Document:

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                                                                   Exhibit 10.14

              SEMICONDUCTOR MANUFACTURING INTERNATIONAL CORPORATION

                 2001 REGULATION S PREFERENCE SHARES STOCK PLAN

     1.   Purposes of the Plan. The purposes of this 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 this Plan
are not intended to qualify under Rule 701 promulgated under the Securities Act,
but instead the Company intends upon relying on the exception to registration as
provided under Regulation S promulgated under the Securities Act.

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

          (a)  "Acquisition Date" means the respective dates on which the
Shares are sold under the Plan or the Shares are issued upon exercise of an
Option.

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

          (c)  "Applicable Laws" means the requirements relating to the
administration of stock option plans under Cayman Islands laws, U.S. state
corporate laws, U.S. federal and state securities laws, the Code, any stock
exchange or quotation system on which the Ordinary Shares are listed or quoted
and the applicable laws of any other country or jurisdiction where Options are
granted under the Plan.

          (d)  "Articles of Association" means the Amended and Restated Articles
of Association of the Company, as amended to date and hereafter.

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

          (f)  "Change in Control" means the occurrence of any of the following
events:

               (i)    Any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) becomes the "beneficial owner" (as defined in Rule
13d-3 of the Exchange Act), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the total voting power represented
by the Company's then outstanding voting securities; or

               (ii)   The consummation of the sale or disposition by the Company
of all or substantially all of the Company's assets; or

               (iii)  The consummation of a merger or consolidation of the
Company with any other corporation, other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or its parent)

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at least a majority of the total voting power represented by the voting
securities of the Company or such surviving entity or its parent outstanding
immediately after such merger or consolidation.

          (g)  "Code" means the U.S. Internal Revenue Code of 1986, as amended.

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

          (i)  "Company" means Semiconductor Manufacturing International
Corporation, a Cayman Islands company.

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

          (k)  "Director" means a member of the Board.

          (l)  "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.

          (m)  "Employee" means any person, including officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. A Service
Provider shall not cease to be an Employee in the case of (i) any leave of
absence approved by the Company or any Parent or Subsidiary of the Company or
(ii) transfers between locations of the Company or between the Company, its
Parent, any Subsidiary, or any successor. Neither service as a Director nor
payment of a director's fee by the Company or any Parent or Subsidiary of the
Company shall be sufficient to constitute "employment" by the Company or any
Parent or Subsidiary of the Company.

          (n)  "Exchange Act" means the U.S. Securities Exchange Act of 1934, as
amended.

          (o)  "Fair Market Value" means, as of any date: (x) with respect
to the Preference Shares, the value of the Preference Shares as determined in
good faith by the Administrator, but shall not be less than $1.1111 per share
(as adjusted in accordance with Section 13 hereof); and (y) with respect to the
Ordinary Shares:

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

               (ii)   If the Ordinary Shares are regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean between the high bid and low asked prices for the
Ordinary Shares on the day of determination; or

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

                                       -2-

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          (p)  "IPO Date" means the date upon which the Company's initial firm
commitment underwritten public offering pursuant to a registration statement
under the Securities Act, or under the applicable securities laws of another
jurisdiction, covering the offer and sale of Ordinary Shares to the public, is
consummated.

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

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

          (s)  "Optionee" means the holder of an outstanding Option granted
under the Plan.

          (t)  "Ordinary Shares" means the Ordinary Shares of the Company.

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

          (v)  "Plan" means this 2001 Regulation S Preference Shares Stock Plan,
as amended from time to time.

          (w)  "Preference Shares" mean the Series A Preference Shares of the
Company.

          (x)  "Securities Act" means the U.S. Securities Act of 1933, as
amended.

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

          (z)  "Share" means a share of the Preference Shares or, on and after
the conversion of the Preference Shares into Ordinary Shares, a share of the
Ordinary Shares, in either case as adjusted in accordance with Section 13 below.

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

          (bb) "United States" means the United States of America, its
territories and possessions, any State of the United States, and the District of
Columbia.

          (cc) "U.S. person" means:

               (i)    Any natural person resident in the United States;

               (ii)   Any partnership or corporation organized or incorporated
                      under the laws of the United States;

               (iii)  Any estate of which any executor or administrator is a
                      U.S. person;

               (iv)   Any trust of which any trustee is a U.S. person;

               (v)    Any agency or branch of a foreign entity located in the
                      United States;

                                       -3-

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               (vi)   Any non-discretionary account or similar account (other
                      than an estate or trust) held by a dealer or other
                      fiduciary for the benefit or account of a U.S. person;

               (vii)  Any discretionary account or similar account (other than
                      an estate or trust) held by a dealer or other fiduciary
                      organized, incorporated, or (if an individual) resident in
                      the United States; and

               (viii) Any partnership or corporation if:

                      (A)  Organized or incorporated under the laws of any
                           foreign jurisdiction; and

                      (B)  Formed by a U.S. person principally for the purpose
                           of investing in securities not registered under the
                           Securities Act, unless it is organized or
                           incorporated, and owned, by accredited investors (as
                           defined in Rule 501(a) promulgated under the
                           Securities Act) who are not natural persons, estates
                           or trusts.

     3.   Shares Subject to the Plan. Subject to the provisions of Section 13 of
the Plan, the maximum aggregate number of Shares that may be subject to option
and sold under the Plan is 20,000,360 Shares. The Shares that may be subject to
option and sold under the Plan may be authorized but unissued, or reacquired
Shares.

          If an Option 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). However, Shares that have actually been issued under the Plan, upon
exercise of an Option, shall not be returned to the Plan and shall not become
available for future distribution under the Plan, except that if restricted
Shares issued pursuant to an Option are repurchased by the Company at their
original purchase price, such Shares shall become available for future grant
under the Plan.

     4.   Administration of the Plan.

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

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

               (i)    to determine the Fair Market Value;

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

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

                                       -4-

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

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

               (vi)   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 satisfying applicable foreign laws;

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

               (viii) to construe and interpret the terms of the Plan and
Options granted pursuant to the Plan.

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

     5.   Eligibility. Only non-United States resident Service Providers shall
be eligible for the grant of Options or the purchase of Shares.

     6.   At-Will Employment. Neither the Plan nor any Option shall confer upon
any Optionee any right with respect to continuing the Optionee's relationship as
a Service Provider with the Company or any Parent or Subsidiary of the Company,
nor shall it interfere in any way with his or her right or the right of the
Company or any Parent or Subsidiary of the Company to terminate such
relationship at any time, with or without cause, and with or without notice.

     7.   Term of Plan. Subject to shareholder approval in accordance with
Section 19, the Plan shall become effective upon its adoption by the Board.
Unless sooner terminated under Section 15, it shall continue in effect for a
term of ten (10) years from the later of (i) the effective date of the Plan, or
(ii) the date of the most recent Board approval of an increase in the number of
shares reserved for issuance under the Plan; provided, however, that no
additional Options may be granted under the Plan on or after the IPO Date.

     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.

                                       -5-

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     9.   Option Exercise Price and Consideration.

          (a)  Exercise Price. 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.

          (b)  Forms of Consideration. The consideration to be paid for the
Shares to be issued upon exercise of an Option, including the method of payment,
shall be determined by the Administrator. Such consideration may consist of,
without limitation, (1) cash, (2) check, (3) promissory note, (4) other Shares,
provided Shares acquired directly from the Company (x) have been owned by the
Optionee 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) consideration
received by the Company under a cashless exercise program implemented by the
Company in connection with the Plan, or (6) any combination of the foregoing
methods of payment. In making its determination as to the type of consideration
to accept, the Administrator shall consider if acceptance of such consideration
may be reasonably expected to benefit the Company. Notwithstanding the
foregoing, the Administrator may permit an Optionee to exercise his or her
Option by delivery of a full-recourse promissory note secured by the purchased
Shares. The terms of such promissory note shall be determined by the
Administrator in its sole discretion.

     10.  Exercise of Option.

          (a)  Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable according to the terms hereof at such
times and under such conditions as determined by the Administrator and as set
forth in the Option Agreement. Unless the Administrator provides otherwise,
vesting of Options granted hereunder shall be suspended during any unpaid leave
of absence. An Option may not be exercised for a fraction of a Share.

               An Option shall be deemed exercised when the Company receives (i)
written or electronic notice of exercise (in accordance with the Option
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Shares, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 13 of the Plan.

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

                                       -6-

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          (b)  Termination of Relationship as a Service Provider. If an Optionee
ceases to be a Service Provider, other than because of death or disability, such
Optionee may exercise his or her Option within thirty (30) days of termination,
or such longer period of time as specified in the Option Agreement, to the
extent that the Option is vested on the date of termination (but in no event
later than the expiration of the term of the Option as set forth in the Option
Agreement). If, on the date of termination, the Optionee is not vested as to his
or her entire Option, the Shares covered by the unvested portion of the Option
shall revert to the Plan. If, after termination, the Optionee does not exercise
his or her Option within the time specified by the Administrator, the Option
shall terminate, and the Shares covered by such Option shall revert to the Plan.

          (c)  Disability of Optionee. If an Optionee ceases to be a Service
Provider as a result of the Optionee's Disability, the Optionee may exercise his
or her Option within six (6) months of termination, or such longer period of
time as specified in the Option Agreement, to the extent the Option is vested on
the date of termination (but in no event later than the expiration of the term
of such Option as set forth in the Option Agreement). If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.

          (d)  Death of Optionee. If an Optionee dies while a Service Provider,
the Option may be exercised within six (6) months following Optionee's death, or
such longer period of time as specified in the Option Agreement, to the extent
that the Option is vested on the date of death (but in no event later than the
expiration of the term of such Option as set forth in the Option Agreement) by
the Optionee's designated beneficiary, provided such beneficiary has been
designated prior to Optionee's death in a form acceptable to the Administrator.
If no such beneficiary has been designated by the Optionee, then such Option may
be exercised by the personal representative of the Optionee's estate or by the
person(s) to whom the Option is transferred pursuant to the Optionee's will or
in accordance with the laws of descent and distribution. If, at the time of
death, the Optionee is not vested as to his or her entire Option, the Shares
covered by the unvested portion of the Option shall immediately revert to the
Plan. If the Option is not so exercised within the time specified herein, the
Option shall terminate, and the Shares covered by such Option shall revert to
the Plan.

     11.  Restriction on Transfer. Any Shares sold under the Plan shall not be
offered or sold to a U.S. person or for the account or benefit of a U.S. person
prior to the expiration of one year from the Acquisition Date. Any Shares
awarded or sold under the Plan offered or sold prior to the expiration of one
year from the Acquisition Date may be offered or sold only pursuant to the
following conditions: (i) the purchaser of the Shares certifies that it is not a
U.S. person and is not acquiring the Shares for the account or benefit of any
U.S. person or is a U.S. person who purchased the Shares in a transaction that
did not require registration under the Securities Act; (ii) the purchaser of the
Shares agrees to resell such Shares only in accordance with the provisions of
Regulation S promulgated under the Securities Act, pursuant to registration
under the Securities Act, or pursuant to an available exemption from
registration; and agrees not to engage in hedging transactions with regard to
such Shares unless in compliance with the Securities Act; and (iii) the
certificate evidencing the Shares shall contain restrictive legends to a similar
effect as set forth in (ii). In addition, any Shares awarded or sold under the
Plan shall also be subject to such special forfeiture conditions, rights of
repurchase, rights of first refusal and other transfer restrictions as the Board
may determine.

                                       -7-

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The restrictions shall be set forth in the applicable Option Agreement and shall
apply in addition to any restrictions that may apply to holders of Shares
generally.

     12.  Limited Transferability of Options. Unless determined otherwise by the
Administrator, Options may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or the laws of
descent and distribution, and may be exercised during the lifetime of the
Optionee, only by the Optionee.

     13.  Adjustments Upon Changes in Capitalization, Merger or Change in
Control.

          (a)  Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the number and type of Shares 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, and the number and type of Shares covered by each outstanding
Option, as well as the price per Share covered by each such outstanding Option,
shall be proportionately adjusted for any increase or decrease in the number or
type of issued Shares resulting from a share split, reverse share split, share
dividend, combination or reclassification of the Ordinary Shares or the
Preference Shares, or any other increase or decrease in the number of issued
shares of Ordinary Shares or Preference Shares effected without receipt of
consideration by the Company. The conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of any class, or
securities convertible into shares of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number, type or price of
Shares subject to an Option.

          (b)  Automatic Conversion of Preference Shares. In the event of the
automatic conversion of the Preference Shares into Ordinary Shares in accordance
with the terms of the Articles of Association, each outstanding Option
immediately prior to such automatic conversion which remains outstanding
following such automatic conversion shall be exercisable, following such
automatic conversion, for that number of Ordinary Shares into which each
outstanding Preference Share was converted at the time of such automatic
conversion, and the exercise price for each such Ordinary Share following such
automatic conversion shall be adjusted proportionately.

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

          (d)  Merger or Change in Control. In the event of a merger of the
Company with or into another corporation, or a Change in Control, each
outstanding Option shall be assumed or an

                                       -8-

<PAGE>

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

     14.  Time of Granting Options. The date of grant of an Option shall, for
all purposes, be the date on which the Administrator makes the determination
granting such Option, or such later date as is determined by the Administrator.
Notice of the determination shall be given to each Service Provider to whom an
Option 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 amend,
alter, suspend or terminate the Plan.

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

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

     16.  Conditions Upon Issuance of Shares.

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

                                       -9-

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

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

                                      -10-Amended & Restated Axis Systems, Inc. 1997 Stock Plan

 EXHIBIT 4.1 
  

AXIS SYSTEMS, INC. 
  
 1997 STOCK PLAN 
  
 ADOPTED ON OCTOBER 6, 1997 
  
 (AMENDED AND RESTATED
ON DECEMBER 8, 1998) 
  
 (AMENDED AND RESTATED ON FEBRUARY 9, 2004) 

 TABLE OF CONTENTS 
  

					
	 	 	 	  	Page No.

	SECTION 1.	 	ESTABLISHMENT AND PURPOSE	  	1
			
	SECTION 2.	 	ADMINISTRATION	  	1
			
	(a)	 	Committees of the Board of Directors	  	1
	(b)	 	Authority of the Board of Directors	  	1
			
	SECTION 3.	 	ELIGIBILITY	  	1
			
	(a)	 	General Rule	  	1
	(b)	 	Ten–Percent Stockholders	  	1
			
	SECTION 4.	 	STOCK SUBJECT TO PLAN	  	1
			
	(a)	 	Basic Limitation	  	1
	(b)	 	Additional Shares	  	2
			
	SECTION 5.	 	TERMS AND CONDITIONS OF AWARDS OR SALES	  	2
			
	(a)	 	Stock Purchase Agreement	  	2
	(b)	 	Duration of Offers and Nontransferability of Rights	  	2
	(c)	 	Purchase Price	  	2
	(d)	 	Withholding Taxes	  	2
	(e)	 	Restrictions on Transfer of Shares and Minimum Vesting	  	2
	(f)	 	Accelerated Vesting	  	3
			
	SECTION 6.	 	TERMS AND CONDITIONS OF OPTIONS	  	3
			
	(a)	 	Stock Option Agreement	  	3
	(b)	 	Number of Shares	  	3
	(c)	 	Exercise Price	  	3
	(d)	 	Withholding Taxes	  	3
	(e)	 	Exercisability	  	3
	(f)	 	Accelerated Exercisability	  	3
	(g)	 	Basic Term	  	4
	(h)	 	Nontransferability	  	4
	(i)	 	Termination of Service (Except by Death)	  	4
	(j)	 	Leaves of Absence	  	4
	(k)	 	Death of Optionee	  	5
	(l)	 	No Rights as a Stockholder	  	5
	(m)	 	Modification, Extension and Assumption of Options	  	5
	(n)	 	Restrictions on Transfer of Shares and Minimum Vesting	  	5
	(o)	 	Accelerated Vesting	  	5

  

 i 

					
			
	SECTION 7.	 	PAYMENT FOR SHARES	  	6
			
	(a)	 	General Rule	  	6
	(b)	 	Surrender of Stock	  	6
	(c)	 	Services Rendered	  	6
	(d)	 	Promissory Note	  	6
	(e)	 	Exercise/Sale	  	6
	(f)	 	Exercise/Pledge	  	6
			
	SECTION 8.	 	ADJUSTMENT OF SHARES	  	7
			
	(a)	 	General	  	7
	(b)	 	Mergers and Consolidations	  	7
	(c)	 	Reservation of Rights	  	7
			
	SECTION 9.	 	SECURITIES LAW REQUIREMENTS	  	7
			
	(a)	 	General	  	7
	(b)	 	Financial Reports	  	7
			
	SECTION 10.	 	NO RETENTION RIGHTS	  	8
			
	SECTION 11.	 	DURATION AND AMENDMENTS	  	8
			
	(a)	 	Term of the Plan	  	8
	(b)	 	Right to Amend or Terminate the Plan	  	8
	(c)	 	Effect of Amendment or Termination	  	8
			
	SECTION 12.	 	DEFINITIONS	  	8

  

 ii 

 AXIS SYSTEMS, INC. 1997 STOCK
PLAN 
  
 SECTION 1. ESTABLISHMENT AND PURPOSE.

  
 The purpose of the Plan is to offer selected individuals
an opportunity to acquire a proprietary interest in the success of the Company, or to increase such interest, by purchasing Shares of the Company’s Stock. The Plan provides both for the direct award or sale of Shares and for the grant of
Options to purchase Shares. Options granted under the Plan may include Nonstatutory Options as well as ISOs intended to qualify under Section 422 of the Code. 
  

Capitalized terms are defined in Section 12. 
  
 SECTION 2. ADMINISTRATION. 
  
 (a) Committees of the Board of Directors. The Plan may be administered by one or more Committees. Each Committee shall consist of one
or more members of the Board of Directors who have been appointed by the Board of Directors. Each Committee shall have such authority and be responsible for such functions as the Board of Directors has assigned to it. If no Committee has been
appointed, the entire Board of Directors shall administer the Plan. Any reference to the Board of Directors in the Plan shall be construed as a reference to the Committee (if any) to whom the Board of Directors has assigned a particular function.

  
 (b) Authority of the Board of Directors.
Subject to the provisions of the Plan, the Board of Directors shall have full authority and discretion to take any actions it deems necessary or advisable for the administration of the Plan. All decisions, interpretations and other actions of the
Board of Directors shall be final and binding on all Purchasers, all Optionees and all persons deriving their rights from a Purchaser or Optionee. 
  
 SECTION 3. ELIGIBILITY. 
  
 (a) General Rule. Only Employees, Outside Directors and Consultants shall be eligible for the grant of Options or the direct award or
sale of Shares. Only Employees shall be eligible for the grant of ISOs. 
  
 (b) Ten-Percent Stockholders. An individual who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Company, its Parent or any of its Subsidiaries shall not be eligible for
designation as an Optionee or Purchaser unless (i) the Exercise Price is at least 110% of the Fair Market Value of a Share on the date of grant, (ii) the Purchase Price (if any) is at least 100% of the Fair Market Value of a Share and (iii) in the
case of an ISO, such ISO by its terms is not exercisable after the expiration of five years from the date of grant. For purposes of this Subsection (b), in determining stock ownership, the attribution rules of Section 424(d) of the Code shall be
applied. 
  
 SECTION 4. STOCK SUBJECT TO PLAN. 
  
 (a) Basic Limitation. Shares offered under the Plan may
be authorized but unissued Shares or treasury Shares. The aggregate number of Shares that may be issued under the Plan 

  

 1 

 
(upon exercise of Options or other rights to acquire Shares) shall not exceed 1,124,013 Shares, subject to adjustment pursuant to Section 8. The number of
Shares that are subject to Options or other rights outstanding at any time under the Plan shall not exceed the number of Shares that then remain available for issuance under the Plan. The Company, during the term of the Plan, shall at all times
reserve and keep available sufficient Shares to satisfy the requirements of the Plan. 
  
 (b) Additional Shares. In the event that any outstanding Option or other right for any reason expires or is canceled or otherwise terminated, the Shares allocable to the unexercised portion of
such Option or other right shall again be available for the purposes of the Plan. In the event that Shares issued under the Plan are reacquired by the Company pursuant to any forfeiture provision, right of repurchase or right of first refusal, such
Shares shall again be available for the purposes of the Plan, except that the aggregate number of Shares which may be issued upon the exercise of ISOs shall in no event exceed 1,124,013 Shares (subject to adjustment pursuant to Section 8).

  
 SECTION 5. TERMS AND CONDITIONS OF AWARDS OR SALES. 
  
 (a) Stock Purchase Agreement. Each award or sale of
Shares under the Plan (other than upon exercise of an Option) shall be evidenced by a Stock Purchase Agreement between the Purchaser and the Company. Such award or sale shall be subject to all applicable terms and conditions of the Plan and may be
subject to any other terms and conditions which are not inconsistent with the Plan and which the Board of Directors deems appropriate for inclusion in a Stock Purchase Agreement. The provisions of the various Stock Purchase Agreements entered into
under the Plan need not be identical. 
  
 (b) Duration of
Offers and Nontransferability of Rights. Any right to acquire Shares under the Plan (other than an Option) shall automatically expire if not exercised by the Purchaser within 30 days after the grant of such right was communicated
to the Purchaser by the Company. Such right shall not be transferable and shall be exercisable only by the Purchaser to whom such right was granted. 
  
 (c) Purchase Price. The Purchase Price of Shares to be offered under the Plan shall not be less than 85% of the Fair Market Value of such
Shares, and a higher percentage may be required by Section 3(b). Subject to the preceding sentence, the Purchase Price shall be determined by the Board of Directors at its sole discretion. The Purchase Price shall be payable in a form described in
Section 7. 
  
 (d) Withholding Taxes. As a
condition to the purchase of Shares, the Purchaser shall make such arrangements as the Board of Directors may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with such
purchase. 
  
 (e) Restrictions on Transfer of Shares and
Minimum Vesting. Any Shares awarded or sold under the Plan shall be subject to such special forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the Board of Directors may
determine. Such restrictions shall be set forth in the applicable Stock Purchase Agreement and 

  

 2 

 
shall apply in addition to any restrictions that may apply to holders of Shares generally. Any such right may be exercised only within three months after the
termination of the Purchaser’s Service for cash or for cancellation of indebtedness incurred in purchasing the Shares. 
  
 (f) Accelerated Vesting. Unless the applicable Stock Purchase Agreement provides otherwise, any right to repurchase a
Purchaser’s Shares at the original Purchase Price (if any) upon termination of the Purchaser’s Service shall lapse and all of such Shares shall become vested if (i) the Company is subject to a Change in Control before the Purchaser’s
Service terminates and (ii) the repurchase right is not assigned to the entity that employs the Purchaser immediately after the Change in Control or to its parent or subsidiary. 
  
 SECTION 6. TERMS AND CONDITIONS OF OPTIONS. 
  

(a) Stock Option Agreement. Each grant of an Option under the Plan shall be evidenced by a Stock Option Agreement between the
Optionee and the Company. Such Option shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan and which the Board of Directors deems
appropriate for inclusion in a Stock Option Agreement. The provisions of the various Stock Option Agreements entered into under the Plan need not be identical. 
  

(b) Number of Shares. Each Stock Option Agreement shall specify the number of Shares that are subject to the Option and shall
provide for the adjustment of such number in accordance with Section 8. The Stock Option Agreement shall also specify whether the Option is an ISO or a Nonstatutory Option. 
  
 (c) Exercise Price. Each Stock Option Agreement shall specify the Exercise Price. The Exercise Price of
an ISO shall not be less than 100% of the Fair Market Value of a Share on the date of grant, and a higher percentage may be required by Section 3(b). The Exercise Price of a Nonstatutory Option shall not be less than 85% of the Fair Market Value of
a Share on the date of grant, and a higher percentage may be required by Section 3(b). Subject to the preceding two sentences, the Exercise Price under any Option shall be determined by the Board of Directors at its sole discretion. The Exercise
Price shall be payable in a form described in Section 7. 
  
 (d)
Withholding Taxes. As a condition to the exercise of an Option, the Optionee shall make such arrangements as the Board of Directors may require for the satisfaction of any federal, state, local or foreign withholding tax
obligations that may arise in connection with such exercise. The Optionee shall also make such arrangements as the Board of Directors may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise
in connection with the disposition of Shares acquired by exercising an Option. 
  
 (e) Exercisability. Each Stock Option Agreement shall specify the date when all or any installment of the Option is to become exercisable. The exercisability provisions of any Stock Option
Agreement shall be determined by the Board of Directors at its sole discretion. 
  
 (f) Accelerated Exercisability. Unless the applicable Stock Option Agreement provides otherwise, all of an Optionee’s Options shall become exercisable in full if (i) the Company is subject to
a Change in Control before the Optionee’s Service terminates, (ii) such 

  

 3 

 
Options do not remain outstanding, (iii) such Options are not assumed by the surviving corporation or its parent and (iv) the surviving corporation or its
parent does not substitute options with substantially the same terms for such Options. 
  
 (g) Basic Term. The Stock Option Agreement shall specify the term of the Option. The term shall not exceed 10 years from the date of grant, and a shorter term may be required by Section 3(b).
Subject to the preceding sentence, the Board of Directors at its sole discretion shall determine when an Option is to expire. 
  
 (h) Nontransferability. No Option shall be transferable by the Optionee other than by beneficiary designation, will or the laws of
descent and distribution. An Option may be exercised during the lifetime of the Optionee only by the Optionee or by the Optionee’s guardian or legal representative. No Option or interest therein may be transferred, assigned, pledged or
hypothecated by the Optionee during the Optionee’s lifetime, whether by operation of law or otherwise, or be made subject to execution, attachment or similar process. 
  
 (i) Termination of Service (Except by Death). If an Optionee’s Service terminates for any reason
other than the Optionee’s death, then the Optionee’s Options shall expire on the earliest of the following occasions: 
  
 (i) The expiration date determined pursuant to Subsection (g) above; 
  
 (ii) The date three months after the termination of the Optionee’s Service for any reason other than
Disability, or such later date as the Board of Directors may determine; or 
  
 (iii) The date six months after the termination of the Optionee’s Service by reason of Disability, or such later date as the Board of Directors may determine. 
  
 The Optionee may exercise all or part of the Optionee’s Options at any time before the
expiration of such Options under the preceding sentence, but only to the extent that such Options had become exercisable before the Optionee’s Service terminated (or became exercisable as a result of the termination) and the underlying Shares
had vested before the Optionee’s Service terminated (or vested as a result of the termination). The balance of such Options shall lapse when the Optionee’s Service terminates. In the event that the Optionee dies after the termination of
the Optionee’s Service but before the expiration of the Optionee’s Options, all or part of such Options may be exercised (prior to expiration) by the executors or administrators of the Optionee’s estate or by any person who has
acquired such Options directly from the Optionee by beneficiary designation, bequest or inheritance, but only to the extent that such Options had become exercisable before the Optionee’s Service terminated (or became exercisable as a result of
the termination) and the underlying Shares had vested before the Optionee’s Service terminated (or vested as a result of the termination). 
  
 (j) Leaves of Absence. For purposes of Subsection (i) above, Service shall be deemed to continue while the Optionee is on a bona fide
leave of absence, if such leave was approved by the Company in writing and if continued crediting of Service for this purpose is expressly required by the terms of such leave or by applicable law (as determined by the Company). 
  

 4 

 (k) Death of Optionee. If an Optionee dies while the Optionee is in Service, then
the Optionee’s Options shall expire on the earlier of the following dates: 
  
 (i) The expiration date determined pursuant to Subsection (g) above; 
  
 or 
  
 (ii) The date 12 months after the Optionee’s death. 
  
 All or part of the Optionee’s Options may be exercised at any time before the expiration of such Options under the preceding sentence
by the executors or administrators of the Optionee’s estate or by any person who has acquired such Options directly from the Optionee by beneficiary designation, bequest or inheritance, but only to the extent that such Options had become
exercisable before the Optionee’s death or became exercisable as a result of the death. The balance of such Options shall lapse when the Optionee dies. 
  
 (l) No Rights as a Stockholder. An Optionee, or a transferee of an Optionee, shall have no rights as a stockholder with respect to
any Shares covered by the Optionee’s Option until such person becomes entitled to receive such Shares by filing a notice of exercise and paying the Exercise Price pursuant to the terms of such Option. 
  
 (m) Modification, Extension and Assumption of Options.
Within the limitations of the Plan, the Board of Directors may modify, extend or assume outstanding Options or may accept the cancellation of outstanding Options (whether granted by the Company or another issuer) in return for the grant of new
Options for the same or a different number of Shares and at the same or a different Exercise Price. The foregoing notwithstanding, no modification of an Option shall, without the consent of the Optionee, impair the Optionee’s rights or increase
the Optionee’s obligations under such Option. 
  
 (n)
Restrictions on Transfer of Shares and Minimum Vesting. Any Shares issued upon exercise of an Option shall be subject to such special forfeiture conditions, rights of repurchase, rights of first refusal and other transfer
restrictions as the Board of Directors may determine. Such restrictions shall be set forth in the applicable Stock Option Agreement and shall apply in addition to any restrictions that may apply to holders of Shares generally. Any such repurchase
right may be exercised only within 90 days after the termination of the Optionee’s Service for cash or for cancellation of indebtedness incurred in purchasing the Shares. 
  
 (o) Accelerated Vesting. Unless the applicable Stock Option Agreement provides otherwise, any right to
repurchase an Optionee’s Shares at the original Exercise Price upon termination of the Optionee’s Service shall lapse and all of such Shares shall become vested if (i) the Company is subject to a Change in Control before the
Optionee’s Service terminates and (ii) the repurchase right is not assigned to the entity that employs the Optionee immediately after the Change in Control or to its parent or subsidiary. 
  

 5 

 SECTION 7. PAYMENT FOR SHARES. 
  
 (a) General Rule. The entire Purchase Price or Exercise Price of Shares issued under the Plan shall be payable in
cash or cash equivalents at the time when such Shares are purchased, except as otherwise provided in this Section 7. 
  
 (b) Surrender of Stock. To the extent that a Stock Option Agreement so provides, all or any part of the Exercise Price may be paid by
surrendering, or attesting to the ownership of, Shares that are already owned by the Optionee. Such Shares shall be surrendered to the Company in good form for transfer and shall be valued at their Fair Market Value on the date when the Option is
exercised. The Optionee shall not surrender, or attest to the ownership of, Shares in payment of the Exercise Price if such action would cause the Company to recognize compensation expense (or additional compensation expense) with respect to the
Option for financial reporting purposes. 
  
 (c) Services
Rendered. At the discretion of the Board of Directors, Shares may be awarded under the Plan in consideration of services rendered to the Company, a Parent or a Subsidiary prior to the award. At the discretion of the Board of
Directors, Shares may also be awarded under the Plan in consideration of services to be rendered to the Company, a Parent or a Subsidiary after the award, except that the par value of such Shares, if newly issued, shall be paid in cash or cash
equivalents. 
  
 (d) Promissory Note. To the
extent that a Stock Option Agreement or Stock Purchase Agreement so provides, all or a portion of the Exercise Price or Purchase Price (as the case may be) of Shares issued under the Plan may be paid with a full-recourse promissory note. However,
the par value of the Shares, if newly issued, shall be paid in cash or cash equivalents. The Shares shall be pledged as security for payment of the principal amount of the promissory note and interest thereon. The interest rate payable under the
terms of the promissory note shall not be less than the minimum rate (if any) required to avoid the imputation of additional interest under the Code. Subject to the foregoing, the Board of Directors (at its sole discretion) shall specify the term,
interest rate, amortization requirements (if any) and other provisions of such note. 
  
 (e) Exercise/Sale. To the extent that a Stock Option Agreement so provides, and if Stock is publicly traded, payment may be made all or in part by the delivery (on a form prescribed by the
Company) of an irrevocable direction to a securities broker approved by the Company to sell Shares and to deliver all or part of the sales proceeds to the Company in payment of all or part of the Exercise Price and any withholding taxes. 

 
 (f) Exercise/Pledge. To the extent that a Stock Option
Agreement so provides, and if Stock is publicly traded, payment may be made all or in part by the delivery (on a form prescribed by the Company) of an irrevocable direction to pledge Shares to a securities broker or lender approved by the Company,
as security for a loan, and to deliver all or part of the loan proceeds to the Company in payment of all or part of the Exercise Price and any withholding taxes. 
  

 6 

 SECTION 8. ADJUSTMENT OF SHARES. 
  
 (a) General. In the event of a subdivision of the outstanding Stock, a declaration of a dividend
payable in Shares, a declaration of an extraordinary dividend payable in a form other than Shares in an amount that has a material effect on the Fair Market Value of the Stock, a combination or consolidation of the outstanding Stock into a lesser
number of Shares, a recapitalization, a spin off, a reclassification or a similar occurrence, the Board of Directors shall make appropriate adjustments in one or more of (i) the number of Shares available for future grants under Section 4, (ii) the
number of Shares covered by each outstanding Option or (iii) the Exercise Price under each outstanding Option. 
  
 (b) Mergers and Consolidations. In the event that the Company is a party to a merger or consolidation, outstanding Options shall be
subject to the agreement of merger or consolidation. Such agreement, without the Optionees’ consent, may provide for: 
  
 (i) The continuation of such outstanding Options by the Company (if the Company is the surviving corporation); 
  
 (ii) The assumption of the Plan and such outstanding Options
by the surviving corporation or its parent; 
  
 (iii) The substitution by the surviving corporation or its parent of options with substantially the same terms for such outstanding Options; or 
  
 (iv) The cancellation of such outstanding Options without payment of any consideration. 
  
 (c) Reservation of Rights. Except as provided in this
Section 8, an Optionee or Purchaser shall have no rights by reason of (i) any subdivision or consolidation of shares of stock of any class, (ii) the payment of any dividend or (iii) any other increase or decrease in the number of shares of stock of
any class. Any issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or Exercise Price of
Shares subject to an Option. The grant of an Option pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, to merge
or consolidate or to dissolve, liquidate, sell or transfer all or any part of its business or assets. 
  
 SECTION 9. SECURITIES LAW REQUIREMENTS. 
  
 (a) General. Shares shall not be issued under the Plan unless the issuance and delivery of such Shares comply with (or are exempt from) all applicable requirements of law, including (without limitation)
the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, state securities laws and regulations, and the regulations of any stock exchange or other securities market on which the Company’s securities may then be
traded. 
  
 (b) Financial Reports. The
Company each year shall furnish to Optionees, Purchasers and stockholders who have received Stock under the Plan its balance sheet and 

  

 7 

 
income statement, unless such Optionees, Purchasers or stockholders are key Employees whose duties with the Company assure them access to equivalent
information. Such balance sheet and income statement need not be audited. 
  
 SECTION 10. NO RETENTION RIGHTS. 
  
 Nothing in
the Plan or in any right or Option granted under the Plan shall confer upon the Purchaser or Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company
(or any Parent or Subsidiary employing or retaining the Purchaser or Optionee) or of the Purchaser or Optionee, which rights are hereby expressly reserved by each, to terminate his or her Service at any time and for any reason, with or without
cause. 
  
 SECTION 11. DURATION AND AMENDMENTS. 
  
 (a) Term of the Plan. The Plan, as set forth herein, shall become
effective on the date of its adoption by the Board of Directors, subject to the approval of the Company’s stockholders. In the event that the stockholders fail to approve the Plan within 12 months after its adoption by the Board of Directors,
any grants of Options or sales or awards of Shares that have already occurred shall be rescinded, and no additional grants, sales or awards shall be made thereafter under the Plan. The Plan shall terminate automatically 10 years after its adoption
by the Board of Directors and may be terminated on any earlier date pursuant to Subsection (b) below. 
  
 (b) Right to Amend or Terminate the Plan. The Board of Directors may amend, suspend or terminate the Plan at any time and for any reason; provided,
however, that any amendment of the Plan which increases the number of Shares available for issuance under the Plan (except as provided in Section 8), or which materially changes the class of persons who are eligible for the grant of ISOs, shall be
subject to the approval of the Company’s stockholders. Stockholder approval shall not be required for any other amendment of the Plan. 
  
 (c) Effect of Amendment or Termination. No Shares shall be issued or sold under the Plan after the termination thereof, except upon exercise of an
Option granted prior to such termination. The termination of the Plan, or any amendment thereof, shall not affect any Share previously issued or any Option previously granted under the Plan. 
  
 SECTION 12. DEFINITIONS. 
  
 (a) “Board of Directors” shall mean the Board of Directors
of the Company, as constituted from time to time. 
  
 (b)
“Change in Control” shall mean: 
  
 (i) The consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, if more than 50% of the combined voting power of the continuing or surviving entity’s securities
outstanding immediately after such merger, consolidation or other reorganization is owned by persons who were not 

  

 8 

 
stockholders of the Company immediately prior to such merger, consolidation or other reorganization; or 
  
 (ii) The sale, transfer or other disposition of all or
substantially all of the Company’s assets. 
  
 A transaction shall not
constitute a Change in Control if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s
securities immediately before such transaction. 
  
 (c)
“Code” shall mean the Internal Revenue Code of 1986, as amended. 
  
 (d) “Committee” shall mean a committee of the Board of Directors, as described in Section 2(a). 
  
 (e) “Company” shall mean Axis Systems, Inc., a Delaware corporation. 
  
 (f) “Consultant” shall mean a person who performs bona fide services for the Company, a Parent or a
Subsidiary as a consultant or advisor, excluding Employees and Outside Directors. 
  
 (g) “Disability” shall mean that the Optionee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment. 
  
 (h) “Employee” shall mean any individual who is a common law
employee of the Company, a Parent or a Subsidiary. 
  
 (i)
“Exercise Price” shall mean the amount for which one Share may be purchased upon exercise of an Option, as specified by the Board of Directors in the applicable Stock Option Agreement. 
  
 (j) “Fair Market Value” shall mean the fair market value of
a Share, as determined by the Board of Directors in good faith. Such determination shall be conclusive and binding on all persons. 
  
 (k) “ISO” shall mean an employee incentive stock option described in Section 422(b) of the Code. 
  
 (l) “Nonstatutory Option” shall mean a stock option not
described in Sections 422(b) or 423(b) of the Code. 
  
 (m)
“Option” shall mean an ISO or Nonstatutory Option granted under the Plan and entitling the holder to purchase Shares. 
  
 (n) “Optionee” shall mean an individual who holds an Option. 
  

 9 

 (o) “Outside Director” shall mean a member of the Board of Directors who is not an
Employee. 
  
 (p) “Parent” shall mean any
corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one
of the other corporations in such chain. A corporation that attains the status of a Parent on a date after the adoption of the Plan shall be considered a Parent commencing as of such date. 
  
 (q) “Plan” shall mean this Axis Systems, Inc. 1997 Stock
Plan. 
  
 (r) “Purchase Price” shall mean the
consideration for which one Share may be acquired under the Plan (other than upon exercise of an Option), as specified by the Board of Directors. 
  
 (s) “Purchaser” shall mean an individual to whom the Board of Directors has offered the right to acquire Shares under the Plan (other
than upon exercise of an Option). 
  
 (t)
“Service” shall mean service as an Employee, Outside Director or Consultant. 
  
 (u) “Share” shall mean one share of Stock, as adjusted in accordance with Section 8 (if applicable). 
  
 (v) “Stock” shall mean the Ordinary Shares of Verisity Ltd., with a par value of NIS 0.01 per Share. 
  
 (w) “Stock Option Agreement” shall mean the agreement
between the Company and an Optionee which contains the terms, conditions and restrictions pertaining to the Optionee’s Option. 
  
 (x) “Stock Purchase Agreement” shall mean the agreement between the Company and a Purchaser who acquires Shares under the Plan which
contains the terms, conditions and restrictions pertaining to the acquisition of such Shares. 
  
 (y) “Subsidiary” means any corporation (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 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Subsidiary on a date after die adoption of the
Plan shall be considered a Subsidiary commencing as of such date. 
  

 10

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