Document:

exv10w17

 

Exhibit 10.17

EARTHWATCH INCORPORATED

1995 STOCK OPTION/STOCK ISSUANCE PLAN

ARTICLE ONE

GENERAL PROVISIONS

	I.	 	PURPOSES OF THE PLAN

This 1995 Stock Option/Stock Issuance Plan is intended to promote the interests of EarthWatch,
Incorporated, a Delaware corporation, by providing a method whereby eligible individuals who
provide valuable services to the Corporation (or any Parent or Subsidiary) may be offered
incentives and rewards which will encourage them to acquire a proprietary interest, or otherwise
increase their proprietary interest, in the Corporation and continue to render services to the
Corporation (or any Parent or Subsidiary).

	II.	 	DEFINITIONS

For the purposes of this Plan, the following definitions shall be in effect:

	 	A.	 	Board shall mean the Corporation’s Board of Directors.
	 
	 	B.	 	Code shall mean the Internal Revenue Code of 1986, as amended.
	 
	 	C.	 	Committee(s) shall mean a committee of two (2) or more Board members
appointed by the Board to exercise one or more administrative functions under the Plan.
	 
	 	D.	 	Common Stock shall mean the Corporation’s common stock.
	 
	 	E.	 	Corporate Transaction shall mean either of the following shareholder
approved transactions to which the Corporation is a party:

	 	1.	 	a merger or consolidation in which securities possessing more
than fifty percent (50%) of the total combined voting power of the
Corporation’s outstanding securities are transferred to a person or persons
different from those who held those securities immediately prior to such
transaction, or
	 
	 	2.	 	the sale, transfer or other disposition of all or substantially
all of the Corporation’s assets in complete liquidation or dissolution of the
Corporation.

	 	F.	 	Corporation shall mean EarthWatch Incorporated, a Delaware corporation.
	 
	 	G.	 	Disability shall mean the inability of an individual to engage in any
substantial gainful activity by reason of any medically determinable physical or mental
impairment and shall be determined by the Plan Administrator on the basis of such
medical evidence as the Plan Administrator deems warranted under the circumstances. Disability shall be
deemed to constitute Permanent Disability in the 

1.

 

	 	 	 	event that such Disability is expected to result in death or has lasted or can be expected to last for a
continuous period of not less than twelve (12) months.

	 	H.	 	Employee shall mean an individual who is in the employ of the
Corporation or any Parent or Subsidiary, subject to the control and direction of the
employer entity as to both the work to be performed and the manner and method of
performance.
	 
	 	I.	 	Exchange Act shall mean the Securities Exchange Act of 1934, as
amended.
	 
	 	J.	 	Exercise Date shall mean the date on which the Corporation shall have
received written notice of the option exercise.
	 
	 	K.	 	Fair Market Value per share of Common Stock on any relevant date under
the Plan shall be the value determined in accordance with the following provisions:

	 	1.	 	If the Common Stock is not at the time listed or admitted to
trading on any Stock Exchange but is traded on the Nasdaq National Market, the
Fair Market Value shall be the closing selling price per share of Common Stock
on the date in question, as such price is reported by the National Association
of Securities Dealers through the Nasdaq National Market or any successor
system. If there is no closing selling price for the Common Stock on the date
in question, then the Fair Market Value shall be the closing selling price on
the last preceding date for which such quotation exists.
	 
	 	2.	 	If the Common Stock is at the time listed or admitted to
trading on any Stock Exchange, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question on the Stock
Exchange determined by the Plan Administrator to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no closing selling price for the
Common Stock on the date in question, then the Fair Market Value shall be the
closing selling price on the last preceding date for which such quotation
exists.
	 
	 	3.	 	If the Common Stock is at the time neither listed nor admitted
to trading on any Stock Exchange nor traded on the Nasdaq National Market, then
such Fair Market Value shall be determined by the Plan Administrator after
taking into account such factors as the Plan Administrator shall deem
appropriate.

	 	L.	 	Incentive Option shall mean a stock option which satisfies the
requirements of Code Section 422.
	 
	 	M.	 	Non-Statutory Option shall mean a stock option not intended to meet the
requirements of Code Section 422.
	 
	 	N.	 	Optionee shall mean any person to whom an option is granted under the
Option Grant Program in effect under the Plan.

2.

 

	 	O.	 	Parent shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each corporation
in the unbroken chain (other than the Corporation) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other corporations in such chain.
	 
	 	P.	 	Participant shall mean any person who receives a direct issuance of
Common Stock under the Stock Issuance Program in effect under the Plan.
	 
	 	Q.	 	Plan shall mean the Corporation’s 1995 Stock Option/Stock Issuance
Plan, as set forth in this document.
	 
	 	R.	 	Plan Administrator shall mean either the Board or the Committee(s), to
the extent the Committee(s) is at the time responsible for the administration of the
Plan in accordance with Section IV of Article One.
	 
	 	S.	 	Service shall mean the provision of services to the Corporation or any
Parent or Subsidiary by an individual in the capacity of an Employee, a non-employee
member of the board of directors or a consultant.
	 
	 	T.	 	Stock Exchange shall mean either the American Stock Exchange or the New
York Stock Exchange.
	 
	 	U.	 	Subsidiary shall mean each corporation (other than the Corporation) in
an unbroken chain of corporations beginning with the Corporation, provided each such
corporation (other than the last corporation) in the unbroken chain owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations in such
chain.
	 
	 	V.	 	10% Shareholder shall mean the owner of stock (as determined under Code
Section 424(d)) possessing ten percent (10%) or more of the total combined voting power
of all classes of stock of the Corporation or any Parent or Subsidiary.

3.

 

III. STRUCTURE OF THE PLAN

	 	A.	 	The Plan shall be divided into two (2) separate components: the Option Grant
Program specified in Article Two and the Stock Issuance Program specified in Article
Three. Under the Option Grant Program, eligible individuals may, at the discretion of
the Plan Administrator. be granted options to purchase shares of Common Stock in
accordance with the provisions of Article Two. Under the Stock Issuance Program,
eligible individuals may be issued shares of Common Stock directly, either through the
immediate purchase of such shares at a price not less than eighty-five percent (85%) of
the fair market value of the shares at the time of issuance or as a bonus for services
rendered the Corporation without any cash payment required of the recipient.
	 
	 	B.	 	The provisions of Articles One and Four of the Plan shall apply to both the
Option Grant Program and the Stock Issuance Program and shall accordingly govern the
interests of all individuals under the Plan.

IV. ADMINISTRATION OF THE PLAN

	 	A.	 	The Plan shall be administered by the Board. However, any or all administrative
functions otherwise exercisable by the Board may be delegated to one or more
Committees. Members of the Committee(s) shall serve for such period of time as the
Board may determine and shall be subject to removal by the Board at any time. The
Board may also at any time terminate the functions of the Committee(s) and reassume all
powers and authority previously delegated to the Committee(s).
	 
	 	B.	 	The Plan Administrator shall have full power and authority (subject to the
provisions of the Plan) to establish such rules and regulations as it may deem
appropriate for proper administration of the Plan and to make such determinations
under, and issue such interpretations of, the Plan and any outstanding options as it
may deem necessary or advisable. Decisions of the Plan Administrator shall be final
and binding on all parties who have an interest in the Plan or any outstanding option.

V. OPTION GRANTS AND SHARE ISSUANCES

	 	A.	 	The persons eligible to participate in the Option Grant Program and the Stock
Issuance Program shall be limited to the following:

	 	1.	 	Employees,
	 
	 	2.	 	non-employee members of the Board or the non-employee members
of the board of directors of any Parent or Subsidiary, and
	 
	 	3.	 	consultants who provide valuable services to the Corporation
(or any Parent or Subsidiary).

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	 	B.	 	The Plan Administrator shall have full authority to determine, (i) with respect
to the option grants under the Plan, which eligible individuals are to receive option
grants, the number of shares to be covered by each such grant, the status of the granted option
as either an Incentive Option or a Non-Statutory Option, the time or times at which
each option is to become exercisable and the maximum term for which the option is to
remain outstanding, and (ii) with respect to share issuances under the Stock
Issuance Program, the number of shares to be issued to each Participant, the vesting
schedule (if any) to be applicable to the issued shares and the consideration to be
paid by the Participant for such shares.
	 
	 	C.	 	The Plan Administrator shall have the absolute discretion either to grant
options in accordance with Article Two or to effect share issuances in accordance with
Article Three.

VI. STOCK SUBJECT TO THE PLAN

	 	A.	 	The stock issuable under the Plan shall be shares of the Corporation’s
authorized but unissued or reacquired Common Stock. The maximum number of shares which
may be issued over the term of the Plan shall not exceed 2,200,000 shares, subject to
adjustment from time to time in accordance with the provisions Section VI.C of this
Article One.
	 
	 	B.	 	Shares subject to outstanding options shall be available for subsequent
issuance under the Plan to the extent (i) the options expire or terminate for any
reason prior to exercise in full or (ii) the options are canceled in accordance with
the cancellation-regrant provisions of Section 4 of Article Two. All shares issued
under the Plan, whether or not those shares are subsequently repurchased by the
Corporation pursuant to its repurchase rights under the Plan, shall reduce on a
share-for-share basis the number of shares of Common Stock available for issuance under
the Plan.
	 
	 	C.	 	In the event any change is made to the Common Stock issuable under the Plan by
reason of any stock split, stock dividend, recapitalization, combination of shares,
exchange of shares or other change affecting the outstanding Common Stock as a class
without the Corporation’s receipt of consideration, appropriate adjustments shall be
made to (i) the maximum number and/or class of securities issuable under the Plan and
(ii) the number and/or class of securities and the exercise price per share in effect
under each outstanding option in order to prevent the dilution or enlargement of
benefits thereunder. The adjustments determined by the Plan Administrator shall be
final, binding and conclusive. In no event shall any adjustments be made for the
conversion of one or more outstanding series of the Corporation’s preferred stock into shares of the Common Stock.

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ARTICLE TWO

OPTION GRANT PROGRAM

	I.	 	TERMS AND CONDITIONS OF OPTIONS

	II.	 	
 Options granted pursuant to the Plan shall be authorized by action of the Plan Administrator
and may, at the Plan Administrator’s discretion, be either Incentive Options or Non-Statutory
Options. Each granted option shall be evidenced by one or more instruments in the form
approved by the Plan Administrator, provided, however, that each such instrument shall
comply with the terms and conditions specified below. Each instrument evidencing an Incentive
Option shall, in addition, be subject to the applicable provisions of Section II of this
Article Two.

	 	A.	 	Exercise Price.

	 	1.	 	The exercise price per share shall be fixed by the Plan
Administrator. In no event, however, shall the exercise price per share be
less than eighty-five percent (85%) of the Fair Market Value per share of
Common Stock on the date of the option grant.
	 
	 	2.	 	If the individual to whom the option is granted is a 10%
Shareholder. then the exercise price per share shall not be less than one
hundred ten percent (110%) of the Fair Market Value per share of Common Stock
on the grant date.
	 
	 	3.	 	The exercise price shall become immediately due upon exercise
of the option and shall, subject to the provisions of Section I of Article Four
and the agreement evidencing the grant, be payable in cash or check made
payable to the Corporation. Should the Corporation’s outstanding Common Stock
be registered under Section 12(g) of the Exchange Act at the time the option is
exercised, then the exercise price may also be paid as follows:

	 	(i)	 	in shares of Common Stock held by the Optionee
for the requisite period necessary to avoid a charge to the
Corporation’s earnings for financial reporting purposes and valued at
Fair Market Value on the Exercise Date, or
	 
	 	(ii)	 	through a special sale and remittance procedure
pursuant to which the Optionee shall concurrently provide irrevocable
written instructions (a) to a Corporation-designated brokerage firm to
effect the immediate sale of the purchased shares and remit to the
Corporation, out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate exercise price payable for the
purchased shares plus all applicable Federal, state and local income
and employment taxes required to be withheld by the Corporation by
reason of such purchase and (b) to the Corporation to deliver the

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	 	 	 	certificates for the purchased shares directly to such brokerage firm in order to complete the sale
transaction.

Except to the extent such sale and remittance procedure is utilized, payment of the exercise
price for the purchased shares must be made on the Exercise Date.

	 	B.	 	Term and Exercise of Options.

Each option granted under the Plan shall be exercisable at such time or times, during such
period and for such number of shares as shall be determined by the Plan Administrator and
set forth in the stock option agreement. However, no option shall have a term in excess of
ten (10) years measured from the grant date. The option shall be exercisable during the
Optionee’s lifetime only by the Optionee and shall not be assignable or transferable other
than by will or by the laws of descent and distribution following the Optionee’s death.

	 	C.	 	Effect of Termination of Service.

	 	1.	 	Except to the extent otherwise provided pursuant to subsection
C.2 below, the following provisions shall govern the exercise period applicable
to any options held by the Optionee at the time of cessation of Service or
death:

	 	(i)	 	Should the Optionee cease to remain in Service
for any reason other than death or Disability, then the period during
which each outstanding option held by such Optionee is to remain
exercisable shall be limited to the three (3)-month period following
the date of such cessation of Service.
	 
	 	(ii)	 	Should such Service terminate by reason of
Disability, then the period during which each outstanding option held
by the Optionee is to remain exercisable shall be limited to the six
(6)-month period following the date of such cessation of Service.
However, should such Disability be deemed to constitute Permanent
Disability, then the period during which each outstanding option held
by the Optionee is to remain exercisable shall be extended by an
additional six (6) months so that the exercise period shall be limited
to the twelve (12)-month period following the date of the Optionee’s
cessation of Service by reason of such Permanent Disability.
	 
	 	(iii)	 	Should the Optionee die while holding one or
more outstanding options, then the period during which each such option
is to remain exercisable shall be limited to the twelve (12)-month
period following the date of the Optionee’s death. During such limited
period, the option may be exercised by the personal representative of
the Optionee’s estate or by the person or persons to whom the option is
transferred pursuant to the Optionee’s will or in accordance with the
laws of descent and distribution.

7.

 

	 	(iv)	 	Under no circumstances, however, shall any such
option be exercisable after the specified expiration date of the option
term.
	 
	 	(v)	 	During the applicable post-Service exercise
period, the option may not be exercised in the aggregate for more than
the number of vested shares for which the option is exercisable on the
date of the Optionee’s cessation of Service. Upon the expiration of
the applicable exercise period or (if earlier) upon the expiration of
the option term, the option shall terminate and cease to be exercisable
for any vested shares for which the option has not been exercised.
However, the option shall, immediately upon the Optionee’s cessation of
Service, terminate and cease to be outstanding with respect to any
option shares for which the option is not at that time exercisable or
in which the Optionee is not otherwise at that time vested.

	 	2.	 	The Plan Administrator shall have full power and authority to
extend the period of time for which the option is to remain exercisable
following the Optionee’s cessation of Service or death from the limited period
in effect under subsection C.1 of this Article Two to such greater period of
time as the Plan Administrator shall deem appropriate; provided, that
in no event shall such option be exercisable after the specified expiration
date of the option term.

	 	D.	 	Shareholder Rights.

An Optionee shall have no shareholder rights with respect to the shares subject to the
option until such individual shall have exercised the option and paid the exercise price.

	 	E.	 	Unvested Shares.

The Plan Administrator shall have the discretion to authorize the issuance of unvested shares of Common Stock under the Plan. Should the Optionee cease Service while holding such
unvested shares, the Corporation shall have the right to repurchase, at the exercise price
paid per share, all or (at the discretion of the Corporation and with the consent of the
Optionee) any of those unvested shares. The terms and conditions upon which such repurchase
right shall be exercisable (including the period and procedure for exercise and the
appropriate vesting schedule for the purchased shares) shall be established by the Plan
Administrator and set forth in the agreement evidencing such repurchase right. In no event,
however, may the Plan Administrator impose a vesting schedule upon any option granted under
the Plan or any shares of Common Stock subject to the option which is more restrictive than
twenty percent (20%) per year vesting, beginning one (1) year after the grant date. All
outstanding repurchase rights under the Plan shall terminate automatically upon the
occurrence of any Corporate Transaction, except to the extent the repurchase rights are
expressly assigned to the successor corporation (or parent thereof) in connection with the
Corporate Transaction.

	 	F.	 	First Refusal Rights.

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Until such time as the Corporation’s outstanding shares of Common
Stock are first registered under Section 12(g) of the Exchange Act,
the Corporation shall have the right of first refusal with respect to
any proposed sale or other disposition by the Optionee (or any
successor in interest by reason of purchase, gift or other transfer)
of any shares of Common Stock issued under the Plan. Such right of
first refusal shall be exercisable in accordance with the terms and
conditions established by the Plan Administrator and set forth in the
agreement evidencing such right.

	III.	 	INCENTIVE OPTIONS

The terms and conditions specified below shall be applicable to all Incentive Options granted under
the Plan. Except as modified by the provisions of this Section II, all the provisions of Articles
One, Two and Four shall be applicable to Incentive Options. Incentive Options may only be granted
to individuals who are Employees. Options which are specifically designated as Non-Statutory shall
not be subject to such terms and conditions.

	 	A.	 	Exercise Price.

The exercise price per share of the Common Stock subject to an Incentive Option shall in no
event be less than one hundred percent (100%) of the Fair Market Value per share of Common
Stock on the date of grant.

	 	B.	 	Dollar Limitation.

The aggregate Fair Market Value of the Common Stock (determined as of the respective date or
dates of grant) for which one (1) or more options granted to any Employee under this Plan
(or any other option plan of the Corporation or any Parent or Subsidiary) may for the first
time become exercisable as Incentive Options during any one (1) calendar year shall not
exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the Employee holds
two (2) or more such options which become exercisable for the first time in the same
calendar year, the foregoing limitation on the exercisability of such options as Incentive
Options shall be applied on the basis of the order in which such options are granted.
Should the applicable One Hundred Thousand Dollar ($100,000) limitation in fact be exceeded
in any calendar year, then the option shall nevertheless become exercisable for the excess
number of shares in such calendar year as a Non-Statutory Option.

	 	C.	 	10% Shareholder.

If any individual to whom an Incentive Option is granted is a 10% Shareholder, then the
option term shall not exceed five (5) years measured from the grant date.

9.

 

	IV.	 	CORPORATE TRANSACTION

	 	A.	 	Upon the occurrence of a Corporate Transaction, each option at the time
outstanding under the Plan shall terminate and cease to be exercisable, except to the
extent assumed by the successor corporation or parent thereof.
	 
	 	B.	 	Each outstanding option which is assumed in connection with a Corporate
Transaction or is otherwise to remain outstanding shall be appropriately adjusted,
immediately after such Corporate Transaction, to apply and pertain to the number and
class of securities which would have been issuable to the Optionee in the consummation
of such Corporate Transaction, had the option been exercised immediately prior to such
Corporate Transaction. Appropriate adjustments shall also be made to (i) the class and
number of securities available for issuance under the Plan following the consummation
of such Corporate Transaction, and (ii) the exercise price payable per share,
provided the aggregate exercise price payable for such securities shall remain
the same.
	 
	 	C.	 	The grant of options under this Plan shall in no way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or transfer
all or any part of its business or assets.

	V.	 	CANCELLATION AND REGRANT OF OPTIONS

The Plan Administrator shall have the authority to effect, at any time and from time to time, with
the consent of the affected option holders, the cancellation of any or all outstanding options
under the Plan and to grant in substitution therefor new options under the Plan covering the same
or different numbers of shares of Common Stock but with an exercise price per share not less than
(i) one hundred percent (100%) of the Fair Market Value per share of Common Stock on the new grant
date in the case of a grant of an Incentive Option, (ii) one hundred ten percent (110%) of such
Fair Market Value in the case of an option grant to a 10% Shareholder or (iii) eighty-five percent
(85%) of such Fair Market Value in the case of all other grants.

ARTICLE THREE

STOCK ISSUANCE PROGRAM

	I.	 	TERMS AND CONDITIONS OF STOCK ISSUANCES

Shares may be issued under the Stock Issuance Program through direct and immediate issuances
without any intervening stock option grants. Each such stock issuance shall be evidenced by a
Restricted Stock Purchase Agreement (“Purchase Agreement”) which complies with each of the terms
and conditions of this Article Three.

10.

 

	 	A.	 	Issue Price

	 	1.	 	The purchase price per share shall be fixed by the Plan
Administrator, but in no event shall it be less than eighty-five percent (85%)
of the Fair Market Value per share of Common Stock on the date of issuance.
	 
	 	2.	 	If the individual to whom a share issuance is made is a 10%
Shareholder, then the purchase price per share shall not be less than one
hundred ten percent (110%) of the Fair Market Value per share of Common Stock
on the issuance date.
	 
	 	3.	 	Shares shall be issued under the Plan for such consideration as
the Plan Administrator shall from time to time determine, provided that, except
as set forth in Section I of Article Four, in no event shall shares be issued
for consideration other than

	 	(i)	 	cash or check made payable to the Corporation,
or
	 
	 	(ii)	 	past services rendered to the Corporation or
any Parent or Subsidiary.

	 	B.	 	Vesting Provisions

	 	1.	 	Shares of Common Stock issued under the Stock Issuance Program
may, in the absolute discretion of the Plan Administrator, be fully and
immediately vested upon issuance or may vest in one or more installments over
the Participant’s period of Service. The elements of the vesting schedule
applicable to any unvested shares of Common Stock issued under the Stock
Issuance Program, namely:

	 	(i)	 	the Service period to be completed by the
Participant or the performance objectives to be achieved by the
Corporation,
	 
	 	(ii)	 	the number of installments in which the shares
are to vest,
	 
	 	(iii)	 	the interval or intervals (if any) which are
to lapse between installments, and
	 
	 	(iv)	 	the effect which death, Disability or other
event designated by the Plan Administrator is to have upon the vesting
schedule,
	 
	 	(v)	 	shall be determined by the Plan Administrator
and incorporated into the Purchase Agreement executed by the
Corporation and the Participant at the time such unvested shares are
issued. In no event, however, may the Plan Administrator impose a
vesting schedule upon any stock issuance effected under the Stock
Issuance Program which is more restrictive than twenty percent (20%)
per year annual vesting, beginning one (1) year after the issuance
date.

11.

 

	 	2.	 	The Participant shall have full shareholder rights with respect
to any shares of Common Stock issued to him or her under the Plan, whether or
not his or her interest in those shares is vested. Accordingly, the
Participant shall have the right to vote such shares and to receive any regular
cash dividends paid on such shares. Any new, additional or different shares of
stock or other property (including money paid other than as a regular cash
dividend) which the Participant may have the right to receive with respect to
his unvested shares by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation’s
receipt of consideration or by reason of any Corporate Transaction shall be
issued subject to (i) the same vesting requirements applicable to the
Participant’s unvested shares and (ii) such escrow arrangements as the Plan
Administrator shall deem appropriate.
	 
	 	3.	 	Should the Participant cease to remain in Service while holding
one or more unvested shares of Common Stock under the Stock Issuance Program,
then those shares shall be immediately surrendered to the Corporation for
cancellation, and the Participant shall have no further shareholder rights with
respect to those shares. To the extent the surrendered shares were previously
issued to the Participant for consideration paid in cash or cash equivalent
(including the Participant’s purchase-money promissory note), the Corporation
shall repay to the Participant the cash consideration paid for the surrendered
shares and shall cancel the unpaid principal balance of any outstanding
purchase-money note of the Participant attributable to such surrendered shares.
	 
	 	4.	 	The Plan Administrator may in its discretion elect to waive the
surrender and cancellation of one or more unvested shares of Common Stock (or
other assets attributable thereto) which would otherwise occur upon the
non-completion of the vesting schedule applicable to such shares. Such waiver
shall result in the immediate vesting of the Participant’s interest in the
shares of Common Stock as to which the waiver applies. Such waiver may be
effected at any time, whether before or after the Participant’s cessation of
Service or the attainment or non-attainment of the applicable performance
objectives.

	 	C.	 	First Refusal Rights.

Until such time as the Corporation’s outstanding shares of Common
Stock are first registered under Section 12(g) of the Exchange Act,
the Corporation shall have a right of first refusal with respect to
any proposed disposition by the Participant (or any successor in
interest by reason of purchase, gift or other transfer) of any shares
of Common Stock issued under the Plan. Such right of first refusal
shall be exercisable in accordance with the terms and conditions
established by the Plan Administrator and set forth in the agreement
evidencing such right.

12.

 

	II.	 	SHARE ESCROW/TRANSFER RESTRICTIONS

	 	A.	 	Share Escrow.

Unvested shares may, in the Plan Administrator’s discretion, be held in escrow by the
Corporation until the Participant’s interest in such shares vests or may be issued) directly
to the Participant with restrictive legends on the certificates evidencing such unvested shares. To the extent an escrow arrangement is utilized, the unvested shares and any
securities or other assets issued with respect to such shares (other than regular cash
dividends) shall be delivered in escrow to the Corporation to be held until the
Participant’s interest in such shares (or other securities or assets) vests. Alternatively,
if the unvested shares are issued directly to the Participant, the restrictive legend on the
certificates for such shares shall read substantially as follows:

“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE UNVESTED AND ARE ACCORDINGLY SUBJECT TO (I)
CERTAIN TRANSFER RESTRICTIONS AND (II) CANCELLATION OR REPURCHASE IN THE EVENT THE
REGISTERED HOLDER (OR HIS/HER PREDECESSOR IN INTEREST) CEASES TO REMAIN IN THE CORPORATION’S
SERVICE. SUCH TRANSFER RESTRICTIONS AND THE TERMS AND CONDITIONS OF SUCH CANCELLATION OR
REPURCHASE ARE SET FORTH IN A STOCK PURCHASE AGREEMENT BETWEEN THE CORPORATION AND THE
REGISTERED HOLDER (OR HIS/HER PREDECESSOR IN INTEREST) DATED                     , 199    , A COPY OF WHICH IS ON
FILE AT THE PRINCIPAL OFFICE OF THE CORPORATION.”

	 	B.	 	Transfer Restrictions.

The Participant shall have no right to transfer any unvested shares
of Common Stock issued to him or her under the Stock Issuance
Program. For purposes of this restriction, the term “transfer” shall
include (without limitation) any sale, pledge, assignment,
encumbrance, gift, or other disposition of such shares, whether
voluntary or involuntary. Upon any such attempted transfer, the
unvested shares shall immediately be canceled in accordance with
substantially the same procedure in effect under Section I.B.3 of
this Article Three, and neither the Participant nor the proposed
transferee shall have any rights with respect to such canceled
shares. However, the Participant shall have the right to make a gift
of unvested shares acquired under the Stock Purchase Program to his
or her spouse or issue, including adopted children, or to a trust
established for such spouse or issue, provided the donee of such
shares delivers to the Corporation a written agreement to be bound by
all the provisions of the Stock Issuance Program and the Purchase
Agreement applicable to the gifted shares.

13.

 

	III.	 	CORPORATE TRANSACTION

All of the Corporation’s outstanding repurchase rights under this Article Three shall automatically
terminate upon the occurrence of a Corporate Transaction, except to the extent the Corporation’s
outstanding repurchase rights are to be assigned to the successor corporation (or parent thereof)
in connection with the Corporate Transaction.

ARTICLE FOUR

MISCELLANEOUS

	I.	 	LOANS

	 	A.	 	The Plan Administrator may assist any Optionee or Participant in the exercise
of one or more options granted to the Optionee under Article Two or the purchase of one
or more shares issued to the Participant under Article Three by:

	 	1.	 	authorizing the extension of a loan from the Corporation to the
Optionee or Participant, or
	 
	 	2.	 	permitting the Optionee or Participant to pay the exercise
price or purchase price in installments over a period of years.

	 	B.	 	The terms of any loan or installment method of payment (including the interest
rate and terms of repayment) shall be established by the Plan Administrator in its sole
discretion. Loans or installment payments may be authorized with or without security
or collateral. However, any loan made to a consultant or other non-employee advisor
must be secured by property other than the purchased shares of Common Stock. In all
events, the maximum credit available to each Optionee or Participant may not exceed the
sum of (i) the aggregate exercise price or purchase price payable for the
purchased shares plus (ii) any Federal, state and local income and employment tax
liability incurred by the Optionee or Participant in connection with such exercise or
purchase.
	 
	 	C.	 	The Plan Administrator may, in its absolute discretion, determine that one or
more loans extended under this Section I shall be subject to forgiveness by the
Corporation in whole or in part upon such terms and conditions as the Plan
Administrator may in its discretion deem appropriate.

	II.	 	NO EMPLOYMENT OR SERVICE RIGHTS

Nothing in the Plan shall confer upon the Optionee or the Participant any right to continue in
Service for any period of specific duration or interfere with or otherwise restrict in any way the
rights of the Corporation (or any Parent or Subsidiary) or of the Optionee or the Participant,
which rights are hereby expressly reserved by each, to terminate the Service of the Optionee or
Participant at any time for any reason, with or without cause.

14.

 

	III.	 	AMENDMENT OF THE PLAN AND AWARDS

	 	A.	 	The Board shall have complete and exclusive power and authority to amend or
modify the Plan in any or all respects whatsoever. However, no such amendment or
modification shall adversely affect the rights and obligations of an Optionee with
respect to options at the time outstanding under the Plan, nor adversely affect the
rights of any Participant with respect to Common Stock issued under the Plan prior to
such action, unless the Optionee or Participant consents to such amendment. In
addition, the Board shall not, without the approval of the Corporation’s shareholders,
(i) increase the maximum number of shares issuable under the Plan, except for
permissible adjustments under Section VI.C of Article One, (ii) materially modify the
eligibility requirements for participation in the Plan or (iii) otherwise materially
increase the benefits accruing to individuals who participate in the Plan.
	 
	 	B.	 	Options to purchase shares of Common Stock may be granted under Article Two and
shares of Common Stock may be issued under Article Three that are in both instances in
excess of the number of shares then available for issuance under the Plan,
provided any excess shares actually issued are held in escrow until there is
obtained shareholder approval of an amendment sufficiently increasing the number of
shares of Common Stock available for issuance under the Plan. If such shareholder
approval is not obtained within twelve (12) months after the date the initial excess
issuances are made, whether as stock option grants or direct stock issuances, then (i)
any unexercised options representing such excess shall terminate and cease to be
exercisable and (ii) the Corporation shall promptly refund to the Optionees and
Participants the exercise or purchase price paid for any excess shares issued under the
Plan and held in escrow, together with interest (at the applicable Short-Term Federal
Rate) for the period the shares were held in escrow, and such shares shall thereupon be
automatically canceled and cease to be outstanding.

	IV.	 	EFFECTIVE DATE AND TERM OF PLAN

	 	A.	 	The Plan shall become effective when adopted by the Board, but no option
granted under the Plan shall become exercisable, and no shares shall be issuable under
the Stock Issuance Program, unless and until the Plan shall have been approved by the
Corporation’s shareholders. If such shareholder approval is not obtained within twelve
(12) months after the date of the Board’s adoption of the Plan, then all options
previously granted under the Plan shall terminate, and no further options shall be
granted and no shares shall be issued under the Stock Issuance Program. Subject to
such limitation, the Plan Administrator may grant options and issue shares under the
Plan at any time after the effective date and before the date fixed herein for
termination of the Plan.
	 
	 	B.	 	The Plan shall terminate upon the earliest of (i) the expiration of the
ten (10)-year period measured from the date the Plan is adopted by the Board, (ii) the
date on which all shares available for issuance under the Plan shall have been issued
or (iii) the termination of all outstanding options under Section III of Article Two.
Each option and unvested share issuance outstanding under the Plan at such time shall

15.

 

	 	 	 	continue to have full force and effect in accordance with the provisions of the agreements
evidencing that option or share issuance.

	V.	 	USE OF PROCEEDS

Any cash proceeds received by the Corporation from the sale of shares of Common Stock under the
Plan shall be used for general corporate purposes.

	VI.	 	WITHHOLDING

The Corporation’s obligation to deliver shares upon the exercise of any options granted under
Article Two or upon the purchase of any shares issued under Article Three shall be subject to the
satisfaction of all applicable Federal, state and local income and employment tax withholding
requirements.

	VII.	 	REGULATORY APPROVALS

The implementation of the Plan, the granting of any options under Article Two and the issuance of
Common Stock upon (i) the exercise of any option or (ii) a direct issuance under Article Three
shall be subject to the Corporation’s procurement of all approvals and permits required by
regulatory authorities having jurisdiction over the Plan, the options granted under it and the
Common Stock issued pursuant to it.

	VIII.	 	FINANCIAL REPORTS

The Corporation shall deliver a balance sheet and an income statement at least annually to each
Optionee holding an outstanding option under the Plan and to each Participant holding a right to
purchase stock under the Plan, unless the Optionee or Participant is a key employee whose duties in
connection with the Corporation assure such individual access to equivalent information.

16.exv10w18

 

Exhibit 10.18

Amended
and Restated

February 28, 2007

EARTHWATCH INCORPORATED

1999 Equity Incentive Plan

Amended and Restated February 28, 2007

I. PURPOSES.

A. Eligible Stock Award Recipients. The persons eligible to receive Stock Awards
are the Employees, Directors and Consultants of the Company and its Affiliates.

B. Available Stock Awards. The purpose of the Plan is to provide a means by which
eligible recipients of Stock Awards may be given an opportunity to benefit from
increases in value of the Common Stock through the granting of the following Stock
Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) stock
bonuses and (iv) rights to acquire restricted stock.

C. General Purpose. The Company, by means of the Plan, seeks to retain the services
of the group of persons eligible to receive Stock Awards, to secure and retain the
services of new members of this group and to provide incentives for such persons to
exert maximum efforts for the success of the Company and its Affiliates.

II. DEFINITIONS.

A. “Accountants” means the independent public accountants of the Company.

B. “Affiliate” means any parent corporation or subsidiary corporation of the
Company, whether now or hereafter existing, as those terms are defined in Sections
424(e) and (f), respectively, of the Code.

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

D. “Cause” means (i) conviction of, a guilty plea with respect to, or a plea of nolo
contendere to a charge that a Participant has committed a felony under the laws of
the United States or of any state or a crime involving moral turpitude, including,
but not limited to, fraud, theft, embezzlement or any crime that results in or is
intended to result in personal enrichment at the expense of the Company or an
Affiliate; (ii) material breach of any agreement entered into between the
Participant and the Company or an Affiliate that impairs the Company’s or the
Affiliate’s interest therein; (iii) willful misconduct, significant failure of the
Participant to perform the Participant’s duties, or gross neglect by the Participant
of the Participant’s duties; or (iv) engagement in any activity that constitutes a
material conflict of interest with the Company or any Affiliate.

E. “Change in Control” means (i) a sale, lease or other disposition of all or
substantially all of the assets of the Company; (ii) a consolidation or merger of
the Company with or into any other corporation or other entity or person, or any
other corporate reorganization, in which the stockholders of the Company immediately
prior to such consolidation, merger or reorganization, own less than 50% of the
outstanding voting power of the surviving entity (or its parent) following the

1.

 

consolidation, merger or reorganization; (iii) a reverse merger in which the Company
is the surviving corporation but the shares of the Common Stock outstanding
immediately preceding the merger are converted by virtue of the merger into other
property, whether in the form of securities, cash or otherwise; (iv) prior to the
Listing Date, any transaction or series of related transactions in
which in excess of fifty percent (50%) of the Company’s outstanding voting power is
transferred to a person, entity or group within the meaning of Section 13(d) or
14(d) of the Exchange Act, as hereafter amended or succeeded, excluding any employee
benefit plan, or related trust, sponsored or maintained by the Company or an
Affiliate (such person, entity or group, a “Group”); or (v) after the Listing Date,
an acquisition by any Group of the beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of securities of the Company or its
successor representing at least thirty percent (30%) of the combined voting power
entitled to vote in the election of directors. Notwithstanding the foregoing, in
the case of (ii) and (iii) above, such transactions shall only be deemed a “Change
in Control” if the stockholders of the Company or its successor immediately prior to
such merger, consolidation or reverse merger: (A) hold less than fifty percent (50%)
of the outstanding securities of the surviving company following the merger,
consolidation or reverse merger, or (B) in the event that the securities of an
affiliated entity or corporation are issued to the stockholders of the Company in
the transaction, hold less than fifty percent (50%) of the outstanding securities of
such affiliated entity or corporation. “Change in Control” does not include the
initial public offering of the securities of the Company pursuant to a registration
statement filed under the Securities Act (the “IPO”), nor does it include any event,
transaction or series of transactions constituting part of an IPO or an attempted
IPO.

F.
“Code” means the Internal Revenue Code of 1986, as amended.

G. “Committee” means a committee of one or more members of the Board appointed by
the Board in accordance with subsection 3(c).

H. “Common Stock” means the common stock of the Company.

I. “Company” means EarthWatch Incorporated, a Delaware corporation.

J. “Constructive Termination” means the occurrence of any of the following events or
conditions: (i) (A) a change in the Participant’s status, title, position or
responsibilities (including reporting responsibilities) which represents an adverse
change from the Participant’s status, title, position or responsibilities as in
effect at any time within ninety (90) days preceding the date of a Change in Control
or at any time thereafter; (B) the assignment to the Participant of any duties or
responsibilities which are inconsistent with the Participant’s status, title,
position or responsibilities as in effect at any time within ninety (90) days
preceding the date of a Change in Control or at any time thereafter; or (C) any
removal of the Participant from or failure to reappoint or reelect the Participant
to any of such offices or positions, except in connection with the termination of
the Participant’s Continuous Service for Cause, as a result of the Participant’s
Disability or death or by the Participant other than as a result of Constructive
Termination; (ii) a reduction in the Participant’s annual base compensation or any
failure to pay the Participant any compensation or benefits to which the Participant
is entitled within five (5) days of the date due; (iii) the Company’s requiring the
Participant to relocate to any place outside a thirty (30) mile radius of the
Participant’s current work site, except for reasonably required travel on the
business of the

2.

 

Company or its Affiliates which is not materially greater than such
travel requirements prior to the Change in Control; (iv) the failure by the Company
to (A) continue in effect (without reduction in benefit level and/or reward
opportunities) any material compensation or employee benefit plan in which the
Participant was participating at any time within ninety (90) days preceding the date
of a Change in Control or at any time thereafter, unless such plan is replaced with a plan that provides
substantially equivalent compensation or benefits to the Participant, or (B) provide
the Participant with compensation and benefits, in the aggregate, at least equal (in
terms of benefit levels and/or reward opportunities) to those provided for under
each other employee benefit plan, program and practice in which the Participant was
participating at any time within ninety (90) days preceding the date of a Change in
Control or at any time thereafter; (v) any material breach by the Company of any
provision of an agreement between the Company and the Participant, whether pursuant
to this Plan or otherwise, other than a breach which is cured by the Company within
fifteen (15) days following notice by the Participant of such breach; or (vi) the
failure of the Company to obtain an agreement, satisfactory to the Participant, from
any successors and assigns to assume and agree to perform the obligations created
under this Plan.

K. “Consultant” means any person, including an advisor, (i) engaged by the Company
or an Affiliate to render consulting or advisory services and who is compensated for
such services or (ii) who is a member of the Board of Directors of an Affiliate.
However, the term “Consultant” shall not include either Directors who are not
compensated by the Company for their services as Directors or Directors who are
merely paid a director’s fee by the Company for their services as Directors.

L.  “Continuous Service” means that the Participant’s service with the Company or an
Affiliate, whether as an Employee, Director or Consultant, is not interrupted or
terminated. The Participant’s Continuous Service shall not be deemed to have
terminated merely because of a change in the capacity in which the Participant
renders service to the Company or an Affiliate as an Employee, Consultant or
Director or a change in the entity for which the Participant renders such service,
provided that there is no interruption or termination of the Participant’s
Continuous Service. For example, a change in status from an Employee of the Company
to a Consultant of an Affiliate or a Director will not constitute an interruption of
Continuous Service. The Board or the chief executive officer of the Company, in
that party’s sole discretion, may determine whether Continuous Service shall be
considered interrupted in the case of any leave of absence approved by that party,
including sick leave, military leave or any other personal leave.

M. “Covered Employee” means the chief executive officer and the four (4) other
highest compensated officers of the Company for whom total compensation is required
to be reported to stockholders under the Exchange Act, as determined for purposes of
Section 162(m) of the Code.

N. “Director” means a member of the Board of Directors of the Company.

O. “Disability” means (i) before the Listing Date, the inability of a person, in the
opinion of a qualified physician acceptable to the Company, to perform the major
duties of that person’s position with the Company or an Affiliate of the Company
because of the sickness or injury of the person and (ii) after the Listing Date, the

3.

 

permanent and total disability of a person within the meaning of Section 22(e)(3) of
the Code.

P. “Employee” means any person employed by the Company or an Affiliate. Mere
service as a Director or payment of a director’s fee by the Company or an Affiliate shall not be sufficient to constitute “employment” by the Company or an
Affiliate.

Q. “Exchange Act” means the Securities Exchange Act of 1934, as amended.

R. “Fair Market Value” means, as of any date, the value of the Common Stock
determined as follows:

1. If the Common Stock is listed on any established stock exchange or traded
on the Nasdaq National Market or the Nasdaq SmallCap Market, the Fair Market
Value of a share of Common Stock shall be the closing sales price for such
stock (or the closing bid, if no sales were reported) as quoted on such
exchange or market (or the exchange or market with the greatest volume of
trading in the Common Stock) on the last market trading day prior to the day
of determination, as reported in The Wall Street Journal or such other
source as the Board deems reliable.

2. In the absence of such markets for the Common Stock, the Fair Market
Value shall be determined in good faith by the Board.

3. Prior to the Listing Date, the value of the Common Stock shall be
determined in a manner consistent with Section 260.140.50 of Title 10 of the
California Code of Regulations.

S. “Incentive Stock Option” means an Option intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code and the regulations
promulgated thereunder.

T. “Listing Date” means the first date upon which any security of the Company is
listed (or approved for listing) upon notice of issuance on any securities exchange
or designated (or approved for designation) upon notice of issuance as a national
market security on an interdealer quotation system if such securities exchange or
interdealer quotation system has been certified in accordance with the provisions of
Section 25100(o) of the California Corporate Securities Law of 1968.

U. “Non-Employee Director” means a Director who either (i) is not a current Employee
or Officer of the Company or its parent or a subsidiary, does not receive
compensation (directly or indirectly) from the Company or its parent or a subsidiary
for services rendered as a consultant or in any capacity other than as a Director
(except for an amount as to which disclosure would not be required under Item 404(a)
of Regulation S-K promulgated pursuant to the Securities Act (“Regulation S-K”)),
does not possess an interest in any other transaction as to which disclosure would
be required under Item 404(a) of Regulation S-K and is not engaged in a business
relationship as to which disclosure would be required under Item 404(b) of
Regulation S-K; or (ii) is otherwise considered a “non-employee director” for
purposes of Rule 16b-3.

4.

 

V. “Nonstatutory Stock Option” means an Option not intended to qualify as an
Incentive Stock Option.

W. “Officer” means (i) before the Listing Date, any person designated by the Company
as an officer and (ii) on and after the Listing Date, a person who is an officer of
the Company within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.

X. “Option” means an Incentive Stock Option or a Nonstatutory Stock Option granted
pursuant to the Plan.

Y. “Option Agreement” means a written agreement between the Company and an
Optionholder evidencing the terms and conditions of an individual Option grant.
Each Option Agreement shall be subject to the terms and conditions of the Plan.

Z. “Optionholder” means a person to whom an Option is granted pursuant to the Plan
or, if applicable, such other person who holds an outstanding Option.

AA. “Outside Director” means a Director who either (i) is not a current employee of
the Company or an “affiliated corporation” (within the meaning of Treasury
Regulations promulgated under Section 162(m) of the Code), is not a former employee
of the Company or an “affiliated corporation” receiving compensation for prior
services (other than benefits under a tax qualified pension plan), was not an
officer of the Company or an “affiliated corporation” at any time and is not
currently receiving direct or indirect remuneration from the Company or an
“affiliated corporation” for services in any capacity other than as a Director or
(ii) is otherwise considered an “outside director” for purposes of Section 162(m) of
the Code.

BB. “Participant” means a person to whom a Stock Award is granted pursuant to the
Plan or, if applicable, such other person who holds an outstanding Stock Award.

CC. “Plan” means this Amended and Restated EarthWatch Incorporated 1999 Equity
Incentive Plan.

DD. “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any
successor to Rule 16b-3, as in effect from time to time.

EE. “Securities Act” means the Securities Act of 1933, as amended.

FF. “Stock Award” means any right granted under the Plan, including an Option, a
stock bonus and a right to acquire restricted stock.

GG. “Stock Award Agreement” means a written agreement between the Company and a
holder of a Stock Award evidencing the terms and conditions of an individual Stock
Award grant. Each Stock Award Agreement shall be subject to the terms and
conditions of the Plan.

HH. “Ten Percent Stockholder” means a person who owns (or is deemed to own pursuant
to Section 424(d) of the Code) stock possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or of any of its
Affiliates.

5.

 

III. ADMINISTRATION.

A. Administration by Board. The Board shall administer the Plan unless and until
the Board delegates administration to a Committee, as provided in subsection 3(c).
Any interpretation of the Plan by the Board and any decision by the Board under the
Plan shall be final and binding on all persons.

B. Powers of Board. The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:

1. To determine from time to time which of the persons eligible under the
Plan shall be granted Stock Awards; when and how each Stock Award shall be
granted; what type or combination of types of Stock Award shall be granted;
the provisions of each Stock Award granted (which need not be identical),
including the time or times when a person shall be permitted to receive
Common Stock pursuant to a Stock Award; and the number of shares of Common
Stock with respect to which a Stock Award shall be granted to each such
person.

2. To construe and interpret the Plan and Stock Awards granted under it, and
to establish, amend and revoke rules and regulations for its administration.
The Board, in the exercise of this power, may correct any defect, omission
or inconsistency in the Plan or in any Stock Award Agreement, in a manner
and to the extent it shall deem necessary or expedient to make the Plan
fully effective.

3. To amend the Plan or a Stock Award as provided in Section 12.

4. Generally, to exercise such powers and to perform such acts as the Board
deems necessary or expedient to promote the best interests of the Company
which are not in conflict with the provisions of the Plan.

C. Delegation to Committee.

1. General. The Board may delegate administration of the Plan to a
Committee or Committees of one (1) or more members of the Board, and the
term “Committee” shall apply to any person or persons to whom such authority
has been delegated. If administration is delegated to a Committee, the
Committee shall have, in connection with the administration of the Plan, the
powers theretofore possessed by the Board, including the power to delegate
to a subcommittee any of the administrative powers the Committee is
authorized to exercise (and references in this Plan to the Board shall
thereafter be to the Committee or subcommittee), subject, however, to such
resolutions, not inconsistent with the provisions of the Plan, as may be
adopted from time to time by the Board. The Board may abolish the Committee
at any time and revest in the Board the administration of the Plan.

2. Committee Composition when Common Stock is Publicly Traded. At such time
as the Common Stock is publicly traded, in the discretion of the Board, a
Committee may consist solely of two or more Outside Directors, in accordance
with Section 162(m) of the Code, and/or solely of two or more Non-Employee
Directors, in accordance with Rule 16b-3. Within the scope of such
authority, the Board or the Committee may (1)

6.

 

delegate to a committee of one
or more members of the Board who are not Outside Directors the authority to
grant Stock Awards to eligible persons who are either (a) not then Covered
Employees and are not expected to be Covered Employees at the time of
recognition of income resulting from such Stock Award or (b) not persons
with respect to whom the Company wishes to comply with Section 162(m) of the
Code and/or (2) delegate to a committee of one or more members of the Board
who are not Non-Employee Directors the authority to grant Stock Awards to eligible persons
who are not then subject to Section 16 of the Exchange Act.

IV. SHARES SUBJECT TO THE PLAN.

A. Share Reserve. Subject to the provisions of Section 11 relating to adjustments
upon changes in Common Stock, the Common Stock that may be issued pursuant to Stock
Awards shall not exceed in the aggregate ten million (10,000,000) shares of Common
Stock.

B. Reversion of Shares to the Share Reserve. If any Stock Award shall for any
reason expire or otherwise terminate, in whole or in part, without having been
exercised in full, the shares of Common Stock not acquired under such Stock Award
shall revert to and again become available for issuance under the Plan.

C. Source of Shares. The shares of Common Stock subject to the Plan may be unissued shares or reacquired shares, bought on the market or otherwise.

D. Share Reserve Limitation. Prior to the Listing Date and to the extent then
required by Section 260.140.45 of Title 10 of the California Code of Regulations,
the total number of shares of Common Stock issuable upon exercise of all outstanding
Options and the total number of shares of Common Stock provided for under any stock
bonus or similar plan of the Company shall not exceed the applicable percentage as
calculated in accordance with the conditions and exclusions of Section 260.140.45 of
Title 10 of the California Code of Regulations, based on the shares of Common Stock
of the Company that are outstanding at the time the calculation is made.

V. ELIGIBILITY.

A. Eligibility for Specific Stock Awards. Incentive Stock Options may be granted
only to Employees. Stock Awards other than Incentive Stock Options may be granted
to Employees, Directors and Consultants.

B. Ten Percent Stockholders.

1. A Ten Percent Stockholder shall not be granted an Incentive Stock Option
unless the exercise price of such Option is at least one hundred ten percent
(110%) of the Fair Market Value of the Common Stock at the date of grant and
the Option is not exercisable after the expiration of five (5) years from
the date of grant.

2. Prior to the Listing Date, a Ten Percent Stockholder shall not be granted
a Nonstatutory Stock Option unless the exercise price of such Option is at
least (i) one hundred ten percent (110%) of the Fair Market Value of the
Common Stock at the date of grant or (ii) such lower percentage of the Fair
Market Value of the Common Stock at the date of

7.

 

grant as is permitted by
Section 260.140.41 of Title 10 of the California Code of Regulations at the
time of the grant of the Option.

3. Prior to the Listing Date, a Ten Percent Stockholder shall not be granted
a restricted stock award unless the purchase price of the restricted stock
is at least (i) one hundred percent (100%) of the Fair Market Value of the
Common Stock at the date of grant or (ii) such lower percentage of
the Fair Market Value of the Common Stock at the date of grant as is
permitted by Section 260.140.41 of Title 10 of the California Code of
Regulations at the time of the grant of the Option.

C. Section 162(m) Limitation. Subject to the provisions of Section 11 relating to
adjustments upon changes in the shares of Common Stock, no Employee shall be
eligible to be granted Options covering more than 10,000,000 shares of Common Stock
during any calendar year. This subsection 5(c) shall not apply prior to the Listing
Date and, following the Listing Date, this subsection 5(c) shall not apply until (i)
the earliest of: (1) the first material modification of the Plan (including any
increase in the number of shares of Common Stock reserved for issuance under the
Plan in accordance with Section 4); (2) the issuance of all of the shares of Common
Stock reserved for issuance under the Plan; (3) the expiration of the Plan; or (4)
the first meeting of stockholders at which Directors are to be elected that occurs
after the close of the third calendar year following the calendar year in which
occurred the first registration of an equity security under Section 12 of the
Exchange Act; or (ii) such other date required by Section 162(m) of the Code and the
rules and regulations promulgated thereunder.

D. Consultants.

1. Prior to the Listing Date, a Consultant shall not be eligible for the
grant of a Stock Award if, at the time of grant, either the offer or the
sale of the Company’s securities to such Consultant is not exempt under Rule
701 of the Securities Act (“Rule 701”) because of the nature of the services
that the Consultant is providing to the Company, or because the Consultant
is not a natural person, or as otherwise provided by Rule 701, unless the
Company determines that such grant need not comply with the requirements of
Rule 701 and will satisfy another exemption under the Securities Act as well
as comply with the securities laws of all other relevant jurisdictions.

2. From and after the Listing Date, a Consultant shall not be eligible for
the grant of a Stock Award if, at the time of grant, a Form S-8 Registration
Statement under the Securities Act (“Form S-8”) is not available to register
either the offer or the sale of the Company’s securities to such Consultant
because of the nature of the services that the Consultant is providing to
the Company, or because the Consultant is not a natural person, or as
otherwise provided by the rules governing the use of Form S-8, unless the
Company determines both (1) that such grant (a) shall be registered in
another manner under the Securities Act (e.g., on a Form S-3 Registration
Statement) or (b) does not require registration under the Securities Act in
order to comply with the requirements of the Securities Act, if applicable,
and (2) that such grant complies with the securities laws of all other
relevant jurisdictions.

8.

 

3. Rule 701 and Form S-8 generally are available to consultants and advisors
only if (1) they are natural persons; (2) they provide bona fide services to
the issuer, its parents, its majority-owned subsidiaries or majority-owned
subsidiaries of the issuer’s parent; and (3) the services are not in
connection with the offer or sale of securities in a capital-raising
transaction, and do not directly or indirectly promote or maintain a market
for the issuer’s securities.

VI. OPTION PROVISIONS.

     Each Option shall be in such form and shall contain such terms and conditions as the Board
shall deem appropriate. All Options shall be separately designated Incentive Stock Options or
Nonstatutory Stock Options at the time of grant, and, if certificates are issued, a separate
certificate or certificates will be issued for shares of Common Stock purchased on exercise of each
type of Option. The provisions of separate Options need not be identical, but each Option shall
include (through incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:

A. Term. Subject to the provisions of subsection 5(b) regarding Ten Percent
Stockholders, no Option shall be exercisable after the expiration of ten (10) years
from the date it was granted.

B. Exercise Price of an Incentive Stock Option. Subject to the provisions of
subsection 5(b) regarding Ten Percent Stockholders, the exercise price of each
Incentive Stock Option shall be not less than one hundred percent (100%) of the Fair
Market Value of the Common Stock subject to the Option on the date the Option is
granted. Notwithstanding the foregoing, an Incentive Stock Option may be granted
with an exercise price lower than that set forth in the preceding sentence if such
Option is granted pursuant to an assumption or substitution for another option in a
manner satisfying the provisions of Section 424(a) of the Code.

C. Exercise Price of a Nonstatutory Stock Option. Subject to the provisions of
subsection 5(b) regarding Ten Percent Stockholders, the exercise price of each
Nonstatutory Stock Option granted prior to the Listing Date shall be not less than
eighty-five percent (85%) of the Fair Market Value of the Common Stock subject to
the Option on the date the Option is granted. The exercise price of each
Nonstatutory Stock Option granted on or after the Listing Date shall be not less
than eighty-five percent (85%) of the Fair Market Value of the Common Stock subject
to the Option on the date the Option is granted. Notwithstanding the foregoing, a
Nonstatutory Stock Option may be granted with an exercise price lower than that set
forth in the preceding sentence if such Option is granted pursuant to an assumption
or substitution for another option in a manner satisfying the provisions of Section
424(a) of the Code.

D. Consideration. The purchase price of Common Stock acquired pursuant to an Option
shall be paid, to the extent permitted by applicable statutes and regulations,
either (i) in cash at the time the Option is exercised or (ii) at the discretion of
the Board at the time of the grant of the Option (or subsequently in the case of a
Nonstatutory Stock Option) (1) by delivery to the Company of other Common Stock, (2)
according to a deferred payment or other similar arrangement with the Optionholder
or (3) in any other form of legal consideration that may be acceptable to the Board;
provided, however, that at any time that the Company is incorporated in Delaware,
payment of the Common Stock’s “par value,” as

9.

 

defined in the Delaware General Corporation Law, shall not be made by deferred payment. In the case of any deferred
payment arrangement, interest shall be compounded at least annually and shall be
charged at the minimum rate of interest necessary to avoid the treatment as
interest, under any applicable provisions of the Code, of any amounts other than
amounts stated to be interest under the deferred payment arrangement. Unless
otherwise specifically provided in the Option, the purchase price of Common Stock
acquired pursuant to an Option that is paid by delivery to the Company of other
Common Stock acquired, directly or indirectly from the Company, shall be paid only
by shares of the Common Stock of the Company that have been held for more than six (6) months (or such longer or shorter period of
time required to avoid a charge to earnings for financial accounting purposes).

E. Transferability of an Incentive Stock Option. An Incentive Stock Option shall
not be transferable except by will or by the laws of descent and distribution and
shall be exercisable during the lifetime of the Optionholder only by the
Optionholder. Notwithstanding the foregoing, the Optionholder may, by delivering
written notice to the Company, in a form satisfactory to the Company, designate a
third party who, in the event of the death of the Optionholder, shall thereafter be
entitled to exercise the Option.

F. Transferability of a Nonstatutory Stock Option. A Nonstatutory Stock Option
granted prior to the Listing Date shall not be transferable except by will or by the
laws of descent and distribution and, to the extent provided in the Option
Agreement, to such further extent as permitted by Section 260.140.41(d) of Title 10
of the California Code of Regulations at the time of the grant of the Option, and
shall be exercisable during the lifetime of the Optionholder only by the
Optionholder. A Nonstatutory Stock Option granted on or after the Listing Date
shall be transferable to the extent provided in the Option Agreement. If the
Nonstatutory Stock Option does not provide for transferability, then the
Nonstatutory Stock Option shall not be transferable except by will or by the laws of
descent and distribution and shall be exercisable during the lifetime of the
Optionholder only by the Optionholder. Notwithstanding the foregoing, the
Optionholder may, by delivering written notice to the Company, in a form
satisfactory to the Company, designate a third party who, in the event of the death
of the Optionholder, shall thereafter be entitled to exercise the Option.

G. Vesting Generally. The total number of shares of Common Stock subject to an
Option may, but need not, vest and therefore become exercisable in periodic
installments that may, but need not, be equal. The Option may be subject to such
other terms and conditions on the time or times when it may be exercised (which may
be based on performance or other criteria) as the Board may deem appropriate. The
vesting provisions of individual Options may vary. The provisions of this
subsection 6(g) are subject to any Option provisions governing the minimum number of
shares of Common Stock as to which an Option may be exercised.

H. Minimum Vesting Prior to the Listing Date. Notwithstanding the foregoing
subsection 6(g), to the extent that the following restrictions on vesting are
required by Section 260.140.41(f) of Title 10 of the California Code of Regulations
at the time of the grant of the Option, then:

1. Options granted prior to the Listing Date to an Employee who is not an
Officer, Director or Consultant shall provide for vesting of the total

10.

 

number of shares of Common Stock at a rate of at least twenty percent (20%)
per year over five (5) years from the date the Option was granted, subject
to reasonable conditions such as continued employment; and

2. Options granted prior to the Listing Date to Officers, Directors or
Consultants may be made fully exercisable, subject to reasonable conditions
such as continued employment, at any time or during any period established
by the Company.

I. Termination of Continuous Service. In the event an Optionholder’s Continuous
Service terminates (other than upon the Optionholder’s death or Disability), the
Optionholder may exercise his or her Option (to the extent that the Optionholder was
entitled to exercise such Option as of the date of termination) but only within such
period of time ending on the earlier of (i) the date thirty (30) days following the
termination of the Optionholder’s Continuous Service (or such longer or shorter
period specified in the Option Agreement, which period shall not be less than thirty
(30) days for Options granted prior to the Listing Date unless such termination is
for cause), or (ii) the expiration of the term of the Option as set forth in the
Option Agreement. If, after termination, the Optionholder does not exercise his or
her Option within the time specified in the Option Agreement, the Option shall
terminate.

J. Extension of Termination Date. An Optionholder’s Option Agreement may also
provide that if the exercise of the Option following the termination of the
Optionholder’s Continuous Service (other than upon the Optionholder’s death or
Disability) would be prohibited at any time solely because the issuance of shares of
Common Stock would violate the registration requirements under the Securities Act,
then the Option shall terminate on the earlier of (i) the expiration of the term of
the Option set forth in subsection 6(a) or (ii) the expiration of a period of thirty
(30) days after the termination of the Optionholder’s Continuous Service during
which the exercise of the Option would not be in violation of such registration
requirements.

K. Disability of Optionholder. In the event that an Optionholder’s Continuous
Service terminates as a result of the Optionholder’s Disability, the Optionholder
may exercise his or her Option (to the extent that the Optionholder was entitled to
exercise such Option as of the date of termination), but only within such period of
time ending on the earlier of (i) the date twelve (12) months following such
termination (or such longer or shorter period specified in the Option Agreement,
which period shall not be less than six (6) months for Options granted prior to the
Listing Date) or (ii) the expiration of the term of the Option as set forth in the
Option Agreement. If, after termination, the Optionholder does not exercise his or
her Option within the time specified herein, the Option shall terminate.

L. Death of Optionholder. In the event (i) an Optionholder’s Continuous Service
terminates as a result of the Optionholder’s death or (ii) the Optionholder dies
within the period (if any) specified in the Option Agreement after the termination
of the Optionholder’s Continuous Service for a reason other than death, then the
Option may be exercised (to the extent the Optionholder was entitled to exercise
such Option as of the date of death) by the Optionholder’s estate, by a person who
acquired the right to exercise the Option by bequest or inheritance or by a person
designated to exercise the option upon the Optionholder’s death pursuant to
subsection 6(e) or 6(f), but only within the period ending on the earlier of (1) the
date twelve (12) months following the date

11.

 

of death (or such longer or shorter period specified in the Option Agreement, which period shall not be less than six
(6) months for Options granted prior to the Listing Date) or (2) the expiration of
the term of such Option as set forth in the Option Agreement. If, after death, the
Option is not exercised within the time specified herein, the Option shall
terminate.

M. Early Exercise. The Option may, but need not, include a provision whereby the
Optionholder may elect at any time before the Optionholder’s Continuous Service
terminates to exercise the Option as to any part or all of the shares of
Common Stock subject to the Option prior to the full vesting of the Option. Subject
to the “Repurchase Limitation” in subsection 10(g), any unvested shares of Common
Stock so purchased may be subject to a repurchase option in favor of the Company or
to any other restriction the Board determines to be appropriate. Provided that the
“Repurchase Limitation” in subsection 10(g) is not violated, the Company will not
exercise its repurchase option until at least six (6) months (or such longer or
shorter period of time required to avoid a charge to earnings for financial
accounting purposes) have elapsed following exercise of the Option unless the Board
otherwise specifically provides in the Option.

N. Right of Repurchase. Subject to the “Repurchase Limitation” in subsection 10(g),
the Option may, but need not, include a provision whereby the Company may elect,
prior to the Listing Date, to repurchase all or any part of the vested shares of
Common Stock acquired by the Optionholder pursuant to the exercise of the Option.
Provided that the “Repurchase Limitation” in subsection 10(g) is not violated, the
Company will not exercise its repurchase option until at least six (6) months (or
such longer or shorter period of time required to avoid a charge to earnings for
financial accounting purposes) have elapsed following exercise of the Option unless
the Board otherwise specifically provides in the Option.

O. Right of First Refusal. The Option may, but need not, include a provision
whereby the Company may elect, prior to the Listing Date, to exercise a right of
first refusal following receipt of notice from the Optionholder of the intent to
transfer all or any part of the shares of Common Stock received upon the exercise of
the Option. Except as expressly provided in this subsection 6(o), such right of
first refusal shall otherwise comply with any applicable provisions of the Bylaws of
the Company.

P. Re-Load Options. Without in any way limiting the authority of the Board to make
or not to make grants of Options hereunder, the Board shall have the authority (but
not an obligation) to include as part of any Option Agreement a provision entitling
the Optionholder to a further Option (a “Re-Load Option”) in the event the
Optionholder exercises the Option evidenced by the Option Agreement, in whole or in
part, by surrendering other shares of Common Stock in accordance with this Plan and
the terms and conditions of the Option Agreement. Any such Re-Load Option shall (i)
provide for a number of shares of Common Stock equal to the number of shares of
Common Stock surrendered as part or all of the exercise price of such Option; (ii)
have an expiration date which is the same as the expiration date of the Option the
exercise of which gave rise to such Re-Load Option; and (iii) have an exercise price
which is equal to one hundred percent (100%) of the Fair Market Value of the Common
Stock subject to the Re-Load Option on the date of exercise of the original Option.
Notwithstanding the foregoing, a Re-Load Option shall be subject to the same
exercise price and term provisions heretofore described for Options under the Plan.
Unless otherwise specifically provided in the Option, the Optionholder shall not
surrender shares of

12.

 

Common Stock acquired, directly or indirectly from the Company,
unless such shares have been held for more than six (6) months (or such longer or
shorter period of time required to avoid a charge to earnings for financial
accounting purposes).

Any such Re-Load Option may be an Incentive Stock Option or a Nonstatutory Stock
Option, as the Board may designate at the time of the grant of the original Option;
provided, however, that the designation of any Re-Load Option as an Incentive Stock
Option shall be subject to the one hundred thousand dollar ($100,000) annual limitation on the exercisability of Incentive Stock Options
described in subsection 10(d) and in Section 422(d) of the Code. There shall be no
Re-Load Options on a Re-Load Option. Any such Re-Load Option shall be subject to
the availability of sufficient shares of Common Stock under subsection 4(a) and the
“Section 162(m) Limitation” on the grants of Options under subsection 5(c) and shall
be subject to such other terms and conditions as the Board may determine which are
not inconsistent with the express provisions of the Plan regarding the terms of
Options.

VII. PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.

A. Stock Bonus Awards. Each stock bonus agreement shall be in such form and shall
contain such terms and conditions as the Board shall deem appropriate. The terms
and conditions of stock bonus agreements may change from time to time, and the terms
and conditions of separate stock bonus agreements need not be identical, but each
stock bonus agreement shall include (through incorporation of provisions hereof by
reference in the agreement or otherwise) the substance of each of the following
provisions:

1. Consideration. A stock bonus may be awarded in consideration for past
services actually rendered to the Company or an Affiliate for its benefit.

2. Vesting. Subject to the “Repurchase Limitation” in subsection 10(g),
shares of Common Stock awarded under the stock bonus agreement may, but need
not, be subject to a share repurchase option in favor of the Company in
accordance with a vesting schedule to be determined by the Board.

3. Termination of Participant’s Continuous Service. Subject to the
“Repurchase Limitation” in subsection 10(g), in the event a Participant’s
Continuous Service terminates, the Company may reacquire any or all of the
shares of Common Stock held by the Participant which have not vested as of
the date of termination under the terms of the stock bonus agreement.

4. Transferability. For a stock bonus award made before the Listing Date,
rights to acquire shares of Common Stock under the stock bonus agreement
shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Participant
only by the Participant. For a stock bonus award made on or after the
Listing Date, rights to acquire shares of Common Stock under the stock bonus
agreement shall be transferable by the Participant only upon such terms and
conditions as are set forth in the stock bonus agreement, as the Board shall
determine in its discretion, so long as Common Stock

13.

 

awarded under the stock bonus agreement remains subject to the terms of the stock bonus agreement.

B. Restricted Stock Awards. Each restricted stock purchase agreement shall be in
such form and shall contain such terms and conditions as the Board shall deem
appropriate. The terms and conditions of the restricted stock purchase agreements
may change from time to time, and the terms and conditions of separate restricted
stock purchase agreements need not be identical, but each restricted stock purchase
agreement shall include (through incorporation of provisions hereof by reference in the agreement or otherwise) the substance of each of the following
provisions:

1. Purchase Price. Subject to the provisions of subsection 5(b) regarding
Ten Percent Stockholders, the purchase price under each restricted stock
purchase agreement shall be such amount as the Board shall determine and
designate in such restricted stock purchase agreement. For restricted stock
awards made prior to the Listing Date, the purchase price shall not be less
than eighty-five percent (85%) of the Common Stock’s Fair Market Value on
the date such award is made or at the time the purchase is consummated. For
restricted stock awards made on or after the Listing Date, the purchase
price shall not be less than eighty-five percent (85%) of the Common Stock’s
Fair Market Value on the date such award is made or at the time the purchase
is consummated.

2. Consideration. The purchase price of Common Stock acquired pursuant to
the restricted stock purchase agreement shall be paid either: (i) in cash
at the time of purchase; (ii) at the discretion of the Board, according to a
deferred payment or other similar arrangement with the Participant; or (iii)
in any other form of legal consideration that may be acceptable to the Board
in its discretion; provided, however, that at any time that the Company is
incorporated in Delaware, then payment of the Common Stock’s “par value,” as
defined in the Delaware General Corporation Law, shall not be made by
deferred payment.

3. Vesting. Subject to the “Repurchase Limitation” in subsection 10(g),
shares of Common Stock acquired under the restricted stock purchase
agreement may, but need not, be subject to a share repurchase option in
favor of the Company in accordance with a vesting schedule to be determined
by the Board.

4. Termination of Participant’s Continuous Service. Subject to the
“Repurchase Limitation” in subsection 10(g), in the event a Participant’s
Continuous Service terminates, the Company may repurchase or otherwise
reacquire any or all of the shares of Common Stock held by the Participant
which have not vested as of the date of termination under the terms of the
restricted stock purchase agreement.

5. Transferability. For a restricted stock award made before the Listing
Date, rights to acquire shares of Common Stock under the restricted stock
purchase agreement shall not be transferable except by will or by the laws
of descent and distribution and shall be exercisable during the lifetime of
the Participant only by the Participant. For a restricted stock award made
on or after the Listing Date, rights to acquire shares of Common Stock under
the restricted stock purchase agreement shall be transferable by the

14.

 

Participant only upon such terms and conditions as are set forth in the
restricted stock purchase agreement, as the Board shall determine in its
discretion, so long as Common Stock awarded under the restricted stock
purchase agreement remains subject to the terms of the restricted stock
purchase agreement.

VIII. COVENANTS OF THE COMPANY.

A. Availability of Shares. During the terms of the Stock Awards, the Company shall
keep available at all times the number of shares of Common Stock required to satisfy
such Stock Awards.

B. Securities Law Compliance. The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such authority as may be
required to grant Stock Awards and to issue and sell shares of Common Stock upon
exercise of the Stock Awards; provided, however, that this undertaking shall not
require the Company to register under the Securities Act the Plan, any Stock Award
or any Common Stock issued or issuable pursuant to any such Stock Award. If, after
reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority which counsel for the Company deems necessary for
the lawful issuance and sale of Common Stock under the Plan, the Company shall be
relieved from any liability for failure to issue and sell Common Stock upon exercise
of such Stock Awards unless and until such authority is obtained.

IX. USE OF PROCEEDS FROM STOCK.

Proceeds from the sale of Common Stock pursuant to Stock Awards shall constitute
general funds of the Company.

X. MISCELLANEOUS.

A. Acceleration of Exercisability and Vesting. The Board shall have the power to
accelerate the time at which a Stock Award may first be exercised or the time during
which a Stock Award or any part thereof will vest in accordance with the Plan,
notwithstanding the provisions in the Stock Award stating the time at which it may
first be exercised or the time during which it will vest.

B. Stockholder Rights. No Participant shall be deemed to be the holder of, or to
have any of the rights of a holder with respect to, any shares of Common Stock
subject to such Stock Award unless and until such Participant has satisfied all
requirements for exercise of the Stock Award pursuant to its terms.

C. No Employment or other Service Rights. Nothing in the Plan or any instrument
executed or Stock Award granted pursuant thereto shall confer upon any Participant
any right to continue to serve the Company or an Affiliate in the capacity in effect
at the time the Stock Award was granted or shall affect the right of the Company or
an Affiliate to terminate (i) the employment of an Employee with or without notice
and with or without cause, (ii) the service of a Consultant pursuant to the terms of
such Consultant’s agreement with the Company or an Affiliate or (iii) the service of
a Director pursuant to the Bylaws of the Company or an Affiliate, and any applicable
provisions of the corporate law of the state in which the Company or the Affiliate
is incorporated, as the case may be.

15.

 

D. Incentive Stock Option $100,000 Limitation. To the extent that the aggregate
Fair Market Value (determined at the time of grant) of Common Stock with respect to
which Incentive Stock Options are exercisable for the first time by any Optionholder
during any calendar year (under all plans of the Company and its Affiliates) exceeds
one hundred thousand dollars ($100,000), the Options or portions thereof which exceed such limit (according to the order in which they were
granted) shall be treated as Nonstatutory Stock Options.

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

F. Information Obligation. Prior to the Listing Date, to the extent required by
Section 260.140.46 of Title 10 of the California Code of Regulations, the Company
shall deliver financial statements to Participants at least annually. This
subsection 10(g) shall not apply to key Employees whose duties in connection with
the Company assure them access to equivalent information.

G. Repurchase Limitation. The terms of any repurchase option shall be specified in
the Stock Award and may be either at Fair Market Value at the time of repurchase or
at not less than the original purchase price. To the extent required by Section
260.140.41 and Section 260.140.42 of Title 10 of the California Code of Regulations
at the time a Stock Award is made, any repurchase option contained in a Stock Award
granted prior to the Listing Date to a person who is not an Officer, Director or
Consultant shall be upon the terms described below:

1. Fair Market Value. If the repurchase option gives the Company the right
to repurchase the shares of Common Stock upon termination of employment at
not less than the Fair Market Value of the shares of Common Stock to be
purchased on the date of termination of Continuous Service, then (i) the
right to repurchase shall be exercised for cash or cancellation of purchase
money indebtedness for the shares of Common Stock within ninety (90) days of
termination of Continuous Service (or in the case of shares of Common Stock
issued upon exercise of Stock

16.

 

Awards after such date of termination, within
ninety (90) days after the date of the exercise) or such longer period as
may be agreed to by the Company and the Participant (for example, for
purposes of satisfying the requirements of Section 1202(c)(3) of the Code
regarding “qualified small business stock”) and (ii) the right terminates
when the shares of Common Stock become publicly traded.

2. Original Purchase Price. If the repurchase option gives the Company the
right to repurchase the shares of Common Stock upon termination of
Continuous Service at the original purchase price, then (i) the right to
repurchase at the original purchase price shall lapse at the rate of at
least twenty percent (20%) of the shares of Common Stock per year over five
(5) years from the date the Stock Award is granted (without respect to the
date the Stock Award was exercised or became exercisable) and (ii) the right
to repurchase shall be exercised for cash or cancellation of purchase money
indebtedness for the shares of Common Stock within ninety (90) days of
termination of Continuous Service (or in the case of shares of Common Stock
issued upon exercise of Options after such date of termination, within
ninety (90) days after the date of the exercise) or such longer period as
may be agreed to by the Company and the Participant (for example, for
purposes of satisfying the requirements of Section 1202(c)(3) of the Code
regarding “qualified small business stock”).

XI. ADJUSTMENTS UPON CHANGES IN STOCK.

A. Capitalization Adjustments. If any change is made in the Common Stock subject to
the Plan, or subject to any Stock Award, without the receipt of consideration by the
Company (through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than cash, stock split,
liquidating dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by the
Company), the Plan will be appropriately adjusted in the class(es) and maximum
number of securities subject to the Plan pursuant to subsection 4(a) and the maximum
number of securities subject to award to any person pursuant to subsection 5(c), and
the outstanding Stock Awards will be appropriately adjusted in the class(es) and
number of securities and price per share of Common Stock subject to such outstanding
Stock Awards. The Board shall make such adjustments, and its determination shall be
final, binding and conclusive. (The conversion of any convertible securities of the
Company shall not be treated as a transaction “without receipt of consideration” by
the Company.)

B. Change in Control. Unless otherwise provided in the applicable Stock Award
Agreement, upon a Change in Control (i) 50% of the then-outstanding unvested Stock
Awards held by each Participant who, as of the Change in Control, has at least one
year of Continuous Service shall vest; and (ii) 25% of the then-outstanding unvested
Stock Awards held by each Participant who, as of the Change in Control, has less
than one year of Continuous Service shall vest. Unless the Board permits otherwise
in its sole discretion, all outstanding Stock Awards shall terminate if not
exercised (if applicable) at or prior to the Change in Control.

17.

 

C. Parachute Payments. In the event that the acceleration of the vesting and
exercisability of the Stock Awards and/or lapse of reacquisition or repurchase
rights held by the Company with respect to Stock Awards provided for in subsection
11(d) and benefits otherwise payable to a Participant (i) constitute “parachute
payments” within the meaning of Section 280G (as it may be amended or replaced) of
the Code, and (ii) but for this subsection would be subject to the excise tax
imposed by Section 4999 (as it may be amended or replaced) of the Code (the “Excise
Tax”), then such Participant’s benefits hereunder shall be either

1. provided to such Participant in full, or

2. provided to such Participant as to such lesser extent which would result
in no portion of such benefits being subject to the Excise Tax,

D. whichever of the foregoing amounts, when taking into account applicable federal,
state and local income taxes and the Excise Tax, results in the receipt by such
Participant, on an after-tax basis, of the greatest amount of benefits,
notwithstanding that all or some portion of such benefits may be taxable under the
Excise Tax. Unless the Company and such Participant otherwise agree in writing, any
determination required under this subsection shall be made in writing in good faith
by the Accountants. In the event of a reduction of benefits hereunder, the
Participant shall be given the choice of which benefits to reduce. For purposes of
making the calculations required by this subsection, the Accountants may make
reasonable assumptions and approximations concerning applicable taxes and may rely
on reasonable, good faith interpretations concerning the application of the Code.
The Company and such Participants shall furnish to the Accountants such information
and documents as the Accountants may reasonably request in order to make a
determination under this subsection. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations contemplated by
this subsection.

XII. AMENDMENT OF THE PLAN AND STOCK AWARDS.

A. Amendment of Plan. The Board at any time, and from time to time, may amend the
Plan. However, except as provided in Section 11 relating to adjustments upon
changes in Common Stock, no amendment shall be effective unless approved by the
stockholders of the Company to the extent stockholder approval is necessary to
satisfy the requirements of Section 422 of the Code, Rule 16b-3 or any Nasdaq or
securities exchange listing requirements.

B. Stockholder Approval. The Board may, in its sole discretion, submit any other
amendment to the Plan for stockholder approval, including, but not limited to,
amendments to the Plan intended to satisfy the requirements of Section 162(m) of the
Code and the regulations thereunder regarding the exclusion of performance-based
compensation from the limit on corporate deductibility of compensation paid to
certain executive officers.

C. Contemplated Amendments. It is expressly contemplated that the Board may amend
the Plan in any respect the Board deems necessary or advisable to provide eligible
Employees with the maximum benefits provided or to be provided under the provisions
of the Code and the regulations promulgated thereunder relating to Incentive Stock
Options and/or to bring the Plan and/or Incentive Stock Options granted under it
into compliance therewith.

18.

 

D. No Impairment of Rights. Rights under any Stock Award granted before amendment
of the Plan shall not be impaired by any amendment of the Plan unless (i) the
Company requests the consent of the Participant and (ii) the Participant consents in
writing.

E. Amendment of Stock Awards. The Board at any time, and from time to time, may
amend the terms of any one or more Stock Awards; provided, however, that the rights
under any Stock Award shall not be impaired by any such amendment unless (i) the
Company requests the consent of the Participant and (ii) the Participant consents in
writing.

XIII. TERMINATION OR SUSPENSION OF THE PLAN.

A. Plan Term. The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate on the day before the tenth (10th)
anniversary of the date the Plan is adopted by the Board or approved by the
stockholders of the Company, whichever is earlier. No Stock Awards may be granted
under the Plan while the Plan is suspended or after it is terminated.

B. No Impairment of Rights. Suspension or termination of the Plan shall not impair
rights and obligations under any Stock Award granted while the Plan is in effect
except with the written consent of the Participant.

XIV. EFFECTIVE DATE OF PLAN.

     The Plan shall become effective as determined by the Board, but no Stock Award shall be
exercised (or, in the case of a stock bonus, shall be granted) unless and until the Plan has been
approved by the stockholders of the Company, which approval shall be within twelve (12) months
before or after the date the Plan is adopted by the Board.

XV. CHOICE OF LAW.

     The law of the State of Colorado shall govern all questions concerning the construction,
validity and interpretation of this Plan, without regard to such state’s conflict of laws rules.

19.

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