Document:

2000 Stock Option Plan

 Exhibit 10.2 
  
 ARCSOFT, INC. 
  
 2000 STOCK OPTION PLAN 
  
 1. Purposes of this Plan. The purposes of this 2000 Stock Option Plan are to attract, and retain the best available personnel, to provide
additional incentive to the Employees of the Company and its Subsidiaries, to promote the success of the Company’s business and to enable the Employees to share in the growth and prosperity of the Company by providing them with an opportunity
to purchase stock in the Company. 
  
 Options granted hereunder
may be either Incentive Stock Options or Nonstatutory Stock Options, at the discretion of the Board and as reflected in the terms of the written stock option agreement. 
  
 2. Definitions. As used herein, the following definitions shall apply: 
  
 (a) “Board” shall mean the Board of
Directors of the Company. 
  
 (b)
“Code” shall mean the Internal Revenue Code of the 1986, as amended. 
  
 (c) “Common Stock” shall mean the Common Stock of the Company. 
  
 (d) “Company” shall mean ARCSOFT, INC., a
California corporation. 
  
 (e)
“Committee” shall mean the Committee appointed by the Board in accordance with Section 4 of this Plan, if one is appointed. 
  
 (f) “Continuous Employment” or “Continuous Status as an Employee” shall mean the absence of any
interruption or termination of employment or service as an Employee by or to the Company or any Parent or Subsidiary of the Company which now exists or is hereafter organized or acquired by or acquires the Company. Continuous Employment shall not be
considered interrupted in the case of sick leave, military leave or any other leave of absence approved by the Board or in the event of transfers between locations of the Company or between the Company, its Parent, any of its Subsidiaries or its
successors. 
  
 (g) “Employee”
shall mean any person, including officers and directors, employed by the Company, its Parent, any of its Subsidiaries or its successors; or, for purposes of eligibility for Nonstatutory Stock Options, any person employed by the Company, including
officers and directors, or any consultant to, or director of, the Company, or any Parent or Subsidiary of the Company, whether or not such consultant or director is an employee of such entities. 
  
 (h) “Exchange Act” shall mean the
Securities Exchange Act of 1934, as amended, or any successor legislation. 
  

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 (i) “Incentive Stock Option” shall mean an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code. 
  
 (j) “Non-Employee Director” shall mean a director who is a “Non-Employee Director,” as such term is defined -under Rule 16b-3 (b)(3)(i) promulgated pursuant to the Exchange Act and
any applicable releases and opinions or the Securities and Exchange Commission. 
  
 (k) “Nonstatutory Stock Option” shall mean an Option which is not an Incentive Stock Option. 
  
 (l) “Option” shall mean a stock option
granted pursuant to this Plan. 
  
 (m)
“Option Agreement” shall mean a written agreement in such form or forms as the Board (subject to the terms and conditions of this Plan) may from time to time approve, evidencing an Option. 
  
 (n) “Optioned Stock” shall mean the Common
Stock subject to an Option. 
  
 (o)
“Optionee” shall mean an Employee who is granted an Option. 
  
 (p) “Parent” shall mean a “parent corporation,” whether now or hereafter existing, as defined in Sections 424(e) and (g) of the Code. 
  
 (q) “Plan” shall mean this 2000 Stock
Option Plan, as amended. 
  
 (r)
“Registration Date” shall mean the effective date of the first registration statement which is filed by the Company and declared effective pursuant to Section 12(g) of the Exchange Act, with respect to any class of the
Company’s securities. 
  
 (s)
“Securities Act” shall mean the Securities Act of 1933, as amended, or any successor legislation. 
  
 (t) “Share” or “Shares” shall mean the Common Stock, as adjusted in accordance with Section 11 of this
Plan. 
  
 (u) “Stock Purchase
Agreement” shall mean an agreement in such form or forms as the Board (subject to the terms and conditions of this Plan) may from time to time approve, which is to be executed as a condition of purchasing Optioned Stock upon exercise of an
Option. 
  
 (v) “Subsidiary”
shall mean a subsidiary corporation, whether now or hereafter existing, as defined in Sections 424(f) and (g) of the Code. 
  
 3. Stock Subject to this Plan. Subject to the provisions of Section 11 of this Plan, the maximum aggregate number of Shares which may be optioned
and sold under this Plan is Four Million (4,000,000) Shares. The Shares may be authorized, but unissued or reacquired 

  

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Shares other than reacquired Shares delivered pursuant to Section 7(c)(iv) hereof as payment of consideration in the exercise of an option. 
  
 If (a) an Option should expire or become unexercisable for any reason without
having been, exercised in full or (b) if the Company repurchases Shares from the Optionee pursuant to the terms of a Stock Purchase Agreement (provided that the Optionee did not receive benefits of ownership, such as dividends, which would destroy
the exemption from the provisions of Section 16(b) of the Exchange Act provided by Rule 16b-3 promulgated pursuant to the Exchange Act), the unpurchased Shares or repurchased Shares, respectively, which were subject thereto shall ‘ unless this
Plan shall have been terminated, return to this Plan and become available for other Options under this Plan. 
  
 The Company intends that as long as it is not subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, and is not an investment
company registered or required to be registered under the Investment Company Act of 1940, as amended, all offers and sales of Options and Common Stock issuable upon exercise of any Option shall be exempt from registration under the provisions of
Section 5 of the Securities Act, and this Plan shall be administered in such a manner so as to preserve such exemption. The Company intends for this Plan to constitute a written compensatory benefit plan within the meaning of Rule 701 (b) of 17 CFR
Section 230.701 (“Rule 701”) promulgated by the Securities and Exchange Commission pursuant to the Securities Act. Unless otherwise designated by the Committee at the time an Option is granted, all options granted under this Plan by
the Company, and the issuance of any Shares upon exercise thereof, are intended to be granted in reliance on Rule 701. 
  
 4. Administration of this Plan. 
  
 (a) Procedure. This Plan shall be administered by the Board. The Board may appoint a Committee consisting of two (2) or more
members of the Board (or such greater number as is required to qualify for the exemption from the provisions of Section 16(b) of the Exchange Act provided by Rule 16b-3 promulgated pursuant to the Exchange Act) to administer this Plan on behalf of
the Board, subject to such terms and conditions as the Board may prescribe. Once appointed, the Committee shall continue to serve until otherwise directed by the Board. From time to time, the Board may increase the size of the Committee and appoint
additional members of the Board thereto, remove members (with or without cause) and appoint new members of the Board in substitution therefor, fill vacancies, however caused, and remove all members of the Committee and, thereafter, directly
administer this Plan. Members of the Board or Committee who are either eligible for Options or have been granted Options may vote on any matters affecting the administration of this Plan or the grant of Options pursuant to this Plan, except that no
such member shall act upon the granting of an Option to such person nor shall any such member’s presence at a meeting of the Board of Directors establish the existence of a quorum at any meeting of the Board or the Committee during which action
is taken with respect to the granting of an Option to him. 
  
 (b) Procedure After Registration Date. Notwithstanding the provisions of subsection 4(a) above, after the Registration Date this Plan shall be administered either by: (i) the fall Board, provided that at all
times each member of the Board is a Non-Employee Director; or (ii) a Committee which at all times consists solely of Board members who are Non-Employee 

  

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Directors. After the Registration Date, the Board shall take all action necessary to administer this Plan in accordance with the then-effective provisions of
Rule 16b-3 promulgated under the Exchange Act, provided that any amendment to this Plan required for compliance with such provisions shall be made in accordance with Section 13 of this Plan. 
  
 (c) Powers of the Board and/or Committee. Subject to
the provisions of this Plan, the Committee or the Board, as appropriate, shall have the authority, in its discretion: (i) to grant Incentive Stock Options and Nonstatutory Stock Options; (ii) to determine, upon review of relevant information and in
accordance with Section 7 of this Plan, the fair market value per Share; (iii) to determine the exercise price of the Options, which exercise price and type of consideration shall be determined in accordance with Section 7 of this Plan; (iv) to
determine the Employees to whom, and the time or times at which, Options shall be granted, and the number of Shares to be subject to each Option; (v) to prescribe, amend and rescind rules and regulations relating to this Plan; (vi) to determine the
terms and provisions of each Option Agreement and each Stock Purchase Agreement (each of which need not be identical with the terms of other Option Agreements and Stock Purchase Agreements) and, with the consent of the holder thereof, to modify or
amend each Option Agreement and Stock Purchase Agreement; (vii) to determine whether a stock repurchase agreement or other agreement will be required to be executed by any Employee as a condition to the exercise of an Option, and to determine the
terms and provisions of any such agreement (which need not be identical with the terms of any other such agreement) and, with the consent of the Optionee, to amend any such agreement; (viii) to interpret this Plan, the Option Agreements, the Stock
Purchase Agreements or any agreement entered into with respect to the grant or exercise of Options; (ix) to authorize any person to execute on behalf of the Company any instrument required to effectuate the grant of an Option previously granted by
the Board or to take such other actions as may be necessary or appropriate with respect to the Company’s rights pursuant to Options or agreements relating to the grant or exercise thereof, and (x) to make such other determinations and establish
such other procedures as it deems necessary or advisable for the administration of this Plan. 
  
 (d) Effect of the Board’s or Committee’s Decision. All decisions, determinations and interpretations of the Board or the
Committee shall be final and binding on all Optionees and any other holders of Options. 
  
 5. Eligibility. Options may be granted only to Employees. An Employee who has been granted an Option may, if such Employee is otherwise eligible, be granted additional Options. 
  
 6. Term of Plan. This Plan shall become effective upon the earlier to
occur of its adoption by the Board or its approval by vote of a majority of the outstanding shares of the Company’s capital stock entitled to vote on the adoption of this Plan. This Plan shall continue in effect for a term of ten (10) years
unless sooner terminated in accordance with the terms and provisions of this Plan. 
  
 7. Option Price and Consideration. 
  
 (a) Exercise Price. The exercise price per Share for the Shares to be issued pursuant to the exercise of an Option shall be such price as is determined by the Board; provided, 

  

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however, that such price shall in no event be less than eighty-five percent (85%) with respect to Nonstatutory Stock Options, and one hundred percent
(100%) with respect to Incentive Stock Options, of the fair market value per Share on the date of grant. In the case of an Option granted to an Employee who, at the time the Option is granted, owns stock (as determined under Section 424(d) of the
Code) constituting more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or its Parent or Subsidiaries, the exercise price per Share shall be no less than one hundred ten percent (I 10%) of the fair
market value per Share on the date of grant. 
  
 (b) Fair Market Value. The fair market value per Share on the date of grant shall be determined by the Board in its sole discretion, exercised in good faith; provided, however, that where there is a public market for
the Common Stock, the fair market value per Share shall be the average of the closing bid and asked prices of the Common Stock on the date of grant, as reported in The Wall Street Journal (or, if not so reported, as otherwise reported by the
National Association of Securities Dealers Automated Quotations (“NASDAQ”) System), or, in the event the Common Stock is listed on a stock exchange or on the NASDAQ System, the fair market value per Share shall be the closing price
on the exchange or on the NASDAQ System as of the date of grant of the Option, as reported in The Wall Street Journal. 
  
 (c) Payment of Consideration. The consideration to be paid for the Shares to be issued upon exercise of an Option, including the
method of payment, shall be determined by the Board and may consist entirely of cash, check, promissory notes, Shares held by the Optionee for the requisite period necessary to avoid a charge to the Company’s earnings for financial reporting
purposes which have a fair market value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised, or any combination of such methods of payment. Subject to subparagraphs (i) through (iv)
hereto, utilization of Shares as the method of payment may be completed by either (a) the tender of Shares then held by the Optionee, or (b) the withholding of Shares which would otherwise be issued pursuant to an Option pursuant to broker-dealer
sale and remittance procedure described in subparagraph (iii) hereto. In making its determination as to the type of consideration to accept, the Board shall consider if acceptance of such consideration is deemed to be such as may be reasonably
expected to benefit the Company. 
  
 (i) If the
consideration for the exercise of an Option is a promissory note, it shall be a fall recourse promissory note executed by the Optionee, bearing interest at a rate which shall be sufficient to preclude the imputation of interest under the applicable
provisions of the Code. Until such time as the promissory note has been paid in full, the Company may retain the Shares purchased upon exercise of the Option in escrow as security for payment of the promissory note. 
  
 (ii) If the consideration for the exercise of an Option is
the surrender of previously acquired and owned Shares, the Optionee will be required to make representations and warranties satisfactory to the Company regarding his title to the Shares used to effect the purchase, including, without limitation,
representations and warranties that the Optionee has good and marketable title to such Shares free and clear of any and all liens, encumbrances, charges, equities, claims, security interests, options or restrictions and has full power to deliver
such Shares without obtaining the consent or approval of any person or governmental authority other 

  

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than those which have already given consent or approval in a form satisfactory to the Company. The value of the Shares used to effect the purchase shall be
the fair market value of those Shares as determined by the Board in its sole discretion, exercised in good faith. 
  
 (iii) If the consideration for the exercise of an Option is to be paid through a broker-dealer sale and remittance procedure, the Optionee
shall provide (1) irrevocable written instructions to a designated brokerage firm to effect the immediate sale of the purchased shares and to remit to the Company, out of the sale proceeds available on the settlement date, sufficient funds to cover
the aggregate option price payable for the purchased Shares plus all applicable Federal and State income and employment taxes required to be withheld by the Company in connection with such purchase and (2) written instructions to the Company to
deliver the certificates for the purchased Shares directly to such brokerage firm in order to complete the sale transaction. 
  
 (iv) If an Optionee is permitted to exercise an Option by delivering shares of the Company’s Common Stock, the option agreement
covering such Option may include provisions authorizing the Optionee to exercise the Option, in whole or in part, by: (1) delivering whole shares of the Company’s Common Stock previously owned by such Optionee (whether or not acquired through
the prior exercise of a stock option) having a fair market value equal to the option price; and/or (2) directing the Company to withhold from the Shares that would otherwise be issued upon exercise of the Option that number of whole Shares having a
fair market value equal to the option price. Shares of the Company’s Common Stock so delivered or withheld shall be valued at their fair market value on the date of exercise of the Option, as determined by the Committee and/or the Board, as
appropriate. Any balance of the exercise price shall be paid in cash or by check or a promissory note, each in accordance with the terms of this Section 7. Any Shares delivered or withheld in accordance with this provision shall again become
available for purposes of this Plan and for Options subsequently granted thereunder to the extent permissible pursuant to Section 3 of this Plan. 
  
 8. Options. 
  
 (a) Terms and Provisions of Options. As provided in Section 4 of this Plan and subject to any limitations specified herein, the
Board and/or Committee shall have the authority to determine the terms and provisions of any Option granted under this Plan or any agreement required to be executed in connection with the grant or exercise of an Option. Each Option granted pursuant
to this Plan shall be evidenced by an Option Agreement. Options granted pursuant to this Plan are conditioned upon the Company obtaining any required permit or order from appropriate governmental agencies authorizing the Company to issue such
Options and Shares issuable upon exercise thereof 
  
 (b) Term of Option. The term of each Option may be up to ten (10) years from the date of grant thereof as determined by the Board upon the grant of the Option and specified in the Option Agreement, except that the term of an Option
granted to an Employee who, at the time the Option is granted, owns stock comprising more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or its Parent or Subsidiaries, shall be five (5) years from
the date of grant thereof or such shorter term as may be provided in the Option Agreement. 
  

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 (c) Exercise of Option 
  
 (i) Procedure for Exercise; Rights as a Shareholder.
Any Option shall be exercisable at such times, in such installments and under such conditions as may be determined by the Board and specified in the Option Agreement, including performance criteria with respect to the Company and/or the Optionee,
and as shall be permissible under the terms of this Plan. 
  
 An Option may be exercised in accordance with the provisions of this Plan as to all or any portion of the Shares then exercisable under an Option, from time to time during the term of the Option. An Option may not be
exercised for a fraction of a Share. 
  
 An
Option shall be deemed to be exercised when written notice of such exercise has been given to the Company at its principal business office in accordance with the terms of the Option Agreement by the person entitled to exercise the Option and, except
when the broker-dealer sale and remittance procedure described in Section 7(c)(iii) hereto is used, full payment for the Shares with respect to which the Option is exercised has been received by the Company, accompanied by an executed Stock Purchase
Agreement and any other agreements required by the terms of this Plan and/or the Option Agreement. Full payment may consist of such consideration and method of payment allowable under Section 7 of this Plan. Until the Option is properly exercised in
accordance with the terms of this paragraph, no right to vote or receive dividends or any other rights as a stockholder exist with respect to the Optioned Stock. No adjustment shall be made for a dividend or other right for which the record date is
prior to the date the Option is exercised, except as provided in Section 11 of this Plan. 
  
 As soon as practicable after any proper exercise of an Option in accordance with the provisions of this Plan, the Company shall, without
transfer or issue tax to the Optionee, deliver to the Optionee at the principal executive office of the Company or such other place as shall be mutually agreed upon between the Company and the Optionee, a certificate or certificates representing the
Shares for which the Option shall have been exercised. The time of issuance and delivery of the certificate(s) representing the Shares for which the Option shall have been exercised may be postponed by the Company for such period as may be required
by the Company, with reasonable diligence, to comply with any applicable listing requirements of any national or regional securities exchange or any law or regulation applicable to the issuance or delivery of such Shares. No Option may be exercised
unless this Plan has been duly approved by the shareholders of the Company in accordance with applicable law. Notwithstanding anything to the contrary herein, the terms of a Stock Purchase Agreement required to be executed and delivered in
connection with the exercise of an Option may require the certificate or certificates representing the Shares purchased upon exercise of an Option to be delivered and deposited with the Company as security for the Optionee’s faithful
performance of the terms of his Stock Purchase Agreement. 
  
 Exercise of an Option in any manner shall result in a decrease in the number of Shares which thereafter may be available, both for purposes of this Plan and for sale under the Option, by the number of Shares as to
which the Option is exercised. 
  

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 (ii) Termination of Status as an Employee. If an Optionee ceases to serve as an
Employee for any reason other than death or disability and thereby terminates his Continuous Status as an Employee, such Optionee shall have the right to exercise the Option at any time within thirty (30) days (or such other period of time not
exceeding three (3) months as is determined by the Board at the time of granting the Option), following the date such Optionee ceases his Continuous Status as an Employee of the Company to the extent that such Optionee was entitled to exercise the
Option at the date of such termination; provided, however, that no Option shall be exercisable after the expiration of the term set forth in the Option Agreement. To the extent that such Optionee was not entitled to exercise the Option
at the date of such termination, or if such Optionee does not exercise such Option (which such Optionee was entitled to exercise) within the time specified herein, the Option shall terminate. 
  
 (iii) Death or Disability of Optionee. If an Optionee
ceases to serve as an Employee due to death or disability and thereby terminates his Continuous Status as an Employee, the Option may be exercised at any time within six (6) months following the date of death or termination of employment due to
disability, in the case of death, by the Optionee’s estate or by a person who acquired the right to exercise the Option by bequest or inheritance, or, in the case of disability, by the Optionee, but in any case only to the extent the Optionee
was entitled to exercise the Option at the date of his termination of employment by death or disability; provided, however, that no Option shall be exercisable after the expiration of the Option term set forth in the Option Agreement.
To the extent that such Optionee was not entitled to exercise such Option at the date of his termination of employment by death or disability or if such Option is not exercised (to the extent it could be exercised) within the time specified herein,
the Option shall terminate. 
  
 (iv) Extension
of Time to Exercise. Notwithstanding anything to the contrary in this Section 8, the Board may at any time and from time to time prior to the termination of a Nonstatutory Stock Option, with the consent of the Optionee, extend the period of time
during which the Optionee may exercise his Nonstatutory Stock Option following the date the Optionee ceases such Optionee’s Continuous Status as an Employee; provided, however, that (1) the maximum period of time during which a
Nonstatutory Stock Option shall be exercisable following such termination date shall not exceed an aggregate of six (6) months, (2) the Nonstatutory Stock Option shall not become exercisable after the expiration of the term of such Option as set
forth in the Option Agreement as a result of such extension, and (3) notwithstanding any extension of time during which the Nonstatutory Stock Option may be exercised, such Option, unless otherwise amended by the Board, shall only be exercisable to
the extent to which the Optionee was entitled to exercise it on the date Optionee ceased Continuous Status as an Employee. To the extent that such Optionee was not entitled to exercise the Option at the date of such termination, or if such Optionee
does not exercise an Option which Optionee was entitled to exercise within the time specified herein, the Option shall terminate. 
  
 9. Limit on Value of Optioned Stock. No Incentive Stock Option may be granted to an Employee if, as a result of such grant, the aggregate fair
market value (determined at the time an Incentive Stock Option is granted) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by an Optionee during any calendar year under all incentive stock option plans
of the Company, its Parents or its Subsidiaries, if any, exceeds One Hundred Thousand Dollars ($100,000). 
  

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 10. Non-transferability of Options. Options granted under this Plan may not be sold, pledged,
assigned, hypothecated, gifted, transferred or disposed of in any manner, either voluntarily or involuntarily by operation of law, other than by will or by the laws of descent or distribution, and may be exercised during the lifetime of the Optionee
only by such Optionee. 
  
 11. Adjustments Upon Changes in
Capitalization or Merger. 
  
 (a) Subject to
any required action by the shareholders of the Company, the number of Shares covered by each outstanding Option, and the number of Shares which have been authorized for issuance under this Plan but as to which no Options have yet been granted or
which have been returned to this Plan upon cancellation or expiration of an Option or repurchase of shares from an Optionee upon termination of employment or service, as well as the exercise or purchase price per Share covered by each such
outstanding Option, shall be proportionately adjusted for any increase or decrease in the number of issued Shares resulting from a stock split, reverse stock split, combination or reclassification of the Common Stock, or the payment of a stock
dividend (but only on the Common Stock) or any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company (other than stock bonuses to Employees, including, without limitation,
officers and directors); provided, however, that the conversion of any convertible securities of the Company shall not be deemed to have been effected without the receipt of consideration. Such adjustment shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price of Shares subject to this Plan or an Option. 
  
 (b) In the event of the merger, consolidation or reorganization of the Company with or into another corporation as a result of which the
Company is not the surviving corporation or as a result of which the outstanding Shares are exchanged for or converted into cash or property or securities not of the Company, the Board may (i), make provision for the assumption of all outstanding
Options by the successor corporation or a Parent or a Subsidiary thereof, or (ii) declare that outstanding Options shall terminate as of a date fixed by the Board which is at least thirty (30) days after the notice thereof to the Optionee, unless
such thirty (30) days period is waived by the Optionee. In the event of a dissolution or liquidation of the Company or the sale of all or substantially all of the assets of the Company, the Company’s outstanding Options shall terminate as to an
Optionee upon termination of Continuous Status as an Employee. 
  
 (c) No fractional shares of Common Stock shall be issuable on account of any action described in this Section, and the aggregate number of shares into which Shares then covered by the Option, when changed as the
result of such action, shall be reduced to the largest number of whole shares resulting from such action, unless the Board, in its sole discretion, shall determine to issue scrip certificates in respect to any fractional shares, which scrip
certificates, in such event, shall be in a form and have such terms and conditions as the Board in its discretion shall prescribe. 
  

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 12. Time of Granting Options. The date of grant of an Option shall be the date on which the Board
makes the determination granting such Option; provided, however, that if the Board determines that such grant shall be as of some future date, the date of grant shall be such future date. ‘ Notice of the determination shall be
given to each Employee to whom an Option is so granted within a reasonable time after the date of such grant. 
  
 13. Amendment and Termination of this Plan. 
  
 (a) Amendment and Termination. The Board may amend or terminate this Plan from time to time in such respects as the Board may deem
advisable and shall make any amendments which may be required so that Options intended to be Incentive Stock Options shall at all times continue to be Incentive Stock Options for the purpose of the Code, except that, without approval of the holders
of a majority of the outstanding shares of the Company’s capital stock, no such revision or amendment shall: 
  
 (i) Increase the number of Shares subject to this Plan, other than in connection with an adjustment under Section 11 of this Plan;

  
 (ii) Materially change the designation of the
class of Employees eligible to be granted Options; 
  
 (iii) Remove the administration of this Plan from the Board (other than to the Committee); 
  
 (iv) Materially increase the benefits accruing to participants under this Plan; or 
  
 (v) Extend the term of this Plan. 
  
 (b) Effect of Amendment or Termination. Except as
otherwise provided in Section 11, any amendment or termination of this Plan shall not affect Options already granted and such Options shall remain in full force and effect as if this Plan had not been amended or terminated, unless mutually agreed
otherwise between the Optionee and the Company, which agreement must be in writing and signed by the Optionee and the Company. 
  
 14. Conditions Upon Issuance of Shares. 
  
 (a) Shares shall not be issued pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of
such Shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act, the Exchange Act, applicable state securities laws, the rules and regulations promulgated thereunder, and the
requirement of any stock exchange upon which the Shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance. 
  
 (b) As a condition to the exercise of an Option, the Board may require the person exercising such Option to
execute an agreement with, and/or may require the person exercising such Option to make any representation and warranty to, the Company as may in the 

  

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judgment of counsel to the Company be required under applicable law or regulation, including but not limited to a representation and warranty that the Shares
are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is appropriate under any of the aforementioned relevant provisions of
law. 
  
 15. Reservation of Shares. The Company, during the
term of this Plan, at all times shall reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of this Plan. 
  
 The Company, during the term of this Plan, shall use diligent efforts to seek to obtain from appropriate regulatory agencies any requisite authorization
in order to issue and sell such number of Shares as shall be sufficient to satisfy the requirements of this Plan. The inability of the Company to obtain the requisite authorization(s) deemed by the Company’s counsel to be necessary for the
lawful issuance and sale of any Shares hereunder, or the inability of the Company to confirm to its satisfaction that any issuance and sale of any Shares hereunder will meet applicable legal requirements, shall relieve the Company of any liability
in respect to the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained. 
  
 16. Stock Option and Stock Purchase Agreements. Options shall be evidenced by written stock option agreements in such form or forms as the Board
shall approve from time to time. Upon the exercise of an Option, the Optionee shall sign and deliver to the Company a Stock Purchase Agreement (if required to be executed and delivered to the Company by an Optionee as a condition to the exercise of
an Option) in such form or forms as the Board shall approve from time to time. 
  
 17. Shareholder Approval. Continuance of this Plan shall be subject to approval by the shareholders of the Company within twelve (12) months before or after the date this Plan is adopted by the Board. If such
shareholder approval is obtained at a duly held shareholders’ meeting, it may be obtained by the affirmative vote of the holders of a majority of the outstanding shares of the Company entitled to vote thereon. All Options granted prior to
shareholder approval of this Plan are subject to such approval, and if such approval is not obtained within twelve (12) months before or after the date this Plan is adopted by the Board all such Options shall expire and shall be of no further force
or effect. 
  
 18. Taxes, Fees, Expenses and Withholding of
Taxes. 
  
 (a) The Company shall pay all
original issue and transfer taxes (but not income taxes, if any) with respect to the grant of Options and/or the issue and transfer of Shares pursuant to the exercise thereof, and all other fees and expenses necessarily incurred by the Company in
connection therewith, and will from time to time use diligent efforts to comply with all laws and regulations which, in the opinion of counsel for the Company, shall be applicable thereto. 
  
 (b) The grant of Options hereunder and the issuance of
Shares pursuant to the exercise thereof is conditioned upon the Company’s reservation of the right to withhold, in accordance with any applicable law, from any compensation payable to the Optionee any taxes 

  

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required to be withheld by federal, state or local law as a result of the grant or exercise of such Option or the sale of the Shares issued upon exercise
thereof. To the extent that compensation or other amounts, if any, payable to the Optionee are insufficient to pay any taxes required to be so withheld, the Company may, in its sole discretion, require the Optionee, as a condition of the exercise of
an Option, to pay in cash to the Company an amount sufficient to cover such tax liability or otherwise to make adequate provision for the Company’s satisfaction of its withholding obligations under federal and state law. 
  
 (c) The Board or the Committee may, in its discretion and
upon such terms and conditions as it may deem appropriate (including the applicable safe-harbor provisions of SEC Rule 16b-3 and interpretations thereof by the staff of the Securities and Exchange Commission) provide any or all holders of
outstanding option grants under this Plan with the election to have the Company withhold, from the shares of Common Stock otherwise issuable upon the exercise of such options, one or more of such shares with an aggregate fair market value equal to
the designated percentage (any multiple of 5% specified by the optionee) of the Federal and State income taxes (“Taxes”) incurred in connection with the acquisition of such Shares. In lieu of such direct withholding, one or more
optionees may also be granted the right to deliver shares of Common Stock to the Company in satisfaction of such Taxes. The withheld or delivered shares shall be valued at the Fair Market Value on the applicable determination date for such Taxes or
such other date required by the applicable safe-harbor provisions of SEC Rule 16b-3. 
  
 19. Liability of Company. The Company, its Parent or any Subsidiary which is in existence or hereafter comes into existence shall not be liable to an Optionee or other person if it is determined for any reason
by the Internal Revenue Service or any court having jurisdiction that any Options intended to be Incentive Stock Options granted hereunder do not qualify as incentive stock options within the meaning of Section 422 of the Code. 
  
 20. Information to Optionee. The Company shall provide without charge
at least annually to each Optionee during the period his Option is outstanding a balance sheet and income statement of the Company. In the event that the Company provides annual reports or periodic reports to its shareholders during the period in
which an Optionee’s Option is outstanding, the Company shall provide to each Optionee a copy of each such report. 
  
 21. Notices. Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery or
upon deposit in the United States mail, as first class, registered or certified mail, with postage and fees prepaid and addressed (i) if to the Company, at its principal place of business, attention: Secretary, or (ii) if to the Optionee at his
address as set forth on the signature page of his Option Agreement, or at such other address as either party may from time to time designate in writing to other. It shall be the obligation of each Optionee and each transferee holding Shares
purchased upon exercise of an Option to provide the Secretary of the Company, by letter mailed as provided hereinabove, with written notice of his direct mailing address. 
  
 22. No Enlargement of Employee Rights. This Plan is purely voluntary on the part of the Company, and the continuance
of this Plan shall not be deemed to constitute a contract between the Company and any Employee, or to be consideration for or a condition of the employment or service of any Employee. Nothing contained in this Plan shall be deemed to give 

  

 12 

 
any Employee the right to be retained in the employ or service of the Company, its Parent, Subsidiary or a successor corporation, or to interfere with the
right of the Company or any such corporations to discharge or retire any Employee at any time with or without cause and with or without notice. No Employee shall have any right to or interest in Options authorized hereunder prior to the grant
thereof to such Employee, and upon such grant such Employee shall have only such rights and interests as are expressly provided herein, subject, however, to all applicable provisions of the Company’s Articles of Incorporation, as the same may
be amended from time to time. 
  
 23. Legends on
Certificates. 
  
 (a) Federal Law.
Unless an appropriate registration statement is filed pursuant to the Securities Act with respect to the Options and Shares issuable under this Plan, each document or certificate representing such Options or Shares shall be endorsed thereon with a
legend substantially as follows: 
  
 “THIS OPTION AND THE
SECURITIES WHICH MAY BE PURCHASED UPON EXERCISE OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION,
THEREOF. NO SALE, TRANSFER OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATING THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.” 
  
 (b) California Legend. If required by the California
Commissioner of Corporations, each document or certificate representing the Options or Shares issuable under this Plan shall be endorsed thereon with a legend substantially as follows: 
  
 “IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS OPTION AND THE SECURITIES WHICH MAY BE PURCHASED UPON
EXERCISE OF THIS OPTION, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER’S RULES.”

  
 (c) Additional Legends. Each
document or certificate representing the Options or Shares issuable under this Plan shall also contain legends as may be required under applicable blue sky laws or by any Stock Purchase Agreement or other agreement the execution of which is a
condition to the exercise of an Option under this Plan. 
  

 13 

 24. Availability of Plan. A copy of this Plan shall be delivered to the Secretary of the Company
and shall -be shown by him to any eligible person making reasonable inquiry concerning it. 
  
 25. Compliance with Exchange Act Rule 16b-3. With respect to persons subject to Section 16 of the Exchange Act, transactions under this Plan are intended to comply with all applicable conditions of Rule 16b-3,
promulgated pursuant to the Exchange Act, or its successors. To the extent any provision of this Plan or action by the Board or any Committee fails so to comply, it shall be deemed null and void to the extent permitted by law and deemed advisable by
the Board or any Committee. 
  
 26. Invalid Provisions. In
the event that any provision of this Plan is found to be invalid or otherwise unenforceable under any applicable law, such invalidity or unenforceability shall not be construed as rendering any other provisions contained herein as invalid or
unenforceable, and all such other provisions shall be given full force and effect to the same extent as though the invalid or unenforceable provision was not contained herein. 
  
 27. Applicable Law. This Plan shall be governed by and construed in accordance with the laws of the State of
California. 
  

 14Form of 2004 Stock Incentive Plan

 Exhibit 10.3 
  
 ARCSOFT, INC. 
  
 2004 STOCK INCENTIVE PLAN 
  
 (Adopted by the Board on             , 2004) 

 Table of Contents 
  

							
	 	 	 	 	 	  	Page

	 SECTION 1. ESTABLISHMENT AND PURPOSE
	  	1
		
	 SECTION 2. DEFINITIONS
	  	1
	 	 	 (a)
	 	 “Affiliate”
	  	1
	 	 	 (b)
	 	 “Award”
	  	1
	 	 	 (c)
	 	 “Board of Directors”
	  	1
	 	 	 (d)
	 	 “Change in Control”
	  	1
	 	 	 (e)
	 	 “Code”
	  	2
	 	 	 (f)
	 	 “Committee”
	  	2
	 	 	 (g)
	 	 “Company”
	  	2
	 	 	 (h)
	 	 “Consultant”
	  	3
	 	 	 (i)
	 	 “Employee”
	  	3
	 	 	 (j)
	 	 “Exchange Act”
	  	3
	 	 	 (k)
	 	 “Exercise Price”
	  	3
	 	 	 (l)
	 	 “Fair Market Value”
	  	3
	 	 	 (m)
	 	 “ISO”
	  	3
	 	 	 (n)
	 	 “Nonstatutory Option” or “NSO”
	  	3
	 	 	 (o)
	 	 “Offeree”
	  	4
	 	 	 (p)
	 	 “Option”
	  	4
	 	 	 (q)
	 	 “Optionee”
	  	4
	 	 	 (r)
	 	 “Outside Director”
	  	4
	 	 	 (s)
	 	 “Parent”
	  	4
	 	 	 (t)
	 	 “Participant”
	  	4
	 	 	 (u)
	 	 “Plan”
	  	4
	 	 	 (v)
	 	 “Purchase Price”
	  	4
	 	 	 (w)
	 	 “Restricted Share”
	  	4
	 	 	 (x)
	 	 “Restricted Share Agreement”
	  	4
	 	 	 (y)
	 	 “SAR”
	  	4
	 	 	 (z)
	 	 “SAR Agreement”
	  	4
	 	 	 (aa)
	 	 “Service”
	  	4
	 	 	 (bb)
	 	 “Share”
	  	4
	 	 	 (cc)
	 	 “Stock”
	  	4
	 	 	 (dd)
	 	 “Stock Option Agreement”
	  	4
	 	 	 (ee)
	 	 “Stock Unit”
	  	5
	 	 	 (ff)
	 	 “Stock Unit Agreement”
	  	5
	 	 	 (gg)
	 	 “Subsidiary”
	  	5
		
	 SECTION 3. ADMINISTRATION
	  	5
	 	 	 (a)
	 	 Committee Composition
	  	5
	 	 	 (b)
	 	 Committee for Non-Officer Grants
	  	5
	 	 	 (c)
	 	 Committee Procedures
	  	5

  

 ARCSOFT, INC. 
 2004 STOCK INCENTIVE PLAN 
  
 -i- 

							
	 	  	(d)	  	 Committee Responsibilities
	  	5
		
	 SECTION 4. ELIGIBILITY
	  	7
	 	  	(a)	  	 General Rule
	  	7
	 	  	(b)	  	 Automatic Grants to Outside Directors
	  	7
	 	  	(c)	  	 Ten-Percent Stockholders
	  	8
	 	  	(d)	  	 Attribution Rules
	  	8
	 	  	(e)	  	 Outstanding Stock
	  	8
		
	 SECTION 5. STOCK SUBJECT TO PLAN
	  	8
	 	  	(a)	  	 Basic Limitation
	  	8
	 	  	(b)	  	 Award Limitation
	  	9
	 	  	(c)	  	 Additional Shares
	  	9
		
	 SECTION 6. RESTRICTED SHARES
	  	9
	 	  	(a)	  	 Restricted Stock Agreement
	  	9
	 	  	(b)	  	 Payment for Awards
	  	9
	 	  	(c)	  	 Vesting
	  	9
	 	  	(d)	  	 Voting and Dividend Rights
	  	10
	 	  	(e)	  	 Restrictions on Transfer of Shares
	  	10
		
	 SECTION 7. TERMS AND CONDITIONS OF OPTIONS
	  	10
	 	  	(a)	  	 Stock Option Agreement
	  	10
	 	  	(b)	  	 Number of Shares
	  	10
	 	  	(c)	  	 Exercise Price
	  	10
	 	  	(d)	  	 Withholding Taxes
	  	10
	 	  	(e)	  	 Exercisability and Term
	  	11
	 	  	(f)	  	 Exercise of Options
	  	11
	 	  	(g)	  	 Effect of Change in Control
	  	11
	 	  	(h)	  	 Leaves of Absence
	  	11
	 	  	(i)	  	 No Rights as a Stockholder
	  	11
	 	  	(j)	  	 Modification, Extension and Renewal of Options
	  	12
	 	  	(k)	  	 Restrictions on Transfer of Shares
	  	12
	 	  	(l)	  	 Buyout Provisions
	  	12
		
	 SECTION 8. PAYMENT FOR SHARES
	  	12
	 	  	(a)	  	 General Rule
	  	12
	 	  	(b)	  	 Surrender of Stock
	  	12
	 	  	(c)	  	 Services Rendered
	  	12
	 	  	(d)	  	 Cashless Exercise
	  	13
	 	  	(e)	  	 Exercise/Pledge
	  	13
	 	  	(f)	  	 Promissory Note
	  	13
	 	  	(g)	  	 Other Forms of Payment
	  	13
	 	  	(h)	  	 Limitations under Applicable Law
	  	13

  

 ARCSOFT, INC. 
 2004 STOCK INCENTIVE PLAN 
  
 -ii- 

							
	 SECTION 9. STOCK APPRECIATION RIGHTS
	  	13
	 	 	 (a)
	  	 SAR Agreement
	  	13
	 	 	 (b)
	  	 Number of Shares
	  	13
	 	 	 (c)
	  	 Exercise Price
	  	13
	 	 	 (d)
	  	 Exercisability and Term
	  	13
	 	 	 (e)
	  	 Effect of Change in Control
	  	14
	 	 	 (f)
	  	 Exercise of SARs
	  	14
	 	 	 (g)
	  	 Modification or Assumption of SARs
	  	14
		
	 SECTION 10. STOCK UNITS
	  	14
	 	 	 (a)
	  	 Stock Unit Agreement
	  	14
	 	 	 (b)
	  	 Payment for Awards
	  	14
	 	 	 (c)
	  	 Vesting Conditions
	  	14
	 	 	 (d)
	  	 Voting and Dividend Rights
	  	15
	 	 	 (e)
	  	 Form and Time of Settlement of Stock Units
	  	15
	 	 	 (f)
	  	 Death of Recipient
	  	15
	 	 	 (g)
	  	 Creditors’ Rights
	  	15
		
	 SECTION 11. ADJUSTMENT OF SHARES
	  	15
	 	 	 (a)
	  	 Adjustments
	  	15
	 	 	 (b)
	  	 Dissolution or Liquidation
	  	16
	 	 	 (c)
	  	 Reorganizations
	  	16
	 	 	 (d)
	  	 Reservation of Rights
	  	17
		
	 SECTION 12. DEFERRAL OF AWARDS
	  	17
	 	 	 (a)
	  	 Committee Powers.
	  	17
	 	 	 (b)
	  	 General Rules.
	  	17
		
	 SECTION 13. AWARDS UNDER OTHER PLANS
	  	18
		
	 SECTION 14. PAYMENT OF DIRECTOR’S FEES IN SECURITIES
	  	18
	 	 	 (a)
	  	 Effective Date
	  	18
	 	 	 (b)
	  	 Elections to Receive NSOs, Restricted Shares or Stock Units
	  	18
	 	 	 (c)
	  	 Number and Terms of NSOs, Restricted Shares or Stock Units
	  	18
		
	 SECTION 15. LEGAL AND REGULATORY REQUIREMENTS
	  	18
		
	 SECTION 16. WITHHOLDING TAXES
	  	18
	 	 	 (a)
	  	 General
	  	18
	 	 	 (b)
	  	 Share Withholding
	  	19
		
	 SECTION 17. OTHER PROVISIONS APPLICABLE TO AWARDS
	  	19
	 	 	 (a)
	  	 Transferability
	  	19
	 	 	 (b)
	  	 Qualifying Performance Criteria
	  	19

  

 ARCSOFT, INC. 
 2004 STOCK INCENTIVE PLAN 
  
 -iii- 

							
		
	 SECTION 18. NO EMPLOYMENT RIGHTS
	  	20
		
	 SECTION 19. DURATION AND AMENDMENTS
	  	20
	 	 	 (a)
	  	 Term of the Plan
	  	20
	 	 	 (b)
	  	 Right to Amend or Terminate the Plan
	  	20
	 	 	 (c)
	  	 Effect of Termination
	  	20
		
	 SECTION 20. EXECUTION
	  	21

  

 ARCSOFT, INC. 
 2004 STOCK INCENTIVE PLAN 
  
 -iv- 

 ArcSoft, INC. 
  
 2004 STOCK INCENTIVE PLAN 
  
 SECTION 1. ESTABLISHMENT AND PURPOSE. 
  
 The Plan was adopted by the Board of Directors on August 11, 2004, effective as of the date of the initial offering of Stock to the public pursuant to a
registration statement filed by the Company with the Securities and Exchange Commission (the “Effective Date”). The purpose of the Plan is to promote the long-term success of the Company and the creation of stockholder value by (a)
encouraging Employees, Outside Directors and Consultants to focus on critical long-range objectives, (b) encouraging the attraction and retention of Employees, Outside Directors and Consultants with exceptional qualifications and (c) linking
Employees, Outside Directors and Consultants directly to stockholder interests through increased stock ownership. The Plan seeks to achieve this purpose by providing for Awards in the form of restricted shares, stock units, options (which may
constitute incentive stock options or nonstatutory stock options) or stock appreciation rights. 
  
 SECTION 2. DEFINITIONS. 
  
 (a) “Affiliate” shall mean any entity other than a Subsidiary, if the Company and/or one of more Subsidiaries own not less than 50% of such entity. 
  
 (b) “Award” shall mean any award of an Option, a SAR, a Restricted Share or a Stock Unit under the
Plan. 
  
 (c) “Board of Directors” shall
mean the Board of Directors of the Company, as constituted from time to time. 
  
 (d) “Change in Control” shall mean the occurrence of any of the following events: 
  
 (i) A change in the composition of the Board of Directors occurs, as a result of which fewer than one-half of the incumbent directors are directors who
either: 
  
 (A) Had been directors of the Company on the
“look-back date” (as defined below) (the “original directors”); or 
  
 (B) Were elected, or nominated for election, to the Board of Directors with the affirmative votes of at least a majority of the aggregate of the original directors who were still in office at the time of the election
or nomination and the directors whose election or nomination was previously so approved (the “continuing directors”); or 
  
 (ii) Any “person” (as defined below) who by the acquisition or aggregation of securities, is or becomes the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange 
  

 ARCSOFT, INC. 
 2004 STOCK INCENTIVE PLAN 
  
 -1- 

 Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the
Company’s then outstanding securities ordinarily (and apart from rights accruing under special circumstances) having the right to vote at elections of directors (the “Base Capital Stock”); except that any change in the relative
beneficial ownership of the Company’s securities by any person resulting solely from a reduction in the aggregate number of outstanding shares of Base Capital Stock, and any decrease thereafter in such person’s ownership of securities,
shall be disregarded until such person increases in any manner, directly or indirectly, such person’s beneficial ownership of any securities of the Company; or 
  
 (iii) The consummation of a merger or consolidation of the Company with or into another entity or any other corporate
reorganization, if persons who were not stockholders of the Company immediately prior to such merger, consolidation or other reorganization own immediately after such merger, consolidation or other reorganization 50% or more of the voting power of
the outstanding securities of each of (A) the continuing or surviving entity and (B) any direct or indirect parent corporation of such continuing or surviving entity; or 
  
 (iv) The sale, transfer or other disposition of all or substantially all of the Company’s assets. 
  
 For purposes of subsection (d)(i) above, the term “look-back” date
shall mean the later of (1) the Effective Date or (2) the date 24 months prior to the date of the event that may constitute a Change in Control. 
  
 For purposes of subsection (d)(ii)) above, the term “person” shall have the same meaning as when used in Sections 13(d) and 14(d) of the
Exchange Act but shall exclude (1) a trustee or other fiduciary holding securities under an employee benefit plan maintained by the Company or a Parent or Subsidiary and (2) a corporation owned directly or indirectly by the stockholders of the
Company in substantially the same proportions as their ownership of the Stock. 
  
 Any other provision of this Section 2(d) notwithstanding, a transaction shall not constitute a Change in Control if its sole purpose is to change the state of the Company’s incorporation or to create a holding
company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction, and a Change in Control shall not be deemed to occur if the Company files a registration
statement with the Securities and Exchange Commission for the initial offering of Stock to the public. 
  
 (e) “Code” shall mean the Internal Revenue Code of 1986, as amended. 
  
 (f) “Committee” shall mean the Compensation Committee as designated by the Board of Directors, which
is authorized to administer the Plan, as described in Section 3 hereof. 
  
 (g) “Company” shall mean ArcSoft, Inc. 
  

 ARCSOFT, INC. 
 2004 STOCK INCENTIVE PLAN 
  
 -2- 

 (h) “Consultant” shall mean a consultant or advisor who provides bona fide
services to the Company, a Parent, a Subsidiary or an Affiliate as an independent contractor or a member of the board of directors of a Parent or a Subsidiary who is not an Employee. 
  
 (i) “Employee” shall mean any individual who is a common-law employee of the Company, a Parent or a
Subsidiary. 
  
 (j) “Exchange Act” shall
mean the Securities Exchange Act of 1934, as amended. 
  
 (k) “Exercise Price” shall mean, in the case of an Option, the amount for which one Share may be purchased upon exercise of such Option, as specified in the applicable Stock Option Agreement. “Exercise
Price,” in the case of a SAR, shall mean an amount, as specified in the applicable SAR Agreement, which is subtracted from the Fair Market Value of one Share in determining the amount payable upon exercise of such SAR. 
  
 (l) “Fair Market Value” with respect to a Share,
shall mean the market price of one Share, determined by the Committee as follows: 
  
 (i) If the Stock was traded over-the-counter on the date in question but was not traded on The Nasdaq Stock Market, then the Fair Market Value shall be equal to the last transaction price quoted for such date by the
OTC Bulletin Board or, if not so quoted, shall be equal to the mean between the last reported representative bid and asked prices quoted for such date by the principal automated inter-dealer quotation system on which the Stock is quoted or, if the
Stock is not quoted on any such system, by the Pink Sheets LLC; 
  
 (ii) If the Stock was traded on The Nasdaq Stock Market, then the Fair Market Value shall be equal to the last reported sale price quoted for such date by The Nasdaq Stock Market; 
  
 (iii) If the Stock was traded on a United States stock exchange on the date
in question, then the Fair Market Value shall be equal to the closing price reported for such date by the applicable composite-transactions report; and 
  
 (iv) If none of the foregoing provisions is applicable, then the Fair Market Value shall be determined by the Committee in good faith on such basis as it
deems appropriate. 
  
 In all cases, the determination of Fair Market Value by the
Committee shall be conclusive and binding on all persons. 
  
 (m) “ISO” shall mean an employee incentive stock option described in Section 422 of the Code. 
  
 (n) “Nonstatutory Option” or “NSO” shall mean an employee stock option that is not an ISO. 
  

 ARCSOFT, INC. 
 2004 STOCK INCENTIVE PLAN 
  
 -3- 

 (o) “Offeree” shall mean an individual to whom the Committee has offered the
right to acquire Shares under the Plan (other than upon exercise of an Option). 
  
 (p) “Option” shall mean an ISO or Nonstatutory Option granted under the Plan and entitling the holder to purchase Shares. 
  
 (q) “Optionee” shall mean an individual or estate who holds an Option or SAR. 
  
 (r) “Outside Director” shall mean a member of the
Board of Directors who is not a common-law employee of, or paid consultant to, the Company, a Parent or a Subsidiary. 
  
 (s) “Parent” shall mean any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if
each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Parent on a date
after the adoption of the Plan shall be a Parent commencing as of such date. 
  
 (t) “Participant” shall mean an individual or estate who holds an Award. 
  
 (u) “Plan” shall mean this 2004 Stock Incentive Plan of ArcSoft, Inc., as amended from time to time. 
  
 (v) “Purchase Price” shall mean the consideration for
which one Share may be acquired under the Plan (other than upon exercise of an Option), as specified by the Committee. 
  
 (w) “Restricted Share” shall mean a Share awarded under the Plan. 
  
 (x) “Restricted Share Agreement” shall mean the agreement between the Company and the recipient of a
Restricted Share which contains the terms, conditions and restrictions pertaining to such Restricted Shares. 
  
 (y) “SAR” shall mean a stock appreciation right granted under the Plan. 
  
 (z) “SAR Agreement” shall mean the agreement between
the Company and an Optionee which contains the terms, conditions and restrictions pertaining to his or her SAR. 
  
 (aa) “Service” shall mean service as an Employee, Consultant or Outside Director. 
  
 (bb) “Share” shall mean one share of Stock, as
adjusted in accordance with Section 8 (if applicable). 
  
 (cc) “Stock” shall mean the Common Stock of the Company. 
  
 (dd) “Stock Option Agreement” shall mean the agreement between the Company and an Optionee that contains the terms, conditions and restrictions pertaining to his Option. 
  

 ARCSOFT, INC. 
 2004 STOCK INCENTIVE PLAN 
  
 -4- 

 (ee) “Stock Unit” shall mean a bookkeeping entry representing the equivalent of one
Share, as awarded under the Plan. 
  
 (ff) “Stock Unit
Agreement” shall mean the agreement between the Company and the recipient of a Stock Unit which contains the terms, conditions and restrictions pertaining to such Stock Unit. 
  
 (gg) “Subsidiary” shall mean any corporation, if the Company and/or one or more other Subsidiaries own not
less than 50% of the total combined voting power of all classes of outstanding stock of such corporation. A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as
of such date. 
  
 SECTION 3. ADMINISTRATION. 
  
 (a) Committee Composition. The Plan shall be administered by the
Committee. The Committee shall consist of two or more directors of the Company, who shall be appointed by the Board. In addition, the composition of the Committee shall satisfy (i) such requirements as the Securities and Exchange Commission may
establish for administrators acting under plans intended to qualify for exemption under Rule 16b-3 (or its successor) under the Exchange Act; and (ii) such requirements as the Internal Revenue Service may establish for outside directors acting under
plans intended to qualify for exemption under Section 162(m)(4)(C) of the Code. 
  
 (b) Committee for Non-Officer Grants. The Board may also appoint one or more separate committees of the Board, each composed of one or more directors of the Company who need not satisfy the requirements of
Section 3(a), who may administer the Plan with respect to Employees who are not considered officers or directors of the Company under Section 16 of the Exchange Act, may grant Awards under the Plan to such Employees and may determine all terms of
such grants. Within the limitations of the preceding sentence, any reference in the Plan to the Committee shall include such committee or committees appointed pursuant to the preceding sentence. The Board of Directors may also authorize one or more
officers of the Company to designate Employees, other than officers under Section 16 of the Exchange Act, to receive Awards and/or to determine the number of such Awards to be received by such persons; provided, however, that the Board of Directors
shall specify the total number of Awards that such officers may so award. 
  
 (c) Committee Procedures. The Board of Directors shall designate one of the members of the Committee as chairman. The Committee may hold meetings at such times and places as it shall determine. The acts of a
majority of the Committee members present at meetings at which a quorum exists, or acts reduced to or approved in writing by all Committee members, shall be valid acts of the Committee. 
  
 (d) Committee Responsibilities. Subject to the provisions of the Plan, the Committee shall have full authority and
discretion to take the following actions: 
  

 ARCSOFT, INC. 
 2004 STOCK INCENTIVE PLAN 
  
 -5- 

 (i) To interpret the Plan and to apply its provisions; 
  
 (ii) To adopt, amend or rescind rules, procedures and forms relating to the

  
 Plan; 
  
 (iii) To authorize any person to execute, on behalf of the Company, any
instrument required to carry out the purposes of the Plan; 
  
 (iv) To determine when Awards are to be granted under the Plan; 
  
 (v) To select the Offerees and Optionees; 
  
 (vi) To determine the number of Shares to be made subject to each Award; 
  
 (vii) To prescribe the terms and conditions of each Award, including (without limitation) the Exercise Price and Purchase Price, and the vesting or
duration of the Award (including accelerating the vesting of Awards, either at the time of the Award or thereafter, without the consent of the Participant), to determine whether an Option is to be classified as an ISO or as a Nonstatutory Option,
and to specify the provisions of the agreement relating to such Award; 
  
 (viii) To amend any outstanding Award agreement, subject to applicable legal restrictions and to the consent of the Participant if the Participant’s rights or obligations would be materially impaired; 
  
 (ix) To prescribe the consideration for the grant of each Award or other
right under the Plan and to determine the sufficiency of such consideration; 
  
 (x) To determine the disposition of each Award or other right under the Plan in the event of a Participant’s divorce or dissolution of marriage; 
  
 (xi) To determine whether Awards under the Plan will be granted in replacement of other grants under an incentive or other
compensation plan of an acquired business; 
  
 (xii) To correct
any defect, supply any omission, or reconcile any inconsistency in the Plan or any Award agreement; 
  
 (xiii) To establish or verify the extent of satisfaction of any performance goals or other conditions applicable to the grant, issuance, exercisability,
vesting and/or ability to retain any Award; and 
  
 (xiv) To take
any other actions deemed necessary or advisable for the administration of the Plan. 
  

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 Subject to the requirements of applicable law, the Committee may designate persons other than members of the Committee to
carry out its responsibilities and may prescribe such conditions and limitations as it may deem appropriate, except that the Committee may not delegate its authority with regard to the selection for participation of or the granting of Options or
other rights under the Plan to persons subject to Section 16 of the Exchange Act. All decisions, interpretations and other actions of the Committee shall be final and binding on all Offerees, all Optionees, and all persons deriving their rights from
an Offeree or Optionee. No member of the Committee shall be liable for any action that he has taken or has failed to take in good faith with respect to the Plan, any Option, or any right to acquire Shares under the Plan. 
  
 SECTION 4. ELIGIBILITY. 
  
 (a) General Rule. Only Employees shall be eligible for the grant of ISOs. Only Employees, Consultants and Outside
Directors shall be eligible for the grant of Restricted Shares, Stock Units, Nonstatutory Options or SARs. 
  
 (b) Automatic Grants to Outside Directors. 
  
 (i) Each Outside Director who first joins the Board of Directors on or after the Effective Date, and who was not previously an Employee, shall receive a
Nonstatutory Option, subject to approval of the Plan by the Company’s stockholders, to purchase [            ] Shares (subject to adjustment under Section 11) on the date of his
or her election to the Board of Directors. The number of Shares in the immediately preceding sentence shall be increased to [            ] in the case of an Outside Director who
joins the Board as Chairman. Twenty-five percent (25%) of the Shares subject to each Option granted under this Section 4(b)(i) shall vest and become exercisable on the first anniversary of the date of grant. The balance of the Shares subject to such
Option (i.e. the remaining seventy-five percent (75%)) shall vest and become exercisable in twelve calendar quarter installments over a three-year period beginning on the day which is three months after the first anniversary of the date of grant, at
a calendar quarterly rate of 6.25% of the total number of Shares subject to such Options. Notwithstanding the foregoing, each such Option shall become vested if a Change in Control occurs with respect to the Company during the Optionee’s
Service. 
  
 (ii) On the first business day following the
conclusion of each regular annual meeting of the Company’s stockholders, commencing with the annual meeting occurring after the Effective Date, each Outside Director who was not elected to the Board for the first time at such meeting and who
will continue serving as a member of the Board of Directors thereafter shall receive an Option to purchase [            ] Shares (subject to adjustment under Section 11), provided
that such Outside Director has served on the Board of Directors for at least six months. Each Option granted under this Section 4(b)(ii) shall vest and become exercisable as to 50% of the Shares subject to the Option on the first anniversary of the
date of grant (or immediately prior to the next regular annual meeting of the Company’s stockholders following the date of grant in the event such meeting occurs prior to the first anniversary date), and as to the remaining 50% of the Shares
subject to the Option on the second anniversary of the date of grant (or immediately 
  

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 prior to the second regular annual meeting of the Company’s stockholders following the date of grant in the event
such meeting occurs prior to the second anniversary date). Notwithstanding the foregoing, each Option granted under this Section 4(b)(ii) shall become vested if a Change in Control occurs with respect to the Company during the Optionee’s
Service. 
  
 (iii) The Exercise Price of all Nonstatutory Options
granted to an Outside Director under this Section 4(b) shall be equal to 100% of the Fair Market Value of a Share on the date of grant, payable in one of the forms described in Section 8(a), (b) or (d). 
  
 (iv) All Nonstatutory Options granted to an Outside Director under this
Section 4(b) shall terminate on the earlier of (A) the day before the tenth anniversary of the date of grant of such Options or (B) the date twelve months after the termination of such Outside Director’s Service for any reason; provided,
however, that any such Options that are not vested upon the termination of the Outside Director’s Service for any reason shall terminate immediately and may not be exercised. 
  
 (c) Ten-Percent Stockholders. An Employee who owns more than 10% of the total combined voting power of all classes of
outstanding stock of the Company, a Parent or Subsidiary shall not be eligible for the grant of an ISO unless such grant satisfies the requirements of Section 422(c)(5) of the Code. 
  
 (d) Attribution Rules. For purposes of Section 4(c) above, in determining stock ownership, an Employee shall be
deemed to own the stock owned, directly or indirectly, by or for such Employee’s brothers, sisters, spouse, ancestors and lineal descendants. Stock owned, directly or indirectly, by or for a corporation, partnership, estate or trust shall be
deemed to be owned proportionately by or for its stockholders, partners or beneficiaries. 
  
 (e) Outstanding Stock. For purposes of Section 4(c) above, “outstanding stock” shall include all stock actually issued and outstanding immediately after the grant. “Outstanding stock” shall
not include shares authorized for issuance under outstanding options held by the Employee or by any other person. 
  
 SECTION 5. STOCK SUBJECT TO PLAN. 
  
 (a) Basic Limitation. Shares offered under the Plan shall be authorized but unissued Shares or treasury Shares. The aggregate number of Shares
authorized for issuance as Awards under the Plan shall not exceed [            ] Shares, plus an annual increase on the first day of each fiscal year during the term of the Plan,
beginning January 1, [2006], in each case in an amount equal to the lesser of (i) [                    ] Shares, (ii)
[    %] of the outstanding Shares on the last day of the immediately preceding year, or (iii) an amount determined by the Board. The limitations of this Section 5(a) shall be subject to adjustment pursuant to Section 11.
The number of Shares that are subject to Options or other Awards outstanding at any time under the Plan shall not exceed the number of Shares which then remain available for issuance under the Plan. 
  

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 The Company, during the term of the Plan, shall at all times reserve and keep available sufficient Shares to satisfy the
requirements of the Plan. 
  
 (b) Award Limitation. Subject
to the provisions of Section 11, no Participant may receive Options, SARs, Restricted Shares or Stock Units under the Plan in any calendar year that relate to more than
[                    ] Shares. The aggregate number of Shares issued pursuant to ISOs shall not exceed the aggregate number of Shares
authorized for issuance as Awards under the Plan pursuant to Section 5(a), subject to adjustment pursuant to Sections 5(c) and 11 only to the extent that such adjustment is consistent with adjustments permitted of a plan authorizing ISOs under
Section 422 of the Code. 
  
 (c) Additional Shares. If
Restricted Shares or Shares issued upon the exercise of Options are forfeited, then such Shares shall again become available for Awards under the Plan. If Stock Units, Options or SARs are forfeited or terminate for any other reason before being
exercised, then the corresponding Shares shall again become available for Awards under the Plan. If Stock Units are settled, then only the number of Shares (if any) actually issued in settlement of such Stock Units shall reduce the number available
under Section 5(a) and the balance shall again become available for Awards under the Plan. If SARs are exercised, then only the number of Shares (if any) actually issued in settlement of such SARs shall reduce the number available in Section 5(a)
and the balance shall again become available for Awards under the Plan. 
  
 SECTION 6. RESTRICTED SHARES. 
  
 (a)
Restricted Stock Agreement. Each grant of Restricted Shares under the Plan shall be evidenced by a Restricted Stock Agreement between the recipient and the Company. Such Restricted Shares shall be subject to all applicable terms of the Plan and
may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Restricted Stock Agreements entered into under the Plan need not be identical. 
  
 (b) Payment for Awards. Subject to the following sentence, Restricted Shares may be sold or awarded under the Plan
for such consideration as the Committee may determine, including (without limitation) cash, cash equivalents, full-recourse promissory notes, past services and future services. To the extent that an Award consists of newly issued Restricted Shares,
the Award recipient shall furnish consideration with a value not less than the par value of such Restricted Shares in the form of cash, cash equivalents, or past services rendered to the Company (or a Parent or Subsidiary), as the Committee may
determine. 
  
 (c) Vesting. Each Award of Restricted Shares
may or may not be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Restricted Stock Agreement. A Restricted Stock Agreement may provide for accelerated vesting in the event of
the Participant’s death, disability or retirement or other events. The Committee may determine, at the time of granting Restricted Shares of thereafter, that all or part of such 
  

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 Restricted Shares shall become vested in the event that a Change in Control occurs with respect to the Company.

  
 (d) Voting and Dividend Rights. The holders of
Restricted Shares awarded under the Plan shall have the same voting, dividend and other rights as the Company’s other stockholders. A Restricted Stock Agreement, however, may require that the holders of Restricted Shares invest any cash
dividends received in additional Restricted Shares. Such additional Restricted Shares shall be subject to the same conditions and restrictions as the Award with respect to which the dividends were paid. 
  
 (e) Restrictions on Transfer of Shares. Restricted Shares shall be
subject to such rights of repurchase, rights of first refusal or other restrictions as the Committee may determine. Such restrictions shall be set forth in the applicable Restricted Stock Agreement and shall apply in addition to any general
restrictions that may apply to all holders of Shares. 
  
 SECTION 7. TERMS AND
CONDITIONS OF OPTIONS. 
  
 (a) Stock Option Agreement.
Each grant of an Option under the Plan shall be evidenced by a Stock Option Agreement between the Optionee and the Company. Such Option shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and
conditions which are not inconsistent with the Plan and which the Committee deems appropriate for inclusion in a Stock Option Agreement. The Stock Option Agreement shall specify whether the Option is an ISO or an NSO. The provisions of the various
Stock Option Agreements entered into under the Plan need not be identical. Options may be granted in consideration of a reduction in the Optionee’s other compensation. 
  
 (b) Number of Shares. Each Stock Option Agreement shall specify the number of Shares that are subject to the Option
and shall provide for the adjustment of such number in accordance with Section 11. 
  
 (c) Exercise Price. Each Stock Option Agreement shall specify the Exercise Price. The Exercise Price of an ISO shall not be less than 100% of the Fair Market Value of a Share on the date of grant, except as
otherwise provided in 4(c), and the Exercise Price of an NSO shall not be less 85% of the Fair Market Value of a Share on the date of grant. Notwithstanding the foregoing, a Stock Option Agreement may specify that the exercise price of an NSO may
vary in accordance with a predetermined formula. Subject to the foregoing in this Section 7(c), the Exercise Price under any Option shall be determined by the Committee at its sole discretion. The Exercise Price shall be payable in one of the forms
described in Section 8. 
  
 (d) Withholding Taxes. As a
condition to the exercise of an Option, the Optionee shall make such arrangements as the Committee may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with such exercise.
The Optionee shall also make such arrangements as the Committee may require for the 

  

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satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with the disposition of Shares acquired by
exercising an Option. 
  
 (e) Exercisability and
Term. Each Stock Option Agreement shall specify the date when all or any installment of the Option is to become exercisable. The Stock Option Agreement shall also specify the term of the Option; provided that the term of an ISO shall in no event
exceed 10 years from the date of grant (five years for Employees described in Section 4(c)). A Stock Option Agreement may provide for accelerated exercisability in the event of the Optionee’s death, disability, or retirement or other events and
may provide for expiration prior to the end of its term in the event of the termination of the Optionee’s Service. Options may be awarded in combination with SARs, and such an Award may provide that the Options will not be exercisable unless
the related SARs are forfeited. Subject to the foregoing in this Section 7(e), the Committee at its sole discretion shall determine when all or any installment of an Option is to become exercisable and when an Option is to expire. 
  
 (f) Exercise of Options. Upon Termination of Service.
Each Stock Option Agreement shall set forth the extent to which the Optionee shall have the right to exercise the Option following termination of the Optionee’s Service with the Company and its Subsidiaries, and the right to exercise the Option
of any executors or administrators of the Optionee’s estate or any person who has acquired such Option(s) directly from the Optionee by bequest or inheritance. Such provisions shall be determined in the sole discretion of the Committee, need
not be uniform among all Options issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of Service. 
  
 (g) Effect of Change in Control. The Committee may determine, at the time of granting an Option or thereafter, that such Option shall become
exercisable as to all or part of the Shares subject to such Option in the event that a Change in Control occurs with respect to the Company. 
  
 (h) Leaves of Absence. An Employee’s Service shall cease when such Employee ceases to be actively employed by, or a Consultant to, the
Company (or any subsidiary) as determined in the sole discretion of the Board of Directors. For purposes of Options, Service does not terminate when an Employee goes on a bona fide leave of absence, that was approved by the Company in writing, if
the terms of the leave provide for continued service crediting, or when continued service crediting is required by applicable law. However, for purposes of determining whether an Option is entitled to ISO status, an Employee’s Service will be
treated as terminating 90 days after such Employee went on leave, unless such Employee’s right to return to active work is guaranteed by law or by a contract. Service terminates in any event when the approved leave ends, unless such Employee
immediately returns to active work. The Company determines which leaves count toward Service, and when Service terminates for all purposes under the Plan. 
  
 (i) No Rights as a Stockholder. An Optionee, or a transferee of an Optionee, shall have no rights as a stockholder with respect to any
Shares covered by his Option until the date of 

  

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the issuance of a stock certificate for such Shares. No adjustments shall be made, except as provided in Section 11. 
  
 (j) Modification, Extension and Renewal of Options. Within the
limitations of the Plan, the Committee may modify, extend or renew outstanding options or may accept the cancellation of outstanding options (to the extent not previously exercised), whether or not granted hereunder, in return for the grant of new
Options for the same or a different number of Shares and at the same or a different exercise price, or in return for the grant of the same or a different number of Shares. The foregoing notwithstanding, no modification of an Option shall, without
the consent of the Optionee, materially impair his or her rights or obligations under such Option. 
  
 (k) Restrictions on Transfer of Shares. Any Shares issued upon exercise of an Option shall be subject to such special forfeiture conditions,
rights of repurchase, rights of first refusal and other transfer restrictions as the Committee may determine. Such restrictions shall be set forth in the applicable Stock Option Agreement and shall apply in addition to any general restrictions that
may apply to all holders of Shares. 
  
 (l) Buyout
Provisions. The Committee may at any time (a) offer to buy out for a payment in cash or cash equivalents an Option previously granted or (b) authorize an Optionee to elect to cash out an Option previously granted, in either case at such time and
based upon such terms and conditions as the Committee shall establish. 
  
 SECTION 8. PAYMENT FOR SHARES. 
  
 (a)
General Rule. The entire Exercise Price or Purchase Price of Shares issued under the Plan shall be payable in lawful money of the United States of America at the time when such Shares are purchased, except as provided in Section 8(b) through
Section 8(g) below. 
  
 (b) Surrender of Stock. To
the extent that a Stock Option Agreement so provides, payment may be made all or in part by surrendering, or attesting to the ownership of, Shares which have already been owned by the Optionee or his representative. Such Shares shall be valued at
their Fair Market Value on the date when the new Shares are purchased under the Plan. The Optionee shall not surrender, or attest to the ownership of, Shares in payment of the Exercise Price if such action would cause the Company to recognize
compensation expense (or additional compensation expense) with respect to the Option for financial reporting purposes. 
  
 (c) Services Rendered. At the discretion of the Committee, Shares may be awarded under the Plan in consideration of services rendered to the
Company or a Subsidiary prior to the award. If Shares are awarded without the payment of a Purchase Price in cash, the Committee shall make a determination (at the time of the award) of the value of the services rendered by the Offeree and the
sufficiency of the consideration to meet the requirements of Section 6(b). 
  

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 (d) Cashless Exercise. To the extent that a Stock Option Agreement so provides, payment may
be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker to sell Shares and to deliver all or part of the sale proceeds to the Company in payment of the aggregate Exercise Price.

  
 (e) Exercise/Pledge. To the extent that a Stock
Option Agreement so provides, payment may be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker or lender to pledge Shares, as security for a loan, and to deliver all or part of
the loan proceeds to the Company in payment of the aggregate Exercise Price. 
  
 (f) Promissory Note. To the extent that a Stock Option Agreement or Restricted Stock Agreement so provides, payment may be made all or in part by delivering (on a form prescribed by the Company) a
full-recourse promissory note. However, the par value of the Common Shares being purchased under the Plan, if newly issued, shall be paid in cash or cash equivalents. 
  
 (g) Other Forms of Payment. To the extent that a Stock Option Agreement or Restricted Stock Agreement so
provides, payment may be made in any other form that is consistent with applicable laws, regulations and rules. 
  
 (h) Limitations under Applicable Law. Notwithstanding anything herein or in a Stock Option Agreement or Restricted Stock Agreement to the
contrary, payment may not be made in any form that is unlawful, as determined by the Committee in its sole discretion. 
  
 SECTION 9. STOCK APPRECIATION RIGHTS. 
  
 (a) SAR Agreement. Each grant of a SAR under the Plan shall be evidenced by a SAR Agreement between the Optionee and the Company. Such SAR
shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various SAR Agreements entered into under the Plan need not be identical. SARs may be granted
in consideration of a reduction in the Optionee’s other compensation. 
  
 (b) Number of Shares. Each SAR Agreement shall specify the number of Shares to which the SAR pertains and shall provide for the adjustment of such number in accordance with Section 11. 
  
 (c) Exercise Price. Each SAR Agreement shall specify the
Exercise Price. A SAR Agreement may specify an Exercise Price that varies in accordance with a predetermined formula while the SAR is outstanding. 
  
 (d) Exercisability and Term. Each SAR Agreement shall specify the date when all or any installment of the SAR is to become exercisable. The
SAR Agreement shall also specify the term of the SAR. A SAR Agreement may provide for accelerated exercisability in the event of the Optionee’s death, disability or retirement or other events and may provide for expiration 
  

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 prior to the end of its term in the event of the termination of the Optionee’s service. SARs may be awarded in
combination with Options, and such an Award may provide that the SARs will not be exercisable unless the related Options are forfeited. A SAR may be included in an ISO only at the time of grant but may be included in an NSO at the time of grant or
thereafter. A SAR granted under the Plan may provide that it will be exercisable only in the event of a Change in Control. 
  
 (e) Effect of Change in Control. The Committee may determine, at the time of granting a SAR or thereafter, that such SAR shall become fully
exercisable as to all Common Shares subject to such SAR in the event that a Change in Control occurs with respect to the Company. 
  
 (f) Exercise of SARs. Upon exercise of a SAR, the Optionee (or any person having the right to exercise the SAR after his or her death) shall
receive from the Company (a) Shares, (b) cash or (c) a combination of Shares and cash, as the Committee shall determine. The amount of cash and/or the Fair Market Value of Shares received upon exercise of SARs shall, in the aggregate, be equal to
the amount by which the Fair Market Value (on the date of surrender) of the Shares subject to the SARs exceeds the Exercise Price. 
  
 (g) Modification or Assumption of SARs. Within the limitations of the Plan, the Committee may modify, extend or assume outstanding SARs or
may accept the cancellation of outstanding SARs (whether granted by the Company or by another issuer) in return for the grant of new SARs for the same or a different number of shares and at the same or a different exercise price. The foregoing
notwithstanding, no modification of a SAR shall, without the consent of the holder, materially impair his or her rights or obligations under such SAR. 
  
 SECTION 10. STOCK UNITS. 
  
 (a) Stock Unit Agreement. Each grant of Stock Units under the Plan shall be evidenced by a Stock Unit Agreement between the recipient and
the Company. Such Stock Units shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Stock Unit Agreements entered into under the Plan need
not be identical. Stock Units may be granted in consideration of a reduction in the recipient’s other compensation. 
  
 (b) Payment for Awards. To the extent that an Award is granted in the form of Stock Units, no cash consideration shall be required of the
Award recipients. 
  
 (c) Vesting Conditions. Each
Award of Stock Units may or may not be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Stock Unit Agreement. A Stock Unit Agreement may provide for accelerated vesting in the
event of the Participant’s death, disability or retirement or other events. The Committee may determine, at the time of granting Stock Units or thereafter, that all or part of 
  

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 such Stock Units shall become vested in the event that a Change in Control occurs with respect to the Company.

  
 (d) Voting and Dividend Rights. The holders of Stock
Units shall have no voting rights. Prior to settlement or forfeiture, any Stock Unit awarded under the Plan may, at the Committee’s discretion, carry with it a right to dividend equivalents. Such right entitles the holder to be credited with an
amount equal to all cash dividends paid on one Share while the Stock Unit is outstanding. Dividend equivalents may be converted into additional Stock Units. Settlement of dividend equivalents may be made in the form of cash, in the form of Shares,
or in a combination of both. Prior to distribution, any dividend equivalents which are not paid shall be subject to the same conditions and restrictions (including without limitation, any forfeiture conditions) as the Stock Units to which they
attach. 
  
 (e) Form and Time of Settlement of Stock Units.
Settlement of vested Stock Units may be made in the form of (a) cash, (b) Shares or (c) any combination of both, as determined by the Committee. The actual number of Stock Units eligible for settlement may be larger or smaller than the number
included in the original Award, based on predetermined performance factors. Methods of converting Stock Units into cash may include (without limitation) a method based on the average Fair Market Value of Shares over a series of trading days. Vested
Stock Units may be settled in a lump sum or in installments. The distribution may occur or commence when all vesting conditions applicable to the Stock Units have been satisfied or have lapsed, or it may be deferred to any later date. The amount of
a deferred distribution may be increased by an interest factor or by dividend equivalents. Until an Award of Stock Units is settled, the number of such Stock Units shall be subject to adjustment pursuant to Section 11. 
  
 (f) Death of Recipient. Any Stock Units Award that becomes payable
after the recipient’s death shall be distributed to the recipient’s beneficiary or beneficiaries. Each recipient of a Stock Units Award under the Plan shall designate one or more beneficiaries for this purpose by filing the prescribed form
with the Company. A beneficiary designation may be changed by filing the prescribed form with the Company at any time before the Award recipient’s death. If no beneficiary was designated or if no designated beneficiary survives the Award
recipient, then any Stock Units Award that becomes payable after the recipient’s death shall be distributed to the recipient’s estate. 
  
 (g) Creditors’ Rights. A holder of Stock Units shall have no rights other than those of a general creditor of the Company. Stock Units
represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Stock Unit Agreement. 
  
 SECTION 11. ADJUSTMENT OF SHARES. 
  
 (a) Adjustments. In the event of a subdivision of the outstanding Stock, a declaration of a dividend payable in Shares, a declaration of a dividend
payable in a form other than Shares in an amount that has a material effect on the price of Shares, a combination or consolidation of 
  

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 the outstanding Stock (by reclassification or otherwise) into a lesser number of Shares, a recapitalization, a spin-off
or a similar occurrence, the Committee shall make such adjustments as it, in its sole discretion, deems appropriate in one or more of: 
  
 (i) The number of Options, SARs, Restricted Shares and Stock Units available for future Awards under Section 5; 
  
 (ii) The limitations set forth in Sections 5(a) and (b); 
  
 (iii) The number of NSOs to be granted to Outside Directors under Section
4(b); 
  
 (iv) The number of Shares covered by each outstanding
Option and SAR; 
  
 (v) The Exercise Price under each outstanding
Option and SAR; or 
  
 (vi) The number of Stock Units included in
any prior Award which has not yet been settled. 
  
 Except as provided in this
Section 11, a Participant shall have no rights by reason of any issue by the Company of stock 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 or any other increase or decrease in the number of shares of stock of any class. 
  
 (b) Dissolution or Liquidation. To the extent not previously exercised or settled, Options, SARs and Stock Units shall terminate immediately prior to the dissolution or liquidation of the Company. 

 
 (c) Reorganizations. In the event that the Company is a party to a
merger or other reorganization, outstanding Awards shall be subject to the agreement of merger or reorganization. Such agreement shall provide for: 
  
 (i) The continuation of the outstanding Awards by the Company, if the Company is a surviving corporation; 
  
 (ii) The assumption of the outstanding Awards by the surviving corporation or
its parent or subsidiary; 
  
 (iii) The substitution by the
surviving corporation or its parent or subsidiary of its own awards for the outstanding Awards; 
  
 (iv) Full exercisability or vesting and accelerated expiration of the outstanding Awards; or 
  

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 (v) Settlement of the full value of the outstanding Awards in cash or cash equivalents followed by
cancellation of such Awards. 
  
 (d) Reservation of Rights.
Except as provided in this Section 11, an Optionee or Offeree shall have no rights by reason of any subdivision or consolidation of shares of stock of any class, the payment of any dividend or any other increase or decrease in the number of shares
of stock of any class. Any issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or Exercise
Price of Shares subject to an Option. The grant of an Option pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure,
to merge or consolidate or to dissolve, liquidate, sell or transfer all or any part of its business or assets. 
  
 SECTION 12. DEFERRAL OF AWARDS. 
  
 (a) Committee Powers. The Committee (in its sole discretion) may permit or require a Participant to: 
  
 (i) Have cash that otherwise would be paid to such Participant as a result of the exercise of a SAR or the settlement of Stock Units credited to a
deferred compensation account established for such Participant by the Committee as an entry on the Company’s books; 
  
 (ii) Have Shares that otherwise would be delivered to such Participant as a result of the exercise of an Option or SAR converted into an equal number of
Stock Units; or 
  
 (iii) Have Shares that otherwise would be
delivered to such Participant as a result of the exercise of an Option or SAR or the settlement of Stock Units converted into amounts credited to a deferred compensation account established for such Participant by the Committee as an entry on the
Company’s books. Such amounts shall be determined by reference to the Fair Market Value of such Shares as of the date when they otherwise would have been delivered to such Participant. 
  
 (b) General Rules. A deferred compensation account established under
this Section 12 may be credited with interest or other forms of investment return, as determined by the Committee. A Participant for whom such an account is established shall have no rights other than those of a general creditor of the Company. Such
an account shall represent an unfunded and unsecured obligation of the Company and shall be subject to the terms and conditions of the applicable agreement between such Participant and the Company. If the deferral or conversion of Awards is
permitted or required, the Committee (in its sole discretion) may establish rules, procedures and forms pertaining to such Awards, including (without limitation) the settlement of deferred compensation accounts established under this Section 12.

  

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 SECTION 13. AWARDS UNDER OTHER PLANS. 
  
 The Company may grant awards under other plans or programs. Such awards may be settled in the form of Shares issued under
this Plan. Such Shares shall be treated for all purposes under the Plan like Shares issued in settlement of Stock Units and shall, when issued, reduce the number of Shares available under Section 5. 
  
 SECTION 14. PAYMENT OF DIRECTOR’S FEES IN SECURITIES. 
  
 (a) Effective Date. No provision of this Section 14 shall be
effective unless and until the Board has determined to implement such provision. 
  
 (b) Elections to Receive NSOs, Restricted Shares or Stock Units. An Outside Director may elect to receive his or her annual retainer payments and/or meeting fees from the Company in the form of cash, NSOs,
Restricted Shares or Stock Units, or a combination thereof, as determined by the Board. Such NSOs, Restricted Shares and Stock Units shall be issued under the Plan. An election under this Section 14 shall be filed with the Company on the prescribed
form. 
  
 (c) Number and Terms of NSOs, Restricted Shares or
Stock Units. The number of NSOs, Restricted Shares or Stock Units to be granted to Outside Directors in lieu of annual retainers and meeting fees that would otherwise be paid in cash shall be calculated in a manner determined by the Board. The
terms of such NSOs, Restricted Shares or Stock Units shall also be determined by the Board. 
  
 SECTION 15. LEGAL AND REGULATORY REQUIREMENTS. 
  
 Shares shall not be issued under the Plan unless the issuance and delivery of such Shares complies with (or is exempt from) all applicable requirements of law, including (without limitation) the Securities Act of
1933, as amended, the rules and regulations promulgated thereunder, state securities laws and regulations and the regulations of any stock exchange on which the Company’s securities may then be listed, and the Company has obtained the approval
or favorable ruling from any governmental agency which the Company determines is necessary or advisable. The Company shall not be liable to a Participant or other persons as to: (a) the non-issuance or sale of Shares as to which the Company has been
unable to obtain from any regulatory body having jurisdiction the authority deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares under the Plan; and (b) any tax consequences expected, but not realized,
by any Participant or other person due to the receipt, exercise or settlement of any Award granted under the Plan. 
  
 SECTION 16. WITHHOLDING TAXES. 
  
 (a) General. To the extent required by applicable federal, state, local or foreign law, a Participant or his or her successor shall make
arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise in connection with the Plan. The 
  

 ARCSOFT, INC. 
 2004 STOCK INCENTIVE PLAN 
  
 -18- 

 Company shall not be required to issue any Shares or make any cash payment under the Plan until such obligations are
satisfied. 
  
 (b) Share Withholding. The Committee may
permit a Participant to satisfy all or part of his or her withholding or income tax obligations by having the Company withhold all or a portion of any Shares that otherwise would be issued to him or her or by surrendering all or a portion of any
Shares that he or she previously acquired. Such Shares shall be valued at their Fair Market Value on the date when taxes otherwise would be withheld in cash. In no event may a Participant have Shares withheld that would otherwise be issued to him or
her in excess of the number necessary to satisfy the legally required minimum tax withholding. 
  
 SECTION 17. OTHER PROVISIONS APPLICABLE TO AWARDS. 
  
 (a) Transferability. Unless the agreement evidencing an Award (or an amendment thereto authorized by the Committee) expressly provides otherwise, no Award granted under this Plan, nor any interest in such
Award, may be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise transferred in any manner (prior to the vesting and lapse of any and all restrictions applicable to Shares issued under such Award), other than by will or the laws of
descent and distribution; provided, however, that an ISO may be transferred or assigned only to the extent consistent with Section 422 of the Code. Any purported assignment, transfer or encumbrance in violation of this Section 17(a) shall be void
and unenforceable against the Company. 
  
 (b) Qualifying
Performance Criteria. The number of Shares or other benefits granted, issued, retainable and/or vested under an Award may be made subject to the attainment of performance goals for a specified period of time relating to one or more of the
following performance criteria, either individually, alternatively or in any combination, applied to either the Company as a whole or to a business unit or Subsidiary, either individually, alternatively or in any combination, and measured either
annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years’ results or to a designated comparison group or index, in each case as specified by the Committee in the Award: (a)
cash flow, (b) earnings per share, (c) earnings before interest, taxes and amortization, (d) return on equity, (e) total stockholder return, (f) share price performance, (g) return on capital, (h) return on assets or net assets, (i) revenue, (j)
income or net income, (k) operating income or net operating income, (l) operating profit or net operating profit, (m) operating margin or profit margin, (n) return on operating revenue, (o) return on invested capital, or (p) market segment shares
(“Qualifying Performance Criteria”). The Committee may appropriately adjust any evaluation of performance under a Qualifying Performance Criteria to exclude any of the following events that occurs during a performance period: (i) asset
write-downs, (ii) litigation or claim judgments or settlements, (iii) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results, (iv) accruals for reorganization and restructuring programs
and (v) any extraordinary nonrecurring items as described in Accounting Principles Board Opinion No. 30 and/or in managements’ discussion and analysis of financial condition and results of operations appearing in the Company’s annual
report to stockholders for 
  

 ARCSOFT, INC. 
 2004 STOCK INCENTIVE PLAN 
  
 -19- 

 the applicable year. If applicable, the Committee shall determine the Qualifying Performance Criteria not later than the
90th day of the performance period, and shall determine and certify, for each Participant, the extent to which the
Qualifying Performance Criteria have been met. The Committee may not in any event increase the amount of compensation payable under the Plan upon the attainment of a Qualifying Performance Goal to a Participant who is a “covered employee”
within the meaning of Section 162(m) of the Code. 
  
 SECTION 18. NO EMPLOYMENT
RIGHTS. 
  
 No provision of the Plan, nor any right or Option
granted under the Plan, shall be construed to give any person any right to become, to be treated as, or to remain an Employee. The Company and its Subsidiaries reserve the right to terminate any person’s Service at any time and for any reason,
with or without notice. 
  
 SECTION 19. DURATION AND AMENDMENTS.

  
 (a) Term of the Plan. The Plan, as set forth
herein, shall terminate automatically on August 10, 2014 and may be terminated on any earlier date pursuant to Subsection (b) below. 
  
 (b) Right to Amend or Terminate the Plan. The Board of Directors may amend the Plan at any time and from time to time. Rights and obligations under
any Award granted before amendment of the Plan shall not be materially impaired by such amendment, except with consent of the Participant. An amendment of the Plan shall be subject to the approval of the Company’s stockholders only to the
extent required by applicable laws, regulations or rules. 
  
 (c) Effect of Termination. No Awards shall be granted under the Plan after the termination thereof. The termination of the Plan shall not affect Awards previously granted under the Plan. 
  
 [Remainder of this page intentionally left blank] 
  

 ARCSOFT, INC. 
 2004 STOCK INCENTIVE PLAN 
  
 -20- 

 SECTION 20. EXECUTION. 
  

To record the adoption of the Plan by the Board of Directors, the Company has caused its authorized officer to execute the same. 
  

			
	 ARCSOFT, INC.

		
	 By
	 	  

	 Name
	 	  

	 Title
	 	  

  

 ARCSOFT, INC. 
 2004 STOCK INCENTIVE PLAN 
  
 -21- 

 ARCSOFT, INC. 
 2004 STOCK INCENTIVE PLAN 
  
 NOTICE OF STOCK OPTION GRANT 
  
 You have been granted the following Option to purchase Common Stock of
ARCSOFT, INC. (the “Company”) under the Company’s 2004 Stock Incentive Plan (the “Plan”): 
  

			
	 Name of Optionee:
	  	[Name of Optionee]
		
	 Total Number of Option Shares Granted:
	  	[Total Number of Shares]
		
	 Type of Option:
	  	  ̈  Incentive Stock
Option
  
  ̈  Nonstatutory Stock Option

		
	 Exercise Price Per Share:
	  	$                    
		
	 Grant Date:
	  	[Date of Grant]
		
	 Vesting Commencement Date:
	  	[Vesting Commencement Date]
		
	 Vesting Schedule:
	  	This Option becomes exercisable with respect to the first 1/4th of the shares subject to this Option when you complete 12 months of continuous “Service” (as defined in the Plan) from the Vesting Commencement Date. Thereafter, this Option becomes exercisable with respect to an
additional 1/48th of the shares subject to this Option when you complete each additional month of
Service.
		
	 Expiration Date:
	  	[Expiration Date] This Option expires earlier if your Service terminates earlier, as described in the Stock Option Agreement.

  
 ARCSOFT, INC. 
 STOCK OPTION AGREEMENT

  
 -1- 
  

 By your signature and the signature of the Company’s representative below, you and the Company agree
that this Option is granted under and governed by the term and conditions of the Plan and the Stock Option Agreement, both of which are attached to and made a part of this document. 
  

					
	OPTIONEE:	 	ARCSOFT, INC.
			
	  

	 	 By:
	 	  

	 Optionee’s Signature
	 	 	 	 
	  

	 	 Title:
	 	  

	 Optionee’s Printed Name
	 	 	 	 

  
 ARCSOFT, INC. 
 STOCK OPTION AGREEMENT

  
 -2- 
  

 ARCSOFT, INC. 
 2004 STOCK INCENTIVE PLAN 
  
 STOCK OPTION AGREEMENT 
  

			
	 Tax Treatment
	  	This Option is intended to be an incentive stock option under Section 422 of the Internal Revenue Code or a nonstatutory option, as provided in the Notice of Stock Option Grant. Even if this
Option is designated as an incentive stock option, it shall be deemed to be an nonstatutory option to the extent required by the $100,000 annual limitation under Section 422(d) of the Internal Revenue Code.
		
	 Vesting
	  	This Option becomes exercisable in installments, as shown in the Notice of Stock Option Grant. This Option will in no event become exercisable for additional shares after your Service has
terminated for any reason.
		
	 Term
	  	This Option expires in any event at the close of business at Company headquarters on the day before the 10th anniversary of the Grant Date, as shown on the Notice of Stock Option Grant (fifth
anniversary for a more than 10% stockholder as provided under the Plan if this is an incentive stock option). This Option may expire earlier if your Service terminates, as described below.
		
	 Regular
 Termination
	  	If your Service terminates for any reason except death or “Total and Permanent Disability” (as defined in the Plan), then this Option will expire at the close of business at Company
headquarters on the date three (3) months after the date your Service terminates (or, if earlier, the Expiration Date). The Company has discretion to determine when your Service terminates for all purposes of the Plan and its determinations are
conclusive and binding on all persons.
		
	 Death
	  	If you die, then this Option will expire at the close of business at Company headquarters on the date 12 months after the date your Service terminates (or, if earlier, the Expiration Date).
During that period of up to 12 months, your estate or heirs may exercise the Option.
		
	 Disability
	  	If your Service terminates because of your Total and Permanent Disability, then this Option will expire at the close of business at Company headquarters on the date 12 months after the date
your Service terminates (or, if earlier, the Expiration Date).

  
 ARCSOFT, INC. 
 STOCK OPTION AGREEMENT

  
 -3- 

			
	 Leaves of Absence
	  	 For purposes of this Option, your Service does not terminate when you go on a military leave, a sick leave or another bona fide leave of absence,
if the leave was approved by the Company in writing and if continued crediting of Service is required by the terms of the leave or by applicable law. But your Service terminates when the approved leave ends, unless you immediately return to active
work.
  
 If you go on a leave of absence, then the vesting schedule specified in
the Notice of Stock Option Grant may be adjusted in accordance with the Company’s leave of absence policy or the terms of your leave. If you commence working on a part-time basis, then the vesting schedule specified in the Notice of Stock
Option Grant may be adjusted in accordance with the Company’s part-time work policy or the terms of an agreement between you and the Company pertaining to your part-time schedule.

		
	 Restrictions on
 Exercise
	  	The Company will not permit you to exercise this Option if the issuance of shares at that time would violate any law or regulation. The inability of the Company to obtain approval from any
regulatory body having authority deemed by the Company to be necessary to the lawful issuance and sale of the Company stock pursuant to this Option shall relieve the Company of any liability with respect to the non-issuance or sale of the Company
stock as to which such approval shall not have been obtained. However, the Company shall use its best efforts to obtain such approval.
		
	 Notice of Exercise
	  	When you wish to exercise this Option you must notify the Company by completing the attached “Notice of Exercise of Stock Option” form and filing it with the Human Resources
Department of the Company. You notice must specify how many shares you wish to purchase. Your notice must also specify how your shares should be registered. The notice will be effective when it is received by the Company. If someone else wants to
exercise this Option after your death, that person must prove to the Company’s satisfaction that he or she is entitled to do so.
		
	 Form of Payment
	  	When you submit your notice of exercise, you must include payment of the Option exercise price for the shares you are purchasing. Payment may be made in the following
form(s):
		
	 	  	 •     Your personal check, a cashier’s check or a money order.

  
 ARCSOFT, INC. 
 STOCK OPTION AGREEMENT

  
 -4- 

			
	 	  	 •     Certificates for shares of Company stock that you own, along with any forms needed to effect a transfer
of those shares to the Company. The value of the shares, determined as of the effective date of the Option exercise, will be applied to the Option exercise price. Instead of surrendering shares of Company stock, you may attest to the ownership of
those shares on a form provided by the Company and have the same number of shares subtracted from the Option shares issued to you. However, you may not surrender, or attest to the ownership of shares of Company stock in payment of the exercise price
if your action would cause the Company to recognize a compensation expense (or additional compensation expense) with respect to this Option for financial reporting purposes.

		
	 	  	 •     By delivering on a form approved by the Committee of an irrevocable direction to a securities broker
approved by the Company to sell all or part of your Option shares and to deliver to the Company from the sale proceeds in an amount sufficient to pay the Option exercise price and any withholding taxes. The balance of the sale proceeds, if any, will
be delivered to you. The directions must be given by signing a special “Notice of Exercise” form provided by the Company.

		
	 	  	 •     Irrevocable directions to a securities broker or lender approved by the Company to pledge Option shares
as security for a loan and to deliver to the Company from the loan proceeds an amount sufficient to pay the Option exercise price and any withholding taxes. The directions must be given by signing a special “Notice of Exercise” form
provided by the Company.

		
	 	  	Notwithstanding the foregoing, payment may not be made in any form that is unlawful, as determined by the Company in its sole discretion.
		
	 Withholding Taxes
 and Stock
 Withholding
	  	You will not be allowed to exercise this Option unless you make arrangements acceptable to the Company to pay any withholding taxes that may be due as a result of the Option exercise. These
arrangements may include withholding shares of Company stock that otherwise would be issued to you when you exercise this Option. The value of these shares, determined as of the effective date of the Option exercise, will be applied to the
withholding taxes.

  
 ARCSOFT, INC. 
 STOCK OPTION AGREEMENT

  
 -5- 
  

			
	 Restrictions on
 Resale
	  	By signing this Agreement, you agree not to sell any Option shares at a time when applicable laws, Company policies or an agreement between the Company and its underwriters prohibit a sale
(e.g., a lock-up period after the Company goes public). This restriction will apply as long as you are an employee, consultant or director of the Company or a subsidiary of the Company.
	 Transfer of Option
	  	 In general, only you can exercise this Option prior to your death. You cannot transfer or assign this Option, other than as designated by you by
will or by the laws of descent and distribution, except as provided below. For instance, you may not sell this Option or use it as security for a loan. If you attempt to do any of these things, this Option will immediately become invalid. You may in
any event dispose of this Option in your will. Regardless of any marital property settlement agreement, the Company is not obligated to honor a notice of exercise from your former spouse, nor is the Company obligated to recognize your former
spouse’s interest in your Option in any other way.
  
 However, if this
Option is designated as a nonstatutory stock option in the Notice of Stock Option Grant, then the “Committee” (as defined in the Plan) may, in its sole discretion, allow you to transfer this Option as a gift to one or more family members.
For purposes of this Agreement, “family member” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law or sister-in-law (including adoptive
relationships), any individual sharing your household (other than a tenant or employee), a trust in which one or more of these individuals have more than 50% of the beneficial interest, a foundation in which you or one or more of these persons
control the management of assets, and any entity in which you or one or more of these persons own more than 50% of the voting interest.
  
 In addition, if this Option is designated as a nonstatutory stock option in the Notice of Stock Option Grant, then the Committee may, in its sole discretion, allow you to
transfer this option to your spouse or former spouse pursuant to a domestic relations order in settlement of marital property rights.
  
 The Committee will allow you to transfer this Option only if both you and the transferee(s) execute the forms prescribed by the Committee, which include the consent of
the transferee(s) to be bound by this Agreement.

  
 ARCSOFT, INC. 
 STOCK OPTION AGREEMENT

  
 -6- 
  

			
	 Retention Rights
	  	Neither your Option nor this Agreement gives you the right to be retained by the Company or a subsidiary of the Company in any capacity. The Company and its subsidiaries reserve the right to
terminate your Service at any time, with or without cause.
		
	 Stockholder
 Rights
	  	You, or your estate or heirs, have no rights as a stockholder of the Company until you have exercised this Option by giving the required notice to the Company and paying the exercise price.
No adjustments are made for dividends or other rights if the applicable record date occurs before you exercise this Option, except as described in the Plan.
		
	 Adjustments
	  	In the event of a stock split, a stock dividend or a similar change in Company stock, the number of shares covered by this Option and the exercise price per share may be adjusted pursuant to
the Plan.
		
	 Applicable Law
	  	This Agreement will be interpreted and enforced under the laws of the State of Delaware (without regard to their choice-of-law provisions).
		
	 The Plan and
 Other Agreements
	  	The text of the Plan is incorporated in this Agreement by reference. All capitalized terms in the Stock Option Agreement shall have the meanings assigned to them in the Plan. This Agreement
and the Plan constitute the entire understanding between you and the Company regarding this Option. Any prior agreements, commitments or negotiations concerning this Option are superseded. This Agreement may be amended only by another written
agreement, signed by both parties.

  
 BY SIGNING THE COVER
SHEET OF THIS AGREEMENT, 
 YOU AGREE TO ALL OF THE TERMS AND CONDITIONS 
 DESCRIBED ABOVE AND IN THE PLAN. 
  
 ARCSOFT, INC. 
 STOCK OPTION
AGREEMENT 
  
 -7-

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