Document:

Exhibit 10(s)

 

INDIGO N.V. 1996
INTERNATIONAL

FLEXIBLE STOCK
INCENTIVE PLAN

1.                          Establishment,
Purpose, and Definitions.

a.                           There is
hereby adopted the 1996 International Flexible Stock Incentive Plan (the
“Plan”) of Indigo N.V. (the “Company”).

b.                          The purpose
of the Plan is to provide a means whereby eligible individuals (as defined in
paragraph 4 below) can acquire Common Stock of the Company (the “Stock”). The
Plan provides employees (including part-time and potential employees), officers
and directors (including potential officers and directors), consultants and
advisors (collectively, the “Eligible Individuals”) of the Company or of its
Affiliates (as hereinafter defined) an opportunity to purchase shares of Stock
pursuant to options (the “Options”). The Plan also provides for the sale or
bonus of Stock to Eligible Individuals in connection with the performance of
services for the Company or its Affiliates. Moreover, the Plan authorizes the
grant of stock appreciation rights (“SARs”), either separately or in tandem
with Options, entitling holders to cash compensation measured by appreciation
in the value of the Stock. Options may be granted either on the basis of past
or future services (“Service Options”) or on the basis of performance
(“Performance Options”). The Plan also allows for sub-plans with respect to the
Company or an Affiliate, or with respect to citizens or residents of one or
more countries, provided the sub-plan is no less restrictive than the Plan.

c.                           The term
“Affiliates”, as used in the Plan, means parent or subsidiary corporations of
the Company, including parents or subsidiaries that become such after adoption
of the Plan.

2.                          Administration
of the Plan

a.                           The Plan
shall be administered by the Supervisory Board of the Company (the “Board”).
The Board may delegate the responsibility for administering the Plan to a
committee (the “Committee”) under such terms and conditions as the Board shall
determine.  Members of the Committee
shall serve at the pleasure of the Board. The Committee shall select one of its
members as chairman, and shall hold meetings at such times and places as it may
determine. A majority of the Committee shall constitute a quorum, and acts of
the Committee at which a quorum is present, or acts reduced to or approved in writing
by all the members of the Committee, shall be the valid acts of the Committee.
If the Board does not delegate administration of the Plan to the Committee,
then each reference in this Plan to “the Committee” shall be construed to refer
to 

 

 

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the Board. No member
of the Board or the Committee shall be liable to any person for any action,
determination or inaction with respect to the Plan that is taken or made in
good faith.

b.                          In the event
that the Company becomes subject to the requirements of Rule 16b-3 promulgated
under the Securities Exchange Act of 1934, as amended (“Rule 16b-3”), then,
notwithstanding the provisions of Section 2(a) hereof, (i) the Committee shall
consist of two (2) or more members of the Board or such lesser number of
members of the Board as permitted by Rule 16b-3 and (ii) none of the members of
the Committee shall receive, while serving on the Committee, or during the
one-year period preceding appointment to the Committee, a grant or award of
equity securities under (a) the Plan or (b) any other plan of the Company or
its Affiliates under which the participants are entitled to acquire Stock
(including restricted Stock), Options, stock bonuses, related rights or stock
appreciation rights of the Company or any of its Affiliates, other than
pursuant to transactions in any such other plan which do not disqualify a
director from being a disinterested person under Rule 16b-3. The limitations
set forth in this Section 2(b) shall automatically incorporate any additional
requirements that may, in the future, be necessary for the Plan to comply with
Rule 16b-3.

c.                           The Committee
shall determine and designate, in the manner described in paragraph 4 below,
which Eligible Individuals (as defined in paragraph 1(b) above) shall be
granted Options under the Plan, the timing of such grants, the terms thereof
(including any restrictions on the Stock), and the number of shares subject to
such Options.

d.                          The Committee
may amend the terms of any outstanding Option granted under this Plan, but any
amendment that would adversely affect the Optionee’s rights under an
outstanding Option shall not be made without the Optionee’s written consent.
The Committee may, with the Optionee’s written consent, cancel any outstanding
Option or accept any outstanding Option in exchange for a new Option.

e.                           The Committee
shall also determine and designate, in the manner described in paragraph 4
below, which Eligible Individuals shall be issued Stock or SARs under the Plan,
the timing of such issuance, the terms thereof (including any restrictions),
and the number of Stock or SARs to be issued. The Stock shall be issued for
such consideration (if any) as the Committee deems appropriate. Stock issued
subject to restrictions shall be evidenced by a written agreement (the
“Restricted Stock Purchase Agreement” or the “Restricted Stock Bonus
Agreement”). The Committee may amend any Restricted Stock Purchase Agreement,
but any amendment which would adversely affect the individual’s rights to the
Stock shall not be made without his or her written consent.

f.                              In its
administration of the Plan, The Committee shall have the sole authority, in its
absolute discretion, (i) to adopt, amend, and rescind such rules and
regulations as, in its opinion, may be advisable, (ii) to construe and
interpret the Plan, the rules and the regulations, and the instruments
evidencing Options, 

 

 

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Stock or SARs
granted under the Plan, and  (iii) to
make all other determinations deemed necessary or advisable for the
administration of the Plan. All decisions, determinations, and interpretations
of the Committee shall be binding on all participants.

g.                          Delegation of Authority for the Day-to-Day Administration of the
Plan.  Except to the extent
prohibited by applicable law or applicable rules of a stock exchange, the Board
or any of its committees as shall be administering the Plan may delegate to one
or more individuals the day-to-day administration of the Plan and any of the
functions assigned to it in this Plan. The delegation may be revoked at any
time.

3.                          Stock Subject
to the Plan.

a.                           An aggregate
of not more than 1,500,000 shares of Stock shall be available for the grant of
Options, Stock or SARs under the Plan. 
If an Option is surrendered (except if such surrender is for shares of
Stock), or for any other reason ceases to be exercisable in whole or in part,
the shares that were subject to such Option but as to which the Option had not
been exercised shall continue to be available under the Plan.

b.                          If there is
any change in the Stock subject to the Plan, the Stock subject to a Restricted
Stock Purchase Agreement, Restricted Stock Bonus Agreement or an SAR Agreement,
or the Stock subject to any Option granted under the Plan, through merger,
consolidation, reorganization, recapitalization, reincorporation, stock split,
stock dividend (in excess of two percent), or other change in the corporate
structure of the Company, appropriate adjustments shall be made by the Committee
in order to preserve but not to increase the benefits to the individual,
including adjustments to the aggregate number and kind of shares subject to the
Plan or to a Restricted Stock Purchase Agreement, Restricted Stock Bonus
Agreement or  SAR Agreement, and to the
number and kind of shares, and the price per share, subject to outstanding
Options.

4.                          Eligible
Individuals

Individuals
who shall be eligible to have granted to them the Options, Stock or SARs
provided for by the Plan shall be those Eligible Individuals (defined in
Paragraph 1 (b) above) as the Committee, in its discretion, shall designate
from time to time (the “Optionee/s”).

5.                          Exercise
Price

The exercise price
of each Option (the “Exercise Price”) shall be as determined by the Committee,
provided that in no case shall the Exercise Price of any Option be less than
80% of the Common Stock Value on the date of issuance of such Option

 

 

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(“Date of
Grant”). The “Common Stock Value” at any time shall be equal to the then
current fair market value of the Stock, as determined by the Committee.  The Exercise Price shall be subject to
adjustment to the extent provided in paragraphs 3(b) above and 15 below.

6.                          Terms and
Conditions of Options.

a.                           Each Option
granted pursuant to the Plan will be evidenced by a written Stock Option
Agreement (“Option Agreement”) executed by the Company and the relevant
Optionee,  the terms of which Agreement
shall be determined by the Committee subject to the terms of the Plan.

b.                          The Committee
shall determine the term of each Option granted under the Plan; provided,
however, that in no event shall the term of an Option exceed ten (10) years.

c.                         Upon
termination of employment or other contractual relationship between the
Optionee and the Company/Affiliate for cause, all unexercised Options (whether
or not vested) shall immediately lapse. 
Upon termination of employment or other contractual relationship between
the Optionee and the Company/Affiliate (regardless of whether or not
termination is by the Optionee or the Company/Affiliate or for cause), all
unvested Options shall lapse (unless otherwise determined by the Board or the
Committee).  Upon termination of
employment (regardless of whether or not termination is by the employee or
employer or for cause), and at the option of the Company, vested Options may be
repurchased by the Company if permitted by, and pursuant to the terms of, an
applicable Option Agreement.

d.                          The Service
Options will vest over a period of five (5) years, with 20% of the Service
Options vesting on each of the first five anniversaries of the Date of Grant.
Notwithstanding the foregoing, the Board or the Committee may determine
different vesting schedules in special circumstances.

e.                           Commencing in
respect of the first full calendar year after the Date of Grant, Performance
Options will vest over a period of five (5) years in relation to the
achievement by the Company and its Affiliates of earnings, shipment and/or
other targets to be determined annually, in advance, by the Board, with partial
vesting on a sliding scale, as determined by the Board. Notwithstanding the
foregoing, (i) all non-vested Performance Options shall vest eight (8) years
and eleven (11) months following the Date of Grant, and (ii) the Board or the
Committee may determine different vesting schedules in special circumstances.

f.                             The Option
Agreement may contain such other terms, provisions, and conditions as may be
determined by the Board or the Committee, provided that the same are not
inconsistent with this Plan.

 

 

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7.                          Terms and
Conditions of Stock Purchase and Bonus

a.                           Each sale or
grant of Stock pursuant to the Plan will be evidenced by either a written
Restricted Stock Purchase Agreement executed by the Company and the person to
whom such Stock is sold or a written Restricted Stock Bonus Agreement executed
by the Company and the person to whom such Stock is granted.

b.                          The
Restricted Stock Purchase Agreement or Restricted Stock Bonus Agreement may
contain such other terms, provisions, and conditions as may be determined by
the Board or the Committee (not inconsistent with this Plan), including,
without limitation, restrictions on transfer, forfeiture provisions, repurchase
provisions and vesting provisions.

8.                        Terms and
Conditions of SARs.

The Committee
may, under such terms and conditions as it deems appropriate, authorize the
issuance of SARs evidenced by a written SAR Agreement (which, in the case of
tandem options, may be part of the Option Agreement to which the SAR relates)
executed by the Company and the person to whom such SAR is granted. The SAR
Agreement may contain such terms, provisions and conditions as may be
determined by the Committee and that are not inconsistent with this Plan.

9.                          Use of
Proceeds.

Cash proceeds
realized from the sale of Stock under the Plan or pursuant to Options granted
under the Plan shall constitute general funds of the Company.

10.                   Amendment,
Suspension, or Termination of the Plan.

a.                           The Board
may, at any time, amend, suspend or terminate the Plan as it deems advisable;
provided that such amendment, suspension or termination complies with all
applicable legal requirements, including any applicable requirement that the
Plan, or an amendment to the Plan, be approved by the shareholders, and
provided further that, except as provided in paragraph 3 (b), above, the Board
shall in no event amend the Plan in the following respects without the consent
of stockholders then sufficient to approve the Plan in the first instance:

(i)                         To increase
the maximum number of shares subject to Options issued under the Plan; or

(ii)                    To change the
designation or class of persons eligible to receive Options under the Plan.

b.                           No Option may
be granted under the Plan during any suspension or after the termination of the
Plan, and no amendment, suspension, or termination of the Plan shall, without
the affected individual’s consent, alter or impair any rights or obligations
under any Option previously granted under the Plan. The Plan 

 

 

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shall terminate,
with respect to the grant of Options, on December 18, 2005 (or with respect to
The Netherlands sub-plan, December 18, 2000), unless previously terminated by
the Board pursuant to this paragraph 10.

11.                   Assignability.

Each
Option granted pursuant to this Plan shall, during Optionee’s lifetime, be
exercisable only by him or her, and neither the Option nor any right hereunder
shall be transferable by Optionee, by operation of law or otherwise, other than
by will or the laws of descent and distribution. Stock subject to a Restricted
Stock Purchase Agreement or a Restricted Stock Bonus Agreement shall be
transferable only as provided in such Agreement.

12.                   Payment Upon
Exercise of Options.

Payment of
the Exercise Price upon exercise of any Option granted under this Plan shall be
made in cash in such currency as the Committee shall specify in the applicable
Option Agreement; provided, however, that the Committee, in its sole discretion,
may permit an Optionee to pay the Exercise Price, in whole or in part, (a) with
shares of Stock owned by the Optionee; (b) by delivery, on a form prescribed by
the Committee, of an irrevocable direction to a securities broker approved by
the Committee to sell shares and to deliver all or a portion of the proceeds to
the Company in payment for the Stock; (c) by delivery of the Optionee’s
promissory note with such recourse, interest, security, and redemption
provisions as the Committee, in its discretion, determines appropriate; (d) by
shares of stock issuable upon exercise of the Option; or (e) in any combination
of the foregoing. Any Stock used to exercise Options shall be valued by the
Committee at its fair market value on the date of the exercise of the Option.

13.                   Withholding
Taxes.

No Option or
Stock shall be granted or sold under the Plan to any participant, and no Option
or SAR may be exercised, until the participant has made arrangements acceptable
to the Committee for the satisfaction of any tax and social security
withholding obligations, including without limitation obligations incident to
the receipt of Stock under the Plan, the lapsing of restrictions applicable to
such Stock, the failure to satisfy the conditions for treatment as Options under
applicable tax law, or the receipt of cash payments. Upon the exercise of an
Option and the sale of the underlying shares, and upon the lapsing of a
restriction on Stock issued under the Plan, the Company, at its Option, may
withhold a portion of the proceeds from the Optionee or require the Stockholder
to surrender shares of the Company’s Stock (as the case may be) sufficient to
satisfy any tax and social security withholding obligations.

 

 

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14.                   Restrictions on
Transfer of Shares.

The Stock
acquired pursuant to the Plan shall be subject to such restrictions,
limitations and agreements regarding sale, assignment, encumbrances, or other
transfer or disposal as the Board and/or Committee may, from time to time, deem
advisable.

15.                   Re-Pricing,
Cancellation and Re-Grant of Options

The Committee
shall have the authority to effect, at any time and from time to time, with the
consent of the affected Option holders, (a) the re-pricing of the Exercise
Price of any or all outstanding Options under the Plan and/or (b) the
cancellation of any or all outstanding Options under the Plan and the grant in
substitution therefor of new Options under the Plan covering the same or
different numbers of Stock but having an Exercise Price of not less than 80% of
the Common Stock Value (as defined in paragraph 5 hereof) on the new Date of
Grant.

16.                   Buyout
Provisions.

At any time, the Committee may, but shall not be required to, authorize
the Company to offer to buy out for a payment in cash or Stock an Option
previously granted based on such terms and conditions as the Committee shall
establish and communicate to the Optionee in connection with such offer.

 

***

 

9/12/02                                  Section 16 added and plan restated by HR
& Compensation Committee

11/21/02                            Section 2.g. added and plan restated by
HR & Compensation Committee

 

 

7Exhibit
10(u)

 

VERIFONE,
INC

 

AMENDED
AND RESTATED

 

1987
SUPPLEMENTAL STOCK OPTION PLAN

 

Amended and
restated by HR & Compensation Committee November 21, 2002

Amended and
restated by HR & Compensation Committee September 12, 2002

Adopted by Board
of Directors in May, 1987

Approved by the
Stockholders on April 10, 1988

Amended by Board
of Directors on April 30, 1990

Approved by the
Stockholder on June 22, 1990

Amended by Board
of Directors on February 13, 1992

Approved by the
Stockholders on April 23, 1992

Amended by Board
of Directors an March 15, 1995

Approved by the
Stockholders on May 5, 1995

Amended by Board
of Directors on January 18, 1996

Approved by the
Stockholders an May 10, 1996

Amended by Board of
Directors on January 23, 1997

 

1.             PURPOSE

 

(a)           The purpose of the Plan is to provide
a means by which selected employees, directors and consultants of VeriFone,
Inc. (the “Company”) and its Affiliates, as defined in subparagraph 1(b), may
be given an opportunity to purchase stock of the Company.

(b)           The word “Affiliate” as used in the
Plan means any parent corporation or subsidiary corporation of the company as
those terms are defined in Sections 424(e) and (f), respectively, of the
Internal Revenue code of 1986, as amended from time to time (the “Code”).

(c)           The Company, by means of the Plan,
seeks to retain the services of persons now employed by or serving as
consultants or directors to the Company, to secure and retain the services of
new employees/persons capable of filling such positions, and to provide
incentives for such persons to exert maximum efforts for the success of the
Company.

(d)           The Company intends that the options
issued under the Plan not be incentive stock options as that term is used in
Section 422 of the Code.

2.             ADMINISTRATION

 

(a)           The Plan shall be administered by the
Board of Directors (the “Board”) of the Company unless and until the Board
delegates administration to a committee, as provided in subparagraph 2(c).
Whether or not the Board has delegated administration, 

 

 

1

 

the Board shall
have the final power to determine all questions of policy and expediency that
may arise in the administration of the Plan.

(b)           The Board shall have the power,
subject to, and within the limitations of, the express provisions of the Plan:

(i)            To determine from time to time which
of the persons eligible under the Plan shall be granted options; when and how
the option shall be granted; the provisions of each option granted (which need
not be identical), including the time or times during the term of each option
within which all or portions of such option may be exercised; and the number of
shares for which an option shall be granted to each such person.

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

(iii)          To amend the Plan or an Option as
provided in paragraph 10.

(iv)          Generally, to exercise such powers and
to perform such acts as the Board deems necessary or expedient to promote the
best interest of the Company.

(c)           The Board may delegate administration
of the Plan to a committee composed of not fewer than two (2) members of the
Board (the “Committee”), all of the members of which Committee may be
“non-employee directors,” as defined by the provisions of subparagraph 2(d),
and may also be, in the discretion of the Board, outside directors as defined
in Section 162(m) of the Code.  If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore
possessed by the Board, subject, however, to such resolutions, not inconsistent
with the provisions of the Plan, as may be adopted from time to time by the
Board and references to the Board herein shall be construed as references to
the Committee.  The Board may abolish
the Committee at any time and revest in the Board the administration of the
Plan.  Notwithstanding anything in this
paragraph 2 to the contrary, the Board may delegate to a committee of one or
more members of the Board the authority to grant options to eligible persons
who (i) are not then subject to Section 16 under the Securities Exchange Act of
1934, as amended (the “Exchange Act”) and (ii) are either (A) not persons
expected to be subject to Section 162(m) of the code (Section 162(m)”) at the
time of recognition of income from such Option or (B) not persons with respect
to whom the Company desires to comply with Section 162(m).

(d)           The term “non-employee director,” as
used in the Plan, shall mean a member of the Company’s Board of Directors who
either (i) is not a current employee or officer of the Company or its parent or
subsidiary, does not receive compensation (directly or indirectly) from the
Company or its parent or subsidiary for services rendered as a consultant or in
any other capacity other than as a member of the Board (except for 

 

 

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an amount as to
which disclosure would not be required under Item 404(a) of Regulation 8-K, and
is not engaged in a business relationship as to which disclosure would be
required under Item 404(b) of Regulation S-K; or (ii) is otherwise considered a
“non-employee director” for purposes of Rule 16b-3.

(e)           Delegation of Authority for the Day-to-Day Administration
of the Plan.  Except to the
extent prohibited by applicable law or applicable rules of a stock exchange,
the Board or any of its committees as shall be administering the Plan may
delegate to one or more individuals the day-to-day administration of the Plan
and any of the functions assigned to it in this Plan. The delegation may be
revoked at any time.

3.             SHARES SUBJECT TO THE PLAN

(a)           Subject to the provisions of
paragraph 9 relating to adjustments upon changes in stock, the stock that may
be sold pursuant to options granted under either the Plan or the Company’s
Amended and Restated Incentive Stock Option Plan shall not exceed in the
aggregate Eight Million Five Hundred Fifteen Thousand (8,515,000) shares of the
Company’s common stock.  The aggregate
number of shares as to which options may be granted under the Plan shall be
reduced to reflect the number of shares of the Company’s common stock which has
been sold under, or may be sold pursuant to outstanding options granted under
the Company’s Amended and Restated Incentive Stock Option Plan to the same
extent as if such sales had been made or option had been granted pursuant to
this plan.  If any option granted under
the Plan shall for any reason expire or otherwise terminate without having been
exercised in full, the stock not purchased under such option shall again become
available for the Plan.

(b)           The stock subject to the Plan may be
unissued shares or reacquired shares, bought on the market or otherwise.

(c)           Subject to the provisions of paragraph
9 relating to adjustments upon changes in stock, no employee shall be eligible,
during any twelve (12) month period, to be granted options under the Plan to
purchase in excess of 750,000 shares of common stock of the Company.  The total number of shares as to which
options may be granted to an employee under this paragraph 3(c) shall be
reduced to reflect the total number of shares as to which options have been
granted, during the same twelve (12) month period, under the Company’s Amended
and Restated Incentive Stock Option Plan.

4.             ELIGIBILITY

 

(a)           Options may be granted only to
employees (including officers) of, directors of or consultants to the company
or its Affiliates.

(b)           A director shall in no event be
eligible for the benefits of the Plan unless and until such director is
expressly declared eligible to participate in the Plan by action of the Board.

 

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5.             OPTION
PROVISIONS

 

Each option shall be in such form and shall contain
such terms and conditions as the Board or the Committee shall deem appropriate.
The provisions of separate options need not be identical, but each option shall
include (through incorporation of provisions hereof by reference in the option
or otherwise) the substance of each of the following provisions:

 

(a)           The term of any option shall not be
greater than ten (10) years from the date it was granted. Notwithstanding the
foregoing, an option may be granted with an exercise price lower than that set
forth in the preceding sentence if such option is granted pursuant to
assumption or substitution for another option in a manner satisfying the
provisions of Section 424(a) of the Code.

(b)           The exercise price of each option
shall be not less the fair market value of the stock subject to the option on
the date the option is granted.

(c)           The purchase price of stock acquired
pursuant to an option shall be paid, to the extent permitted by applicable
statutes and regulations, either (i) in cash at the time the option is
exercised, or (ii) at the discretion of the Board or the Committee, either at
the time of grant or exercise of the option (A) by delivery to the Company of
other common stock of the Company, (B) according to a deferred payment or other
arrangement (which may include, without limiting the generality of the
foregoing, the use of other common stock of the Company) with the person to
whom the option is granted or to whom the option is transferred pursuant to
subparagraph 5(d), or (C) in any other form of legal consideration that may be acceptable
to the Board or the Committee in their discretion.

                                In the case of
any deferred payment arrangement, any interest shall be compounded at least
annually and shall be charged at the minimum rate of interest necessary to
avoid the treatment as interest, under any applicable provisions of the Code,
of any amounts other than amounts stated to be interest under the deferred
payment arrangement.

(d)           An option shall only be transferable
by the optionee upon such terms and conditions as are set forth in the option
agreement for such option, as the Board or the Committee shall determine in its
discretion. The person to whom an option is granted may, by delivering written
notice to the Company, in a form satisfactory to the Company, designate a third
party who, in the event of the death of the person to whom the option is
granted, shall thereafter be entitled to exercise the option.

(e)           The total number of shares of stock
subject to an option may, but need not, be allotted in periodic installments
(which may, but need not, be equal). From time to time during each of such
installment periods, the option may be exercised with respect to some or all of
the shares allotted to that period, and/or with respect to some or all of the
shares allotted to any prior period as to which the option was not fully
exercised. During the remainder of the term of the option (if its term extends
beyond the end of the installment periods), the option may be exercised from
time to time with respect to any shares then remaining subject to the option.
The option may be subject to such other 

 

 

4

 

terms and
conditions on the time or times when it may be exercised (which may be based on
performance or other criteria) as the Board may deem appropriate. The
provisions of this subparagraph 5(e) are subject to any option provisions
governing the minimum number of shares as to which an option may be exercised.

(f)            The company may require any
optionee, or any person to whom an option is transferred under subparagraph
5(d), as a condition of exercising any such option: (1) to give written
assurances satisfactory to the Company as to the optionee’s knowledge and
experience in
financial and business matters and/or to employ a purchaser
representative reasonably satisfactory to the company who is knowledgeable and
experienced in financial and business matters that he or she is capable
of evaluating, alone or together with the purchaser representative, the merits
and risks of exercising the option; and (2) to give written assurances
satisfactory to the Company stating that such person is acquiring the stock
subject to the option for such person’s own account and not with any present
intention of selling or otherwise distributing the stock. These requirements,
and any assurances given pursuant to such requirements, shall be inoperative if
(i) the issuance of the shares upon the exercise of the option has been
registered under a then currently effective registration statement under the
Securities Act of 1933, as amended (the “Securities Act”), or (ii), as to any
particular requirement, a determination is made by counsel for the Company that
such requirement need not be met in the circumstances under the then applicable
securities laws. The Company may require the holder of the option to provide
such other representations, written assurances or information which the Company
shall determine is necessary, desirable or appropriate to comply with
applicable securities and other laws as a condition of granting an option to
such person or permitting such person to exercise the option. The Company may,
upon advice of counsel to the Company, place legends on stock certificates
issued under the Plan as such counsel deems necessary or appropriate in order
to comply with applicable securities laws, including but not limited to,
legends restricting the transfer of the stock.

(g)           An option shall terminate three (3)
months after termination of the optionee’s service with the Company or an
Affiliate whether as an employee, consultant or member of the Board
(“Service”), unless (i) the termination of Service of the optionee is due to
such person’s permanent and total disability, within the meaning of Section
422(e)(3) of the Code, in which case the option may, but need not, provide that
it may be exercised at any time within one (1) year following such termination
of Service; or (ii) the optionee dies while in the employ of the Company or an
Affiliate, or within not more than three (3) months after termination of such
Service, in which case the option may, but need not, provide that it may be
exercised at any time within eighteen (18) months following the death of the
optionee by the person or persons to whom the optionee’s rights under such
option pass by will or by the laws of descent and distribution; or (iii) the
option by its terms specifies either (a) that it shall terminate sooner than
three (3) months after termination of the optionee’s Service, or (b) that it
may be exercised more than three (3) months after termination of the optionee’s
service with the Company or an Affiliate. 
This subparagraph 5(g) shall not be construed to extend the term of any
option or to permit anyone to exercise the option after
expiration of its term, nor shall it be construed to increase the number of
shares as to which any option is exercisable from the amount exercisable on the
date of termination of the optionee’s Service.

 

 

5

 

(h)           The option may, but need not, include
a provision whereby the optionee may elect at any time during the term of his
or her Service with the Company or any Affiliate to exercise the option as to
any part or all of the shares subject to the option prior to the stated vesting
date of the option or of any installment or installments specified in the
option. Any shares so purchased from any unvested installment or option may be
subject to a repurchase right in favor of the Company or to any other
restriction the Board or the Committee determines to be appropriate.

(i)            To the extent provided in the terms
of an Option Agreement, an optionee may satisfy any federal, state, or local
tax withholding obligation relating to the exercise of such option by any of
the following means or by a combination of such means:    (i) tendering a cash payment, (ii)
authorizing the Company to withhold from the shares of common stock otherwise
issuable to the optionee as a result of the exercise of the option or (iii)
delivering to the company owned and unencumbered shares of the common stock of
the Company.

(j)            Buyout Provisions. At any time, the Committee may, but shall not be
required to, authorize the Company to offer to buy out for a payment in cash or
shares an option previously granted based on such terms and conditions as the
Committee shall establish and communicate to the optionee in connection with
such offer.

6.             COVENANTS OF THE COMPANY

 

(a)           During the terms of the options
granted under the Plan, the Company shall keep available at all times the
number of shares of stock required to satisfy such options.

(b)           The Company shall seek to obtain from
each regulatory commission or agency having jurisdiction aver the Plan such
authority as may be required to issue and sell shares of stock upon exercise of
the options granted under the Plan; provided, however, that this undertaking
shall not require the Company to register under the Securities Act either the
Plan, any option granted under the Plan or any stock issued or issuable
pursuant to any such option. If, after
reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority which counsel for the company deems
necessary for the lawful issuance and sale of stock under the Plan, the Company
shall be relieved from any liability for failure to issue and sell stock upon
exercise of such options unless and until such authority is obtained.

7.             USE OF PROCEEDS FROM STOCK

 

Proceeds from the sale of stock pursuant to options
granted under the Plan shall constitute general funds of the Company.

 

6

 

8.             MISCELLANEOUS

 

(a)           The Board or the Committee shall have
the power to accelerate the time during which an option may be exercised or the
time during which an option or any portion thereof will vest pursuant to subparagraph
5(e), notwithstanding the provisions in the option stating the time during
which it may be exercised or the time during which it will vest.

(b)           Neither an optionee nor any person to
whom an option is transferred under subparagraph 5(d) shall be deemed to be the
holder of, or to have any of the rights of a holder with respect to, any shares
subject to such option unless and until such person has satisfied all
requirements for exercise of the option pursuant to its terms.

(c)           Throughout the term of any option
granted pursuant to the Plan, the Company shall make available to the holder of
such option, not later than one hundred twenty (120) days after the close of
each of the Company’s fiscal years during the option term, upon request, such
financial and other information regarding the Company as comprises the annual
report to the shareholders of the Company provided for in the bylaws of the
Company.

(d)           Nothing in the Plan or any instrument
executed or option granted pursuant thereto shall confer upon any eligible
employee, consultant or optionee any right to continue in the employ of the
Company or any Affiliate or shall affect the right of the Company or any
Affiliate to terminate the employment of any eligible person or optionee with
or without cause, or to terminate the relationship of any consultant subject to
the terms of that consultant’s agreement with the Company or Affiliate to which
such Consultant is providing services.

9.             ADJUSTMENTS UPON CHANGES IN STOCK

 

(a)           If any change is made in the stock
subject to the Plan, or subject to any option granted under the Plan (through
merger, consolidation, reorganization, recapitalization, stock dividend,
dividend in property other than cash, stock split, liquidating dividend,
combination of shares, exchange of shares, change in corporate structure or
other transaction not involving the receipt of consideration by the Company),
the Plan and outstanding options will be appropriately adjusted in the type of
security and maximum number of shares subject to the Plan, the maximum number
of shares subject to option that may be granted to any single person under
subparagraph 3(c), and the type of security and number of shares and price per
share of stock subject to outstanding options. 
Such adjustments shall be made by the Board or the Committee, the
determination of which shall be final, binding and conclusive. (The conversion
of any  convertible securities of
the Company shall not be treated as a “transaction not involving the receipt of
consideration by the Company.”)

(b)           In the event of: (1) a dissolution or
liquidation of the Company or sale of all or substantially all of the assets of
the Company; (2) a merger or consolidation in which the Company is not the
surviving corporation; (3) a reverse merger in which the Company is the
surviving corporation but the shares of the Company’s common stock 

 

 

7

 

outstanding
immediately preceding the merger are converted by virtue of the merger into
other property, whether in the form of securities, cash or otherwise; or (4)
any other capital reorganization in which more than fifty percent (50%) of the
shares of the Company entitled to vote are exchanged, then, at the sole
discretion of the Board and to the extent permitted by applicable law: (i) any
surviving corporation shall assume any options outstanding under the Plan or
shall substitute similar options for those outstanding under the Plan, or (ii)
the time during which such options may be exercised shall be accelerated and the
option terminated if not exercised prior to such event, or (iii) such options
shall continue in full force and effect.

10.          AMENDMENT OF THE PLAN AND OPTIONS

 

(a)           The Board at any time, and  from time to time, may
amend the Plan. However, except as provided in paragraph 9 relating to
adjustments upon changes in stock, no amendment shall be effective unless
approved by the vote of a majority of the outstanding shares of the Company
entitled to vote, or by the written consent of the holders of  the outstanding shares of the Company
entitled to vote to the extent necessary under applicable laws to obtain
incentive stock option treatment under Section 422 of the Code, within twelve
(12) months before or after the adoption of the amendment, where the amendment will:

(i)            Increase the number of shares
reserved for options under the Plan;

(ii)           Modify the requirements as to
eligibility for participation in the Plan to the extent such modification
requires stockholder approval in order for the Plan to satisfy the requirements
of Section 422 of the Code; or

(iii)          Otherwise modify the Plan to the
extent such modification requires stockholder approval in order for the Plan to
satisfy the requirements of Section 422 of the Code.

(b)           The Board may, in its discretion,
submit any other amendment to the Plan for stockholder approval.

(c)           Rights and obligations under any
option granted before amendment of the Plan shall not be impaired by any
amendment of the Plan, except with the consent of the person to whom the option
was granted.

(d)           The Board at any time, and from time
to time, may amend the terms of any one or more options; provided, however,
that the rights and obligations under any option shall not be impaired by any
such amendment unless (i) the Company requests the consent of the person to
whom the option was granted and (ii) such person consents in writing.

 

8

 

11.          TERMINATION OR SUSPENSION OF THE PLAN

 

(a)           The Board may suspend or terminate
the Plan at any time. Unless sooner terminated, the Plan shall terminate on
December 31, 2005. No options may be granted under the Plan while the  Plan
is suspended or after it is terminated.

(b)           Rights and obligations under any
option granted while the Plan is in effect shall not be impaired by suspension
or termination of the Plan, except with the consent of the person to whom the
option was granted.

12.          EFFECTIVE DATE OF PLAN

 

The Plan shall become effective as determined by the Board, but no
options granted under the Plan shall be exercised unless and until the Plan has
been approved by the vote or written consent of the holders of a majority of
the outstanding shares of the Company entitled to vote.

 

 

9

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