Document:

1994 Stock Plan

	

SILICON
LIGHT MACHINES

1994 STOCK
PLAN

     1.
Purposes of the Plan. The purposes of this Stock Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees and Consultants of the
Company and its Subsidiaries and to promote the success of the Company’s business.
Options granted under the Plan may be incentive stock options (as defined under Section
422 of the Code) or non-statutory stock options, as determined by the Administrator at
the time of grant of an option and subject to the applicable provisions of Section 422 of
the Code, as amended, and the regulations promulgated thereunder. Stock purchase rights
may also be granted under the Plan.  

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

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

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

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

     (d)
"Committee"means a Committee appointed by the Board of Directors in accordance
with Section 4 of the Plan. 

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

     (f)
"Company"means Silicon Light Machines, a California corporation. 

     (g)
“Consultant”means any person who is engaged by the Company or any Parent
or Subsidiary to render consulting or advisory services and is compensated for such
services, and any director of the Company whether compensated for such services or not;
provided that if and in the event the Company registers any class of any equity security
pursuant to the Exchange Act, the term Consultant shall thereafter not include directors
who are not compensated for their services or are paid only a director’s fee by the
Company.  

(h)
“Continuous Status as an Employee or Consultant”
means that the employment or consulting relationship with the Company or any
Parent or Subsidiary is not interrupted or terminated. Continuous Status as an
Employee or Consultant shall not be considered interrupted in the case of:
(i) any leave of absence approved by the Company, including sick leave,
military leave, or any other personal leave; provided, however, that for
purposes of Incentive Stock Options, no such leave may exceed ninety (90) days,
unless reemployment upon the expiration of such leave is guaranteed by contract
(including certain Company policies) or statute; provided, further, that on the
ninety-first (91st) day of any such leave (where reemployment is not guaranteed
by contract or statute) the Optionee’s Incentive Stock Option shall cease
to be treated as an Incentive Stock Option and will be treated for tax purposes
as a Nonstatutory Stock Option; or (ii) transfers between locations of the
Company or between the Company, its Parent, its Subsidiaries or its successor. 

	

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

	

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

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

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

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

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

	

     (l)
“Incentive Stock Option”means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code. 

     (m)
“Nonstatutory Stock Option”means an Option not intended to qualify as an
Incentive Stock Option.  

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

     (o)
“Option”means a stock option granted pursuant to the Plan. 

     (p)
“Optioned Stock”means the Common Stock subject to an Option or a
Stock Purchase Right.  

     (q)
“Optionee”means an Employee or Consultant who receives an Option or
Stock Purchase Right. 

	

     (r)
“Parent”means a “parent corporation”, whether now or hereafter
existing, as defined in Section 424(e) of the Code.  

     (s)
“Plan”means this 1994 Stock Plan.  

     (t)
“Restricted Stock”means shares of Common Stock acquired pursuant to a
grant of a Stock Purchase Right under Section 11 below.  

     (u)
“Share”means a share of the Common Stock, as adjusted in accordance with
Section 12 below.  

     (v)
“Stock Purchase Right”means the right to purchase Common Stock pursuant
to Section 11 below.  

     (w)
“Subsidiary”means a “subsidiary corporation”, whether now or
hereafter existing, as defined in Section 424(f) of the Code.  

     3. Stock Subject to the Plan.
Subject to the provisions of Section 12 of the Plan, the maximum aggregate number of
shares which may be optioned and sold under the Plan is 3,495,000 shares of Common Stock.
The shares may be authorized, but unissued, or reacquired Common Stock. 

     If
an Option or Stock Purchase Right should expire or become unexercisable for any
reason without having been exercised in full, the unpurchased Shares which were
subject thereto shall, unless the Plan shall have been terminated, become
available for future grant under the Plan. 

     4.
Administration of the Plan. 

     (a)
Initial Plan Procedure. Prior to the date, if any, upon which the Company becomes
subject to the Exchange Act, the Plan shall be administered by the Board or a committee
appointed by the Board.  

     (b) Plan
Procedure After the Date, if any, upon Which the Company becomes Subject to the Exchange
Act. 

	 	     
(i)
Administration With Respect to Directors and Officers. With respect to grants of
Options or Stock Purchase Rights to Employees who are also officers or directors of the
Company, the Plan shall be administered by (A) the Board if the Board may administer
the Plan in compliance with Rule 16b-3 promulgated under the Exchange Act or any
successor thereto (“Rule 16b-3”) with respect to a plan intended to
qualify thereunder as a discretionary plan, or (B) a committee designated by the
Board to administer the Plan, which committee shall be constituted in such a manner as to
permit the Plan to comply with Rule 16b-3 with respect to a plan intended to qualify
thereunder as a discretionary plan. Once appointed, such Committee shall continue to
serve in its designated capacity until otherwise directed by the Board. From time to time
the Board may increase the size of the Committee and appoint additional members thereof,
remove members (with or without cause) and appoint new members in substitution therefor,
fill vacancies, however caused, and remove all members of the Committee and thereafter
directly administer the Plan, all to the extent permitted by Rule 16b-3 with respect
to a plan intended to qualify thereunder as a discretionary plan. 

	

	 	     
(ii)
Multiple Administrative Bodies. If permitted by Rule 16b-3, the Plan may be
administered by different bodies with respect to directors, non-director officers and
Employees who are neither directors nor officers. 

	 	     
(iii)
Administration With Respect to Consultants and Other Employees. With respect to
grants of Options or Stock Purchase Rights to Employees or Consultants who are neither
directors nor officers of the Company, the Plan shall be administered by (A) the
Board or (B) a committee designated by the Board, which committee shall be
constituted in such a manner as to satisfy the legal requirements relating to the
administration of incentive stock option plans, if any, of California corporate and
securities laws, of the Code, and of any applicable stock exchange (the “Applicable
Laws”). Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From time to time the Board may increase
the size of the Committee and appoint additional members thereof, remove members (with or
without cause) and appoint new members in substitution therefor, fill vacancies, however
caused, and remove all members of the Committee and thereafter directly administer the
Plan, all to the extent permitted by the Applicable Laws. 

	

(c) Powers of the Administrator. Subject to the provisions of
the Plan and, in the case of a Committee, the specific duties delegated by the
Board to such Committee, and subject to the approval of any relevant
authorities, including the approval, if required, of any stock exchange upon
which the Common Stock is listed, the Administrator shall have the authority, in
its discretion: 

	 	     
(i) to determine the Fair Market Value of the Common Stock, in accordance with Section 2(k)
of the Plan; (ii) to select the Consultants and Employees to whom Options and Stock
Purchase Rights may from time to time be granted hereunder; (iii) to determine whether
and to what extent Options and Stock Purchase Rights or any combination thereof are
granted hereunder; (iv) to determine the number of shares of Common Stock to be covered
by each such award granted hereunder; (v) to approve forms of agreement for use under the
Plan; (vi) to determine the terms and conditions of any award granted hereunder; (vii) to
determine whether and under what circumstances an Option may be settled in cash under
subsection 9(f) instead of Common Stock; (viii) to reduce the exercise price of any
Option to the then current Fair Market Value if the Fair Market Value of the Common Stock
covered by such Option shall have declined since the date the Option was granted; (ix) to
determine the terms and restrictions applicable to Stock Purchase Rights and the
Restricted Stock purchased by exercising such Stock Purchase Rights; and 

	

	 	     
(x) to construe and interpret the terms of the Plan and awards granted pursuant to the Plan.

	

     (d)
Effect of Administrator's Decision. All decisions, determinations and interpretations of
the Administrator shall be final and binding on all Optionees and any other holders of
any Options or Stock Purchase Rights. 

     5.
Eligibility. 

(a) Nonstatutory Stock
Options and Stock Purchase Rights may be granted to Employees and Consultants.
Incentive Stock Options may be granted only to Employees. An Employee or
Consultant who has been granted an Option or Stock Purchase Right may, if
otherwise eligible, be granted additional Options or Stock Purchase Rights. 

(b) Each Option shall be
designated in the written option agreement as either an Incentive Stock Option
or a Nonstatutory Stock Option. However, notwithstanding such designations, to
the extent that the aggregate Fair Market Value: 

     (i) of
Shares subject to an Optionee's Incentive Stock Options granted by the Company, any
Parent or Subsidiary, which 

	 	     
(ii)become
exercisable for the first time during any calendar year (under all plans of the Company
or any Parent or Subsidiary) exceeds $100,000, such excess Options shall be treated as
Nonstatutory Stock Options. For purposes of this Section 5(b), Incentive Stock
Options shall be taken into account in the order in which they were granted, and the Fair
Market Value of the Shares shall be determined as of the time the Option with respect to
such Shares is granted. (c) The Plan shall not confer upon any Optionee any right with
respect to continuation of employment relationship with the Company, nor shall it
interfere in any way with his or her right or the Company’s right to terminate his
or her employment relationship at any time, with or without cause. 

(d) Upon the Company or a
successor corporation issuing any class of common equity securities required to
be registered under Section 12 of the Exchange Act or upon the Plan being
assumed by a corporation having a class of common equity securities required to
be registered under Section 12 of the Exchange Act, the following limitations
shall apply to grants of Options and Stock Purchase Rights to Employees: 

	 	     
(i) No Employee shall be granted, in any fiscal year of the Company, Options and Stock Purchase
Rights to purchase more than 1,125,000 Shares. 

	

	 	     
(ii)
The foregoing limitations shall be adjusted proportionately in connection with any change
in the Company’s capitalization as described in Section 12. 

	 	     
(iii) If an Option or Stock Purchase Right is canceled in the same fiscal year of the Company
in which it was granted (other than in connection with a transaction described in Section
12), the canceled Option will be counted against the limit set forth in Section 5(d)(i).
For this purpose, if the exercise price of an Option is reduced, the transaction will be
treated as a cancellation of the Option and the grant of a new Option. 

	

6.
Term of Plan. The Plan shall become effective upon the earlier
to occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company, as described in Section 18 of the Plan. It
shall continue in effect for a term of ten (10) years unless sooner terminated
under Section 14 of the Plan. 

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

     8.
Option Exercise Price and Consideration. 

(a) The per share exercise
price for the Shares to be issued pursuant to exercise of an Option shall be
such price as is determined by the Board, but shall be subject to the following:
 

	 	     
(i) In the case of an Incentive Stock Option 

	 	     (1)
granted to an Employee who, at the time of the grant of such Incentive Stock Option, owns
stock representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be
no less than 110% of the Fair Market Value per Share on the date of grant. 

	 	     (2)
granted to any Employee other than an Employee described in the preceding paragraph, the
per Share exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.

	 	     
(ii) In the case of a Nonstatutory Stock Option

	 	     (1)
granted to a person who, at the time of the grant of such Option, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the Company or
any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the
Fair Market Value per Share on the date of the grant. 

	

	 	     (2)
granted to any person, the per Share exercise price shall be no less than 85% of the Fair
Market Value per Share on the date of grant. (b) The consideration to be paid for the
Shares to be issued upon exercise of an Option, including the method of payment, shall be
determined by the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist entirely of (1) cash, (2) check,
(3) promissory note, (4) other Shares which (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more than six
months on the date of surrender, and (y) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said Option
shall be exercised, (5) delivery of a properly executed exercise notice together with
such other documentation as the Administrator and the broker, if applicable, shall
require to effect an exercise of the Option and delivery to the Company of the sale or
loan proceeds required to pay the exercise price, or (6) any combination of the
foregoing methods of payment. In making its determination as to the type of consideration
to accept, the Board shall consider if acceptance of such consideration may be reasonably
expected to benefit the Company. 

	

     9.
Exercise of Option. 

     (a)
Procedure for Exercise; Rights as a Shareholder. Any Option granted
hereunder shall be exercisable at such times and under such conditions as determined by
the Board, including performance criteria with respect to the Company and/or the
Optionee, and as shall be permissible under the terms of the Plan.  

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

     An Option
shall be deemed to be exercised when written notice of such exercise has been
given to the Company in accordance with the terms of the Option by the person
entitled to exercise the Option and full payment for the Shares with respect to
which the Option is exercised has been received by the Company. Full payment
may, as authorized by the Board, consist of any consideration and method of
payment allowable under Section 8(b) of the Plan. Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate evidencing
such Shares, no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. The Company shall issue (or cause to be issued) such
stock certificate promptly upon exercise of the Option. No adjustment will be
made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 12 of
the Plan. 

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

	

     (b) Termination of Employment
or Consulting Relationship. In the event of termination of an Optionee’s
Continuous Status as an Employee or Consultant with the Company (but not in the event of
an Optionee’s change of status from Employee to Consultant (in which case an Employee’s
Incentive Stock Option shall automatically convert to a Nonstatutory Stock Option on the
ninety-first (91st) day following such change of status) or from Consultant to Employee),
such Optionee may, but only within such period of time as is determined by the
Administrator, of at least thirty (30) days, with such determination in the case of an
Incentive Stock Option not exceeding three (3) months after the date of such termination
(but in no event later than the expiration date of the term of such Option as set forth
in the Option Agreement), exercise his or her Option to the extent that Optionee was
entitled to exercise it at the date of such termination. To the extent that Optionee was
not entitled to exercise the Option at the date of such termination, or if Optionee does
not exercise such Option to the extent so entitled within the time specified herein, the
Option shall terminate.  

     (c)
Disability of Optionee. In the event of termination of an Optionee’s
consulting relationship or Continuous Status as an Employee as a result of his or her
disability, Optionee may, but only within six (6) months from the date of such
termination (and in no event later than the expiration date of the term of such Option as
set forth in the Option Agreement), exercise the Option to the extent otherwise entitled
to exercise it at the date of such termination; provided, however, that if such
disability is not a “disability”as such term is defined in Section 22(e)(3) of
the Code, in the case of an Incentive Stock Option such Incentive Stock Option shall
automatically convert to a Nonstatutory Stock Option on the day three months and one day
following such termination. To the extent that Optionee was not entitled to exercise the
Option at the date of termination, or if Optionee does not exercise such Option to the
extent so entitled within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.  

     (d)
Death of Optionee. In the event of the death of an Optionee, the Option
may be exercised at any time within twelve (12) months following the date of death (but
in no event later than the expiration of the term of such Option as set forth in the
Notice of Grant), by the Optionee’s estate or by a person who acquired the right to
exercise the Option by bequest or inheritance, but only to the extent that the Optionee
was entitled to exercise the Option at the date of death. If, at the time of death, the
Optionee was not entitled to exercise his or her entire Option, the Shares covered by the
unexercisable portion of the Option shall immediately revert to the Plan. If, after
death, the Optionee’s estate or a person who acquired the right to exercise the
Option by bequest or inheritance does not exercise the Option within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall revert to
the Plan.  

     (e)
Rule 16b-3. Options granted to persons subject to Section 16(b) of the Exchange
Act must comply with Rule 16b-3 and shall contain such additional conditions or
restrictions as may be required thereunder to qualify for the maximum exemption from
Section 16 of the Exchange Act with respect to Plan transactions.  

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

	

10.
Non-Transferability of Options and Stock Purchase Rights.
Options and Stock Purchase Rights may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by
the laws of descent or distribution and may be exercised, during the lifetime of
the Optionee, only by the Optionee. 

     11.
Stock Purchase Rights. 

(a) Rights to
Purchase. Stock Purchase Rights may be issued either alone, in addition to,
or in tandem with other awards granted under the Plan and/or cash awards made
outside of the Plan. After the Administrator determines that it will offer Stock
Purchase Rights under the Plan, it shall advise the offeree in writing of the
terms, conditions and restrictions related to the offer, including the number of
Shares that such person shall be entitled to purchase, the price to be paid, and
the time within which such person must accept such offer, which shall in no
event exceed thirty (30) days from the date upon which the Administrator made
the determination to grant the Stock Purchase Right. The offer shall be accepted
by execution of a Restricted Stock purchase agreement in the form determined by
the Administrator. Shares purchased pursuant to the grant of a Stock Purchase
Right shall be referred to herein as “Restricted Stock.” (b)
Repurchase Option. Unless the Administrator determines otherwise, the
Restricted Stock purchase agreement shall grant the Company a repurchase option
exercisable upon the voluntary or involuntary termination of the
purchaser’s employment with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at such rate as the
Administrator may determine, but at a minimum rate of 20% per year. 

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

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

     12.
Adjustments Upon Changes in Capitalization or Merger. 

(a) Changes in
Capitalization. Subject to any required action by the shareholders of the
Company, the number of shares of Common Stock covered by each outstanding Option
or Stock Purchase Right, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options or Stock
Purchase Rights have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option or Stock Purchase Right, as well as
the price per share of Common Stock covered by each such outstanding Option or
Stock Purchase Right, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock, or any other increase or decrease in the number of issued
shares of Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been “effected without receipt of
consideration.” Such adjustment shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive. Except as
expressly provided herein, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares of Common Stock subject to an Option or Stock Purchase
Right. 

	

     (b)
Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Board shall notify the Optionee at least fifteen (15)
days prior to such proposed action. To the extent it has not been previously exercised,
the Option or Stock Purchase Right will terminate immediately prior to the consummation
of such proposed action.  

     (c) Merger.
In the event of a merger of the Company with or into another corporation, each
outstanding Option or Stock Purchase Right shall be assumed or an equivalent option or
right shall be substituted by such successor corporation or a parent or subsidiary of
such successor corporation. If, in such event, the Option or Stock Purchase Right is not
assumed or substituted, the Option or Stock Purchase Right shall terminate as of the date
of the closing of the merger. For the purposes of this paragraph, the Option or Stock
Purchase Right shall be considered assumed if, following the merger, the option or right
confers the right to purchase, for each Share of Optioned Stock subject to the Option or
Stock Purchase Right immediately prior to the merger, the consideration (whether stock,
cash, or other securities or property) received in the merger by holders of Common Stock
for each Share held on the effective date of the transaction (and if holders were offered
a choice of consideration, the type of consideration chosen by the holders of a majority
of the outstanding Shares); provided, however, that if such consideration received in the
merger was not solely common stock of the successor corporation or its Parent, the
Administrator may, with the consent of the successor corporation, provide for the
consideration to be received upon the exercise of the Option or Stock Purchase Right, for
each Share of Optioned Stock subject to the Option or Stock Purchase Right, to be solely
common stock of the successor corporation or its Parent equal in fair market value to the
per share consideration received by holders of Common Stock in the merger.  

     13.
Time of Granting Options and Stock Purchase Rights. The date of
grant of an Option or Stock Purchase Right shall, for all purposes, be the date on which
the Administrator makes the determination granting such Option or Stock Purchase Right,
or such other date as is determined by the Board. Notice of the determination shall be
given to each Employee or Consultant to whom an Option or Stock Purchase Right is so
granted within a reasonable time after the date of such grant.  

     14. Amendment and Termination of the Plan.

	

     (a)
Amendment and Termination. The Board may at any time amend, alter, suspend or
discontinue the Plan, but no amendment, alteration, suspension or discontinuation shall
be made which would impair the rights of any Optionee under any grant theretofore made,
without his or her consent. In addition, to the extent necessary and desirable to comply
with Rule 16b-3 under the Exchange Act or with Section 422 of the Code (or any other
applicable law or regulation, including the requirements of the NASD or an established
stock exchange), the Company shall obtain shareholder approval of any Plan amendment in
such a manner and to such a degree as required.  

     (b)
Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options or Stock Purchase Rights already
granted, and such Options and Stock Purchase Rights shall remain in full force and effect
as if this Plan had not been amended or terminated, unless mutually agreed otherwise
between the Optionee and the Board, which agreement must be in writing and signed by the
Optionee and the Company.  

     15.
Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option or Stock Purchase Right unless the exercise of such
Option or Stock Purchase Right and the issuance and delivery of such Shares pursuant
thereto shall comply with all relevant provisions of law, including, without limitation,
the Securities Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, and the requirements of any stock exchange upon which the Shares
may then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.  

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

16.
Reservation of Shares. The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan. 

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

     17. Agreements.
Options and Stock Purchase Rights shall be evidenced by written agreements in such form
as the Board shall approve from time to time.  

     18.
Shareholder Approval. Continuance of the Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months before or after the date the Plan
is adopted. Such shareholder approval shall be obtained in the degree and manner required
under applicable state and federal law and the rules of any stock exchange upon which the
Common Stock is listed. 

	

     19. Information
to Optionees and Purchasers. The Company shall provide to each Optionee and to each
individual who acquired Shares pursuant to the Plan, not less frequently than annually
during the period such Optionee or purchaser has one or more Options or Stock Purchase
Rights outstanding, and, in the case of an individual who acquired Shares pursuant to the
Plan, during the period such individual owns such Shares, copies of annual financial
statements. The Company shall not be required to provide such statements to key employees
whose duties in connection with the Company assure their access to equivalent
information.1997 Stock Plan

	

SILICON
LIGHT MACHINES, INC.

1997 STOCK
PLAN

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

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

     (a)
"Administrator" means the Board or any of its Committees as shall be administering the
Plan in accordance with Section 4 hereof. 

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

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

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

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

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

     (g)
"Company" means Silicon Light Machines, Inc., a California corporation. 

     (h)
“Consultant” means any person who is engaged by the Company or
any Parent or Subsidiary to render consulting or advisory services to such
entity. 

     (i)
"Director" means a member of the Board of Directors of the Company.  

     (j)
“Employee” means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. A Service
Provider shall not cease to be an Employee in the case of (i) any leave of
absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed ninety days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, on the 181st day of such leave any Incentive Stock
Option held by the Optionee shall cease to be treated as an Incentive Stock
Option and shall be treated for tax purposes as a Nonstatutory Stock Option.
Neither service as a Director nor payment of a director’s fee by the
Company shall be sufficient to constitute “employment” by the Company. 

	

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

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

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

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

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

	

     (m)
“Incentive Stock Option” means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code. 

     (n)
"Nonstatutory Stock Option" means an Option not intended to qualify as an Incentive Stock
Option. 

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

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

     (q)
“Option Agreement” means a written or electronic agreement
between the Company and an Optionee evidencing the terms and conditions of an
individual Option grant. The Option Agreement is subject to the terms and
conditions of the Plan. 

     (r)
“Option Exchange Program” means a program whereby outstanding
Options are exchanged for Options with a lower exercise price. 

	

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

     (t)
"Optionee" means the holder of an outstanding Option or Stock Purchase Right granted
under the Plan. 

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

     (v)
"Plan" means this 1997 Stock Plan. 

     (w)
“Restricted Stock” means shares of Common Stock acquired
pursuant to a grant of a Stock Purchase Right under Section 11 below. 

     (x)
"Section 16(b) " means Section 16(b) of the Securities Exchange Act of 1934, as amended. 

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

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

     (aa)
"Stock Purchase Right" means a right to purchase Common Stock pursuant to Section 11
below. 

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

     3.
Stock Subject to the Plan. Subject to the provisions
of Section 12 of the Plan, the maximum aggregate number of Shares which may be
subject to option and sold under the Plan is 1,300,000 Shares. The Shares may be
authorized but unissued, or reacquired Common Stock. 

     If
an Option or Stock Purchase Right expires or becomes unexercisable without having been
exercised in full, or is surrendered pursuant to an Option Exchange Program, the
unpurchased Shares which were subject thereto shall become available for future grant or
sale under the Plan (unless the Plan has terminated). However, Shares that have actually
been issued under the Plan, upon exercise of either an Option or Stock Purchase Right,
shall not be returned to the Plan and shall not become available for future distribution
under the Plan, except that if Shares of Restricted Stock are repurchased by the Company
at their original purchase price, such Shares shall become available for future grant
under the Plan.  

     4.
Administration of the Plan. 

     (a)
The Plan shall be administered by the Board or a Committee appointed by the
Board, which Committee shall be constituted to comply with Applicable Laws. 

	

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

	 	     
(i)
to determine the Fair Market Value;

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

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

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

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

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

	 	     
(vii)
to reduce the exercise price of any Option to the then current Fair Market Value if the
Fair Market Value of the Common Stock covered by such Option has declined since the date
the Option was granted; 

	 	     
(viii) to initiate an Option Exchange Program;

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

	 	     
(x)
to allow Optionees to satisfy withholding tax obligations by electing to have the Company
withhold from the Shares to be issued upon exercise of an Option or Stock Purchase Right
that number of Shares having a Fair Market Value equal to the amount required to be
withheld. The Fair Market Value of the Shares to be withheld shall be determined on the
date that the amount of tax to be withheld is to be determined. All elections by
Optionees to have Shares withheld for this purpose shall be made in such form and under
such conditions as the Administrator may deem necessary or advisable; and 

	 	     
(xi)
to construe and interpret the terms of the Plan and awards granted pursuant to the Plan.

	

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

     5.
Eligibility. 

     (a)
Nonstatutory Stock Options and Stock Purchase Rights may be granted to Service Providers.
Incentive Stock Options may be granted only to Employees. 

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

     (c)
Neither the Plan nor any Option or Stock Purchase Right shall confer upon any
Optionee any right with respect to continuing the Optionee’s relationship
as a Service Provider with the Company, nor shall it interfere in any way with
his or her right or the Company’s right to terminate such relationship at
any time, with or without cause. 

     6.
Term of Plan. The Plan shall become effective upon its adoption by the Board. It shall
continue in effect for a term of ten (10) years unless sooner terminated under Section 14
of the Plan. 

     7.
Term of Option. The term of each Option shall be stated in the Option
Agreement; provided, however, that the term shall be no more than ten (10)
years from the date of grant thereof. In the case of an Incentive Stock Option
granted to an Optionee who, at the time the Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Option shall
be five (5) years from the date of grant or such shorter term as may be provided
in the Option Agreement. 

     8.
Option Exercise Price and Consideration. 

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

	 	     
(i)
In the case of an Incentive Stock Option

	 	     (1)
granted to an Employee who, at the time of grant of such Option, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the Company or
any Parent or Subsidiary, the exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant. 

	

	 	     (2)
granted to any other Employee, the per Share exercise price shall be no less than 100% of
the Fair Market Value per Share on the date of grant. 

	 	     
(ii)
In the case of a Nonstatutory Stock Option

     (1)
granted to a Service Provider who, at the time of grant of such Option, owns
stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the exercise price
shall be no less than 110% of the Fair Market Value per Share on the date of the
grant. 

     (2)
granted to any other Service Provider, the per Share exercise price shall be no
less than 85% of the Fair Market Value per Share on the date of grant. 

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

	

     (b)
The consideration to be paid for the Shares to be issued upon exercise of an
Option, including the method of payment, shall be determined by the
Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant). Such consideration may consist of
(1) cash, (2) check, (3) promissory note, (4) other Shares
which (x) in the case of Shares acquired upon exercise of an Option, have
been owned by the Optionee for more than six months on the date of surrender,
and (y) have a Fair Market Value on the date of surrender equal to the
aggregate exercise price of the Shares as to which such Option shall be
exercised, (5) consideration received by the Company under a cashless exercise
program implemented by the Company in connection with the Plan, or (6) any
combination of the foregoing methods of payment. In making its determination as
to the type of consideration to accept, the Administrator shall consider if
acceptance of such consideration may be reasonably expected to benefit the
Company. 

     9.
Exercise of Option. 

     (a)
Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable according to the terms hereof at such
times and under such conditions as determined by the Administrator and set forth
in the Option Agreement, but in no case at a rate of less than 20% per year over
five (5) years from the date the Option is granted. Unless the Administrator
provides otherwise, vesting of Options granted hereunder shall be tolled during
any unpaid leave of absence. An Option may not be exercised for a fraction of a
Share. 

An Option
shall be deemed exercised when the Company receives: (i) written or electronic
notice of exercise (in accordance with the Option Agreement) from the person
entitled to exercise the Option, and (ii) full payment for the Shares with
respect to which the Option is exercised. Full payment may consist of any
consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan. Shares issued upon exercise of
an Option shall be issued in the name of the Optionee or, if requested by the
Optionee, in the name of the Optionee and his or her spouse. Until the Shares
are issued (as evidenced by the appropriate entry on the books of the Company or
of a duly authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a shareholder shall exist with respect to the
Shares, notwithstanding the exercise of the Option. The Company shall issue (or
cause to be issued) such Shares promptly after the Option is exercised. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the Shares are issued, except as provided in
Section 12 of the Plan. 

	

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

     (b)
Termination of Relationship as a Service Provider. If an Optionee
ceases to be a Service Provider, such Optionee may exercise his or her Option
within such period of time as is specified in the Option Agreement (of at least
thirty (30) days) to the extent that the Option is vested on the date of
termination (but in no event later than the expiration of the term of the Option
as set forth in the Option Agreement). In the absence of a specified time in the
Option Agreement, the Option shall remain exercisable for three (3) months
following the Optionee’s termination. If, on the date of termination, the
Optionee is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall revert to the Plan. If, after termination,
the Optionee does not exercise his or her Option within the time specified by
the Administrator, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan. 

     (c)
Disability of Optionee. If an Optionee ceases to be a Service Provider as
a result of the Optionee’s Disability, the Optionee may exercise his or her
Option within such period of time as is specified in the Option Agreement to the
extent the Option is vested on the date of termination (but in no event later
than the expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the
Optionee’s termination. If such disability is not a “disability”
as such term is defined in Section 22(e)(3) of the Code, in the case of an
Incentive Stock Option such Incentive Stock Option shall automatically cease to
be treated as an Incentive Stock Option and shall be treated for tax purposes as
a Nonstatutory Stock Option on the day three months and one day following such
termination. If, on the date of termination, the Optionee is not vested as to
his or her entire Option, the Shares covered by the unvested portion of the
Option shall revert to the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan. 

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

	

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

     10.
Non-Transferability of Options and Stock Purchase Rights.
Options and Stock Purchase Rights may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by
the laws of descent or distribution and may be exercised, during the lifetime of
the Optionee, only by the Optionee. 

     11.
Stock Purchase Rights. 

     (a)
Rights to Purchase. Stock Purchase Rights may be issued either alone, in
addition to, or in tandem with other awards granted under the Plan and/or cash
awards made outside of the Plan. After the Administrator determines that it will
offer Stock Purchase Rights under the Plan, it shall advise the offeree in
writing or electronically of the terms, conditions and restrictions related to
the offer, including the number of Shares that such person shall be entitled to
purchase, the price to be paid, and the time within which such person must
accept such offer. The terms of the offer shall comply in all respects with
Section 260.140.42 of Title 10 of the California Code of Regulations. The offer
shall be accepted by execution of a Restricted Stock purchase agreement in the
form determined by the Administrator. 

     (b)
Repurchase Option. Unless the Administrator determines otherwise, the
Restricted Stock purchase agreement shall grant the Company a repurchase option
exercisable upon the voluntary or involuntary termination of the
purchaser’s service with the Company for any reason (including death or
disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at such rate as the
Administrator may determine, but in no case at a rate of less than 20% per year
over five years from the date of purchase. 

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

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

     12.
Adjustments Upon Changes in Capitalization, Merger or Asset Sale. 

	

     (a)
Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option or Stock Purchase Right, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option or Stock
Purchase Right, as well as the price per share of Common Stock covered by each
such outstanding Option or Stock Purchase Right, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company. The conversion of any convertible securities of
the Company shall not be deemed to have been “effected without receipt of
consideration.” Such adjustment shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive. Except as
expressly provided herein, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares of Common Stock subject to an Option or Stock Purchase
Right. 

     (b)
Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Administrator shall notify each Optionee as soon
as practicable prior to the effective date of such proposed transaction. The
Administrator in its discretion may provide for an Optionee to have the right to
exercise his or her Option until fifteen (15) days prior to such transaction as
to all of the Optioned Stock covered thereby, including Shares as to which the
Option would not otherwise be exercisable. In addition, the Administrator may
provide that any Company repurchase option applicable to any Shares purchased
upon exercise of an Option or Stock Purchase Right shall lapse as to all such
Shares, provided the proposed dissolution or liquidation takes place at the time
and in the manner contemplated. To the extent it has not been previously
exercised, an Option or Stock Purchase Right will terminate immediately prior to
the consummation of such proposed action. 

     (c)
Merger or Asset Sale. In the event of a merger of the Company with or
into another corporation, or the sale of substantially all of the assets of the
Company, each outstanding Option and Stock Purchase Right shall be assumed or an
equivalent option or right substituted by the successor corporation or a Parent
or Subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the Option or Stock Purchase
Right, the Optionee shall fully vest in and have the right to exercise the
Option or Stock Purchase Right as to all of the Optioned Stock, including Shares
as to which it would not otherwise be vested or exercisable. If an Option or
Stock Purchase Right becomes fully vested and exercisable in lieu of assumption
or substitution in the event of a merger or sale of assets, the Administrator
shall notify the Optionee in writing or electronically that the Option or Stock
Purchase Right shall be fully exercisable for a period of fifteen (15) days from
the date of such notice, and the Option or Stock Purchase Right shall terminate
upon the expiration of such period. For the purposes of this paragraph, the
Option or Stock Purchase Right shall be considered assumed if, following the
merger or sale of assets, the option or right confers the right to purchase or
receive, for each Share of Optioned Stock subject to the Option or Stock
Purchase Right immediately prior to the merger or sale of assets, the
consideration (whether stock, cash, or other securities or property) received in
the merger or sale of assets by holders of Common Stock for each Share held on
the effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares); provided, however, that if such consideration received
in the merger or sale of assets is not solely common stock of the successor
corporation or its Parent, the Administrator may, with the consent of the
successor corporation, provide for the consideration to be received upon the
exercise of the Option or Stock Purchase Right, for each Share of Optioned Stock
subject to the Option or Stock Purchase Right, to be solely common stock of the
successor corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets. 

	

     13.
Time of Granting Options and Stock Purchase Rights. The
date of grant of an Option or Stock Purchase Right shall, for all purposes, be
the date on which the Administrator makes the determination granting such Option
or Stock Purchase Right, or such other date as is determined by the
Administrator. Notice of the determination shall be given to each Employee or
Consultant to whom an Option or Stock Purchase Right is so granted within a
reasonable time after the date of such grant. 

     14.
Amendment and Termination of the Plan. 

     (a)
Amendment and Termination. The Board may at any time amend, alter, suspend or terminate
the Plan. 

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

     (c)
Effect of Amendment or Termination. No amendment,
alteration, suspension or termination of the Plan shall impair the rights of any
Optionee, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the Optionee and
the Company. Termination of the Plan shall not affect the Administrator’s
ability to exercise the powers granted to it hereunder with respect to Options
granted under the Plan prior to the date of such termination. 

     15.
Conditions Upon Issuance of Shares. 

     (a)
Legal Compliance. Shares shall not be issued pursuant to the exercise of
an Option unless the exercise of such Option and the issuance and delivery of
such Shares shall comply with Applicable Laws and shall be further subject to
the approval of counsel for the Company with respect to such compliance. 

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

	

     16.
Inability to Obtain Authority. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company’s counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained. 

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

     18.
Shareholder Approval. The Plan shall be subject to approval by the shareholders of the
Company within twelve (12) months after the date the Plan is adopted. Such shareholder
approval shall be obtained in the degree and manner required under Applicable Laws. 

     19.
Information to Optionees and Purchasers. The Company shall provide to
each Optionee and to each individual who acquires Shares pursuant to the Plan,
not less frequently than annually during the period such Optionee or purchaser
has one or more Options or Stock Purchase Rights outstanding, and, in the case
of an individual who acquires Shares pursuant to the Plan, during the period
such individual owns such Shares, copies of annual financial statements. The
Company shall not be required to provide such statements to key employees whose
duties in connection with the Company assure their access to equivalent
information.

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