Document:

EXHIBIT
4.1

 

YAHOO!
INC.

1995 STOCK PLAN

(AS AMENDED MAY 1999 AND APRIL 2002)

 

 

 1.  Purposes of the Plan.  The purposes of this 1995 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 nonstatutory 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)           “Affiliate”
shall mean an entity (including a partnership or limited liability company) in
which the Company, directly or indirectly through any subsidiary, owns an
equity interest, but which entity is not a Subsidiary.

 

                (c)           “Applicable
Laws” has the meaning set forth in Section 4(a) below.

 

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

 

                (e)           “Code”
means the Internal Revenue Code of 1986, as amended.

 

                (f)            “Committee”
means the Committee appointed by the Board of Directors in accordance with
Section 4(a) of the Plan.

 

                (g)           “Common
Stock” means the Common Stock of the Company.

 

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

 

                (i)            “Consultant”
means any person, including a Director, who is engaged by the Company or any
Parent, Subsidiary or Affiliate to render services and is compensated for such
services.

 

                (j)            “Continuous
Status as an Employee or Consultant” means the absence of any
interruption or termination of service as an Employee or Consultant.  Continuous Status as an Employee or
Consultant shall not be considered interrupted in the case of:  (i) sick leave; (ii) military
leave; (iii) any other leave of absence approved by the Administrator,
provided that such leave is for a period of not more than ninety (90) days, unless
reemployment upon the expiration of such leave is guaranteed by contract or

 

 

 

statute, or unless provided otherwise pursuant to Company policy
adopted from time to time; or (iv) in the case of transfers between
locations of the Company or between the Company, its Subsidiaries or their
respective successors.  For purposes of
this Plan, a change in status from an Employee to a Consultant or from a
Consultant to an Employee will not constitute an interruption of Continuous
Status as an Employee or Consultant.

 

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

 

                (l)            “Employee”
means any person, including Named Executives, Officers and Directors, employed
by the Company or any Parent, Subsidiary or Affiliate of the Company, with the
status of employment determined based upon such minimum number of hours or
periods worked as shall be determined by the Administrator in its discretion,
subject to any requirements of the Code. 
The payment of a director’s fee by the Company to a Director shall not
be sufficient to constitute “employment” of the Director by the Company.

 

                (m)          “Exchange
Act” means the Securities Exchange Act of 1934, as amended.

 

                (n)           “Fair
Market Value” means, as of any date, the fair market 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 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 as quoted on such system on the
date of determination (if for a given day no sales were reported, the closing
bid on that day shall be used), as such price is reported in The Wall Street
Journal or such other source as the Administrator deems reliable;

 

                (ii)           If the Common Stock is quoted on the
Nasdaq System (but not on the 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 bid and asked prices for the Common
Stock on the date of determination, as reported in The Wall Street Journal or
such other source as the Administrator deems reliable; 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.

 

                (o)           “Incentive
Stock Option” means an Option intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code, as designated in
the applicable written option agreement.

 

                (p)           “Named
Executive” means any individual who, on the last day of the
Company’s fiscal year, is the chief executive officer of the Company (or is
acting in such

 

 

 

capacity) or among the four highest compensated officers of the Company
(other than the chief executive officer). 
Such officer status shall be determined pursuant to the executive
compensation disclosure rules under the Exchange Act.

 

                (q)           “Nonstatutory
Stock Option” means an Option not intended to qualify as an
Incentive Stock Option, as designated in the applicable written option
agreement.

 

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

 

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

 

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

 

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

 

                (v)           “Plan”
means this 1995 Stock Plan.

 

                (w)          “Reporting
Person” means an Officer, Director, or greater than ten percent
shareholder of the Company within the meaning of Rule 16a-2 under the
Exchange Act, who is required to file reports pursuant to Rule 16a-3 under
the Exchange Act.

 

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

 

                (y)           “Rule
16b-3” means Rule 16b-3 promulgated under the Exchange Act, as
the same may be amended from time to time, or any successor provision.

 

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

 

                (aa)         “Stock
Exchange” means any stock exchange or consolidated stock price
reporting system on which prices for the Common Stock are quoted at any given
time.

 

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

 

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

 

 3.  Stock Subject to the Plan.  Subject to the provisions of Section 13 of
the Plan, the maximum aggregate number of Shares that may be optioned and sold
under the Plan is 287,000,000 shares of Common Stock.  The Shares may be authorized, but unissued, or reacquired Common
Stock.  If an Option should expire or
become unexercisable for any reason without having been

 

 

exercised
in full, the unpurchased Shares that were subject thereto shall, unless the
Plan shall have been terminated, become available for future grant under the
Plan. In addition, any Shares of Common Stock which are retained by the Company
upon exercise of an Option or Stock Purchase Right in order to satisfy the
exercise or purchase price for such Option or Stock Purchase Right or any
withholding taxes due with respect to such exercise shall be treated as not
issued and shall continue to be available under the Plan.

 

 4.  Administration of the Plan.

 

                (a)  Multiple
Administrative Bodies.  If
permitted by Rule 16b-3 and by the legal requirements relating to the
administration of incentive stock option plans, if any, of applicable
securities laws and the Code (collectively the “Applicable Laws”), grants under
the Plan may be made by different bodies with respect to Directors, Officers who
are not Directors and Employees or Consultants who are not Reporting Persons.

 

                (b) 
Administration With Respect to Reporting Persons.  With respect to grants of Options or Stock
Purchase Rights to Employees or Consultants who are Reporting Persons, grants
under the Plan shall be made by (A) the Board, if the Board may make
grants under the Plan in compliance with Rule 16b-3, or (B) a
Committee designated by the Board to make grants under the Plan, which
committee shall be constituted in such a manner as to permit grants under the
Plan to comply with Rule 16b-3, to qualify grants of Options to Named
Executives as performance-based compensation under Section 162(m) of the Code
and otherwise so as to satisfy the Applicable Laws.

 

                (c) 
Administration With Respect to Other Persons.  With respect to grants of Options or Stock
Purchase Rights to Employees or Consultants who are not Reporting Persons, 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 Applicable Laws.

 

                (d)  General.  If a Committee has been appointed pursuant
to subsection (ii) or (iii) of this Section 4(a), 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, and, in the case of a Committee appointed
under subsection (ii), to the extent permitted by Rule 16b-3, and to
the extent required under Section 162(m) of the Code to qualify grants of
Options to Named Executives as performance-based compensation.

                (e)  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, 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(m) 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,
not inconsistent with the terms of the Plan, of any award granted hereunder,
including, but not limited to, the share price and any restriction or
limitation, the vesting of any Option or the acceleration of vesting or waiver
of a forfeiture restructure, based in each case on such factors as the
Administrator shall determine, in its sole discretion;

 

                (vii)         to determine whether and under what
circumstances an Option may be settled in cash under Section 10(g) 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;

 

                (xi)           in order to fulfill the purposes of
the Plan and without amending the Plan, to modify grants of Options or Stock
Purchase Rights to participants who are foreign nationals or employed outside
of the United States in order to recognize differences in local law, tax policies
or customs.

 

                (f)  Effect of
Administrator’s Decision. 
All decisions, determinations and interpretations of the Administrator
shall be final and binding on all holders of Options or Stock Purchase Rights.

 

 

 5.  Eligibility.

 

                (a)  Recipients of
Grants.  Nonstatutory Stock
Options and Stock Purchase Rights may be granted to Employees and Consultants;
provided, however, that no person subject to the reporting requirements of
Section 16 of the Exchange Act may receive an option or stock purchase right
unless such person is employed by or a consultant to the Company or any Parent
or Subsidiary. Incentive Stock Options may be granted only to Employees,
provided, however, that Employees of an Affiliate shall be not be eligible to
receive Incentive Stock Options.  An
Employee or Consultant who has been granted an Option or Stock Purchase Right
may, if he or she is otherwise eligible, be granted additional Options or Stock
Purchase Rights.

 

                (b)  Type of
Option.  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 of Shares with respect to which Options designated
as Incentive Stock Options are exercisable for the first time by any Optionee
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 subject to an Incentive Stock Option shall be determined as of the
date of the grant of such Option.

 

                (c)  No
Employment Rights.  The Plan
shall not confer upon any Optionee any right with respect to continuation of
employment or consulting relationship with the Company, nor shall it interfere
in any way with such Optionee’s right or the Company’s right to terminate his
or her employment or consulting relationship at any time, with or without
cause.

 

 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 20 of the Plan.  It shall continue in effect for a term of
ten (10) years unless sooner terminated under Section 16 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 or such shorter
term as may be provided in the Option Agreement and provided further that, 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 written option
agreement.

 

 8.  Limitation on Grants to Employees.  Subject to adjustment as provided in this
Plan, the maximum number of Shares which may be subject to Options granted to
any one Employee under this Plan for any fiscal year of the Company shall be
18,000,000.

 

 

 

 9.  Option Exercise Price and Consideration.

 

                (a)  Exercise
Price.  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 and set forth in the
applicable agreement, but shall be subject to the following:

 

                (i)            In the case of an Incentive Stock
Option that is:

 

                (A)          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.

 

                (B)           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 that is:

 

                (A)          granted to a person who, at the time
of grant of such Option, is a Named Executive of the Company, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant; and

 

                (B)           granted to any person other than a Named Executive, the
per Share exercise price shall be no less than 85% of the Fair Market Value per
Share on the date of grant.

                (b)  Permissible
Consideration.  The
consideration to be paid for the Shares to be issued upon exercise of an
Option, including the method of payment, shall be determined by the
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 that (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 or such other period
as may be required to avoid a charge to the Company’s earnings, 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) authorization for the Company to retain from the total number of
Shares as to which the Option is exercised that number of Shares having a Fair
Market Value on the date of exercise equal to the exercise price for the total
number of Shares as to which the Option is exercised, (6) 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 and any applicable income or employment
taxes, (7) any combination of the foregoing methods of payment, or (9) such
other consideration and method of payment for the issuance of Shares to the
extent permitted under Applicable Laws. 
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.

 

 

 10.  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 Administrator, and reflected in
the written option agreement, which may include vesting requirements and/or
performance criteria with respect to the Company and/or the Optionee.

 

                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 the Company has received full payment for the Shares with respect to
which the Option is exercised.  Full
payment may, as authorized by the Board, consist of any consideration and
method of payment allowable under Section 9(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, not
withstanding 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 13 of the Plan.

 

                Exercise of an Option in any
manner shall result in a decrease in the number of Shares that 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.  Subject to
Section 10(c), in the event of termination of an Optionee’s Continuous
Status as an Employee or Consultant with the Company, such Optionee may, but
only within three (3) months (or such other period of time not less than
thirty (30) days and not more than twelve (12) months as is determined by the
Administrator, with such determination in the case of an Incentive Stock Option
being made at the time of grant of the Option and 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 the 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.  No
termination shall be deemed to occur and this Section 10(b) shall not
apply if (I) the Optionee is a Consultant who becomes an Employee; or
(ii) the Optionee is an Employee who becomes a Consultant.

 

 (c)  Disability of Optionee.  Notwithstanding Section 10(b) above, in
the event of termination of an Optionee’s Continuous Status as an Employee or
Consultant as a result of his or her total and permanent disability (within the
meaning of Section 22(e)(3) of the Code), Optionee may, but

 

 

 

only
within twelve (12) months from 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 the Option to the extent otherwise 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 termination, or if Optionee does not exercise such Option to the
extent so entitled within the time specified herein, the Option shall
terminate.

 

 (d)  Death of Optionee.  In the event of the death of an Optionee
during the period of Continuous Status as an Employee or Consultant, or within
thirty (30) days following the termination of the Optionee’s Continuous Status
as an Employee or Consultant, 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 date of the term of such Option as set forth in the Option
Agreement), 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 the
Optionee was entitled to exercise the Option at the date of death or, if
earlier, the date of termination of the Continuous Status as an Employee or
Consultant.  To the extent that Optionee
was not entitled to exercise the Option at the date of death or termination, as
the case may be, or if Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate.

 

 (e)  Extension of Exercise Period.  Notwithstanding the limitations set forth in
Sections 10(b), (c) and (d) above, the Administrator has full power
and authority to extend the period of time for which any Option granted under
the Plan is to remain exercisable following termination of an Optionee’s
Continuous Status as an Employee or Consultant from the limited period set
forth in the written option agreement to such greater period of time as the
Administrator shall deem appropriate; provided, however, that in no event shall
such Option be exercisable after the specified expiration date of the Option
term.

 

 (f)  Rule 16b-3.  Options granted to Reporting Persons shall
comply with Rule 16b-3 and shall contain such additional conditions or
restrictions as may be required thereunder to qualify for the maximum exemption
for Plan transactions.

 

 (g)  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.

 

 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 (which price shall
not be less than 85% of the Fair Market Value of the Shares as of the date of
the offer), 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 purchase price paid 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.

 

 (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 13 of the Plan.

 

 12.  Stock Withholding to Satisfy Withholding Tax
Obligations.  At the
discretion of the Administrator, Optionees may satisfy withholding obligations
as provided in this paragraph.  When an
Optionee incurs tax liability in connection with an Option or Stock Purchase
Right, which tax liability is subject to tax withholding under applicable tax
laws, and the Optionee is obligated to pay the Company an amount required to be
withheld under applicable tax laws, the Optionee may satisfy the withholding
tax obligation by one or some combination of the following methods: (a) by
cash payment, or (b) out of Optionee’s current compensation, (c) if
permitted by the Administrator, in its discretion, by surrendering to the
Company Shares that (I) in the case of Shares previously acquired from the
Company, have been owned by the Optionee for more than six months on the date
of surrender, and (ii) have a fair market value on the date of surrender
equal to or less than Optionee’s marginal tax rate times the ordinary income
recognized, or (d) by electing to have the Company withhold from the
Shares to be issued upon exercise of the Option, or the Shares to be issued in
connection with the Stock Purchase Right, if any, that number of Shares having
a fair market value equal to the amount required to be withheld.  For this purpose, 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 (the “Tax Date”).

 

                Any surrender by a Reporting
Person of previously owned Shares to satisfy tax withholding obligations
arising upon exercise of this Option must comply with the applicable provisions
of Rule 16b-3.

 

 

                All elections by an Optionee to
have Shares withheld to satisfy tax withholding obligations shall be made in
writing in a form acceptable to the Administrator and shall be subject to the
following restrictions:

 

                (a)           the election must be made on or prior
to the applicable Tax Date;

 

                (b)           once made, the election shall be
irrevocable as to the particular Shares of the Option or Stock Purchase Right
as to which the election is made; and

 

                (c)           all elections shall be subject to the
consent or disapproval of the Administrator.

 

                In the event the election to
have Shares withheld is made by an Optionee and the Tax Date is deferred under
Section 83 of the Code because no election is filed under Section 83(b) of
the Code, the Optionee shall receive the full number of Shares with respect to
which the Option or Stock Purchase Right is exercised but such Optionee shall
be unconditionally obligated to tender back to the Company the proper number of
Shares on the Tax Date.

 

 13.  Adjustments Upon Changes in Capitalization,
Corporate Transactions.

 

                (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 that have been authorized for issuance under
the Plan but as to which no Options or Stock Purchase Rights have yet been
granted or that have been returned to the Plan upon cancellation or expiration
of an Option or Stock Purchase Right, the maximum number of Shares of Common
Stock for which Options may be granted to any Employee under Section 8 of the
Plan and 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,
recapitalization 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)  Corporate
Transactions.  In the event
of the proposed dissolution or liquidation of the Company, the Option will
terminate immediately prior to the consummation of such proposed action, unless
otherwise provided by the Administrator. 
The Administrator may, in the exercise of its sole discretion in such
instances, declare that any Option shall terminate as of a date fixed by the
Administrator and give each

 

 

 

Optionee the right to exercise his or her Option as to all or any part
of the Optioned Stock, including Shares as to which the Option would not
otherwise be exercisable.  In the event
of a proposed sale of all or substantially all of the assets of the Company, or
the merger of the Company with or into another corporation, the Option shall be
assumed or an equivalent option shall be substituted by such successor
corporation or a parent or subsidiary of such successor corporation, unless the
Administrator determines, in the exercise of its sole discretion and in lieu of
such assumption or substitution, that the Optionee shall have the right to
exercise the Option as to some or all of the Optioned Stock, including Shares
as to which the Option would not otherwise be exercisable.  If the Administrator makes an Option
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Administrator shall notify the Optionee that the Option
shall be exercisable for a period of thirty (30) days from the date of such
notice, and the Option will terminate upon the expiration of such period.

 

 14.  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; provided, however, that the Administrator may in its
discretion grant transferable Nonstatutory Stock Options pursuant to option
agreements specifying (i) the manner in which such Nonstatutory Stock
Options are transferable and (ii) that any such transfer shall be subject
to the Applicable Laws.  Options and
Stock Purchase Rights may be exercised or purchased during the lifetime of the
Optionee or Stock Purchase Rights Holder only by the Optionee, Stock Purchase
Rights Holder or a transferee permitted by this Section 14.

 

 15.  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.

 

 16.  Amendment and Termination of the Plan.

 

                (a)  Amendment
and Termination.  The Board
may amend or terminate the Plan from time to time in such respects as the Board
may deem advisable; provided that, the following revisions or amendments shall
require approval of the shareholders of the Company in the manner described in
Section 20 of the Plan:

 

                (i)            any increase in the number of Shares
subject to the Plan, other than an adjustment under Section 14 of the Plan;

 

                (ii)           any change in the designation of the
class of persons eligible to be granted Options; or

 

                (iii)          any change in the limitation on grants
to employees as described in Section 8 of the Plan or other changes which
would require shareholder approval

 

 

to qualify options granted hereunder as performance-based compensation
under Section 162(m) of the Code.

 

                (b)  Shareholder
Approval.  If any amendment
requiring shareholder approval under Section 16(a) of the Plan is made
subsequent to the first registration of any class of equity securities by the
Company under Section 12 of the Exchange Act, such shareholder approval shall
be solicited as described in Section 20 of the Plan.

 

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

 

 17.  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.  As a condition to
the exercise of an Option, the Company 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 by law.

 

 18.  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.

 

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

 

 20.  Shareholder Approval.

 

                (a)           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 manner and to
the degree required under applicable federal and state law and the rules of any
stock exchange upon which the Shares are listed.

 

                (b)           In the event that the Company
registers any class of equity securities pursuant to Section 12 of the
Exchange Act, any required approval of the shareholders of

 

 

the Company obtained after such registration shall be solicited
substantially in accordance with Section 14(a) of the Exchange Act and the
rules and regulations promulgated thereunder.

 

                (c)           If any required approval by the
shareholders of the Plan itself or of any amendment thereto is solicited at any
time otherwise than in the manner described in Section 20(b) hereof, then
the Company shall, at or prior to the first annual meeting of shareholders held
subsequent to the later of (1) the first registration of any class of equity
securities of the Company under Section 12 of the Exchange Act or (2) the
granting of an Option hereunder to an officer or director after such
registration, do the following:

 

                (i)            furnish in writing to the holders
entitled to vote for the Plan substantially the same information that would be
required (if proxies to be voted with respect to approval or disapproval of the
Plan or amendment were then being solicited) by the rules and regulations
in effect under Section 14(a) of the Exchange Act at the time such
information is furnished; and

 

                (ii)           file with, or mail for filing to, the
Securities and Exchange Commission four copies of the written information
referred to in subsection (i) hereof not later than the date on which such
information is first sent or given to shareholders.

 

 21.  Information to Optionees.  The Company shall provide to each Optionee,
during the period for which such Optionee has one or more Options outstanding,
copies of all annual reports and other information which are provided to all
shareholders of the Company.EXHIBIT
4.2

 

YAHOO! INC.

1996 DIRECTORS’ STOCK
OPTION PLAN

(AS AMENDED MAY 1999,
NOVEMBER 2001, MARCH 2002 AND APRIL 2002)

(AS REFLECTING THE
FEBRUARY 2000 STOCK SPLIT)

 

1. PURPOSES OF THE PLAN. The purposes of this
Directors’ Stock Option Plan are to attract and retain the best available
personnel for service as Directors of the Company, to provide additional
incentive to the Outside Directors of the Company to serve as Directors, and to
encourage their continued service on the Board. All options granted hereunder
shall be “nonstatutory stock options”.

 

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

 

(a) “BOARD” shall mean
the Board of Directors of the Company.

 

(b) “CODE” shall mean the Internal Revenue Code of
1986, as amended.

 

(c) “COMMON STOCK” shall mean the Common Stock of the
Company.

 

(d) “COMPANY” shall mean Yahoo! Inc., a California
corporation.

 

(e) “CONTINUOUS STATUS AS A DIRECTOR” shall mean the
absence of any interruption or termination of service as a Director.

 

(f) “DIRECTOR” shall mean a member of the Board.

 

(g) “EMPLOYEE” shall mean 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 in and of itself to constitute “employment” by the Company.

 

(h) “EXCHANGE ACT” shall mean the Securities Exchange
Act of 1934, as amended.

 

(i) “OPTION” shall mean a stock option granted
pursuant to the Plan. All options shall be nonstatutory stock options (i.e.,
options that are not intended to qualify as incentive stock options under
Section 422 of the Code).

 

(j) “OPTIONED STOCK” shall mean the Common Stock
subject to an Option.

 

(k) “OPTIONEE” shall mean an Outside Director who
receives an Option.

 

(l) “OUTSIDE DIRECTOR” shall mean a Director who is
not an Employee.

 

 

 

(m) “PARENT” shall mean a “parent corporation”,
whether now or hereafter existing, as defined in Section 424(e) of the Code.

 

(n) “PLAN” shall mean this 1996 Directors’ Stock
Option Plan.

 

(o) “SHARE” shall mean a share of the Common Stock, as
adjusted in accordance with Section 11 of the Plan.

 

(p) “SUBSIDIARY” shall mean 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 11 of the Plan, the maximum
aggregate number of Shares which may be optioned and sold under the Plan is
4,400,000 Shares (the “Pool”) of Common Stock (such number reflecting the
Company’s two-for-one stock split in February 2000). The Shares may be
authorized, but unissued, or reacquired Common Stock. If an Option 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.
If Shares which were acquired upon exercise of an Option are subsequently
repurchased by the Company, such Shares shall not in any event be returned to the
Plan and shall not become available for future grant under the Plan.

 

4. ADMINISTRATION OF AND
GRANTS OF OPTIONS UNDER THE PLAN.

 

(a) ADMINISTRATOR.
Except as otherwise required herein, the Plan shall be administered by the
Board.

 

(b) PROCEDURE FOR
GRANTS. All grants of Options hereunder shall be automatic and nondiscretionary
and shall be made strictly in accordance with the following provisions:

 

(i) No person
shall have any discretion to select which Outside Directors shall be granted
Options or to determine the number of Shares to be covered by Options granted
to Outside Directors.

 

(ii) With respect
to each Outside Director who first becomes an Outside Director at any time
prior to November 13, 2001, he or she shall be automatically granted an Option
to purchase 50,000 Shares (the “First Option”) on the date on which such person
first becomes an Outside Director, whether through election by the shareholders
of the Company or appointment by the Board of Directors to fill a vacancy.  With respect to each Outside Director who
first becomes an Outside Director at any time on or after November 13, 2001, he
or she shall be automatically granted an Option to purchase 100,000 Shares (the
“First Option”) on the date on which such person first becomes an Outside
Director, whether through election by the shareholders of the Company or
appointment by the Board of Directors to fill a vacancy.

 

-2-

 

(iii) Each Outside
Director shall be automatically granted an Option to purchase 30,000 Shares (a
“Subsequent Option”) on the date of each Annual Meeting of the Company’s
Shareholders (which Subsequent Option shall be decreased to 20,000 Shares
commencing with the grants made on the date of the Company’s 2000 Annual Meeting
and increasing to 50,000 Shares commencing with the grants made on the date of
the Company’s 2002 Annual Meeting) immediately following which such Outside
Director is serving on the Board, with the first such grant being made at the
1997 Annual Meeting, provided that, on such date, he or she shall have served
on the Board for at least six (6) months prior to the date of such Annual
Meeting.

 

(iv)
Notwithstanding the provisions of subsections (ii) and (iii) hereof, in the
event that a grant would cause the number of Shares subject to outstanding
Options plus the number of Shares previously purchased upon exercise of Options
to exceed the Pool, then each  such
automatic grant shall be for that number of Shares determined by dividing the
total number of Shares remaining available for grant by the number of Outside
Directors receiving an Option on such date on the automatic grant date. Any
further grants shall then be deferred until such time, if any, as additional
Shares become available for grant under the Plan through action of the
shareholders to increase the number of Shares which may be issued under the
Plan or through cancellation or expiration of Options previously granted
hereunder.

 

(v)
Notwithstanding the provisions of subsections (ii) and (iii) hereof, any grant
of an Option made before the Company has obtained shareholder approval of the
Plan in accordance with Section 17 hereof shall be conditioned upon obtaining
such shareholder approval of the Plan in accordance with Section 17 hereof.

 

(vi) The terms of
each First Option granted hereunder shall be as follows:

 

(1) the First
Option shall be exercisable only while the Outside Director remains a Director
of the Company, except as set forth in Section 9 hereof.

 

(2) the exercise
price per Share shall be 100% of the fair market value per Share on the date of
grant of the First Option, determined in accordance with Section 8 hereof.

 

(3) the First
Option shall become exercisable in installments cumulatively as to 1/48 of the
Shares subject to the First Option at the end of each month following the date
of grant of the Option.

 

(vii) The terms of
each Subsequent Option granted hereunder shall be as follows:

 

(1) the Subsequent
Option shall be exercisable only while the Outside Director remains a Director
of the Company, except as set forth in Section 9 hereof.

 

-3-

 

(2) the exercise
price per Share shall be 100% of the fair market value per Share on the date of
grant of the Subsequent Option, determined in accordance with Section 8 hereof.

 

(3) the Subsequent
Option shall become exercisable as to twenty five percent (25%) of the Shares
subject to the Subsequent Option on the first anniversary of the date of grant
of the Subsequent Option and shall thereafter become exercisable in
installments cumulatively as to 1/48 of the Shares subject to the Subsequent
Option at the end of each month following such first anniversary; provided,
however, that Subsequent Options granted prior to the date of the Company’s 2000
Annual Meeting of Shareholders shall become exercisable as to 100% of the
Shares subject to the Subsequent Option on the four-year anniversary of the
date of grant of the Subsequent Option.

 

(c) POWERS OF THE
BOARD. Subject to the provisions and restrictions of the Plan, the Board shall
have the authority, in its discretion: (i) to determine, upon review of
relevant information and in accordance with Section 8(b) of the Plan, the fair
market value of the Common Stock; (ii) to determine the exercise price per
share of Options to be granted, which exercise price shall be determined in
accordance with Section 8(a) of the Plan; (iii) to interpret the Plan; (iv) to
prescribe, amend and rescind rules and regulations relating to the Plan; (v) to
authorize any person to execute on behalf of the Company any instrument
required to effectuate the grant of an Option previously granted hereunder; and
(vi) to make all other determinations deemed necessary or advisable for the
administration of the Plan.

 

(d) EFFECT OF BOARD’S
DECISION. All decisions, determinations and interpretations of the Board shall
be final and binding on all Optionees and any other holders of any Options
granted under the Plan.

 

(e) SUSPENSION OR
TERMINATION OF OPTION. If the President or his or her designee reasonably
believes that an Optionee has committed an act of misconduct, the President may
suspend the Optionee’s right to exercise any option pending a determination by
the Board of Directors (excluding the Outside Director accused of such misconduct).
If the Board of Directors (excluding the Outside Director accused of such
misconduct) determines an Optionee has committed an act of embezzlement, fraud,
dishonesty, nonpayment of an obligation owed to the Company, breach of
fiduciary duty or deliberate disregard of the Company rules resulting in loss,
damage or injury to the Company, or if an Optionee makes an unauthorized
disclosure of any Company trade secret or confidential information, engages in
any conduct constituting unfair competition, induces any Company customer to
breach a contract with the Company or induces any principal for whom the
Company acts as agent to terminate such agency relationship, neither the
Optionee nor his or her estate shall be entitled to exercise any option whatsoever.
In making such determination, the Board of Directors (excluding the Outside
Director accused of such misconduct) shall act fairly and shall give the
Optionee an opportunity to appear and present evidence on Optionee’s behalf at
a hearing before the Board or a committee of the Board.

 

5. ELIGIBILITY. Options
may be granted only to Outside Directors. All Options shall be automatically
granted in accordance with the terms set forth in Section 4(b) hereof. An
Outside

 

 

-4-

 

Director who has
been granted an Option may, if he or she is otherwise eligible, be granted an
additional Option or Options in accordance with such provisions. The Plan shall
not confer upon any Optionee any right with respect to continuation of service
as a Director or nomination to serve as a Director, nor shall it interfere in
any way with any rights which the Director or the Company may have to terminate
his or her directorship at any time.

 

6. TERM OF PLAN;
EFFECTIVE DATE. The Plan shall become effective on the effectiveness of the
registration statement under the Securities Act of 1933 relating to the
Company’s initial public offering of securities. It shall continue in effect
for a term of ten (10) years unless sooner terminated under Section 13 of the
Plan.

 

7. TERM OF OPTIONS. The
term of each Option shall be ten (10) years from the date of grant thereof.

 

8. EXERCISE PRICE AND
CONSIDERATION.

 

(a) EXERCISE
PRICE. The per Share exercise price for the Shares to be issued pursuant to
exercise of an Option shall be 100% of the fair market value per Share on the
date of grant of the Option.

 

(b) FAIR MARKET
VALUE. The fair market value shall be determined by the Board; provided,
however, that where there is a public market for the Common Stock, the fair
market value per Share shall be the mean of the bid and asked prices of the
Common Stock in the over-the-counter market on the date of grant, as reported
in The Wall Street Journal (or, if not so reported, as otherwise reported by
the National Association of Securities Dealers Automated Quotation (“Nasdaq”)
System) or, in the event the Common Stock is traded on the Nasdaq National
Market or listed on a stock exchange, the fair market value per Share shall be
the closing price on such system or exchange on the date of grant of the
Option, as reported in The Wall Street Journal. With respect to any Options
granted hereunder concurrently with the initial effectiveness of the Plan, the
fair market value shall be the Price to Public as set forth in the final
prospectus relating to such initial public offering.

 

(c) FORM OF
CONSIDERATION. The consideration to be paid for the Shares to be issued upon
exercise of an Option shall consist entirely of cash, check, other Shares of
Common Stock having 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 (which, if acquired from the Company, shall have been held for at
least six months), or any combination of such methods of payment and/or any
other consideration or method of payment as shall be permitted under applicable
corporate law.

 

9. EXERCISE OF OPTION.

 

(a) PROCEDURE FOR
EXERCISE; RIGHTS AS A SHAREHOLDER. Any Option granted hereunder shall be
exercisable at such times as are set forth in Section 4(b) hereof; provided,
however, that no Options shall be exercisable prior to shareholder approval of

 

 

-5-

 

the Plan in
accordance with Section 17 hereof has been obtained. 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 consist of any
consideration and method of payment allowable under Section 8(c) 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. A share certificate for the
number of Shares so acquired shall be issued to the Optionee as soon as
practicable after 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 11 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
STATUS AS A DIRECTOR. If an Outside Director ceases to serve as a Director, he
or she may, but only within ninety (90) days after the date he or she ceases to
be a Director of the Company, exercise his or her Option to the extent that he
or she was entitled to exercise it at the date of such termination.
Notwithstanding the foregoing, in no event may the Option be exercised after
its term set forth in Section 7 has expired. To the extent that such Outside
Director was not entitled to exercise an Option at the date of such
termination, or does not exercise such Option (which he or she was entitled to
exercise) within the time specified herein, the Option shall terminate.

 

(c) DISABILITY OF
OPTIONEE. Notwithstanding Section 9(b) above, in the event a Director is unable
to continue his or her service as a Director with the Company as a result of
his or her total and permanent disability (as defined in Section 22(e)(3) of
the Internal Revenue Code), he or she may, but only within six (6) months (or
such other period of time not exceeding twelve (12) months as is determined by
the Board) from the date of such termination, exercise his or her Option to the
extent he or she was entitled to exercise it at the date of such termination.
Notwithstanding the foregoing, in no event may the Option be exercised after
its term set forth in Section 7 has expired. To the extent that he or she was
not entitled to exercise the Option at the date of termination, or if he or she
does not exercise such Option (which he or she was entitled to exercise) within
the time specified herein, the Option shall terminate.

 

(d) DEATH OF
OPTIONEE. In the event of the death of an Optionee: (i) During the term of the
Option who is, at the time of his or her death, a Director of the Company and
who shall have been in Continuous Status as a Director since the date of grant
of the Option, the Option may be exercised, at any time within six (6) months
following the date of death, 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 of the right to exercise that would have accrued had the Optionee
continued living and remained in Continuous Status as Director for six (6)
months (or such lesser period of time as is determined by the Board) after the
date of death. Notwithstanding

 

 

-6-

 

the foregoing, in
no event may the Option be exercised after its term set forth in Section 7 has
expired. (ii) Within three (3) months after the termination of Continuous
Status as a Director, the Option may be exercised, at any time within six (6)
months following the date of death, 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 of the right to exercise that had accrued at the date of
termination. Notwithstanding the foregoing, in no event may the option be
exercised after its term set forth in Section 7 has expired.

 

10. NONTRANSFERABILITY OF
OPTIONS. The Option 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 or pursuant to a qualified domestic relations order (as
defined by the Code or the rules thereunder). The designation of a beneficiary
by an Optionee does not constitute a transfer. An Option may be exercised during
the lifetime of an Optionee only by the Optionee or a transferee permitted by
this Section.

 

11. ADJUSTMENTS UPON
CHANGES IN CAPITALIZATION; CORPORATE TRANSACTIONS.

 

(a) ADJUSTMENT.
Subject to any required action by the shareholders of the Company, the number
of shares of Common Stock covered by each outstanding Option, and the number of
shares of Common Stock which have been authorized for issuance under the Plan
but as to which no Options have yet been granted or which have been returned to
the Plan upon cancellation or expiration of an Option, as well as the price per
share of Common Stock covered by each such outstanding Option, 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.

 

(b) CORPORATE
TRANSACTIONS. In the event of (i) a dissolution or liquidation of the Company,
(ii) a sale of all or substantially all of the Company’s assets, (iii) a merger
or consolidation in which the Company is not the surviving corporation, or (iv)
any other capital reorganization in which more than fifty percent (50%) of the
shares of the Company entitled to vote are exchanged, the Company shall give to
the Eligible Director, at the time of adoption of the plan for liquidation,
dissolution, sale, merger, consolidation or reorganization, either a reasonable
time thereafter within which to exercise the Option, including Shares as to
which the Option would not be otherwise exercisable, prior to the effectiveness
of such liquidation, dissolution, sale, merger, consolidation or
reorganization, at the end of which time the Option shall terminate, or the
right to exercise the Option, including Shares as to which the

 

-7-

 

Option would not
be otherwise exercisable (or receive a substitute option with comparable
terms), as to an equivalent number of shares of stock of the corporation
succeeding the Company or acquiring its business by reason of such liquidation,
dissolution, sale, merger, consolidation or reorganization.

 

12. TIME OF GRANTING
OPTIONS. The date of grant of an Option shall, for all purposes, be the date
determined in accordance with Section 4(b) hereof. Notice of the determination
shall be given to each Outside Director to whom an Option is so granted within
a reasonable time after the date of such grant.

 

13. AMENDMENT AND
TERMINATION OF THE PLAN.

 

(a) AMENDMENT AND
TERMINATION. The Board may amend or terminate the Plan from time to time in such
respects as the Board may deem advisable; provided that, to the extent
necessary and desirable to comply with Rule 16b-3 under the Exchange Act (or
any other applicable law or regulation), the Company shall obtain approval of
the shareholders of the Company to Plan amendments to the extent and in the
manner required by such law or regulation.

 

(b) EFFECT OF
AMENDMENT OR TERMINATION. Any such amendment or termination of the Plan that
would impair the rights of any Optionee shall not affect Options already
granted to such Optionee and such Options shall remain in full force and effect
as if this Plan had not been amended or terminated, unless mutually agreed
otherwise between the Optionee and the Board, which agreement must be in
writing and signed by the Optionee and the Company.

 

14. CONDITIONS UPON
ISSUANCE OF SHARES. Shares shall not be issued pursuant to the exercise of an
Option unless the exercise of such Option and the issuance and delivery of such
Shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, state
securities laws, 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, the Company 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 by any of the aforementioned
relevant provisions of law.

 

15. 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. 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.

 

 

-8-

 

16. OPTION AGREEMENT.
Options shall be evidenced by written option agreements in such form as the Board
shall approve.

 

17. SHAREHOLDER APPROVAL.
Continuance of the Plan shall be subject to approval by the shareholders of the
Company at or prior to the first annual meeting of shareholders held subsequent
to the granting of an Option hereunder. If such shareholder approval is
obtained at a duly held shareholders’ meeting, it may be obtained by the
affirmative vote of the holders of a majority of the outstanding shares of the
Company present or represented and entitled to vote thereon. If such shareholder
approval is obtained by written consent, it may be obtained by the written
consent of the holders of a majority of the outstanding shares of the Company.
Options may be granted, but not exercised, before such shareholder approval.

 

 

-9-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00040-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00040-of-00352.parquet"}]]