 

17

 

Stock that may be issued under this Plan,
decrease the minimum exercise price of any Stock Option, or to make any other
amendment that would require stockholder approval under the rules of any
exchange or system on which the Company’s securities are listed or traded at
the request of the Company.

 

The Committee
may amend the terms of any Stock Option theretofore granted, prospectively or
retroactively, but, subject to Article IV above or as otherwise specifically
provided herein, no such amendment or other action by the Committee shall
impair the rights of any holder without the holder’s consent.

 

ARTICLE X

 

RIGHTS OF FIRST OFFER AND REPURCHASE

 

To the extent
provided in the Stockholders Agreement, the shares of Common Stock acquired by
a Participant pursuant to the exercise of a Stock Option are subject to rights
of first offer and other Transfer restrictions contained in the Stockholders
Agreement and the Company’s right to repurchase all or a portion of the shares
of Common Stock upon a Participant’s Termination.

 

ARTICLE XI

 

UNFUNDED PLAN

 

This Plan is
intended to constitute an “unfunded” plan for incentive and deferred
compensation. With respect to any payments as to which a Participant has a
fixed and vested interest but which are not yet made to a Participant by the
Company, nothing contained herein shall give any such Participant any rights
that are greater than those of a general unsecured creditor of the Company.

 

ARTICLE XII

 

GENERAL PROVISIONS

 

12.1                        Legend.
The Committee may require each person receiving shares pursuant to a Stock
Option under this Plan to represent to and agree with the Company in writing
that the Participant is acquiring the shares without a view to distribution
thereof and such other securities law related representations as the Committee
shall request. In addition to any legend required by this Plan, the
certificates for such shares may include any legend which the Committee deems
appropriate to reflect any restrictions on Transfer.

 

All certificates for shares of Common Stock delivered under this Plan
shall be subject to such stock transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Common Stock is then listed or any national securities association
system upon whose system the Common Stock is then quoted, any applicable
Federal or state securities law, and any applicable corporate 

 

18

 

law, and the
Committee may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.

 

12.2                        Other
Plans. Nothing contained in this Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to stockholder approval
if such approval is required; and such arrangements may be either generally
applicable or applicable only in specific cases. In the event of any conflict
between the provisions of this Plan and any agreement (including any Stock
Option agreement) approved by the Board or the Committee, between the Company
and any Eligible Employee, Consultant or Non-Employee Director, the provisions
of such agreement shall govern.

 

12.3                        No
Right to Employment/Directorship/Consultancy. Neither this Plan nor the
grant of any Stock Option hereunder shall give any Participant or other
employee, Consultant or Non-Employee Director any right with respect to
continuance of employment, consultancy or directorship by the Company or any
Affiliate, nor shall they be a limitation in any way on the right of the
Company or any Affiliate by which an employee is employed or a Consultant or
Non-Employee Director is retained to terminate his or her employment or
consultancy at anytime.

 

12.4                        Withholding
of Taxes. The Company shall have the right to deduct from any payment to be
made to a Participant, or to otherwise require, prior to the issuance or
delivery of any shares of Common Stock or the payment of any cash hereunder,
payment by the Participant of, any Federal, state or local taxes required by
law to be withheld.

 

Any statutorily required withholding obligation with regard to any
Eligible Employee may be satisfied, subject to the consent of the Committee, by
reducing the number of shares of Common Stock otherwise deliverable or by delivering
shares of Common Stock already owned. Any fraction of a share of Common Stock
required to satisfy such tax obligations shall be disregarded and the amount
due shall be paid instead in cash by the Participant.

 

12.5                        Listing
and Other Conditions.

 

(a)                                 Unless
otherwise determined by the Committee, as long as the Common Stock is listed on
a national securities exchange or system sponsored by a national securities
association, the issue of any shares of Common Stock pursuant to a Stock Option
shall be conditioned upon such shares being listed on such exchange or system. The
Company shall have no obligation to issue such shares unless and until such
shares are so listed, and the right to exercise any Stock Option with respect
to such shares shall be suspended until such listing has been effected.

 

(b)                                 If
at any time counsel to the Company shall be of the opinion that any sale or
delivery of shares of Common Stock pursuant to a Stock Option is or may in the
circumstances be unlawful or result in the imposition of excise taxes on the
Company under the statutes, rules or regulations of any applicable
jurisdiction, the Company shall have no obligation to make such sale or
delivery, or to make any application or to effect or to maintain any
qualification or registration under the Securities Act or otherwise with
respect to shares of Common Stock or Stock Options, and the right to exercise
any Stock Option shall be suspended until, in 

 

19

 

the opinion of
said counsel, such sale or delivery shall be lawful and will not result in the
imposition of excise taxes on the Company.

 

(c)                                  Upon
termination of any period of suspension under this Section 12.5, a Stock Option
affected by such suspension which shall not then have expired or terminated
shall be reinstated as to all shares available before such suspension and as to
shares which would otherwise have become available during the period of such
suspension, but no such suspension shall extend the term of any Stock Option.

 

(d)                                 A
Participant shall be required to supply the Company with any certificates,
representations and information that the Company requests and otherwise
cooperate with the Company in obtaining any listing, registration,
qualification, exemption, consent or approval the Company deems necessary or
appropriate.

 

12.6                        Stockholders
Agreement and Other Requirements. Notwithstanding anything herein to the
contrary, as a condition to the receipt of shares of Common Stock pursuant to a
Stock Option under this Plan, to the extent required by the Committee, the
Participant   shall   execute  
and   deliver   the  
Stockholders   Agreement   or  
such   other documentation which
shall set forth certain restrictions on Transferability of the shares of Common
Stock acquired upon exercise or purchase with respect to a Stock Option, a
right of repurchase of the Company with respect to shares and such other terms
as the Board or Committee shall from time to time establish. Such Stockholders
Agreement shall apply to all Common Stock acquired under the Plan and covered
by such Stockholders Agreement or other documentation. The Company may require,
as a condition of exercise, the Participant to become a party to any other
existing stockholder agreement.

 

12.7                        Governing
Law. This Plan shall be governed and construed in accordance with the laws
of the State of Delaware (regardless of the law that might otherwise govern
under applicable Delaware principles of conflict of laws).

 

12.8                        Construction.
Wherever any words are used in this Plan in the masculine gender they shall be
construed as though they were also used in the feminine gender in all cases
where they would so apply, and wherever any words are used herein in the
singular form they shall be construed as though they were also used in the
plural form in all cases where they would so apply. To the extent applicable,
this Plan shall be limited, construed and interpreted in a manner so as to
comply with the applicable requirements of Rule 16b-3; however, noncompliance
with Rule 16b-3 shall have no impact on the effectiveness of a Stock Option
under this Plan.

 

12.9                        Other
Benefits. No Stock Option payment under this Plan shall be deemed
compensation for purposes of computing benefits under any retirement plan of
the Company or its subsidiaries nor affect any benefits under any other benefit
plan now or subsequently in effect under which the availability or amount of
benefits is related to the level of compensation.

 

20

 

12.10                 Costs.
The Company shall bear all expenses included in administering  this Plan, including expenses of issuing
Common Stock pursuant to any Stock Options hereunder.

 

12.11                 No
Right to Same Benefits. The provisions of Stock Options need not be the
same with respect to each Participant, and such Stock Options to individual
Participants need not be the same in subsequent years.

 

12.12                 Death/Disability.
The Committee may in its discretion require the transferee of a Participant to
supply it with written notice of the Participant’s death or Disability and to
supply it with a copy of the will (in the case of the Participant’s death) or
such other evidence as the Committee deems necessary to establish the validity
of the Transfer of a Stock Option. The Committee may also require that the
agreement of the transferee to be bound by all of the terms and conditions of
this Plan.

 

12.13                 Section
16(b) of the Exchange Act. On and after a Public Offering, all elections
and transactions under this Plan by persons subject to Section 16 of the
Exchange Act involving shares of Common Stock are intended to comply with any
applicable exemptive condition under Rule 16b-3. The Committee may establish
and adopt written administrative guidelines, designed to facilitate compliance
with Section 16(b) of the Exchange Act, as it may deem necessary or proper for
the administration and operation of this Plan and the transaction of business
thereunder.

 

12.14                 Severability
of Provisions. If any provision of this Plan shall be held invalid or
unenforceable, such invalidity or unenforceability shall not affect any other
provisions hereof, and this Plan shall be construed and enforced as if such
provisions had not been included; provided, however, that if the provisions set
forth in Article X shall be held invalid or unenforceable, the Stock Options
granted under the Plan shall be cancelled and terminated.

 

12.15                 Headings
and Captions. The headings and captions herein are provided for reference
and convenience only, shall not be considered part of this Plan, and shall not
be employed in the construction of this Plan.

 

12.16                 Securities
Act Compliance. Except as the Company or Committee shall otherwise
determine, this Plan is intended to comply with Section 4(2) or Rule 701 under
the Securities Act, and any provisions inconsistent with such Section or Rule
of the Securities Act shall be inoperative and shall not affect the validity of
the Plan.

 

12.17                 Successors
and Assigns. The Plan shall be binding on all successors and permitted
assigns of a Participant, including, without limitation, the estate of such
Participant and the executor, administrator or trustee of such estate.

 

12.18                 Payment
to Minors, Etc. Any benefit payable to or for the benefit of a minor, an
incompetent person or other person incapable of receipt thereof shall be deemed
paid when paid to such person’s guardian or to the party providing or
reasonably appearing to provide for the care of such person, and such payment
shall fully discharge the Committee, the Board, the Company, its Affiliates and
their employees, agents and representatives with respect thereto.

 

12.19                 Agreement.
As a condition to the grant of a Stock Option, if requested by the Company and
the lead underwriter of any Public Offering of the Common Stock (the 

 

21

 

“Lead
Underwriter”), a Participant shall irrevocably agree not to sell, contract to
sell, grant any option to purchase, transfer the economic risk of ownership in,
make any short sale of, pledge or otherwise transfer or dispose of, any
interest in any Common Stock or any securities convertible into, derivative of,
or exchangeable or exercisable for, or any other rights to purchase or acquire
Common Stock  (except Common Stock  included in such Public Offering or acquired
on the public market after such offering) during such period of time following
the effective date of a registration statement of the Company filed under the
Securities Act that the Lead Underwriter shall specify (the “Lock-up Period”). The
Participant shall further agree to sign such documents as may be requested by
the Lead Underwriter to effect the foregoing and agree that the Company may
impose stop-transfer instructions with respect to Common Stock acquired
pursuant to a Stock Option until the end of such Lock-up Period.

 

ARTICLE XIII

 

EFFECTIVE DATE OF PLAN

 

The Plan shall
become effective upon adoption by the Board or such later date as provided in
the adopting resolution, subject to the approval of this Plan by the
stockholders of the Company within 12 months before or after adoption of the
Plan by the Board in accordance with the requirements of the laws of the State
of Delaware.

 

ARTICLE XIV

 

TERM OF PLAN

 

No Stock
Option shall be granted pursuant to this Plan on or after the tenth anniversary
of the earlier of the date this Plan is adopted or the date of stockholder
approval, but Stock Options granted prior to such tenth anniversary may, and
the Committee’s authority to administer the terms of such Stock Options shall,
extend beyond that date.

 

22

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