Document:

exv10w5

 

Exhibit 10.5

AEROVIRONMENT, INC.

DIRECTORS’ NONQUALIFIED STOCK OPTION AGREEMENT

     This Directors’ Nonqualified Stock Option Agreement (the “Agreement”) is made as of the ___
day of _                                        , 1999, by and between AeroVironment, Inc., a California corporation, with its
principal office at Monrovia, California (hereinafter called the “Company”), and
                                                             (hereinafter called “Optionee”).

WITNESSETH:

     WHEREAS, the Board of Directors and the stockholders of the Company have adopted the
AeroVironment, Inc. Directors’ Nonqualified Stock Option Plan (hereinafter referred to as the
“Plan”); and

     WHEREAS, the Plan is to be administered by the Company’s Board of Directors; and

     WHEREAS, the Board of Directors, at a meeting duly held, determined that Optionee should be
granted an option under the Plan for the purchase of that number of shares of the Company’s Common
Stock specified in Section 1 hereof at the price specified in Section 2 hereof, subject to the
terms and conditions set forth in the Plan and in this Agreement;

     NOW, THEREFORE, IT IS AGREED:

1. GRANT OF OPTION

     The Company hereby grants to Optionee the right and option to purchase all or any part of an
aggregate of                                         shares (___) of the Company’s capital stock, subject to the terms
and conditions of the Plan and as hereinafter set forth.

     A copy of the Plan has been delivered to Optionee, receipt of which is hereby acknowledged.
Except as otherwise expressly provided herein, all of the terms, provisions

-1-

 

and conditions of the Plan are hereby made a part hereof for all purposes. To the extent that any
provisions of this Agreement are inconsistent with those set forth in the Plan, the provisions of
the Plan shall be deemed to be controlling.

2. OPTION PRICE

     The option price shall be four and seventeen hundreds Dollars ($4.17) per share, being at
least one hundred percent (100%) of the fair market value per share as of the date of this
Agreement as determined at the sole discretion of the Board of Directors of the Company.

3. WHEN OPTION MAY BE EXERCISED

     This option shall become exercisable on the anniversaries of the date hereof indicated in the
following table as to the number of shares set forth opposite said respective anniversaries less
the number of shares previously purchased under this option:

	 	 	 	 	 
	Anniversary of the Date Hereof	 	Number of Shares	 	 
	First
	 	 	 	 
	 

	 	 	 	 
	Second
	 	 	 	 
	 

	 	 	 	 
	Third
	 	 	 	 
	 

	 	 	 	 
	Fourth
	 	 	 	 
	 

	 	 	 	 
	Fifth
	 	 	 	 
	 

	 	 	 	 

and such option shall remain exercisable as to all of such shares until and including the
                     anniversary of the date hereof, subject however to the provisions of Sections 5
and 6 hereof. Shares as to which such option becomes exercisable pursuant to the foregoing
provision may be purchased at any time thereafter prior to the expiration or termination of the
option.

     Optionee acknowledges and understands that this is a nonqualified stock option plan, and that
upon exercise of the option, the optionee shall become taxable on the fair market value of the
stock received upon exercise of the option less the exercise price paid in connection therewith.
Optionee further acknowledges and agrees that Company may

-2-

 

have a
withholding obligation in connection with any such exercise, and that Company is authorized to
withhold from other compensation payable to Optionee amounts necessary to provide for such
withholding, or require a deposit of such funds by Optionee prior to the delivery of shares to be
issued upon exercise of the option. Company shall have no obligation with respect to the tax
liability of Optionee created hereunder.

4. OPTION PERSONAL TO OPTIONEE

     This option may be exercised during the life of Optionee only by him and may not be assigned,
transferred, pledged, hypothecated, sold or otherwise disposed of in whole or in part, either
voluntarily or involuntarily; any attempted assignment, transfer, pledge, hypothecation, sale or
other disposition will be void and of no effect; and if voluntarily entered into by Optionee, shall
terminate the option. Notwithstanding the foregoing, in the event of Optionee’s death prior to the
full exercise of this option, it may be transferred under his will or similar device of
testamentary disposition or equivalent to, and exercised by, Optionee’s personal representative or
other such transferee or by operation of the laws of descent and distribution in accordance with
Section 6.

5. TERMINATION OF POSITION AS A DIRECTOR

     No part of this option may be exercised more than three (3) months after the termination of
Optionee’s position as a Director of the Company except in the case of his death or disability (as
defined in Section 105(d)(4) of the Internal Revenue Code of 1986, as amended) during said three
(3) month period. This option shall in no way confer upon Optionee any rights to remain a Director
or an employee of the Company. Except as otherwise provided in this Section 5, the maximum number
of shares as to which this option may be exercised during the aforesaid three (3) month period
following termination as a Director of the company shall be the remaining number of shares which
Optionee could have purchased, pursuant to Section 3 hereof, on the date of termination.

-3-

 

6. DEATH OR DISABILITY OF OPTIONEE

     If Optionee should die or become disabled within the meaning of Section 105(d)(4) of the
Internal Revenue Code of 1986, as amended, while a Director of the Company or within any three (3)
month period after termination of his position as a Director of the Company during which he is
entitled to exercise the option pursuant to Section 5 hereof, this option, to the extent not
previously exercised and in an amount not exceeding the number of shares Optionee could have
purchased hereunder on the date of termination, may be exercised by the Optionee, or if the
Optionee has died, by his personal representative, heir or legatee, in whole or in part within
twelve (12) months after the Optionee ceases to be a Director of the Company (but not later than
the final date set forth in Section 3 hereof).

7. PARENT, SUBSIDIARY AND SUCCESSOR OF THE COMPANY

     All reference herein to the Company shall be deemed to include any parent or subsidiary of the
Company (as defined in Section 425 of the Internal Revenue Code of 1954, as amended), unless the
context shall otherwise require or indicate.

8. EXERCISE OF OPTION

     This option or any portion thereof shall be exercised by written notice delivered to the
Company at its then principal offices, setting forth the number of shares with respect to which the
option is being exercised, accompanied by the full amount of the purchase price, in the form of a
certified or cashier’s check, or cash, or, if deemed acceptable at the discretion of the Board of
Directors of the Company, stock of the Company whose fair market value equals the exercise price
per share of the option multiplied by the number of shares being purchased, or such other lawful
consideration as is determined acceptable by the Board of Directors at their discretion. Upon
receipt of notice and payment as aforesaid, the Company shall promptly make arrangement for the
issuance to Optionee of the number of shares as to which this option was exercised. Provided,
however, that if any law or any regulation of any regulatory agency or other body having
jurisdiction in the premises shall require any action to be taken in connection with the shares
specified in said notice, then

-4-

 

the delivery date of such shares shall be extended for a period reasonably necessary to permit the
Company to take such action. Provided further that the Company shall not be obligated to issue
shares pursuant to the option if counsel for the Company determines that such issuance would or
would likely be in violation of any applicable securities laws. The Company reserves the right to
require that the Optionee, prior to receipt of the shares, represent and warrant in writing, in
form and substance satisfactory to the Company, that the shares purchased are being acquired
without any view to the distribution thereof and agree in writing to the imposition of legends on
the stock certificates setting forth any restrictions upon disposition under applicable securities
laws.

     In the event Optionee wishes to sell any shares purchased pursuant to this option prior to the
expiration of (a) one year from the date of their issuance, or (b) two years from the date of the
granting of this option, he shall notify the Company in writing not less than thirty (30) days
prior to such sale.

9. FRACTIONAL SHARES

     Notwithstanding any other provisions herein to the contrary, the Optionee shall in no event be
entitled to exercise his option for any fractional shares and any such fractional interests shall
be disregarded.

10. ADJUSTMENT UPON CHANGES IN CAPITALIZATION

     The shares subject to this option shall be subject to equitable and proportionate adjustment
by the Board of Directors in the manner set forth in Section 12 of the Plan in the event of the
occurrence of any of the events specified therein.

11. SHARES SUBJECT TO STOCK REPURCHASE AGREEMENT

     Notwithstanding any other Section of this Agreement, under Section 2 of the Plan, and pursuant
to this Section 11, the stock to be received upon exercise of this option Agreement will be subject
to a Stock Repurchase Agreement to be executed, at the time any or all of this option grant is
first exercised, between the Company and the Optionee, which Stock Repurchase Agreement will be in
substantially the same form as Exhibit “A”

-5-

 

hereto. Notwithstanding any other Section of this Agreement, the Company need not issue any stock to
Optionee pursuant to this Agreement unless and until the parties hereto execute a Stock Repurchase
Agreement as described above.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.

	 	 	 	 	 	 	 
	 	 	“Company”:
	 
	 	 	 	 	 	 
	 	 	AEROVIRONMENT, INC.
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Timothy E. Conver, President	 	 
	 
	 	 	 	 	 	 
	(Corporate Seal)

	 	By	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Joseph S. Edwards, Secretary	 	 
	 
	 	 	 	 	 	 
	 	 	“Optionee”:
	 
	 	 	 	 	 	 
	 	 	 	 	 

-6-exv10w6

 

Exhibit 10.6

AEROVIRONMENT, INC.

2002 EQUITY INCENTIVE PLAN

 

 

	 	 	 	 	 
	1.

	 	PURPOSES OF THE PLAN
	 	I
	2.

	 	DEFINITIONS
	 	I
	3.

	 	STOCK SUBJECT TO THE PLAN
	 	IV
	4.

	 	ADMINISTRATION OF THE PLAN
	 	V
	5.

	 	ELIGIBILITY
	 	VII
	6.

	 	LIMITATIONS
	 	VII
	7.

	 	TERM OF PLAN
	 	VIII
	8.

	 	TERM OF OPTION
	 	VIII
	9.

	 	OPTION EXERCISE PRICE AND CONSIDERATION
	 	VIII
	10.

	 	EXERCISE OF OPTION
	 	IX
	11.

	 	NON-TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS
	 	XII
	12.

	 	STOCK PURCHASE RIGHTS
	 	XII
	13.

	 	ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER OR ASSET SALE
	 	XIII
	14.

	 	TIME OF GRANTING OPTIONS AND STOCK PURCHASE RIGHTS
	 	XVI
	15.

	 	AMENDMENT AND TERMINATION OF THE PLAN
	 	XVI
	16.

	 	STOCKHOLDER APPROVAL
	 	XVI
	17.

	 	INABILITY TO OBTAIN AUTHORITY
	 	XVI
	18.

	 	RESERVATION OF SHARES
	 	XVII
	19.

	 	INFORMATION TO HOLDERS AND PURCHASERS
	 	XVII
	20.

	 	REPURCHASE PROVISIONS
	 	XVII
	21.

	 	INVESTMENT INTENT
	 	XVIII
	22.

	 	GOVERNING LAW
	 	XVIII

 

AEROVIRONMENT, INC.

2002 EQUITY INCENTIVE PLAN

     1. Purposes of the Plan. The purposes of the AeroVironment, Inc. 2002 Equity
Incentive 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 Non-Qualified 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) “Acquisition” means (1) a dissolution, liquidation or sale of all or substantially
all of the assets of the Company; (2) a merger or consolidation in which the Company is not the
surviving corporation; or (3) a reverse merger in which the Company is the surviving corporation
but the shares of the Company’s 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.

          (b) “Administrator” means the Board or the Committee responsible for conducting the
general administration of the Plan, as applicable, in accordance with Section 4 hereof.

          (c) “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.

          (d) “Board” means the Board of Directors of the Company.

          (e) “Code” means the Internal Revenue Code of 1986, as amended, or any successor
statute or statutes thereto. Reference to any particular Code section shall include any successor
section.

          (f) “Committee” means a committee appointed by the Board in accordance with Section 4
hereof.

          (g) “Common Stock” means the Common Stock of the Company, no par value.

          (h) “Company” means AeroVironment, Inc., a California corporation.

i

 

          (i) “Consultant” means any consultant or adviser if: (i) the consultant or adviser
renders bona fide services to the Company or any Parent or Subsidiary of the Company; (ii) the
services rendered by the consultant or adviser 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 Company’s securities; and (iii) the consultant or adviser is a natural person who
has contracted directly with the Company or any Parent or Subsidiary of the Company to render such
services.

          (j) “Director” means a member of the Board.

          (k) “Employee” means any person, including an Officer or Director, who is an employee
(as defined in accordance with Section 3401(c) of the Code) of 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 (90) days, unless reemployment upon expiration of such
leave is guaranteed by statute or contract. Neither service as a Director nor payment of a
director’s fee by the Company shall be sufficient, by itself, to constitute “employment” by the
Company.

          (l) “Equity Capital” means capital contributed to the Company in respect of Common
Stock or Common Stock equivalents (including convertible and exchangeable securities).

          (m) “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any
successor statute or statutes thereto. Reference to any particular Exchange Act section shall
include any successor section.

          (n) “Fair Market Value” means, as of any date, the value of a share 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 a share of 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 Journal
or 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 a share of the Common Stock on the last market trading day prior to the day of
determination; or

ii

 

               (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; provided, however, that
notwithstanding anything to the contrary in the Plan, the Administrator may use such method or
manner to determine Fair Market Value as the Administrator determines in its sole reasonable
discretion is reasonable and appropriate in light of the circumstances of the Company at the time
of such determination.

          (o) “Holder” means a person who has been granted or awarded an Option or Stock
Purchase Right or who holds Shares acquired pursuant to the exercise of an Option or Stock Purchase
Right.

          (p) “Incentive Stock Option” means an Option intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code and which is designated as an Incentive Stock
Option by the Administrator.

          (q) “Independent Director” means a Director who is not an Employee of the Company.

          (r) “Non-Qualified Stock Option” means an Option (or portion thereof) that is not
designated as an Incentive Stock Option by the Administrator, or which is designated as an
Incentive Stock Option by the Administrator but fails to qualify as an incentive stock option
within the meaning of Section 422 of the Code.

          (s) “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.

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

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

          (v) “Parent” means any corporation, whether now or hereafter existing (other than the
Company), in an unbroken chain of corporations ending with the Company if each of the corporations
other than the last corporation in the unbroken chain owns stock possessing more than fifty percent
of the total combined voting power of all classes of stock in one of the other corporations in such
chain.

          (w) “Plan” means the AeroVironment, Inc. 2002 Equity Incentive Plan.

          (x) “Public Trading Date” means the first date upon which Common Stock 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.

iii

 

          (y) “Restricted Stock” means Shares acquired pursuant to the exercise of an unvested
Option in accordance with Section 10(h) below or pursuant to a Stock Purchase Right granted under
Section 12 below.

          (z) “Rule 16b-3” means that certain Rule 16b-3 under the Exchange Act, as such Rule
may be amended from time to time.

          (aa) “Section 16(b)” means Section 16(b) of the Exchange Act, as such Section may be
amended from time to time.

          (bb) “Securities Act” means the Securities Act of 1933, as amended, or any successor
statute or statutes thereto. Reference to any particular Securities Act section shall include any
successor section.

          (cc) “Service Provider” means an Employee, Director or Consultant.

          (dd) “Share” means a share of Common Stock, as adjusted in accordance with Section 13
below.

          (ee) “Stock Purchase Right” means a right to purchase Common Stock pursuant to Section
12 below.

          (ff) “Subsidiary” means any corporation, whether now or hereafter existing (other than
the Company), in an unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns stock possessing more than
fifty percent of the total combined voting power of all classes of stock in one of the other
corporations in such chain.

          (gg) “Total Shares” means the total number of outstanding securities of the Company on
a fully-diluted basis as if all issued and outstanding series of preferred stock or senior common
stock were converted into Common Stock; provided that Total Shares shall not include any shares
that may be received upon exercise of options or warrants to purchase Common Stock unless and until
such options and/or warrants are actually exercised and Common Stock is issued in respect thereof.

     3. Stock Subject to the Plan. Subject to the provisions of Section 13 of the Plan,
the shares of stock subject to Options or Stock Purchase Rights shall be Common Stock, initially
shares of the Company’s Common Stock, no par value. Subject to the provisions of Section 13 of the
Plan, the maximum
aggregate number of Shares which may be issued upon exercise of such Options or Stock Purchase
Rights shall be equal to fifty percent (50%) of the Total Shares, as adjusted from time to time as
additional Equity Capital is contributed to the Company, less the number of options to purchase
shares of Common Stock granted by the Company under option plans other than the Plan, but not in
excess of 500,000 Shares. All adjustments pursuant to the foregoing adjustment shall be deemed to
have been made by the Company concurrently with the actual receipt of the Company of the relevant
Equity Capital by the Company. The Company shall

iv

 

promptly record any such adjustment on its books
and records, and any adjustment so recorded shall be presumptively correct absent manifest error.
Shares issued upon exercise of Options or Stock Purchase Rights 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, the unpurchased Shares which were subject thereto shall
become available for future grant or sale under the Plan (unless the Plan has terminated). Shares
which are delivered by the Holder or withheld by the Company upon the exercise of an Option or
Stock Purchase Right under the Plan, in payment of the exercise price thereof or tax withholding
thereon, may again be optioned, granted or awarded hereunder, subject to the limitations of this
Section 3. 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. Notwithstanding the
provisions of this Section 3, no Shares may again be optioned, granted or awarded if such action
would cause an Incentive Stock Option to fail to qualify as an Incentive Stock Option under Code
Section 422.

     4. Administration of the Plan.

          (a) Administrator. Unless and until the Board delegates administration to a Committee
as set forth below, the Plan shall be administered by the Board. The Board may delegate
administration of the Plan to a Committee or Committees of one 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. Notwithstanding the foregoing, however,
from and after the Public Trading Date, a Committee of the Board shall administer the Plan and the
Committee shall consist solely of two or more Independent Directors each of whom is both an
“outside director,” within the meaning of Section 162(m) of the Code, and a “non-employee director”
within the meaning of Rule 16b-3. Within the scope of such authority, the Board or the Committee
may (i) delegate to a committee of one or more members of the Board who are not Independent
Directors the authority to grant awards under the Plan to eligible persons who are either (1) not
then “covered employees,” within the meaning of Section 162(m) of the Code and are not expected to
be “covered employees” at the time of recognition of income resulting from such award or (2) not
persons with respect to whom the Company wishes to comply with Section 162(m) of the Code and/or
(ii) delegate to a committee of one or more members of the Board who are not “non-employee
directors,” within the meaning of Rule 16b-3,
the authority to grant awards under the Plan to eligible persons who are not then subject to
Section 16 of the Exchange Act. The Board may abolish the Committee at any time and revest in the
Board the administration of the Plan. Appointment of Committee members shall be effective upon
acceptance of appointment. Committee members may resign at any time by delivering written notice to
the Board. Vacancies in the Committee may only be filled by the Board.

v

 

          (b) Powers of the Administrator. Subject to the provisions of the Plan and 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 sole 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 vest or 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 to offer to buyout a previously granted Option as provided in
subsection 10(i) and to determine the terms and conditions of such offer and buyout (including
whether payment is to be made in cash or Shares);

               (vii) 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;

               (viii) to allow Holders 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 minimum amount required to be withheld
based on the statutory withholding rates for federal and state tax purposes that apply to
supplemental taxable income. 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
Holders 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;

               (ix) to amend the Plan or any Option or Stock Purchase Right granted under the Plan as
provided in Section 15; and

               (x) to construe and interpret the terms of the Plan and awards granted pursuant to the Plan
and to exercise such powers and perform such acts as the Administrator

vi

 

deems necessary or desirable
to promote the best interests of the Company which are not in conflict with the provisions of the
Plan.

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

     5. Eligibility. Non-Qualified Stock Options and Stock Purchase Rights may be granted
to Service Providers. Incentive Stock Options may be granted only to Employees. If otherwise
eligible, Service Providers who have been granted an Option or Stock Purchase Right may be granted
additional Options or Stock Purchase Rights.

     6. Limitations.

          (a) Each Option shall be designated by the Administrator in the Option Agreement as either an
Incentive Stock Option or a Non-Qualified Stock Option. However, notwithstanding such
designations, to the extent that the aggregate Fair Market Value of Shares subject to a Holder’s
Incentive Stock Options and other incentive stock options granted by the Company, any Parent or
Subsidiary, which 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 or other options
shall be treated as Non-Qualified Stock Options.

          For purposes of this Section 6(a), 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 of grant.

          (b) Neither the Plan, any Option nor any Stock Purchase Right shall confer upon a Holder any
right with respect to continuing the Holder’s employment or consulting relationship with the
Company, nor shall they interfere in any way with the Holder’s right or the Company’s right to
terminate such employment or consulting relationship at any time, with or without cause.

          (c) No Service Provider shall be granted, in any calendar year, Options or Stock Purchase
Rights to purchase more than 31,595 Shares; provided, however, that the foregoing limitation shall
not apply prior to the Public Trading Date and, following the Public Trading Date, the foregoing
limitation shall not apply until the earliest of: (i) the first material modification of the Plan
(including any increase in the number of shares reserved for issuance under the Plan in accordance
with Section 3); (ii) the issuance of all of the shares of Common Stock reserved for issuance under
the Plan; (iii) the expiration of the Plan; (iv) the first meeting
of stockholders at which Directors of the Company 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 of the Company under Section 12 of the Exchange Act; or (v) such
other date required by Section 162(m) of the Code and the rules and regulations promulgated
thereunder. The foregoing limitation shall be adjusted proportionately in connection with any
change in the Company’s capitalization as described in Section 13. For purposes of this Section
6(c), if an

vii

 

Option is canceled in the same calendar year it was granted (other than in connection
with a transaction described in Section 13), the canceled Option will be counted against the limit
set forth in this Section 6(c). For this purpose, if the exercise price of an
Option is reduced, the transaction shall be treated as a cancellation of the Option and the grant of a new Option.

     7. Term of Plan. The Plan shall become effective upon its initial adoption by the
Board and shall continue in effect until it is terminated under Section 15 of the Plan. No Options
or Stock Purchase Rights may be issued under the Plan after the tenth (10th) anniversary of the
earlier of (i) the date upon which the Plan is adopted by the Board or (ii) the date the Plan is
approved by the stockholders.

     8. 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 a Holder who, at the time the Option
is granted, owns (or is treated as owning under Code Section 424) 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.

     9. 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

                    (A) granted to an Employee who, at the time of grant of such Option, owns (or is treated as
owning under Code Section 424) 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 one hundred ten percent (110%) of the Fair Market Value per Share on the date
of grant.

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

               (ii) In the case of a Non-Qualified Stock Option

                    (A) 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 one hundred ten percent
(110%) of the Fair Market Value per Share on the date of the grant.

viii

 

                    (B) granted to any other Service Provider, the per Share exercise price shall be no less than
eighty-five percent (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) with the consent of the Administrator, a full recourse promissory note
bearing interest (at no less than such rate as shall then preclude the imputation of interest under
the Code) and payable upon such terms as may be prescribed by the Administrator, (4) with the
consent of the Administrator, other Shares which (x) in the case of Shares acquired from the
Company, have been owned by the Holder for more than six (6) 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) with the consent of the Administrator,
surrendered Shares then issuable upon exercise of the Option having a Fair Market Value on the date
of exercise equal to the aggregate exercise price of the Option or exercised portion thereof, (6)
property of any kind which constitutes good and valuable consideration, (7) with the consent of the
Administrator, delivery of a notice that the Holder has placed a market sell order with a broker
with respect to Shares then issuable upon exercise of the Options and that the broker has been
directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction
of the Option exercise price, provided, that payment of such proceeds is then made to the Company
upon settlement of such sale, or (8) with the consent of the Administrator, any combination of the
foregoing methods of payment.

     10. Exercise of Option.

          (a) Vesting; Fractional Exercises. Options granted hereunder shall be vested and
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; provided, however, that,
except with regard to Options granted to Officers, Directors or Consultants, in no event shall
an Option granted hereunder become vested and exercisable at a rate of less than twenty percent
(20%) per year over five (5) years from the date the Option is granted, subject to reasonable
conditions, such as continuing to be a Service Provider. An Option may not be exercised for a
fraction of a Share.

          (b) Deliveries upon Exercise. All or a portion of an exercisable Option shall be
deemed exercised upon delivery of all of the following to the Secretary of the Company or his or
her office:

ix

 

               (i) A written or electronic notice complying with the applicable rules established by the
Administrator stating that the Option, or a portion thereof, is exercised. The notice shall be
signed by the Holder or other person then entitled to exercise the Option or such portion of the
Option;

               (ii) Such representations and documents as the Administrator, in its sole discretion, deems
necessary or advisable to effect compliance with Applicable Laws. The Administrator may, in its
sole discretion, also take whatever additional actions it deems appropriate to effect such
compliance, including, without limitation, placing legends on share certificates and issuing stop
transfer notices to agents and registrars;

               (iii) Upon the exercise of all or a portion of an unvested Option pursuant to Section 10(h), a
Restricted Stock purchase agreement in a form determined by the Administrator and signed by the
Holder or other person then entitled to exercise the Option or such portion of the Option; and

               (iv) In the event that the Option shall be exercised pursuant to Section 10(f) by any person
or persons other than the Holder, appropriate proof of the right of such person or persons to
exercise the Option.

          (c) Conditions to Delivery of Share Certificates. The Company shall not be required
to issue or deliver any certificate or certificates for Shares purchased upon the exercise of any
Option or portion thereof prior to fulfillment of all of the following conditions:

               (i) The admission of such Shares to listing on all stock exchanges on which such class of
stock is then listed;

               (ii) The completion of any registration or other qualification of such Shares under any state
or federal law, or under the rulings or regulations of the Securities and Exchange Commission or
any other governmental regulatory body which the Administrator shall, in its sole discretion, deem
necessary or advisable;

               (iii) The obtaining of any approval or other clearance from any state or federal governmental
agency which the Administrator shall, in its sole discretion, determine to be necessary or
advisable;

               (iv) The lapse of such reasonable period of time following the exercise of the Option as the
Administrator may establish from time to time for reasons of administrative convenience; and

               (v) The receipt by the Company of full payment for such Shares, including payment of any
applicable withholding tax, which in the sole discretion of the Administrator may be in the form of
consideration used by the Holder to pay for such Shares under Section 9(b).

x

 

          (d) Termination of Relationship as a Service Provider. If a Holder ceases to be a
Service Provider other than by reason of the Holder’s disability or death, such Holder may exercise
his or her Option within such period of time as is specified in the Option Agreement to the extent
that the Option is vested on the date of termination; provided, however, that prior to the Public
Trading Date, such period of time shall not be less than thirty (30) days (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 Holder’s termination. If, on the date of termination, the Holder is not
vested as to his or her entire Option, the Shares covered by the unvested portion of the Option
immediately cease to be issuable under the Option and shall again become available for issuance
under the Plan. If, after termination, the Holder does not exercise his or her Option within the
time period specified herein, the Option shall terminate, and the Shares covered by such Option
shall again become available for issuance under the Plan.

          (e) Disability of Holder. If a Holder ceases to be a Service Provider as a result of
the Holder’s disability, the Holder 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;
provided, however, that prior to the Public Trading Date, such period of time shall not be less
than six (6) months (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 Holder’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 Non-Qualified Stock
Option from and after the day which is three (3) months and one (1) day following such termination.
If, on the date of termination, the Holder is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall immediately cease to be issuable under
the Option and shall again become available for issuance under the Plan. If, after termination,
the Holder does not exercise his or her Option within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall again become available for issuance under
the Plan.

          (f) Death of Holder. If a Holder dies while a Service Provider, the Option may be
exercised within such period of time as is specified in the Option Agreement; provided, however,
that prior to the Public Trading Date, such period of time shall not be less than six (6)
months (but in no event later than the expiration of the term of such Option as set forth in
the Notice of Grant), by the Holder’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 Holder’s termination. If, at the time of death,
the Holder is not vested as to his or her entire Option, the Shares covered by the unvested portion
of the Option shall immediately cease to be issuable under the Option and shall again become
available for issuance under the Plan. The Option may be exercised by the executor or
administrator of the Holder’s estate or, if none, by the person(s) entitled to exercise the Option

xi

 

under the Holder’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 again become available for issuance under the Plan.

          (g) Regulatory Extension. A Holder’s Option Agreement may provide that if the
exercise of the Option following the termination of the Holder’s status as a Service Provider
(other than upon the Holder’s death or Disability) would be prohibited at any time solely because
the issuance of shares 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 Section 8 or (ii) the expiration of a period of three (3) months after the termination of the
Holder’s status as a Service Provider during which the exercise of the Option would not be in
violation of such registration requirements.

          (h) Early Exercisability. The Administrator may provide in the terms of a Holder’s
Option Agreement that the Holder may, at any time before the Holder’s status as a Service Provider
terminates, exercise the Option in whole or in part prior to the full vesting of the Option;
provided, however, that subject to Section 20, Shares acquired upon exercise of an Option which has
not fully vested may be subject to any forfeiture, transfer or other restrictions as the
Administrator may determine in its sole discretion.

          (i) Buyout Provisions. The Administrator may at any time offer to buyout 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 Holder at the time that such offer is made.

     11. 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 Holder, only by the Holder.

     12. Stock Purchase Rights.

          (a) Rights to Purchase. Stock Purchase Rights may be issued either alone, in addition
to, or in tandem with Options 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; provided, however, that to the
extent required to comply with applicable securities laws, the purchase price of such Shares shall
not be less than the purchase price requirements set forth in 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.

xii

 

          (b) Repurchase Right. Unless the Administrator determines otherwise, the Restricted
Stock purchase agreement shall grant the Company the right to repurchase Shares acquired upon
exercise of a Stock Purchase Right upon the termination of the purchaser’s status as a Service
Provider for any reason. Subject to Section 20, the purchase price for Shares repurchased by the
Company pursuant to such repurchase right and the rate at which such repurchase right shall lapse
shall be determined by the Administrator in its sole discretion, and shall be set forth in the
Restricted Stock purchase agreement.

          (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 13 of the
Plan.

     13. Adjustments upon Changes in Capitalization, Merger or Asset Sale.

          (a)
In the event that any dividend or other distribution (whether
in the form of cash, Common Stock, other securities, or other property),
recapitalization, reclassification, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin off, combination, repurchase, liquidation,
dissolution, or sale, transfer, exchange or other disposition of all or
substantially all of the assets of the Company, or exchange of Common Stock or other
securities of the Company, issuance of warrants or other rights to purchase Common Stock or
other securities of the Company, or other similar corporate transaction or event, affects the Common
Stock, then the Administrator shall make an equitable and proportional adjustment to all
Options, Stock Purchase Rights or Restricted Stock granted or to be granted under the Plan, in
order to prevent dilution or enlargement of the benefits or potential benefits intended by the
Company to be made available under the Plan. The form of such adjustment shall be determined by
the Administrator in its discretion, but may take the form of an adjustment in:

               (i) the number and kind of shares of Common Stock (or other
securities or property) with respect to which Options or Stock Purchase Rights may be granted or awarded (including, but not
limited to, adjustments of the limitations in Section 3 on the maximum number and kind
of shares which may be issued and adjustments of the maximum number of Shares that may be purchased by any Holder
in any calendar year pursuant to Section 6(c)); and/or

               (ii) the number and kind of shares of Common Stock (or other
securities or property) subject to outstanding Options, Stock Purchase Rights or Restricted Stock; and/or

               (iii) the grant or exercise price with respect to any Option or
Stock Purchase Right.

xiii

 

          (b) In the event of any transaction or event described in Section 13(a), the Administrator, in
its sole discretion, and on such terms and conditions as it deems appropriate, either by the terms
of the Option, Stock Purchase Right or Restricted Stock or by action taken prior to the occurrence
of such transaction or event and either automatically or upon the Holder’s request, is hereby
authorized to take any one or more of the following actions whenever the Administrator determines
that such action is appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended by the Company to be made available under the Plan or with respect to
any Option, Stock Purchase Right or Restricted Stock granted or issued under the Plan or to
facilitate such transaction or event:

               (i) To provide for either the purchase of any such Option, Stock Purchase Right or Restricted
Stock for an amount of cash equal to the amount that could have been obtained upon the exercise of
such Option or Stock Purchase Right or realization of the Holder’s rights had such Option, Stock
Purchase Right or Restricted Stock been currently exercisable or payable or fully vested or the
replacement of such Option, Stock Purchase Right or Restricted Stock with other rights or property
selected by the Administrator in its sole discretion;

               (ii) To provide that such Option or Stock Purchase Right shall be exercisable as to all shares
covered thereby, notwithstanding anything to the contrary in the Plan or the provisions of such
Option or Stock Purchase Right;

               (iii) To provide that such Option, Stock Purchase Right or Restricted Stock be assumed by the
successor or survivor corporation or entity, or a parent or subsidiary thereof, or shall be
substituted for by similar options, rights or awards covering the stock of the successor or
survivor corporation or entity, or a parent or subsidiary thereof, with appropriate adjustments as
to the number and kind of shares and prices;

               (iv) To make adjustments in the number and type of shares of Common Stock (or other securities
or property) subject to outstanding Options and Stock Purchase Rights, and/or in the terms and
conditions of (including the grant or exercise price), and the criteria included in, outstanding
Options, Stock Purchase Rights or Restricted Stock or Options, Stock Purchase Rights or Restricted
Stock which may be granted in the future; and

               (v) To provide that immediately upon the consummation of such event, such Option or Stock
Purchase Right shall not be exercisable and shall terminate; provided, that for a specified period
of time prior to such event, such Option or Stock Purchase Right shall be exercisable as to all
Shares covered thereby, and the restrictions imposed under an Option Agreement or Restricted Stock
purchase agreement upon some or all Shares may be terminated and, in the case of Restricted Stock,
some or all shares of such Restricted Stock may

xiv

 

cease to be subject to repurchase, notwithstanding
anything to the contrary in the Plan or the provisions of such Option, Stock Purchase Right or
Restricted Stock purchase agreement.

          (c) Subject to Section 3, the Administrator may, in its sole discretion, include such further
provisions and limitations in any Option, Stock Purchase Right, Restricted Stock agreement or
certificate, as it may deem equitable and in the best interests of the Company.

          (d) If the Company undergoes an Acquisition, then any surviving corporation or entity or
acquiring corporation or entity, or affiliate of such corporation or entity, may assume any
Options, Stock Purchase Rights or Restricted Stock outstanding under the Plan or may substitute
similar stock awards (including an award to acquire the same consideration paid to the stockholders
in the transaction described in this subsection 13(d)) for those outstanding under the Plan. In
the event any surviving corporation or entity or acquiring corporation or entity in an Acquisition,
or affiliate of such corporation or entity, does not assume such Options, Stock Purchase Rights or
Restricted Stock or does not substitute similar stock awards for those outstanding under the Plan,
then with respect to (i) Options, Stock Purchase Rights or Restricted Stock held by participants in
the Plan whose status as a Service Provider has not terminated prior to such event, the vesting of
such Options, Stock Purchase Rights or Restricted Stock (and, if applicable, the time during which
such awards may be exercised) shall be accelerated and made fully exercisable and all restrictions
thereon shall lapse at least ten (10) days prior to the closing of the Acquisition (and the Options
or Stock Purchase Rights terminated if not exercised prior to the closing of such Acquisition), and
(ii) any other Options or Stock Purchase Rights outstanding under the Plan, such Options or Stock
Purchase rights shall be terminated if not exercised prior to the closing of the Acquisition.

          (e) Notwithstanding the foregoing, in the event that the Company becomes a party to a
transaction that is intended to qualify for “pooling of interests” accounting treatment and, but
for one or more of the provisions of this Plan or any Option Agreement or any Restricted Stock
purchase agreement would so qualify, then this Plan and any such agreement shall be interpreted so
as to preserve such accounting treatment, and to the extent that any provision of the Plan or any
such agreement would disqualify the transaction from pooling of interests accounting treatment
(including, if applicable, an entire Option Agreement or Restricted
Stock purchase agreement), then such provision shall be null and void. All determinations to
be made in connection with the preceding sentence shall be made by the independent accounting firm
whose opinion with respect to “pooling of interests” treatment is required as a condition to the
Company’s consummation of such transaction.

          (f) The existence of the Plan, any Option Agreement or Restricted Stock purchase agreement and
the Options or Stock Purchase Rights granted hereunder shall not affect or restrict in any way the
right or power of the Company or the stockholders of the Company to make or authorize any
adjustment, recapitalization, reorganization or other change in the Company’s capital structure or
its business, any merger or consolidation of the Company, any issue of stock or of options,
warrants or rights to purchase stock or of bonds, debentures, preferred or prior preference stocks
whose rights are superior to or affect the Common Stock or

xv

 

the rights thereof or which are
convertible into or exchangeable for Common Stock, or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise.

     14. 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.

     15. Amendment and Termination of the Plan.

          (a) Amendment and Termination. The Board may at any time wholly or partially amend,
alter, suspend or terminate the Plan. However, without approval of the Company’s stockholders
given within twelve (12) months before or after the action by the Board, no action of the Board
may, except as provided in Section 13, increase the limits imposed in Section 3 on the maximum
number of Shares which may be issued under the Plan or extend the term of the Plan under Section 7.

          (b) Stockholder Approval. The Board shall obtain stockholder 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 Holder, unless mutually agreed otherwise
between the Holder and the Administrator, which agreement must be in writing and signed by the
Holder 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, Stock Purchase Rights or
Restricted Stock granted or awarded under the Plan prior to the date of such termination.

     16. Stockholder Approval. The Plan will be submitted for the approval of the
Company’s stockholders within twelve (12) months after the date of the Board’s initial adoption of
the Plan. Options, Stock Purchase Rights or Restricted Stock may be granted or awarded prior to
such stockholder approval, provided that such Options, Stock Purchase Rights and Restricted Stock
shall not be exercisable, shall not vest and the restrictions thereon shall not lapse prior to the
time when the Plan is approved by the stockholders, and provided further that if such approval has
not been obtained at the end of said twelve-month period, all Options, Stock Purchase Rights and
Restricted Stock previously granted or awarded under the Plan shall thereupon be canceled and
become null and void.

     17. 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

xvi

 

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.

     18. 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.

     19. Information to Holders and Purchasers. Prior to the Public Trading Date and to
the extent required by Section 260.140.46 of Title 10 of the California Code of Regulations, the
Company shall provide to each Holder and to each individual who acquires Shares pursuant to the
Plan, not less frequently than annually during the period such Holder 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. Notwithstanding the preceding sentence, 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.

     20. Repurchase Provisions. The Administrator in its sole discretion may provide that
the Company may repurchase Shares acquired upon exercise of an Option or Stock Purchase Right upon
the occurrence of certain specified events, including, without limitation, a Holder’s termination
as a Service Provider, divorce, bankruptcy or insolvency; provided, however, that any such
repurchase right shall be set forth in the applicable Option Agreement or Restricted Stock purchase
agreement or in another agreement referred to in such agreement and, provided further,
that to the extent required by Section 260.140.41 and Section 260.140.42 of Title 10 of the
California Code of Regulations, any such repurchase right set forth in an Option or Stock Purchase
Right granted prior to the Public Trading Date to a person who is not an Officer, Director or
Consultant shall be upon the following terms: (i) if the repurchase option gives the Company the
right to repurchase the shares upon termination as a Service Provider at not less than the Fair
Market Value of the shares to be purchased on the date of termination of status as a Service
Provider, then (A) the right to repurchase shall be exercised for cash or cancellation of purchase
money indebtedness for the shares within ninety (90) days of termination of status as a Service
Provider (or in the case of shares issued upon exercise of Options or Stock Purchase Rights 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 Administrator and the Plan participant and (B) the right
terminates when the shares become publicly traded; and (ii) if the repurchase option gives the
Company the right to repurchase the Shares upon termination as a Service Provider at the original
purchase price for such Shares, then (A) the right to repurchase at the original purchase price
shall lapse at the rate of at least twenty percent (20%) of the shares per year over five (5) years
from the date the Option or Stock Purchase Right is granted (without respect to the date the Option
or Stock Purchase Right was exercised or became exercisable) and (B) the right to repurchase shall
be exercised for cash or cancellation of purchase money indebtedness for the shares within ninety
(90) days of termination of status as a Service Provider (or, in the case of shares issued upon
exercise of Options or Stock Purchase Rights, after such date of termination,

xvii

 

within ninety (90)
days after the date of the exercise) or such longer period as may be agreed to by the Company and
the Plan participant.

     21. Investment Intent. The Company may require a Plan participant, as a condition of
exercising or acquiring stock under any Option or Stock Purchase Right, (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 Option or Stock Purchase Right; and (ii) to give written assurances
satisfactory to the Company stating that the participant is acquiring the stock subject to the
Option or Stock Purchase Right for the participant’s own account and not with any present intention
of selling or otherwise distributing the stock. The foregoing requirements, and any assurances
given pursuant to such requirements, shall be inoperative if (A) the issuance of the shares upon
the exercise or acquisition of stock under the applicable Option or Stock Purchase Right has been
registered under a then currently effective registration statement under the Securities Act or (B)
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 stock.

     22. Governing Law. The validity and enforceability of this Plan shall be governed by
and construed in accordance with the laws of the State of California without regard to otherwise
governing principles of conflicts of law.

xviii

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}]]