Document:

exv10w1

Exhibit 10.1

AMDL, INC.

2004 STOCK OPTION PLAN

     1. PURPOSE. The purpose of the AMDL, Inc. 2004 Stock Option Plan (the “Plan”) is to
strengthen AMDL, Inc., a Delaware corporation (“Corporation”), by providing to employees, officers,
directors, consultants and independent contractors of the Corporation or any of its subsidiaries
(including dealers, distributors, and other business entities or persons providing services on
behalf of the Corporation or any of its subsidiaries) added incentive for high levels of
performance and unusual efforts to increase the earnings of the Corporation. The Plan seeks to
accomplish this purpose by enabling specified persons to purchase shares of the Corporation’s
common stock, $.001 par value, thereby increasing their proprietary interest in the Corporation’s
success and encouraging them to remain in the employ or service of the Corporation.

     2. CERTAIN DEFINITIONS. As used in this Plan, the following words and phrases shall
have the respective meanings set forth below, unless the context clearly indicates a contrary
meaning:

          2.1 “Board of Directors” The Board of Directors of the Corporation.

          2.2 “Code” The Internal Revenue Code of 1986, as amended.

          2.3 “Committee” The Compensation Committee of the Board of Directors which shall
administer the Plan and consist of a majority of independent directors.

          2.4 “Fair Market Value Per Share” The fair market value per share of the Shares as
determined by the Committee in good faith. The Committee is authorized to make its determination
as to the fair market value per share of the Shares on the following basis: (i) if the Shares are
traded only otherwise than on a securities exchange and are not quoted on the National Association
of Securities Dealers’ Automated Quotation System (“NASDAQ”), but are quoted on the bulletin board
or in the “pink sheets” published by the National Daily Quotation Bureau, the greater of (a) the
average of the mean between the average daily bid and average daily asked prices of the Shares
during the thirty (30) day period preceding the date of grant of an Option, as quoted on the
bulletin board or in the “pink sheets” published by the National Daily Quotation Bureau, or (b) the
mean between the average daily bid and average daily asked prices of the Shares on the date of
grant, as published on the bulletin board or in such “pink sheets;” (ii) if the Shares are traded
on a securities exchange or on the NASDAQ, the greater of (a) the average of the daily closing
prices of the Shares during the ten (10) trading days preceding the date of grant of an Option, or
(b) the closing price of the Shares on the last trading day preceding the date of grant of an
Option; or (iii) if the Shares are traded only otherwise than as described in (i) or (ii) above, or
if the Shares are not publicly traded, the value determined by the Committee in good faith based
upon the fair market value as determined by completely independent and well qualified experts.

          2.5 “Incentive Stock Option” An Option intended to qualify for treatment as an
incentive stock option under Code Sections 421 and 422, and designated as an Incentive Stock
Option.

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          2.6 “Nonqualified Option” An Option not qualifying as an Incentive Stock Option.

          2.7 “Option” A stock option granted under the Plan.

          2.8 “Optionee” The holder of an Option.

          2.9 “Option Agreement” The document setting forth the terms and conditions of each
Option.

          2.10 “Shares” The shares of common stock, $.001 par value, of the Corporation.

          2.11 “Subsidiary” Any corporation of which fifty percent (50%) or more of the total
combined voting power of all classes of stock of such corporation is owned by the Corporation or
another Subsidiary (as so defined).

     3. ADMINISTRATION OF PLAN.

          3.1 In General. This Plan shall be administered by the Committee. Any action of the
Committee with respect to administration of the Plan shall be taken pursuant to (i) a majority vote
at a meeting of the Committee (to be documented by minutes), or (ii) the unanimous written consent
of its members.

          3.2 Authority. Subject to the express provisions of this Plan, the Committee shall
have the authority to: (i) construe and interpret the Plan, decide all questions and settle all
controversies and disputes which may arise in connection with the Plan and to define the terms used
therein; (ii) prescribe, amend and rescind rules and regulations relating to administration of the
Plan; (iii) determine the purchase price of the Shares covered by each Option and the method of
payment of such price, individuals to whom, and the time or times at which, Options shall be
granted and exercisable and the number of Shares covered by each Option; (iv) determine the terms
and provisions of the respective Option Agreements (which need not be identical); (v) determine the
duration and purposes of leaves of absence which may be granted to participants without
constituting a termination of their employment for purposes of the Plan; and (vi) make all other
determinations necessary or advisable to the administration of the Plan. Determinations of the
Committee on matters referred to in this Section 3 shall be conclusive and binding on all parties
howsoever concerned. With respect to Incentive Stock Options, the Committee shall administer the
Plan in compliance with the provisions of Code Section 422 as the same may hereafter be amended
from time to time. No member of the Committee shall be liable for any action or determination made
in good faith with respect to the Plan or any Option.

     4. ELIGIBILITY AND PARTICIPATION.

          4.1 In General. Only officers, employees and directors who are also employees of the
Corporation or any Subsidiary shall be eligible to receive grants of Incentive Stock Options.
Officers, employees and directors (whether or not they are also employees) of the Corporation or
any Subsidiary, as well as consultants, independent contractors or other service providers of the
Corporation or any Subsidiary shall be eligible to receive grants of

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Nonqualified Options. Within the foregoing limits, the Committee, from time to time, shall determine and designate persons to
whom Options may be granted. All such designations shall be made in the absolute discretion of the
Committee and shall not require the approval of the stockholders. In determining (i) the number of
Shares to be covered by each Option, (ii) the purchase price for such Shares and the method of
payment of such price (subject to the other sections hereof), (iii) the individuals of the eligible
class to whom Options shall be granted, (iv) the terms and provisions of the respective Option
Agreements, and (v) the times at which such Options shall be granted, the Committee shall take into
account such factors as it shall deem relevant in connection with accomplishing the purpose of the
Plan as set forth in Section 1. An individual who has been granted an Option may be granted an
additional Option or Options if the Committee shall so determine. No Option shall be granted under
the Plan after February 23, 2014 but Options granted before such date may be exercisable after such
date.

          4.2 Certain Limitations. In no event shall Incentive Stock Options be granted to an
Optionee such that the sum of (i) aggregate fair market value (determined at the time the Incentive
Stock Options are granted) of the Shares subject to all Options granted under the Plan which are
exercisable for the first time during the same calendar year, plus (ii) the aggregate fair market
value (determined at the time the options are granted) of all stock subject to all other incentive
stock options granted to such Optionee by the Corporation, its parent and Subsidiaries which are
exercisable for the first time during such calendar year, exceeds One Hundred Thousand Dollars
($100,000). For purposes of the immediately preceding sentence, fair market value shall be
determined as of the date of grant based on the Fair Market Value Per Share as determined pursuant
to Section 2.3.

     5. AVAILABLE SHARES AND ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.

          5.1 Shares. Subject to adjustment as provided in Section 5.2 below, the total number
of Shares to be subject to Options granted pursuant to this Plan shall not exceed Two Million Four
Hundred Thousand (2,400,000) Shares. Shares subject to the Plan may be either authorized but
unissued shares or shares that were once issued and subsequently reacquired by the Corporation; the
Committee shall be empowered to take any appropriate action required to make Shares available for
Options granted under this Plan. If any Option is surrendered before exercise or lapses without
exercise in full or for any other reason ceases to be exercisable, the Shares reserved therefore
shall continue to be available under the Plan.

          5.2 Adjustments. As used herein, the term “Adjustment Event” means an event pursuant
to which the outstanding Shares of the Corporation are increased, decreased or changed into, or
exchanged for a different number or kind of shares or securities, without receipt of consideration
by the Corporation, through reorganization, merger, recapitalization, reclassification, stock
split, reverse stock split, stock dividend, stock consolidation or otherwise. Upon the occurrence
of an Adjustment Event, (i) appropriate and proportionate adjustments shall be made to the number
and kind of Shares and exercise price for the Shares subject to the Options which may thereafter be
granted under this Plan, (ii) appropriate and proportionate adjustments shall be made to the number
and kind of and exercise price for the Shares subject to the then outstanding Options granted under
this Plan, and (iii) appropriate amendments to the Option Agreements shall be executed by the
Corporation and the Optionees if the Committee

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determines that such an amendment is necessary or desirable to reflect such adjustments. If determined by the Committee to be appropriate, in the
event of an Adjustment Event which involves the substitution of securities of a corporation other
than the Corporation, the Committee shall make arrangements for the assumptions by such other
corporation of any Options then or thereafter outstanding under the Plan. Notwithstanding the
foregoing, such adjustment in an outstanding Option shall be made without change in the total
exercise price applicable to the unexercised portion of the Option, but with an
appropriate adjustment to the number of Shares, kind of shares and exercise price for each
Share subject to the Option. The determination by the Committee as to what adjustments, amendments
or arrangements shall be made pursuant to this Section 5.2, and the extent thereof, shall be final
and conclusive. No fractional Shares shall be issued under the Plan on account of any such
adjustment or arrangement.

     6. TERMS AND CONDITIONS OF OPTIONS.

          6.1 Intended Treatment as Incentive Stock Options. Incentive Stock Options granted
pursuant to this Plan are intended to be “incentive stock options” to which Code Sections 421 and
422 apply, and the Plan shall be construed and administered to implement that intent. If all or
any part of an Incentive Stock Option shall not be an “incentive stock option” subject to Sections
421 or 422 of the Code, such Option shall nevertheless be valid and carried into effect. All
Options granted under this Plan shall be subject to the terms and conditions set forth in this
Section 6 (except as provided in Section 5.2) and to such other terms and conditions as the
Committee shall determine to be appropriate to accomplish the purpose of the Plan as set forth in
Section 1.

          6.2 Amount and Payment of Exercise Price.

               6.2.1 Exercise Price. The exercise price per Share for each Share which the Optionee
is entitled to purchase under a Nonqualified Option shall be determined by the Committee but shall
not be less than eighty-five percent (85%) of the Fair Market Value Per Share on the date of the
grant of the Nonqualified Option. The exercise price per Share for each Share which the Optionee
is entitled to purchase under an Incentive Stock Option shall be determined by the Committee but
shall not be less than the Fair Market Value Per Share on the date of the grant of the Incentive
Stock Option; provided, however, that the exercise price shall not be less than one hundred and ten
percent (110%) of the Fair Market Value Per Share on the date of the grant of the Incentive Stock
Option in the case of an individual then owning (within the meaning of Code Section 425(d)) more
than ten percent (10%) of the total combined voting power of all classes of stock of the
Corporation or of its parent or Subsidiaries.

               6.2.2 Payment of Exercise Price. 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
Committee and may consist of promissory notes, shares of the common stock of the Corporation or
such other consideration and method of payment for the Shares as may be permitted under applicable
state and federal laws.

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          6.3 Exercise of Options.

               6.3.1 Each Option granted under this Plan shall be exercisable at such times and under such
conditions as may be determined by the Committee at the time of the grant of the Option and as
shall be permissible under the terms of the Plan; provided, however, in no event shall an Option be
exercisable after the expiration of ten (10) years from the date it is granted, and in the case of
an Optionee owning (within the meaning of Code Section 425(d)), at the time an Incentive Stock
Option is granted, more than ten percent (10%) of the total combined voting power of all classes of
stock of the Corporation or of its parent or Subsidiaries, such Incentive Stock Option shall not be
exercisable later than five (5) years after the date of grant.

               6.3.2 An Optionee may purchase less than the total number of Shares for which the Option is
exercisable, provided that a partial exercise of an Option may not be for less than One Hundred
(100) Shares and shall not include any fractional Shares.

          6.4 Nontransferability of Options. All Options granted under this Plan shall be
nontransferable, either voluntarily or by operation of law, otherwise than by will or the laws of
descent and distribution, and shall be exercisable during the Optionee’s lifetime only by such
Optionee.

          6.5 Effect of Termination of Employment or Other Relationship. Except as otherwise
determined by the Committee in connection with the grant of Nonqualified Options, the effect of
termination of an Optionee’s employment or other relationship with the Corporation on such
Optionee’s rights to acquire Shares pursuant to the Plan shall be as follows:

               6.5.1 Termination for Other than Disability or Cause. If an Optionee ceases to be
employed by, or ceases to have a relationship with, the Corporation for any reason other than for
disability or cause, such Optionee’s Options shall expire not later than three (3) months
thereafter. During such three (3) month period and prior to the expiration of the Option by its
terms, the Optionee may exercise any Option granted to him, but only to the extent such Options
were exercisable on the date of termination of his employment or relationship and except as so
exercised, such Options shall expire at the end of such three (3) month period unless such Options
by their terms expire before such date. The decision as to whether a termination for a reason
other than disability, cause or death has occurred shall be made by the Committee, whose decision
shall be final and conclusive, except that employment shall not be considered terminated in the
case of sick leave or other bona fide leave of absence approved by the Corporation.

               6.5.2 Disability. If an Optionee ceases to be employed by, or ceases to have a
relationship with, the Corporation by reason of disability (within the meaning of Code Section
22(e)(3)), such Optionee’s Options shall expire not later than one (1) year thereafter. During
such one (1) year period and prior to the expiration of the Option by its terms, the Optionee may
exercise any Option granted to him, but only to the extent such Options were exercisable on the
date the Optionee ceased to be employed by, or ceased to have a relationship with, the Corporation
by reason of disability and except as so exercised, such Options shall expire at the end of such
one (1) year period unless such Options by their terms expire before such date. The decision as to
whether a termination by reason of disability has occurred shall be made by the Committee, whose
decision shall be final and conclusive.

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               6.5.3 Termination for Cause. If an Optionee’s employment by, or relationship with,
the Corporation is terminated for cause, such Optionee’s Option shall expire immediately; provided,
however, the Committee may, in its sole discretion, within thirty (30) days of such termination,
waive the expiration of the Option by giving written notice of such waiver to the Optionee at such
Optionee’s last known address. In the event of such waiver, the Optionee may exercise the Option
only to such extent, for such time, and upon such terms and conditions as if such Optionee had
ceased to be employed by, or ceased to have a relationship with, the Corporation upon the date of
such termination for a reason other than disability, cause, or death. Termination for cause shall
include termination for malfeasance or gross misfeasance in the performance of duties or conviction
of illegal activity in connection therewith or any conduct detrimental to the interests of the
Corporation. The determination of the Committee with respect to whether a termination for cause
has occurred shall be final and conclusive.

          6.6 Withholding of Taxes. As a condition to the exercise, in whole or in part, of any
Options the Board of Directors may in its sole discretion require the Optionee to pay, in addition
to the purchase price of the Shares covered by the Option an amount equal to any Federal, state or
local taxes that may be required to be withheld in connection with the exercise of such Option.

          6.7 No Rights to Continued Employment or Relationship. Nothing contained in this Plan
or in any Option Agreement shall obligate the Corporation to employ or have another relationship
with any Optionee for any period or interfere in any way with the right of the Corporation to
reduce such Optionee’s compensation or to terminate the employment of or relationship with any
Optionee at any time.

          6.8 Time of Granting Options. The time an Option is granted, sometimes referred to
herein as the date of grant, shall be the day the Corporation executes the Option Agreement;
provided, however, that if appropriate resolutions of the Committee indicate that an Option is to
be granted as of and on some prior or future date, the time such Option is granted shall be such
prior or future date.

          6.9 Privileges of Stock Ownership. No Optionee shall be entitled to the privileges of
stock ownership as to any Shares not actually issued and delivered to such Optionee. No Shares
shall be purchased upon the exercise of any Option unless and until, in the opinion of the
Corporation’s counsel, any then applicable requirements of any laws or governmental or regulatory
agencies having jurisdiction and of any exchanges upon which the stock of the Corporation may be
listed shall have been fully complied with.

          6.10 Securities Laws Compliance. The Corporation will diligently endeavor to comply
with all applicable securities laws before any Options are granted under the Plan and before any
Shares are issued pursuant to Options. Without limiting the generality of the foregoing, the
Corporation may require from the Optionee such investment representation or such agreement, if any,
as counsel for the Corporation may consider necessary or advisable in order to comply with the
Securities Act of 1933 as then in effect, and may require that the Optionee agree that any sale of
the Shares will be made only in such manner as is permitted by the Committee. The Committee in its
discretion may cause the Shares underlying the Options to be registered under the Securities Act of
1933, as amended, by the filing of a Form S-8

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Registration Statement covering the Options and Shares underlying such Options. Optionee shall take any action reasonably requested by the
Corporation in connection with registration or qualification of the Shares under federal or state
securities laws.

          6.11 Option Agreement. Each Incentive Stock Option and Nonqualified Option granted
under this Plan shall be evidenced by the appropriate written Stock Option Agreement (“Option
Agreement”) executed by the Corporation and the Optionee in a form substantially the same as the
appropriate form of Option Agreement attached as Exhibit I or II hereto (and made a part hereof by
this reference) and shall contain each of the provisions and agreements specifically required to be
contained therein pursuant to this Section 6, and such other terms and conditions as are deemed
desirable by the Committee and are not inconsistent with the purpose of the Plan as set forth in
Section 1.

     7. PLAN AMENDMENT AND TERMINATION.

          7.1 Authority of Committee. The Committee may at any time discontinue granting
Options under the Plan or otherwise suspend, amend or terminate the Plan and may, with the consent
of an Optionee, make such modification of the terms and conditions of such Optionee’s Option as it
shall deem advisable; provided that, except as permitted under the provisions of Section 5.2, the
Committee shall have no authority to make any amendment or modification to this Plan or any
outstanding Option thereunder which would: (i) increase the maximum number of Shares which may be
purchased pursuant to Options granted under the Plan, either in the aggregate or by an Optionee
(except pursuant to Section 5.2); (ii) change the designation of the class of the employees
eligible to receive Incentive Stock Options; (iii) extend the term of the Plan or the maximum
Option period thereunder; (iv) decrease the minimum Incentive Stock Option price or permit
reductions of the price at which Shares may be purchased for Incentive Stock Options granted under
the Plan; or (v) cause Incentive Stock Options issued under the Plan to fail to meet the
requirements of incentive stock options under Code Section 422. An amendment or modification made
pursuant to the provisions of this Section 7 shall be deemed adopted as of the date of the action
of the Committee effecting such amendment or modification and shall be effective immediately,
unless otherwise provided therein, subject to approval thereof (1) within twelve (12) months before
or after the effective date by stockholders of the Corporation holding not less than a majority
vote of the voting power of the Corporation voting in person or by proxy at a duly held
stockholders meeting when required to maintain or satisfy the requirements of Code Section 422 with
respect to Incentive Stock Options, and (2) by any appropriate governmental agency. No Option may
be granted during any suspension or after termination of the Plan.

          7.2 Ten (10) Year Maximum Term. Unless previously terminated by the Committee, this
Plan shall terminate on February 23, 2014 and no Options shall be granted under the Plan
thereafter.

          7.3 Effect on Outstanding Options. Amendment, suspension or termination of this Plan
shall not, without the consent of the Optionee, alter or impair any rights or obligations under any
Option theretofore granted.

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     8. EFFECTIVE DATE OF PLAN. This Plan shall be effective as of February 23, 2004, the
date the Plan was adopted by the Board of Directors, subject to the approval of the Plan by the
affirmative vote of a majority of the issued and outstanding Shares of common stock of the
Corporation represented and voting at a duly held meeting at which a quorum is present within
twelve (12) months thereafter. The Committee shall be authorized and empowered to make grants of
Options pursuant to this Plan prior to such approval of this Plan by the stockholders; provided,
however, in such event the Option grants shall be made subject to the approval of both this Plan
and such Option grants by the stockholders in accordance with the provisions of this Section 8.

     9. MISCELLANEOUS PROVISIONS.

          9.1 Exculpation and Indemnification. The Corporation shall indemnify and hold
harmless the Committee from and against any and all liabilities, costs and expenses incurred by
such persons as a result of any act, or omission to act, in connection with the performance of such
persons’ duties, responsibilities and obligations under the Plan, other than such liabilities,
costs and expenses as may result from the gross negligence, bad faith, willful conduct and/or criminal
acts of such persons.

          9.2 Governing Law. The Plan shall be governed and construed in accordance with the
laws of the State of Delaware and the Code.

          9.3 Compliance with Applicable Laws. The inability of the Corporation to obtain from
any regulatory body having jurisdiction authority deemed by the Corporation’s counsel to be
necessary to the lawful issuance and sale of any Shares upon the exercise of an Option shall
relieve the Corporation of any liability in respect of the non-issuance or sale of such Shares as
to which such requisite authority shall not have been obtained.

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EXHIBIT I

FORM OF

INCENTIVE STOCK OPTION AGREEMENT

     THIS INCENTIVE STOCK OPTION AGREEMENT (“Agreement”) is entered into as of                     ,
___, by and between AMDL, INC., a Delaware corporation (“Corporation”), and                     
(“Optionee”).

RECITALS

     A. On February 23, 2004, the Board of Directors of the Corporation adopted, subject to the
approval of the Corporation’s shareholders, the AMDL, Inc. 2004 Stock Option Plan (the “Plan”).

     B. Pursuant to the Plan, on                     ,                     , the members of the Board of Directors of
the Corporation serving on the Committee authorized granting to Optionee options to purchase shares
of the Corporation’s common stock, $.001 par value (“Shares”) for the term and subject to the terms
and conditions hereinafter set forth.

AGREEMENT

It is hereby agreed as follows:

     1. CERTAIN DEFINITIONS. Unless otherwise defined herein, or the context otherwise
clearly requires, terms with initial capital letters used herein shall have the meanings assigned
to such terms in the Plan.

     2. GRANT OF OPTIONS. The Corporation hereby grants to Optionee, Options to purchase
all or any part of                      (                    ) Shares, upon and subject to the terms and
conditions of the Plan, which is incorporated in full herein by this reference, and upon the other
terms and conditions set forth herein.

     3. OPTION PERIOD. The Options shall be exercisable at any time during the period
commencing on the date hereof (subject to the provisions of Section 17) and expiring on
                    ,                     , unless earlier terminated pursuant to Section 7.

     4. METHOD OF EXERCISE. The Options shall be exercisable by Optionee by giving written
notice to the Corporation of the election to purchase and of the number of Shares Optionee elects
to purchase, such notice to be accompanied by such other executed instruments or documents as may
be required by the Committee pursuant to this Agreement, and unless otherwise directed by the
Committee, Optionee shall at the time of such exercise tender the purchase price of the Shares he
has elected to purchase. An Optionee may purchase less than the total number of Shares for which
the Option is exercisable, provided that a partial exercise of an Option may not be for less than
one hundred (100) Shares. If Optionee shall not purchase all of the Shares which he is entitled to
purchase under the Options, his right to purchase the remaining unpurchased Shares shall

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continue until expiration of the Options. The Options shall be exercisable with respect of
whole Shares only, and fractional Share interests shall be disregarded.

     5. AMOUNT OF PURCHASE PRICE. The purchase price per Share for each Share which
Optionee is entitled to purchase under the Options shall be $         per Share.

     6. PAYMENT OF PURCHASE PRICE. At the time of Optionee’s notice of exercise of the
Options, Optionee shall tender in cash or by certified or bank cashier’s check payable to the
Corporation, the purchase price for all Shares then being purchased. Provided, however, the Board
of Directors may, in its sole discretion, permit payment by the Corporation of the purchase price
in whole or in part with Shares. If the Optionee is so permitted, and the Optionee elects to make
payment with Shares, the Optionee shall deliver to the Corporation certificates representing the
number of Shares in payment for new Shares, duly endorsed for transfer to the Corporation, together
with any written representations relating to title, liens and encumbrances, securities laws, rules
and regulatory compliance, or other matters, reasonably requested by the Board of Directors. The
value of Shares so tendered shall be their Fair Market Value Per Share on the date of the
Optionee’s notice of exercise.

     7. EFFECT OF TERMINATION OF EMPLOYMENT. If an Optionee’s employment or other
relationship with the Corporation (or a Subsidiary) terminates, the effect of the termination on
the Optionee’s rights to acquire Shares shall be as follows:

          7.1 Termination For Other Than Disability Or Cause. If an Optionee ceases to be
employed by, or ceases to have a relationship with, the Corporation or a Subsidiary for any reason
other than for disability or cause, such Optionee’s Options shall expire not later than three (3)
months thereafter. During such three (3) month period and prior to the expiration of the Option by
its terms, the Optionee may exercise any Option granted to him, but only to the extent such Options
were exercisable on the date of termination of his employment or relationship and except as so
exercised, such Options shall expire at the end of such three (3) month period unless such Options
by their terms expire before such date. The decision as to whether a termination for a reason
other than disability, cause or death has occurred shall be made by the Committee, whose decision
shall be final and conclusive, except that employment shall not be considered terminated in the
case of sick leave or other bona fide leave of absence approved by the Corporation.

          7.2 Disability. If an Optionee ceases to be employed by, or ceases to have a
relationship with, the Corporation or a Subsidiary by reason of disability (within the meaning of
Code Section 22(e)(3)), such Optionee’s Options shall expire not later than one (1) year
thereafter. During such one (1) year period and prior to the expiration of the Option by its
terms, the Optionee may exercise any Option granted to him, but only to the extent such Options
were exercisable on the date the Optionee ceased to be employed by, or ceased to have a
relationship with, the Corporation or Subsidiary by reason of disability. The decision as to
whether a termination by reason of disability has occurred shall be made by the Committee, whose
decision shall be final and conclusive.

          7.3 Termination For Cause. If an Optionee’s employment by, or relationship with, the
Corporation or a Subsidiary is terminated for cause, such Optionee’s Option shall expire
immediately; provided, however, the Committee may, in its sole discretion, within thirty (30) days
of such termination, waive the expiration of the Option by giving written notice of such waiver to

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the Optionee at such Optionee’s last known address. In the event of such waiver, the Optionee
may exercise the Option only to such extent, for such time, and upon such terms and conditions as
if such Optionee had ceased to be employed by, or ceased to have a relationship with, the
Corporation or a Subsidiary upon the date of such termination for a reason other than disability,
cause or death. Termination for cause shall include termination for malfeasance or gross
misfeasance in the performance of duties or conviction of illegal activity in connection therewith
or any conduct detrimental to the interests of the Corporation or a Subsidiary. The determination
of the Committee with respect to whether a termination for cause has occurred shall be final and
conclusive.

     8. NONTRANSFERABILITY OF OPTIONS. The Options shall not be transferable, either
voluntarily or by operation of law, otherwise than by will or the laws of descent and distribution
and shall be exercisable during the Optionee’s lifetime only by Optionee.

     9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. As used herein, the term “Adjustment
Event” means an event pursuant to which the outstanding Shares of the Corporation are increased,
decreased or changed into, or exchanged for a different number or kind of shares or securities,
without receipt of consideration by the Corporation, through reorganization, merger,
recapitalization, reclassification, stock split, reverse stock split, stock dividend, stock
consolidation or otherwise. Upon the occurrence of an Adjustment Event, (i) appropriate and
proportionate adjustments shall be made to the number and kind and exercise price for the Shares
subject to the Options, and (ii) appropriate amendments to this Agreement shall be executed by the
Corporation and Optionee if the Committee determines that such an amendment is necessary or
desirable to reflect such adjustments. If determined by the Committee to be appropriate, in the
event of an Adjustment Event which involves the substitution of securities of a corporation other
than the Corporation, the Committee shall make arrangements for the assumptions by such other
corporation of the Options. Notwithstanding the foregoing, any such adjustment to the Options
shall be made without change in the total exercise price applicable to the unexercised portion of
the Options, but with an appropriate adjustment to the number of Shares, kind of Shares and
exercise price for each Share subject to the Options. The determination by the Committee as to
what adjustments, amendments or arrangements shall be made pursuant to this Section 9, and the
extent thereof, shall be final and conclusive. No fractional Shares shall be issued on account of
any such adjustment or arrangement.

     10. NO RIGHTS TO CONTINUED EMPLOYMENT OR RELATIONSHIP. Nothing contained in this
Agreement shall obligate the Corporation to employ or have another relationship with Optionee for
any period or interfere in any way with the right of the Corporation to reduce Optionee’s
compensation or to terminate the employment of or relationship with Optionee at any time.

     11. TIME OF GRANTING OPTIONS. The time the Options shall be deemed granted, sometimes
referred to herein as the “date of grant,” shall be                         ,                     .

     12. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall not be entitled to the privileges
of stock ownership as to any Shares not actually issued and delivered to Optionee. No Shares shall
be purchased upon the exercise of any Options unless and until, in the opinion of the Corporation’s
counsel, any then applicable requirements of any laws, or governmental or regulatory agencies
having jurisdiction, and of any exchanges upon which the stock of the Corporation may be listed
shall have been fully complied with.

3

 

     13. SECURITIES LAWS COMPLIANCE. The Corporation will diligently endeavor to comply
with all applicable securities laws before any Shares are issued pursuant to the Options. Without
limiting the generality of the foregoing, the Corporation may require from the Optionee such
investment representation or such agreement, if any, as counsel for the Corporation may consider
necessary in order to comply with the Securities Act of 1933 as then in effect, and may require
that the Optionee agree that any sale of the Shares will be made only in such manner as is
permitted by the Committee. The Committee may in its discretion cause the Shares underlying the
Options to be registered under the Securities Act of 1933, as amended, by filing a Form S-8
Registration Statement covering the Options and the Shares underlying the Options. Optionee shall
take any action reasonably requested by the Corporation in connection with registration or
qualification of the Shares under federal or state securities laws.

     14. INTENDED TREATMENT AS INCENTIVE STOCK OPTIONS. The Options granted herein are
intended to be “incentive stock options” to which Sections 421 and 422 of the Internal Revenue Code
of 1986, as amended from time to time (“Code”) apply, and shall be construed to implement that
intent. If all or any part of the Options shall not be subject to Sections 421 and 422 of the
Code, the Options shall nevertheless be valid and carried into effect.

     15. PLAN CONTROLS. The Options shall be subject to and governed by the provisions of
the Plan. All determinations and interpretations of the Plan made by the Committee shall be final
and conclusive.

     16. SHARES SUBJECT TO LEGEND. If deemed necessary by the Corporation’s counsel, all
certificates issued to represent Shares purchased upon exercise of the Options shall bear such
appropriate legend conditions as counsel for the Corporation shall require.

     17. CONDITIONS TO OPTIONS.

          17.1 Compliance with Applicable Laws. The Corporation’s obligation to issue Shares of
its common stock upon exercise of the Options is expressly conditioned upon the completion by the
Corporation of any registration or other qualification of such Shares under any state and/or
Federal law or rulings or regulations of any governmental regulatory body, or the making of such
investment representations or other representations and undertakings by the Optionee or any person
entitled to exercise the Option in order to comply with the requirements of any exemption from any
such registration or other qualification of such Shares which the Committee shall, in its sole
discretion, deem necessary or advisable. Such required representations and undertakings may
include representations and agreements that the Optionee or any person entitled to exercise the
Option (i) is not purchasing such Shares for distribution and (ii) agrees to have placed upon the
face and reverse of any certificates a legend setting forth any representations and undertakings
which have been given to the Committee or a reference thereto.

          17.2 Shareholder Approval of Plan. If the Options granted hereby are granted prior to
approval of the Plan by the shareholders of the Corporation pursuant to Section 8 of the Plan, the
grant of the Options made hereby is expressly conditioned upon and such Options shall not be
exercisable until the approval of the Plan by the shareholders of the Corporation in accordance
with the provisions of Section 8 of the Plan.

4

 

          17.3 Maximum Exercise Period. Notwithstanding any provision of this Agreement to the
contrary, the Options shall expire no later than ten (10) years from the date hereof or five (5)
years if, as of the date hereof, the Optionee owns or is considered to own by reason of Code
Section 425(d) more than ten percent (10%) of the total combined voting power of all classes of
stock of the Corporation or any Subsidiary or parent corporation of the Corporation.

     18. MISCELLANEOUS.

          18.1 Binding Effect. This Agreement shall bind and inure to the benefit of the
successors, assigns, transferees, agents, personal representatives, heirs and legatees of the
respective parties.

          18.2 Further Acts. Each party agrees to perform any further acts and execute and
deliver any documents which may be necessary to carry out the provisions of this Agreement.

          18.3 Amendment. This Agreement may be amended at any time by the written agreement of
the Corporation and the Optionee.

          18.4 Syntax. Throughout this Agreement, whenever the context so requires, the
singular shall include the plural, and the masculine gender shall include the feminine and neuter
genders. The headings and captions of the various Sections hereof are for convenience only and
they shall not limit, expand or otherwise affect the construction or interpretation of this
Agreement.

          18.5 Choice of Law. The parties hereby agree that this Agreement has been executed
and delivered in the State of California and shall be construed, enforced and governed by the laws
thereof. This Agreement is in all respects intended by each party hereto to be deemed and
construed to have been jointly prepared by the parties and the parties hereby expressly agree that
any uncertainty or ambiguity existing herein shall not be interpreted against either of them.

          18.6 Severability. In the event that any provision of this Agreement shall be held
invalid or unenforceable, such provision shall be severable from, and such invalidity or
unenforceability shall not be construed to have any effect on, the remaining provisions of this
Agreement.

          18.7 Notices. All notices and demands between the parties hereto shall be in writing
and shall be served either by registered or certified mail, and such notices or demands shall be
deemed given and made forty-eight (48) hours after the deposit thereof in the United States mail,
postage prepaid, addressed to the party to whom such notice or demand is to be given or made, and
the issuance of the registered receipt therefor. If served by telegraph, such notice or demand
shall be deemed given and made at the time the telegraph agency shall confirm to the sender,
delivery thereof to the addressee. All notices and demands to Optionee or the Corporation may be
given to them at the following addresses:

	 	 	 
	If to Optionee:
	 	 
	 
	 	 
	If to Corporation:

	 	AMDL, Inc.

2492 Walnut Avenue, Suite 100

Tustin, California 92780

5

 

Such parties may designate in writing from time to time such other place or places that such
notices and demands may be given.

          18.8 Entire Agreement. This Agreement constitutes the entire agreement between the
parties hereto pertaining to the subject matter hereof, this Agreement supersedes all prior and
contemporaneous agreements and understandings of the parties, and there are no warranties,
representations or other agreements between the parties in connection with the subject matter
hereof except as set forth or referred to herein. No supplement, modification or waiver or
termination of this Agreement shall be binding unless executed in writing by the party to be bound
thereby. No waiver of any of the provisions of this Agreement shall constitute a waiver of any
other provision hereof (whether or not similar) nor shall such waiver constitute a continuing
waiver.

          18.9 Attorneys’ Fees. In the event that any party to this Agreement institutes any
action or proceeding, including, but not limited to, litigation or arbitration, to preserve, to
protect or to enforce any right or benefit created by or granted under this Agreement, the
prevailing party in each respective such action or proceeding shall be entitled, in addition to any
and all other relief granted by a court or other tribunal or body, as may be appropriate, to an
award in such action or proceeding of that sum of money which represents the attorneys’ fees
reasonably incurred by the prevailing party therein in filing or otherwise instituting and in
prosecuting or otherwise pursuing or defending such action or proceeding, and, additionally, the
attorneys’ fees reasonably incurred by such prevailing party in negotiating any and all matters
underlying such action or proceeding and in preparation for instituting or defending such action or
proceeding.

     IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date first set
forth above.

	 	 	 	 	 
	 	“CORPORATION”

AMDL, INC.,

a Delaware corporation

 	 
	 	By:  	 	 
	 	 	Gary L. Dreher, President 	 
	 	 	 	 
	 
	 	“OPTIONEE”

 	 
	 	
 	 
	 	[INSERT NAME] 	 
	 	 	 
	 

6

 

EXHIBIT II

FORM OF

NON-QUALIFIED STOCK OPTION AGREEMENT

     THIS NON-QUALIFIED STOCK OPTION AGREEMENT (“Agreement”) is entered into as of                                         ,
                    , by and between AMDL, INC., a Delaware corporation (“Corporation”), and                                     
(“Optionee”).

RECITALS

     A. On February 23, 2004, the Board of Directors of the Corporation adopted, subject to the
approval of the Corporation’s shareholders, the AMDL, Inc. 2004 Stock Option Plan (the “Plan”).

     B. Pursuant to the Plan, on                     ,                     , the members of the Board of Directors of
the Corporation serving on the Committee authorized granting to Optionee options to purchase shares
of the common stock, $.001 par value, of the Corporation (“Shares”) for the term and subject to the
terms and conditions hereinafter set forth.

AGREEMENT

     It is hereby agreed as follows:

     1. CERTAIN DEFINITIONS. Unless otherwise defined herein, or the context otherwise
clearly requires, terms with initial capital letters used herein shall have the meanings assigned
to such terms in the Plan.

     2. GRANT OF OPTIONS. The Corporation hereby grants to Optionee, Options to purchase
all or any part of                                          (                    ) Shares, upon and subject to the terms and conditions
of the Plan, which is incorporated in full herein by this reference, and upon the other terms and
conditions set forth herein.

     3. OPTION PERIOD. The Options shall be exercisable at any time during the period
commencing on the date hereof (subject to the provisions of Section 17) and expiring on
                                        ,                     , unless earlier terminated pursuant to Section 7.

     4. METHOD OF EXERCISE. The Options shall be exercisable by Optionee by giving written
notice to the Corporation of the election to purchase and of the number of Shares Optionee elects
to purchase, such notice to be accompanied by such other executed instruments or documents as may
be required by the Committee pursuant to this Agreement, and unless otherwise directed by the
Committee, Optionee shall at the time of such exercise tender the purchase price of the Shares he
has elected to purchase. An Optionee may purchase less than the total number of Shares for which
the Option is exercisable, provided that a partial exercise of an Option may not be for less than
one hundred (100) Shares. If Optionee shall not purchase all of the Shares which he is entitled to
purchase under the Options, his right to purchase the remaining

II-1

 

unpurchased Shares shall continue until expiration of the Options. The Options shall be
exercisable with respect of whole Shares only, and fractional Share interests shall be disregarded.

     5. AMOUNT OF PURCHASE PRICE. The purchase price per Share for each Share which
Optionee is entitled to purchase under the Options shall be $          per Share.

     6. PAYMENT OF PURCHASE PRICE. At the time of Optionee’s notice of exercise of the
Options, Optionee shall tender in cash or by certified or bank cashier’s check payable to the
Corporation, the purchase price for all Shares then being purchased. Provided, however, the Board
of Directors may, in its sole discretion, permit payment by the Corporation of the purchase price
in whole or in part with Shares. If the Optionee is so permitted, and the Optionee elects to make
payment with Shares, the Optionee shall deliver to the Corporation certificates representing the
number of Shares in payment for new Shares, duly endorsed for transfer to the Corporation, together
with any written representations relating to title, liens and encumbrances, securities laws, rules
and regulatory compliance, or other matters, reasonably requested by the Board of Directors. The
value of Shares so tendered shall be their Fair Market Value Per Share on the date of the
Optionee’s notice of exercise.

     7. EFFECT OF TERMINATION OF RELATIONSHIP OR DEATH. If Optionee’s relationship with
the Corporation as [an employee] [a consultant] [a director] terminates (whether voluntarily or
involuntarily because he is not re-elected by the shareholders), or if Optionee dies, all Options
which have previously vested shall expire six (6) months thereafter. All unvested Options shall
lapse and automatically expire. During such six (6) month period (or such shorter period prior to
the expiration of the Option by its own terms), such Options may be exercised by the Optionee, his
executor or administrator or the person or persons to whom the Option is transferred by will or the
applicable laws of descent and distribution, as the case may be, but only to the extent such
Options were exercisable on the date Optionee ceased to have a relationship with the Corporation as
a director or died.

     8. NONTRANSFERABILITY OF OPTIONS. The Options shall not be transferable, either
voluntarily or by operation of law, otherwise than by will or the laws of descent and distribution
and shall be exercisable during the Optionee’s lifetime only by Optionee.

     9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. As used herein, the term “Adjustment
Event” means an event pursuant to which the outstanding Shares of the Corporation are increased,
decreased or changed into, or exchanged for a different number or kind of shares or securities,
without receipt of consideration by the Corporation, through reorganization, merger,
recapitalization, reclassification, stock split, reverse stock split, stock dividend, stock
consolidation or otherwise. Upon the occurrence of an Adjustment Event, (i) appropriate and
proportionate adjustments shall be made to the number and kind and exercise price for the Shares
subject to the Options, and (ii) appropriate amendments to this Agreement shall be executed by the
Corporation and Optionee if the Committee determines that such an amendment is necessary or
desirable to reflect such adjustments. If determined by the Committee to be appropriate, in the
event of an Adjustment Event which involves the substitution of securities of a corporation other
than the Corporation, the Committee shall make arrangements for the assumptions by such other
corporation of the Options. Notwithstanding the

II-2

 

foregoing, any such adjustment to the Options shall be made without change in the total
exercise price applicable to the unexercised portion of the Options, but with an appropriate
adjustment to the number of Shares, kind of Shares and exercise price for each Share subject to the
Options. The determination by the Committee as to what adjustments, amendments or arrangements
shall be made pursuant to this Section 9, and the extent thereof, shall be final and conclusive.
No fractional Shares shall be issued on account of any such adjustment or arrangement.

     10. NO RIGHTS TO CONTINUED EMPLOYMENT OR RELATIONSHIP. Nothing contained in this
Agreement shall obligate the Corporation to employ or have another relationship with Optionee for
any period or interfere in any way with the right of the Corporation to reduce Optionee’s
compensation or to terminate the employment of or relationship with Optionee at any time.

     11. TIME OF GRANTING OPTIONS. The time the Options shall be deemed granted, sometimes
referred to herein as the “date of grant,” shall be                                         ,                .

     12. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall not be entitled to the privileges
of stock ownership as to any Shares not actually issued and delivered to Optionee. No Shares shall
be purchased upon the exercise of any Options unless and until, in the opinion of the Corporation’s
counsel, any then applicable requirements of any laws, or governmental or regulatory agencies
having jurisdiction, and of any exchanges upon which the stock of the Corporation may be listed
shall have been fully complied with.

     13. SECURITIES LAWS COMPLIANCE. The Corporation will diligently endeavor to comply
with all applicable securities laws before any stock is issued pursuant to the Options. Without
limiting the generality of the foregoing, the Corporation may require from the Optionee such
investment representation or such agreement, if any, as counsel for the Corporation may consider
necessary in order to comply with the Securities Act of 1933 as then in effect, and may require
that the Optionee agree that any sale of the Shares will be made only in such manner as is
permitted by the Committee. The Committee may in its discretion cause the Shares underlying the
Options to be registered under the Securities Act of 1933, as amended, by filing a Form S-8
Registration Statement covering the Options and the Shares underlying the Options. Optionee shall
take any action reasonably requested by the Corporation in connection with registration or
qualification of the Shares under federal or state securities laws.

     14. INTENDED TREATMENT AS NON-QUALIFIED STOCK OPTIONS. The Options granted herein are
intended to be non-qualified stock options described in U.S. Treasury Regulation (“Treas. Reg.”)
§1.83-7 to which Sections 421 and 422 of the Internal Revenue Code of 1986, as amended from time to
time (“Code”) do not apply, and shall be construed to implement that intent. If all or any part of
the Options shall not be described in Treas. Reg. §1.83-7 or be subject to Sections 421 and 422 of
the Code, the Options shall nevertheless be valid and carried into effect.

     15. PLAN CONTROLS. The Options shall be subject to and governed by the provisions of
the Plan. All determinations and interpretations of the Plan made by the Committee shall be final
and conclusive.

II-3

 

     16. SHARES SUBJECT TO LEGEND. If deemed necessary by the Corporation’s counsel, all
certificates issued to represent Shares purchased upon exercise of the Options shall bear such
appropriate legend conditions as counsel for the Corporation shall require.

     17. CONDITIONS TO OPTIONS.

          17.1 Compliance with Applicable Laws. The Corporation’s obligation to issue Shares
upon exercise of the Options is expressly conditioned upon the completion by the Corporation of any
registration or other qualification of such Shares under any state and/or Federal law or rulings or
regulations of any governmental regulatory body, or the making of such investment representations
or other representations and undertakings by the Optionee or any person entitled to exercise the
Option in order to comply with the requirements of any exemption from any such registration or
other qualification of such Shares which the Committee shall, in its sole discretion, deem
necessary or advisable. Such required representations and undertakings may include representations
and agreements that the Optionee or any person entitled to exercise the Option (i) is not
purchasing such Shares for distribution and (ii) agrees to have placed upon the face and reverse of
any certificates a legend setting forth any representations and undertakings which have been given
to the Committee or a reference thereto.

          17.2 Shareholder Approval of Plan. If the Options granted hereby are granted prior to
approval of the Plan by the shareholders of the Corporation pursuant to Section 8 of the Plan, the
grant of the Options made hereby is expressly conditioned upon and such Options shall not be
exercisable until the approval of the Plan by the shareholders of the Corporation in accordance
with the provisions of Section 8 of the Plan.

     18. MISCELLANEOUS.

          18.1 Binding Effect. This Agreement shall bind and inure to the benefit of the
successors, assigns, transferees, agents, personal representatives, heirs and legatees of the
respective parties.

          18.2 Further Acts. Each party agrees to perform any further acts and execute and
deliver any documents which may be necessary to carry out the provisions of this Agreement.

          18.3 Amendment. This Agreement may be amended at any time by the written agreement of
the Corporation and the Optionee.

          18.4 Syntax. Throughout this Agreement, whenever the context so requires, the
singular shall include the plural, and the masculine gender shall include the feminine and neuter
genders. The headings and captions of the various Sections hereof are for convenience only and
they shall not limit, expand or otherwise affect the construction or interpretation of this
Agreement.

          18.5 Choice of Law. The parties hereby agree that this Agreement has been executed
and delivered in the State of California and shall be construed, enforced and governed by the laws
thereof. This Agreement is in all respects intended by each party hereto to be deemed and
construed to have been jointly prepared by the parties and the parties hereby

II-4

 

expressly agree that any uncertainty or ambiguity existing herein shall not be interpreted
against either of them.

          18.6 Severability. In the event that any provision of this Agreement shall be held
invalid or unenforceable, such provision shall be severable from, and such invalidity or
unenforceability shall not be construed to have any effect on, the remaining provisions of this
Agreement.

          18.7 Notices. All notices and demands between the parties hereto shall be in writing
and shall be served either by registered or certified mail, and such notices or demands shall be
deemed given and made forty-eight (48) hours after the deposit thereof in the United States mail,
postage prepaid, addressed to the party to whom such notice or demand is to be given or made, and
the issuance of the registered receipt therefor. If served by telegraph, such notice or demand
shall be deemed given and made at the time the telegraph agency shall confirm to the sender,
delivery thereof to the addressee. All notices and demands to Optionee or the Corporation may be
given to them at the following addresses:

	 	 	 
	If to Optionee:
	 	 
	 
	 	 
	If to Corporation:

	 	AMDL, Inc.

2492 Walnut Avenue, Suite 100

Tustin, California 92780

Such parties may designate in writing from time to time such other place or places that such
notices and demands may be given.

          18.8 Entire Agreement. This Agreement constitutes the entire agreement between the
parties hereto pertaining to the subject matter hereof, this Agreement supersedes all prior and
contemporaneous agreements and understandings of the parties, and there are no warranties,
representations or other agreements between the parties in connection with the subject matter
hereof except as set forth or referred to herein. No supplement, modification or waiver or
termination of this Agreement shall be binding unless executed in writing by the party to be bound
thereby. No waiver of any of the provisions of this Agreement shall constitute a waiver of any
other provision hereof (whether or not similar) nor shall such waiver constitute a continuing
waiver.

          18.9 Attorneys’ Fees. In the event that any party to this Agreement institutes any
action or proceeding, including, but not limited to, litigation or arbitration, to preserve, to
protect or to enforce any right or benefit created by or granted under this Agreement, the
prevailing party in each respective such action or proceeding shall be entitled, in addition to any
and all other relief granted by a court or other tribunal or body, as may be appropriate, to an
award in such action or proceeding of that sum of money which represents the attorneys’ fees
reasonably incurred by the prevailing party therein in filing or otherwise instituting and in
prosecuting or otherwise pursuing or defending such action or proceeding, and, additionally, the
attorneys’ fees reasonably incurred by such prevailing party in negotiating any and all matters

II-5

 

underlying such action or proceeding and in preparation for instituting or defending such
action or proceeding.

     IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date first set
forth above.

	 	 	 	 	 
	 	“CORPORATION”

AMDL, INC.,

a Delaware corporation

 	 
	 	By:  	 	 
	 	 	Gary L. Dreher, President 	 
	 	 
	 	“OPTIONEE” 
	 	 
	 	 	 
	 	[INSERT NAME] 

II-6exv10w1

EXHIBIT 10.1

AMDL, Inc.

2006 Equity Incentive Plan

1. Purpose.

The purpose of the AMDL, Inc. 2006 Equity Incentive Plan (the “Plan”) is to strengthen AMDL, Inc.,
a Delaware corporation (the “Company”), by providing to employees, officers, directors, consultants
and independent contractors of the Company or any of its Subsidiaries (as defined below) (including
dealers, distributors, and other business entities or persons providing services on behalf of the
Company or any of its Subsidiaries) added incentive for high levels of performance and unusual
efforts to increase the earnings of the Company. The Plan seeks to accomplish this purpose by
enabling specified persons to purchase shares of the Company’s common stock, $.001 par value,
thereby increasing their proprietary interest in the Company’s success and encouraging them to
remain in the employ or service of the Company.

2. Definitions.

     “Affiliate” means any Parent or Subsidiary of the Company, whether now or hereafter existing.

     “Board” means the Board of Directors of the Company.

     “Change in Control” means (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 shareholders 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 jurisdiction 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.

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

     “Committee” means the Compensation Committee of the Board, which shall administer the Plan and
consist of a majority of Independent Directors.

     “Consultant” means any person, including an advisor, (i) engaged by the Company or an
Affiliate to render consulting or advisory services and who is compensated for such services,
including members of any advisory board constituted by the Company, or (ii) who is a member of the
Board of Directors of an Affiliate. However, the term “Consultant” shall not include either
Directors who are not compensated by the Company for their services as Directors or Directors who
are merely paid a director’s fee by the Company for their services as Directors.

     “Continuous Service” means, with respect to Employees, service with the Company or an
Affiliate that is not interrupted or terminated. With respect to Directors or Consultants,
Continuous Service means service with the Company, or a Parent or Subsidiary of the Company,
whether as a Director or Consultant, that is not interrupted or terminated. The Board or the chief
executive officer of

 

 

the Company, in that party’s sole discretion, may determine whether Continuous Service shall
be considered interrupted in the case of any leave of absence approved by that party, including
sick leave, military leave or any other personal leave.

     “Director” means a member of the Board.

     “Disability” means the permanent and total disability of a person within the meaning of
Section 22(e)(3) of the Code.

     “Eligible Recipient” means any Employee, Officer, Director or Consultant of the Company, or of
a Parent or Subsidiary of the Company.

     “Employee” means any person employed by the Company or an Affiliate. Mere service as a
Director or payment of a director’s fee by the Company or an Affiliate shall not be sufficient to
constitute “employment” by the Company or an Affiliate.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended

     “Fair Market Value” means, as of any date, the value of the Ordinary Shares determined as
follows: The fair market value per share of the Ordinary Shares as determined by the Committee in
good faith. The Committee is authorized to make its determination as to the fair market value per
share of the Ordinary Shares on the following basis: (i) if the Ordinary Shares are traded only
otherwise than on a securities exchange and are not quoted on the National Association of
Securities Dealers’ Automated Quotation System (“NASDAQ”), but are quoted on the bulletin board or
in the “pink sheets” published by the National Daily Quotation Bureau, the greater of (a) the
average of the mean between the average daily bid and average daily asked prices of the Ordinary
Shares during the thirty (30) day period preceding the date of grant of an Option, as quoted on the
bulletin board or in the “pink sheets” published by the National Daily Quotation Bureau, or (b) the
mean between the average daily bid and average daily asked prices of the Ordinary Shares on the
date of grant, as published on the bulletin board or in such “pink sheets;” (ii) if the Ordinary
Shares are traded on a securities exchange or on the NASDAQ, the greater of (a) the average of the
daily closing prices of the Ordinary Shares during the ten (10) trading days preceding the date of
grant of an Option, or (b) the closing price of the Ordinary Shares on the last trading day
preceding the date of grant of an Option; or (iii) if the Ordinary Shares are traded only otherwise
than as described in (i) or (ii) above, or if the Ordinary Shares are not publicly traded, the
value determined by the Committee in good faith based upon the fair market value as determined by
completely independent and well qualified experts.

     “Incentive Stock Option” means an Option intended to qualify as an incentive stock option
within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

     “Independent Director” means an independent director as defined in Section 121 of the American
Stock Exchange Company Guide, or any successor rule, as in effect from time to time.

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

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

     “Option” means a stock option granted pursuant to Section 6 of the Plan.

2

 

     “Option Agreement” means a written agreement between the Company and an Optionholder
evidencing the terms and conditions of an individual Option grant. Each Option Agreement shall be
subject to the terms and conditions of the Plan.

     “Optionholder” means a person to whom an Option is granted pursuant to the Plan or, if
applicable, such other person who holds an outstanding Option.

     “Ordinary Shares” means the shares of common stock, $.001 par value, of the Company.

     “Outside Director” means a Director who either (i) is not a current employee of the Company or
an “affiliated corporation” (within the meaning of Treasury Regulations promulgated under Section
162(m) of the Code), is not a former employee of the Company or an “affiliated corporation”
receiving compensation for prior services (other than benefits under a tax qualified pension plan),
was not an officer of the Company or an “affiliated corporation” at any time and is not currently
receiving direct or indirect remuneration from the Company or an “affiliated corporation” for
services in any capacity other than as a Director, or (ii) is otherwise considered an “outside
director” for purposes of Section 162(m) of the Code.

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

     “Participant” means a person to whom a Stock Award is granted pursuant to the Plan or, if
applicable, such other person who holds an outstanding Stock Award.

     “Plan” means this 2006 Equity Incentive Plan, as amended from time to time.

     “Restricted Stock” shall mean a grant of Ordinary Shares pursuant to Section 7 of the Plan.

     “Securities Act” means the Securities Act of 1933, as amended.

     “Stock Award” means any Option or grant of Restricted Stock governed by the Plan.

     “Stock Award Agreement” means a written agreement between the Company and a holder of a Stock
Award evidencing the terms and conditions of an individual Stock Award grant. Each Stock Award
Agreement shall be subject to the terms and conditions of the Plan.

     “Subsidiary” means (1) in the case of an Incentive Stock Option, a “subsidiary corporation,”
whether now or hereafter existing, as defined in Section 424(f) of the Code, and (2) in the case of
any other Stock Award, in addition to a subsidiary corporation as defined in clause (1), (A) a
limited liability company, partnership or other entity in which the Company controls fifty percent
(50%) or more of the voting power or equity interests, or (B) an entity with respect to which the
Company possesses the power, directly or indirectly, to direct or cause the direction of the
management and policies, whether through the Company’s ownership of voting securities, by contract
or otherwise.

     “Ten Percent Shareholder” means a person who owns (or is deemed to own pursuant to Section
424(d) of the Code) stock comprising more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or of any of its Affiliates.

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3. Administration.

     (a) Administration by the Committee. This Plan shall be administered by the Committee. Any
action of the Committee with respect to administration of the Plan shall be taken pursuant to (i) a
majority vote at a meeting of the Committee (to be documented by minutes), or (ii) the
unanimous written consent of its members.

     (b) Powers of the Committee. Subject to the express provisions of this Plan, the Committee
shall have the authority to: (i) construe and interpret the Plan, decide all questions and settle
all controversies and disputes which may arise in connection with the Plan and to define the terms
used therein; (ii) prescribe, amend and rescind rules and regulations relating to administration of
the Plan; (iii) determine the purchase price of the Shares covered by each Stock Award and the
method of payment of such price, individuals to whom, and the time or times at which, Stock Awards
shall be granted and exercisable and the number of Ordinary Shares covered by each Stock Award;
(iv) determine the terms and provisions of the respective Stock Award Agreements (which need not be
identical); (v) determine the duration and purposes of leaves of absence which may be granted to
participants without constituting a termination of their employment for purposes of the Plan; and
(vi) make all other determinations necessary or advisable to the administration of the Plan.
Determinations of the Committee on matters referred to in this Section 3 shall be conclusive and
binding on all parties howsoever concerned. With respect to Incentive Stock Options, the Committee
shall administer the Plan in compliance with the provisions of Code Section 422 as the same may
hereafter be amended from time to time. No member of the Committee shall be liable for any action
or determination made in good faith with respect to the Plan or any Stock Award.

     (c) Effect of the Committee’s Decision. All determinations, interpretations and constructions
regarding the Plan or any Stock Award made by the Committee in good faith shall not be subject to
review by any person and shall be final, binding and conclusive on all persons.

4. Shares Subject to the Plan.

     (a) Share Reserve. Subject to the provisions of Section 13 relating to adjustments upon
changes in Ordinary Shares, the number of Ordinary Shares that may be issued under the Plan shall
not exceed 5,000,000 in the aggregate.

     (b) Reversion of Shares and Availability of Shares to the Share Reserve. If any Stock Award
granted under the Plan or under any other equity incentive plan of the Company shall for any reason
expire or otherwise terminate, in whole or in part, without having been exercised in full, or if
any Ordinary Shares issued to a Participant pursuant to a Stock Award granted under the Plan or
under any other equity incentive plan of the Company are forfeited back to or repurchased by the
Company, including, but not limited to, any repurchase or forfeiture caused by the failure to meet
a contingency or condition required for the vesting or exercise of such shares, then the Ordinary
Shares not acquired under such Stock Award shall become available for issuance under the Plan,
subject to the limitation in Section 4(a).

     (c) Source of Shares. The Ordinary Shares subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.

5. Eligibility.

     (a) Eligibility for Specific Stock Awards. Incentive Stock Options may be granted only to
Employees. Nonstatutory Stock Options and Restricted Stock awards may be granted to all Eligible

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Recipients. Within the foregoing limits, the Committee, from time to time, shall determine and
designate persons to whom Stock Awards may be granted. All such designations shall be made in the
absolute discretion of the Committee and shall not require the approval of the stockholders, except
to the extent such approval is required pursuant to applicable securities laws or rules of an
applicable securities
exchange. In determining (i) the number of Ordinary Shares to be covered by each Stock Award,
(ii) the purchase price for such Ordinary Shares and the method of payment of such price (subject
to the other sections hereof), (iii) the individuals of the eligible class to whom Stock Awards
shall be granted, (iv) the terms and provisions of the respective Stock Award Agreements, and (v)
the times at which such Stock Awards shall be granted, the Committee shall take into account such
factors as it shall deem relevant in connection with accomplishing the purpose of the Plan as set
forth in Section 1. An individual who has been granted a Stock Award may be granted additional
Stock Awards if the Committee shall so determine. No Stock Award shall be granted under the Plan
after March 14, 2016 but Stock Awards granted before such date may be exercisable after such date.

     (b) Ten Percent Shareholders. A Ten Percent Shareholder shall not be granted an Incentive
Stock Option unless the exercise price of such Option is at least one hundred ten percent (110%) of
the Fair Market Value of the Ordinary Shares at the date of grant and the Option is not exercisable
after the expiration of five (5) years from the date of grant.

     (c) Consultants. A Consultant shall not be eligible for the grant of a Stock Award if, at the
time of grant, a Form S-8 Registration Statement under the Securities Act (“Form S-8”) is not
available to register either the offer or the sale of the Company’s securities to such Consultant
because of the nature of the services that the Consultant is providing to the Company, or because
the Consultant is not a natural person, or as otherwise provided by the rules governing the use of
Form S-8, unless the Company determines both (i) that such grant (A) shall be registered in another
manner under the Securities Act (e.g., on a Form S-3 Registration Statement) or (B) does not
require registration under the Securities Act in order to comply with the requirements of the
Securities Act, if applicable, and (ii) that such grant complies with the securities laws of all
other relevant jurisdictions. Form S-8 generally is available to consultants and advisors only if
(i) they are natural persons, (ii) they provide bona fide services to the issuer, its parents, its
majority-owned subsidiaries or majority-owned subsidiaries of the issuer’s parent, and (iii) the
services are not in connection with the offer or sale of securities in a capital-raising
transaction, and do not directly or indirectly promote or maintain a market for the issuer’s
securities.

     (d) Foreign Participants. Notwithstanding any provision of the Plan to the contrary, in order
to comply with the laws in other countries in which the Company and its subsidiaries operate or
have Employees, Officers, Directors or Consultants, the Committee, in its sole discretion, shall
have the power and authority to: (i) determine which subsidiaries shall be covered by the Plan;
(ii) determine which Employees, Officers, Directors or Consultants outside the United States are
eligible to participate in the Plan; (iii) modify the terms and conditions of any Stock Award
granted to Employees, Officers, Directors or Consultants outside the United States to comply with
applicable foreign laws; (iv) establish subplans and modify exercise procedures and other terms and
procedures, to the extent such actions may be necessary or advisable (any such subplans and/or
modifications shall be attached to this subplan as appendices); provided, however, that no such
subplans and/or modifications shall increase the number of Ordinary Shares reserved for issuance
under the Plan as set forth in Section 4 of the Plan; and (v) take any action, before or after a
Stock Award is granted, that it deems advisable to obtain approval or comply with any applicable
foreign laws. If the terms of any Stock Award Agreement delivered to a foreign Participant
conflict with the terms of this Plan, the terms of such Stock Award Agreement will control.

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6. Option Provisions.

     Each Option shall be in such form and shall contain such terms and conditions as the Committee
shall deem appropriate. All Options shall be separately designated Incentive Stock Options or
Nonstatutory Stock Options at the time of grant, and, if certificates are issued, a separate
certificate or certificates will be issued for Ordinary Shares purchased on exercise of each type
of Option. The provisions of separate Options need not be identical, but each Option shall include
(through incorporation
of provisions hereof by reference in the Option Agreement or otherwise) the substance of each
of the following provisions:

     (a) Term. Subject to the provisions of Section 5(b) regarding Ten Percent Shareholders, no
Option shall be exercisable after the expiration of ten (10) years from the date it was granted.

     (b) Exercise Price of an Incentive Stock Option. Subject to the provisions of Section 5(b)
regarding Ten Percent Shareholders, the exercise price of each Incentive Stock Option shall be not
less than one hundred percent (100%) of the Fair Market Value of the Ordinary Shares subject to the
Option on the date the Option is granted. Notwithstanding the foregoing, an Incentive Stock Option
may be granted with an exercise price lower than that set forth in the preceding sentence if such
Option is granted pursuant to an assumption or substitution for another option in a manner
satisfying the provisions of Section 424(a) of the Code.

     (c) Exercise Price of a Nonstatutory Stock Option. The exercise price of Nonstatutory Stock
Options shall be not less than one hundred percent (100%) of the Fair Market Value of the Ordinary
Shares subject to the Option on the date the Option is granted.

     (d) Consideration. The purchase price of Ordinary Shares 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 Committee at the time of the grant
of the Option (or subsequently in the case of a Nonstatutory Stock Option) (A) by delivery to the
Company of other Ordinary Shares, (B) according to a deferred payment or other similar arrangement
with the Optionholder, subject to compliance with applicable state and federal securities laws, (C)
pursuant to a cashless exercise program implemented by the Company in connection with the Plan, if
any, or (D) in any other form of legal consideration that may be acceptable to the Committee.
Unless otherwise specifically provided in the Option Agreement, the purchase price of Ordinary
Shares acquired pursuant to an Option that is paid by delivery to the Company of other Ordinary
Shares acquired, directly or indirectly from the Company, shall be paid only by shares of the
Ordinary Shares of the Company that have been held for more than six (6) months (or such longer or
shorter period of time required to avoid a charge to earnings for financial accounting purposes).

     In the case of any deferred payment arrangement, 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.

     (e) Transferability of an Incentive Stock Option. An Incentive Stock Option shall not be
transferable except by will or by the laws of descent and distribution and shall be exercisable
during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing,
the Optionholder 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 Optionholder, shall
thereafter be entitled to exercise the Option.

6

 

     (f) Transferability of a Nonstatutory Stock Option. A Nonstatutory Stock Option shall be
transferable only to the extent provided in the Option Agreement (subject to applicable securities
laws). Notwithstanding the foregoing, the Optionholder 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 Optionholder, shall thereafter be entitled to exercise the Option.

     (g) Vesting Generally. The total number of Ordinary Shares subject to an Option may, but need
not, vest and therefore become exercisable in periodic installments that may, but need not, be
equal. The Option may be subject to such other terms and conditions on the time or times when it
may be exercised (which may be based on performance or other criteria) as the Committee may deem
appropriate. The vesting provisions of individual Options may vary. The provisions of this
Section 6(g) are subject to any Option provisions governing the minimum number of Ordinary Shares
as to which an Option may be exercised.

     (h) Termination of Continuous Service. In the event an Optionholder’s Continuous Service
terminates (other than upon the Optionholder’s death or Disability), the Optionholder may exercise
his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of
the date of termination) but only within such period of time ending on the earlier of (i) the date
three (3) months following the termination of the Optionholder’s Continuous Service (or, except
with respect to Incentive Stock Options, such longer or shorter period specified in the Option
Agreement), or (ii) the expiration of the term of the Option as set forth in the Option Agreement.
If, after termination, the Optionholder does not exercise his or her Option within the time
specified in the Option Agreement, the Option shall terminate.

     (i) Extension of Termination Date. Except with respect to Incentive Stock Options, an
Optionholder’s Option Agreement may also provide that if the exercise of the Option following the
termination of the Optionholder’s Continuous Service (other than upon the Optionholder’s death or
Disability) would be prohibited at any time solely because the issuance of Ordinary Shares would
violate the registration requirements under the Securities Act, then the Option shall terminate on
the earlier of (i) the expiration of the term of the Option set forth in Section 6(a), or (ii) the
expiration of a period of three (3) months after the termination of the Optionholder’s Continuous
Service during which the exercise of the Option would not be in violation of such registration
requirements.

     (j) Disability of Optionholder. In the event that an Optionholder’s Continuous Service
terminates as a result of the Optionholder’s Disability, the Optionholder may exercise his or her
Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of
termination), but only within such period of time ending on the earlier of (i) the date twelve (12)
months following such termination (or, except with respect to Incentive Stock Options, such longer
or shorter period specified in the Option Agreement) or (ii) the expiration of the term of the
Option as set forth in the Option Agreement. If, after termination of the Optionholder’s
Continuous Service, the Optionholder does not exercise his or her Option within the time specified
herein, the Option shall terminate.

     (k) Death of Optionholder. In the event (i) an Optionholder’s Continuous Service terminates
as a result of the Optionholder’s death or (ii) the Optionholder dies within the period (if any)
specified in the Option Agreement for exercising an outstanding Option following the termination of
the Optionholder’s Continuous Service for a reason other than death, then the Option may be
exercised (to the extent the Optionholder was entitled to exercise such Option as of the date of
death) by the Optionholder’s estate, by a person who acquired the right to exercise the Option by
bequest or inheritance or by a person designated to exercise the option upon the Optionholder’s
death pursuant to Section 6(e) or 6(f), but only within the period ending on the earlier of (A) the
date eighteen (18) months following the date of death (or, except with respect to Incentive Stock
Options, such longer or shorter period specified

7

 

in the Option Agreement) or (B) the expiration of
the term of such Option as set forth in the Option Agreement. If, after death, the Option is not
exercised within the time specified herein, the Option shall terminate.

     (l) Early Exercise. The Option may, but need not, include a provision whereby the
Optionholder may elect at any time before the Optionholder’s Continuous Service terminates to
exercise the Option as to any part or all of the Ordinary Shares subject to the Option prior to the
full vesting of the Option. The early purchase of any unvested Ordinary Shares will be pursuant to
an early exercise provision in the Option Agreement which may provide for a repurchase option in
favor of the Company and other restrictions the Committee determines to be appropriate. Any
repurchase option so provided for will be subject to the repurchase provisions set forth in Section
12(h) herein.

7. Provisions of Restricted Stock Awards.

     (a) Designation. Restricted Stock may be granted under the Plan. Restricted Stock may
include a dividend equivalent right, as permitted by Section 13(a). After the Committee determines
that it will offer Restricted Stock, it will advise the Participant in writing or electronically,
by means of a Stock Award Agreement, of the terms, conditions and restrictions, including vesting,
if any, related to the offer, including the number of Ordinary Shares that the Participant shall be
entitled to receive or purchase, the price to be paid, if any, and, if applicable, the time within
which the Participant must accept the offer. The offer shall be accepted by execution of a Stock
Award Agreement or as otherwise directed by the Committee. The term of each award of Restricted
Stock shall be at the discretion of the Committee.

     (b) Restrictions. Subject to the performance criteria below, the Committee may impose such
conditions or restrictions on the Restricted Stock granted pursuant to the Plan as it may determine
advisable, including the achievement of specific performance goals, time based restrictions on
vesting, or others. If the Committee has established performance goals, the Committee shall
determine whether a Participant has satisfied the performance goals.

     (c) Performance Criteria. Restricted Stock granted pursuant to the Plan that are intended to
qualify as “performance based compensation” under Section 162(m) of the Code shall be subject to
the attainment of performance goals relating to the Performance Criteria selected by the Committee
and specified at the time such Restricted Stock is granted. For purposes of this Plan,
"Performance Criteria” means any one criterion or multiple criteria for measuring performance
selected by the Committee in its sole discretion, the measurement of which may be based upon
Company, Subsidiary or business unit performance, or the individual performance of the Participant,
either absolute or by relative comparison to other companies, other Participants or any other
external measure of the selected criteria. Performance Criteria may include, without limitation,
one or more of the following (as selected by the Committee): (1) cash flow; (2) earnings per share;
(3) earnings before interest, taxes, and amortization; (4) return on equity; (5) total shareholder
return; (6) share price performance; (7) return on capital; (8) return on assets or net assets; (9)
revenue; (10) revenue growth; (11) earnings growth; (12) operating income; (13) operating profit;
(14) profit margin; (15) return on operating revenue; (16) return on invested capital; (17)
operating efficiency; or (18) productivity.

     (d) Transferability. Restricted Stock shall be transferable by the Participant only upon such
terms and conditions as are set forth in the Stock Award Agreement, as the Committee shall
determine in its discretion.

     (e) Vesting. Unless the Committee determines otherwise, the Stock Award Agreement shall
provide for the forfeiture of the non-vested Ordinary Shares underlying Restricted Stock upon
termination of a Participant’s Continuous Service. To the extent that the Participant purchased
the Ordinary Shares

8

 

granted under any such Restricted Stock award and any such Ordinary Shares
remain non-vested at the time of termination of a Participant’s Continuous Service, the termination
of Participant’s Continuous Service shall cause an immediate sale of such non-vested Ordinary
Shares to the Company at the original price per share of Ordinary Shares paid by the Participant.

8. Change in Control. Upon a Change in Control, Stock Awards outstanding under the Plan
may be subject to the following:

     (a) Assumption by Surviving Corporation. If a Change in Control of the Company occurs, then,
to the extent permitted by applicable law, any surviving corporation may assume all Stock Awards
outstanding under the Plan, or may substitute similar stock awards in lieu of such Stock Awards.

     (b) Acceleration of Vesting. Without limiting the authority of the Committee under any
provision of the Plan, if a Change in Control of the Company occurs, then, if approved by the
Committee in its sole discretion either in a Stock Award Agreement at the time a Stock Award is
granted, or at any time after the grant of a Stock Award, all Stock Awards that have been
outstanding for at least six months will become immediately exercisable in full and will remain
exercisable in accordance with their terms

     (c) Cash Payment. If a Change in Control of the Company occurs, then the Committee, if
approved by the Committee in its sole discretion either in Stock Award Agreement at the time a
Stock Award is granted, or at any time after the grant of a Stock Award, and without the consent of
any Participant affected thereby, may determine that:

          (i) Some or all Participants holding outstanding Stock Awards will receive, with respect to
some or all of the Ordinary Shares subject to such Stock Awards (“Award Shares”), either (i) as of
the effective date of any such Change in Control, cash in an amount equal to the excess of the Fair
Market Value of such Award Shares on the last business day prior to the effective date of such
Change in Control over the exercise price per share of such Award Shares, (ii) immediately prior to
such Change of Control, a number of Ordinary Shares having an aggregate Fair Market Value equal to
the excess of the Fair Market Value of the Award Shares as of the last business day prior to the
effective date of such Change in Control over the exercise price per share of such Award Shares; or
(iii) any combination of cash or Ordinary Shares with the amount of each component to be determined
by the Committee not inconsistent with the foregoing clauses (i) and (ii), as proportionally
adjusted; and

          (ii) Any Stock Awards which, as of the effective date of any such Change in Control, are
“underwater” shall terminate as of the effective date of any such Change in Control. For purposes
of this Section, a Stock Award will be deemed to be “underwater” at any time when the Fair Market
Value of the Ordinary Shares is less than the exercise price of the Stock Award.

     (d) Limitation of Change in Control Payments. Notwithstanding anything in the Plan to the
contrary, if, with respect to a Participant, the acceleration of the exercisability of a Stock
Award as provided in subsection (b) above, or the payment of cash or Ordinary Shares in exchange
for all or part of a Stock Award as provided in subsection (c) (which acceleration or payment could
be deemed a “payment” within the meaning of Section 280G(b)(2) of the Code), together with any
other “payments” that such Participant has the right to receive from the Company or any corporation
that is a member of an “affiliated group” (as defined in Section 1504(a) of the Code without regard
to Section 1504(b) of the Code) of which the Company is a member, would constitute a “parachute
payment” (as defined in Section 280G(b)(2) of the

9

 

Code), then the “payments” to such Participant
pursuant to this Section 8 will be reduced to the largest amount as will result in no portion of
such “payments” being subject to the excise tax imposed by Section 4999 of the Code; provided,
however, that if a Participant is subject to a separate agreement with the Company or a Subsidiary
which specifically provides that payments attributable to one or more forms of employee stock incentives
or to payments made in lieu of
employee stock incentives will not reduce any other payments under such agreement, even if it would
constitute an excess parachute payment, or provides that the Participant will have the discretion
to determine which payments will be reduced in order to avoid an excess parachute payment, then the
limitations of this Section 8(d) will, to that extent, not apply.

9. Covenants of the Company.

     (a) Availability of Shares. During the time any Stock Award remains outstanding, the Company
shall keep available at all times the number of Ordinary Shares required to satisfy such Stock
Awards upon exercise thereof.

     (b) Securities Law Compliance. The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such authority as may be required to grant
Stock Awards and to issue and sell Ordinary Shares upon exercise of the Stock Awards; provided,
however, that this undertaking shall not require the Company to register under the Securities Act
the Plan, any Stock Award or any Ordinary Shares issued or issuable pursuant to any such Stock
Award. 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 Ordinary Shares under the Plan, the Company shall be relieved from any
liability for failure to issue and sell Ordinary Shares upon exercise of such Stock Awards unless
and until such authority is obtained.

10. Use of Proceeds from Stock.

     Proceeds from the sale of Ordinary Shares pursuant to exercises of Stock Awards granted
hereunder shall constitute general funds of the Company.

11. Effective Date of Plan.

     The Plan shall become effective as determined by the Board, but no Stock Awards shall be
exercised unless and until the Plan has been approved by the stockholders of the Company, which
approval shall be within twelve (12) months before or after the date the Plan is adopted by the
Board.

12. Miscellaneous.

     (a) Acceleration of Exercisability and Vesting. The Committee shall have the power to
accelerate the time at which a Stock Award may first be exercised or the time during which a Stock
Award or any part thereof will vest in accordance with the Plan, notwithstanding the provisions in
the applicable Stock Award Agreement stating the time at which it may first be exercised or the
time during which it will vest.

     (b) Shareholder Rights. No Participant shall be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any Ordinary Shares subject to a Stock Award unless and
until such Participant has satisfied all requirements for exercise of the Stock Award pursuant to
the applicable Stock Award Agreement.

10

 

     (c) No Employment or other Service Rights. Nothing in the Plan or any instrument executed or
Stock Award granted pursuant thereto shall confer upon any Participant any right to continue to
serve the Company or an Affiliate in the capacity in effect at the time the Stock Award was granted
or shall affect the right of the Company or an Affiliate to terminate (i) the employment of an
Employee with or without notice and with or without cause, (ii) the service of a Consultant
pursuant to the terms of such
Consultant’s agreement with the Company or an Affiliate, or (iii) the service of an Officer or
Director pursuant to the Bylaws of the Company or an Affiliate, and/or the provisions of any
contract governing such services, and/or any applicable provisions of the corporate law of the
state in which the Company or the Affiliate is incorporated, as the case may be.

     (d) Incentive Stock Option $100,000 Limitation. To the extent that the aggregate Fair Market
Value (determined at the time of grant) of Ordinary Shares with respect to which Incentive Stock
Options are exercisable for the first time by any Option holder during any calendar year (under all
plans of the Company and its Affiliates) exceeds one hundred thousand dollars ($100,000), the
Options or portions thereof which exceed such limit (according to the order in which they were
granted) shall be treated as Nonstatutory Stock Options.

     (e) Maximum Award Amounts. In no event shall a Participant receive Stock Awards during any
one (1) calendar year covering in the aggregate more than 1,000,000 Ordinary Shares.

     (f) Investment Assurances. The Company may require a Participant, as a condition of
exercising or acquiring Ordinary Shares under any Stock Award (i) to give written assurances
satisfactory to the Company as to the Participant’s knowledge and experience in financial and
business matters and/or to employ a purchaser representative reasonably satisfactory to the Company
who is knowledgeable and experienced in financial and business matters and that he or she is
capable of evaluating, alone or together with the purchaser representative, the merits and risks of
exercising the Stock Award, and (ii) to give written assurances satisfactory to the Company stating
that the Participant is acquiring Ordinary Shares subject to the Stock Award for the Participant’s
own account and not with any present intention of selling or otherwise distributing the Ordinary
Shares. The foregoing requirements, and any assurances given pursuant to such requirements, shall
be inoperative if (1) the issuance of the Ordinary Shares upon the exercise or acquisition of
Ordinary Shares under the Stock Award has been registered under a then currently effective
registration statement under the Securities Act, or (2) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not be met in the
circumstances under the then applicable securities laws. The Company may, upon advice of counsel
to the Company, place legends on stock certificates issued under the Plan as such counsel deems
necessary or appropriate in order to comply with applicable securities laws, including, but not
limited to, legends restricting the transfer of the Ordinary Shares.

     (g) Withholding Obligations. To the extent provided by the terms of the applicable Stock
Award Agreement, the Participant may satisfy any federal, state or local tax withholding obligation
relating to the exercise or acquisition of Ordinary Shares under a Stock Award by any of the
following means (in addition to the Company’s right to withhold from any compensation paid to the
Participant by the Company) or by a combination of such means: (i) tendering a cash payment, (ii)
authorizing the Company to withhold Ordinary Shares from the Ordinary Shares otherwise issuable to
the Participant as a result of the exercise or acquisition of Ordinary Shares under the Stock
Award, provided, however, that no Ordinary Shares are withheld with a value exceeding the minimum
amount of tax required to be withheld by law, or (iii) delivering to the Company owned and
unencumbered Ordinary Shares.

     (h) Repurchase Provisions. The Company shall exercise any repurchase option specified in a
Stock Award Agreement by giving the Participant written notice of intent to exercise the repurchase
option. Payment may be cash or cancellation of purchase money indebtedness for the Ordinary
Shares.

11

 

The terms of any repurchase option shall be specified in the applicable Stock Award
Agreement and may be either at Fair Market Value at the time of repurchase or at not less than the
original purchase price.

     (i) Plan Unfunded. The Plan shall be unfunded. Except for the Board’s reservation of a
sufficient number of authorized shares to the extent required by law to meet the requirements of
the Plan, the Company shall not be required to establish any special or separate fund or to make any
other segregation of assets to assure satisfaction of any Stock Award.

13. Adjustments upon Changes in Stock.

     (a) Capitalization Adjustments. In the event that any dividend or other distribution (whether
in the form of cash, shares of the Ordinary Shares, other securities, or other property),
recapitalization, stock split, reverse stock split, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase, exchange of Ordinary Shares or other securities of the
Company, or other change in the corporate structure of the Company affecting the Ordinary Shares
occurs, the Committee, in order to prevent diminution or enlargement of the benefits or potential
benefits intended to be made available under the Plan, may, in its sole discretion, adjust the
number and class of Ordinary Shares that may be delivered under the Plan and/or the number, class,
and price of Ordinary Shares covered by each outstanding Stock Award.

     (b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of
the Company, the Committee will notify each Participant as soon as practicable prior to the
effective date of such proposed transaction. To the extent they have not been previously
exercised, outstanding Stock Awards will terminate immediately prior to the consummation of such
proposed action.

     (c) No Limitations. The grant of Options will in no way affect the Company’s right to adjust,
reclassify, reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

14. Amendment of the Plan and Stock Awards.

     (a) Amendment of Plan. The Committee at any time, and from time to time, may amend the Plan.
However, except as provided in Section 13 relating to adjustments upon changes in Ordinary Shares,
no amendment shall be effective unless approved by the shareholders of the Company to the extent
shareholder approval is necessary to satisfy the applicable requirements of Section 422 or 162(m)
of the Code and the Treasury Regulations thereunder, Rule 16b-3 under the Exchange Act or any
Nasdaq or securities exchange listing requirements. For purposes of clarity, any increase in the
number of shares reserved for issuance hereunder in accordance with the provisions of Section 4(a)
hereof shall not be deemed to be an amendment to the Plan.

     (b) Contemplated Amendments. It is expressly contemplated that the Committee may amend the
Plan in any respect the Committee deems necessary or advisable to provide eligible Employees with
the maximum benefits provided or to be provided under the provisions of the Code and the
regulations promulgated thereunder relating to Incentive Stock Options and/or to bring the Plan
and/or Incentive Stock Options granted under it into compliance therewith.

     (c) No Impairment of Rights. Rights under any Stock Award granted before amendment of the
Plan shall not be impaired by any amendment of the Plan unless (i) the Company requests the consent
of the Participant and (ii) the Participant consents in writing.

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15. Termination or Suspension of the Plan.

     (a) Plan Term. The Committee may suspend or terminate the Plan at any time. Unless sooner
terminated, the Plan shall terminate on the day before the tenth (10th) anniversary of the date the
Plan is adopted by the Board or approved by the shareholders of the Company, whichever is later.
No Stock Award may be granted under the Plan while the Plan is suspended or after it is terminated.

     (b) No Impairment of Rights. Suspension or termination of the Plan shall not impair rights
and obligations under any Stock Award granted while the Plan is in effect except with the written
consent of the Participant.

16. Choice of Law.

     The law of Delaware shall govern all questions concerning the construction, validity and
interpretation of this Plan, without regard to such state’s conflict of laws rules.

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