Document:

EXHIBIT
10.7

 

OVERLAND
STORAGE, INC.

2003 EQUITY INCENTIVE PLAN

 

NOTICE
OF STOCK OPTION GRANT

(OUTSIDE DIRECTOR, LIMITED TRANSFERABILITY)

 

You have been granted the following option to purchase
shares of the Common Stock of Overland Storage, Inc. (the “Company”):

 

	
  Name
  of Optionee:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Total
  Number of Shares:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Type
  of Option:

  	
   

  	
  Nonstatutory Stock Option

  
	
   

  	
   

  	
   

  
	
  Exercise
  Price Per Share:

  	
   

  	
  $

  
	
   

  	
   

  	
   

  
	
  Date
  of Grant:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Vesting
  Commencement

  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Vesting
  Schedule:

  	
   

  	
  This option becomes exercisable with respect to
  1,500 shares subject to this option when you complete one month of continuous
  “Service” (as defined in the Plan) from the Vesting Commencement Date.  Thereafter, this option becomes
  exercisable with respect to an additional 1,500 Shares subject to this option
  when you complete each additional month of Service.  If this option was granted pursuant to Section 7.2 or 7.3
  of the Plan, this option will be fully exercisable upon the first annual
  meeting of the Company’s shareholders following the Date of Grant if Service
  has been continuous from the Date of Grant to such meeting date.

  
	
   

  	
   

  	
   

  
	
  Expiration
  Date:

  	
   

  	
  [                ][      ],
  20[   ], or if such anniversary date would fall on a day when
  Company headquarters are not open for business, at the close of business at
  Company headquarters on the last business day before such anniversary
  date.  This option expires earlier if
  your Service terminates earlier, as described in the Stock Option Agreement.

  

 

You and the Company agree that this option is granted under and
governed by the terms and conditions of the 2003 Equity Incentive Plan (the
“Plan”) and the Stock Option Agreement, both of which are attached to and made
a part of this document.

 

You further agree that the Company may deliver by
email all documents relating to the Plan or this option (including, without
limitation, prospectuses required by the Securities and Exchange Commission)
and all other documents that the Company is required to deliver to its security
holders (including, without limitation, annual reports and proxy
statements).  You also agree that

 

 

the Company may deliver these documents by
posting them on a web site maintained by the Company or by a third party under
contract with the Company.  If the
Company posts these documents on a web site, it will notify you by email.

 

	
  Optionee:

  	
  Overland
  Storage, Inc.

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

2

 

OVERLAND
STORAGE, INC.

2003 EQUITY INCENTIVE PLAN

 

STOCK OPTION AGREEMENT

 

 

	
  Tax Treatment

  	
   

  	
  This option is intended to be
  a nonstatutory stock option.

  
	
   

  	
   

  	
   

  
	
  Vesting

  	
   

  	
  This option becomes
  exercisable in installments, as shown in the Notice of Stock Option
  Grant.  In addition, this option
  becomes exercisable in full if either of the following events occurs:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •                                          Your Service terminates because of total and
  permanent disability, or death, or

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •                                          The Company is subject to a “Change in Control”
  (as defined in the Plan) before your Service terminates.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  This option will in no event
  become exercisable for additional shares after your Service has terminated
  for any reason.

  
	
   

  	
   

  	
   

  
	
  Regular
  Termination

  	
   

  	
  If your Service terminates for
  any reason except death or total and permanent disability, then this option
  will expire at the close of business at Company headquarters on the date
  three months after your termination date, or if such expiration date would
  fall on a day when Company headquarters are not open for business, at the
  close of business at Company headquarters on the last business day before
  such expiration date.  The Company
  determines when your Service terminates for this purpose.

  
	
   

  	
   

  	
   

  
	
  Death

  	
   

  	
  If you die before your Service
  terminates, then this option will expire at the close of business at Company
  headquarters on the date 12 months after the date of death, or if such
  expiration date would fall on a day when Company headquarters are not open
  for business, at the close of business at Company headquarters on the last
  business day before such expiration date.

  
	
   

  	
   

  	
   

  
	
  Disability

  	
   

  	
  If your Service terminates
  because of your total and permanent disability, then this option will expire
  at the close of business at Company headquarters on the date 12 months after
  your termination date, or if such expiration date would fall on a day when
  Company headquarters are not open for business, at the close of business at
  Company headquarters on the last business day before such expiration date.

  

 

3

 

	
   

  	
   

  	
  For all purposes under this
  Agreement, “total and permanent disability” means that you are unable to
  engage in any substantial gainful activity by reason of any medically
  determinable physical or mental impairment which can be expected to result in
  death or which has lasted, or can be expected to last, for a continuous period
  of not less than one year.

  
	
   

  	
   

  	
   

  
	
  Restrictions on Exercise

  	
   

  	
  The
  Company will not permit you to exercise this option if the issuance of shares
  at that time would violate any “Applicable Law” (as defined in the Plan).

  
	
   

  	
   

  	
   

  
	
  Notice
  of Exercise

  	
   

  	
  When you wish to exercise this option, you may
  select one of the following:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •           If you have established an account with
  E*Trade OptionsLink (www.optionslink.com, (800) 838-0908), or such other or
  substitute employee stock option plan administrative service as the Company
  may elect to engage (such stock option administrative service being the “Plan
  Agency”), you may elect to exercise this option by utilizing the procedures
  established by the Plan Agency for exercise of this option. Such procedures
  may include provisions for execution of an electronic or a written notice
  stating the number of shares to be purchased pursuant to this option and
  accompanied by delivery of an executed exercise agreement as implemented by
  the Plan Agency, and payment made in accordance with this Agreement and the
  Plan for the full purchase price of the shares to be purchased.  The Committee may from time to time
  establish further limitations and rules or procedures for exercise through
  the Plan Agency.  The Company may also
  discontinue use of the Plan Agency at any time, in which case you will be
  required to use the exercise procedure described below.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •           Notify the Company by filing the proper
  “Exercise Notice” form at the address given on the form.  Your notice must specify how many shares
  you wish to purchase.  Your notice
  must also specify how your shares should be registered.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Exercise through the
  Plan Agency will be effective in accordance with the policies and procedures
  of the Plan Agency.  An “Exercise
  Notice” filed with the Company will be effective when the Company receives it
  together with payment made in accordance with this Agreement and the Plan for
  the full purchase price of

  

 

4

 

	
   

  	
   

  	
  the shares to be
  purchased.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If another person wants
  to exercise this option after it has been transferred to him or her (a
  “Transferee”), that person must prove to the Company’s satisfaction that he
  or she is entitled to exercise this option, and must then select one of the
  exercise alternatives specified above; provided that exercise by a Transferee
  may not be available through the Plan Agency, and if it is available, such
  exercise may require additional procedures or documentation established by
  the Company or the Plan Agency.

  
	
   

  	
   

  	
   

  
	
  Form of Payment

  	
   

  	
  When
  you exercise your option, you must pay the option exercise price for the
  shares that you are purchasing. 
  Payment may be made in one (or a combination of two or more) of the
  following forms:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •                                          Your personal check, a cashier’s check or a
  money order.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •                                          Irrevocable
  directions to a securities broker (such as the Plan Agency) approved by the
  Company to sell all or part of your option shares and to deliver to the
  Company from the sale proceeds an amount sufficient to pay the option
  exercise price and any withholding taxes. 
  (The balance of the sale proceeds, if any, will be delivered to you.)
  This procedure will be permitted only if you utilize the services of the Plan
  Agency, or another securities broker pre-approved by the Company in its sole
  discretion.  You will not be permitted
  to use this procedure if you are an “Officer” or “Director” (each as defined
  in the Plan) and this procedure would be deemed an extension of credit or the
  arranging of an extension of credit in the form of a personal loan by the
  Company.

  
	
   

  	
   

  	
   

  
	
  Withholding Taxes and Stock Withholding

  	
   

  	
  You
  will not be allowed to exercise this option unless you make arrangements
  acceptable to the Company to pay any withholding taxes that may be due as a
  result of the option exercise.  With
  the Company’s consent, these arrangements may include withholding shares of
  Company stock that otherwise would be issued to you when you exercise this
  option.  The value of these
  shares, determined as of the effective date of the option exercise, will be
  applied to the withholding taxes.

  
	
   

  	
   

  	
   

  
	
  Restrictions on Resale

  	
   

  	
  You
  agree not to sell any option shares at a time when Applicable Law, Company
  policies or an agreement 

  

 

5

 

	
   

  	
   

  	
  between
  the Company and its underwriters prohibit a sale.  This restriction will apply as long as your Service continues
  and for such period of time after the termination of your Service as the
  Company may specify.

  
	
   

  	
   

  	
   

  
	
  Transfer of Option

  	
   

  	
  In general, only you
  may exercise this option prior to your death.  You may not transfer or assign this option,  unless one of the provisions below
  applies. For instance, you may not sell this option or use it as security for
  a loan.  If you attempt to do any of
  these things, this option will immediately become invalid.  You may, however, dispose of this option
  in your will or in a beneficiary designation.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The Committee may, in
  its sole discretion, allow you to transfer this option as a gift to one or
  more family members.  For purposes of this Agreement, “family member”
  means a child, stepchild, grandchild, parent, stepparent, grandparent,
  spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
  son-in-law, daughter-in-law, brother-in-law or sister-in-law (including
  adoptive relationships), any individual sharing your household (other than a
  tenant or employee), a trust in which one or more of these individuals have
  more than 50% of the beneficial interest, a foundation in which you or one or
  more of these persons control the management of assets, and any entity in
  which you or one or more of these persons own more than 50% of the voting
  interest.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Regardless of any
  marital property settlement agreement, the Company is not obligated to honor
  a notice of exercise from your former spouse, nor is the Company obligated to
  recognize your former spouse’s interest in your option in any other way,
  except pursuant to a Domestic Relations Order.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The Committee will
  allow you to transfer this option only if both you and the transferee(s)
  execute the forms prescribed by the Committee, which include the consent of
  the transferee(s) to be bound by this Agreement.

  
	
   

  	
   

  	
   

  
	
  Retention Rights

  	
   

  	
  Your
  option or this Agreement does not give you the right to be retained by the
  Company or a subsidiary of the Company in any capacity.  The Company and its subsidiaries reserve
  the right to terminate your Service at any time, with or without cause.

  
	
   

  	
   

  	
   

  
	
  Shareholder Rights

  	
   

  	
  You,
  or your estate or heirs, have no rights as a shareholder of the Company until
  you have exercised

  

 

6

 

	
   

  	
   

  	
  this
  option by giving the required notice to the Company and paying the exercise
  price.  No adjustments are made for
  dividends or other rights if the applicable record date occurs before you
  exercise this option, except as described in the Plan.

  
	
   

  	
   

  	
   

  
	
  Adjustments

  	
   

  	
  In the event of a stock split,
  a stock dividend or a similar change in Company stock, the number of shares
  covered by this option and the exercise price per share may be adjusted
  pursuant to the Plan.

  
	
   

  	
   

  	
   

  
	
  Governing Law

  	
   

  	
  This
  Agreement will be interpreted and enforced under the laws of the State of
  California (without regard to its choice-of-law provisions).

  
	
   

  	
   

  	
   

  
	
  The Plan and Other Agreements

  	
   

  	
  The text of the Plan is
  incorporated in this Agreement by reference.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  This
  Agreement and the Plan constitute the entire understanding between you and
  the Company regarding this option. 
  Any prior agreements, commitments or negotiations concerning this
  option are superseded.  This Agreement
  may be amended only by another written agreement between the parties.

  

 

 

By signing your Notice of Stock
Option Grant form which precedes this Agreement, you agree to all of the terms
and conditions described above and in the Plan.

 

7EXHIBIT
10.8

 

Overland Storage, Inc.

2003 Equity Incentive Plan

 

Notice of Stock Option Grant

(Standard, Limited Transferability)

 

You have been granted the following option to purchase
shares of the Common Stock of Overland Storage, Inc. (the “Company”):

 

	
  Name of Optionee:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Total Number of Shares:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Type of Option:

  	
   

  	
  Incentive Stock Option

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Nonstatutory Stock Option

  
	
   

  	
   

  	
   

  
	
  Exercise Price Per Share:

  	
   

  	
  $

  
	
   

  	
   

  	
   

  
	
  Date of Grant:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Vesting Commencement Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Vesting Schedule:

  	
   

  	
  This option becomes exercisable with respect to the
  first
  [             ]%
  of the Shares subject to this option when you complete
  [             ]
  months of continuous “Service” (as defined in the Plan) from the Vesting
  Commencement Date.  Thereafter, this
  option becomes exercisable with respect to an additional
  [             ]%
  of the Shares subject to this option when you complete each month of Service.

  
	
   

  	
   

  	
   

  
	
  Expiration Date:

  	
   

  	
  [                    ][     ],
  20[    ], or if such date falls on a day when Company
  headquarters are not open for business, at the close of business at Company
  headquarters on the last business day before such date.  This option expires earlier if your
  Service terminates earlier, as described in the Stock Option Agreement.

  

 

You and the Company agree that this option is granted under and
governed by the terms and conditions of the 2003 Equity Incentive Plan (the
“Plan”) and the Stock Option Agreement, both of which are attached to and made
a part of this document.

 

You further agree that the Company may deliver by email all documents
relating to the Plan or this option (including, without limitation,
prospectuses required by the Securities and Exchange Commission) and all other
documents that the Company is required to deliver to its security

 

 

holders (including, without limitation, annual reports and proxy
statements).  You also agree that the
Company may deliver these documents by posting them on a web site maintained by
the Company or by a third party under contract with the Company.  If the Company posts these documents on a
web site, it will notify you by email.

 

	
  Optionee:

  	
  Overland Storage, Inc.

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

2

 

Overland Storage, Inc.

2003 Equity Incentive Plan

 

Stock Option Agreement

 

	
  Tax
  Treatment

  	
   

  	
  This option is intended to be an incentive stock
  option under section 422 of the Internal Revenue Code or a nonstatutory stock
  option, as provided in the Notice of Stock Option Grant.

  
	
   

  	
   

  	
   

  
	
  Vesting

  	
   

  	
  This option becomes exercisable
  in installments, as shown in the Notice of Stock Option Grant.  In addition, this option becomes exercisable in full if your Service terminates
  because of total and permanent disability, or death.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  This option will in no event become exercisable for
  additional shares after your Service has terminated for any reason.

  
	
   

  	
   

  	
   

  
	
  Term

  	
   

  	
  This option expires in any event at the close of
  business at Company headquarters on the 10th anniversary of the Date of
  Grant, as shown in the Notice of Stock Option Grant, or if such anniversary
  date would fall on a day when Company headquarters are not open for business,
  at the close of business at Company headquarters on the last business day
  before such anniversary date.  (It
  will expire earlier if your Service terminates, as described below.)

  
	
   

  	
   

  	
   

  
	
  Regular
  Termination

  	
   

  	
  If your Service terminates for any reason except
  death or total and permanent disability, then this option will expire at the
  close of business at Company headquarters on the date three months after your
  termination date, or if such expiration date would fall on a day when Company
  headquarters are not open for business, at the close of business at Company
  headquarters on the last business day before such expiration date.  The Company determines when your Service
  terminates for this purpose.

  
	
   

  	
   

  	
   

  
	
  Death

  	
   

  	
  If you die before your Service terminates, then this
  option will expire at the close of business at Company headquarters on the
  date 12 months after the date of death, or if such expiration date would fall
  on a day when Company headquarters are not open for business, at the close of
  business at Company headquarters on the last business day before such
  expiration date.

  

 

3

 

	
  Disability

  	
   

  	
  If your Service terminates because of your total and
  permanent disability, then this option will expire at the close of business
  at Company headquarters on the date 12 months after your termination date, or
  if such expiration date would fall on a day when Company headquarters are not
  open for business, at the close of business at Company headquarters on the
  last business day before such expiration date.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  For all purposes under this Agreement, “total and
  permanent disability” means that you are unable to engage in any substantial
  gainful activity by reason of any medically determinable physical or mental
  impairment which can be expected to result in death or which has lasted, or
  can be expected to last, for a continuous period of not less than one year.

  
	
   

  	
   

  	
   

  
	
  Leaves
  of Absence and Part-Time Work

  	
   

  	
  For purposes of this option, your Service does not
  terminate when you go on a military leave, a sick leave or another bona fide
  leave of absence, if the leave was approved by the Company in writing and if
  continued crediting of Service is required by the terms of the leave or by
  applicable law. But your Service terminates when the approved leave ends,
  unless you immediately return to active work. If this option is designated as
  an Incentive Stock Option, and if such leave exceeds ninety (90) days, and
  reemployment upon expiration of such leave is not guaranteed by statute or
  contract, then this option shall be treated as a Non-Qualified Stock Option
  on the day three (3) months and one (1) day following the expiration of such
  ninety (90) day period.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If you go on a leave of absence, then the vesting
  schedule specified in the Notice of Stock Option Grant may be adjusted in
  accordance with the Company’s leave of absence policy or the terms of your
  leave.  If you commence working on a
  part-time basis, then the vesting schedule specified in the Notice of Stock
  Option Grant may be adjusted in accordance with the Company’s part-time work
  policy or the terms of an agreement between you and the Company pertaining to
  your part-time schedule.

  
	
   

  	
   

  	
   

  
	
  Restrictions
  on Exercise

  	
   

  	
  The Company will not permit anyone to exercise this
  option if the issuance of shares at that time would violate any “Applicable
  Law” (as defined in the Plan).

  
	
   

  	
   

  	
   

  
	
  Notice
  of Exercise

  	
   

  	
  When you wish to exercise this option, you may select
  one of the following:

  

 

4

 

	
   

  	
   

  	
  •                                          If
  you have established an account with E*Trade OptionsLink
  (www.optionslink.com, (800) 838-0908), or such other or substitute employee
  stock option plan administrative service as the Company may elect to engage
  (such stock option administrative service being the “Plan Agency”), you may
  elect to exercise this option by utilizing the procedures established by the
  Plan Agency for exercise of this option. Such procedures may include
  provisions for execution of an electronic or a written notice stating the
  number of shares to be purchased pursuant to this option and accompanied by
  delivery of an executed exercise agreement as implemented by the Plan Agency,
  and payment made in accordance with this Agreement and the Plan for the full
  purchase price of the shares to be purchased.  The “Committee” (as defined in the Plan) may from time to time
  establish further limitations and rules or procedures for exercise through
  the Plan Agency.  The Company may also
  discontinue use of the Plan Agency at any time, in which case you will be
  required to use the exercise procedure described below.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •                                          Notify
  the Company by filing the proper “Exercise Notice” form at the address given
  on the form.  Your notice must specify
  how many shares you wish to purchase. 
  Your notice must also specify how your shares should be registered.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Exercise through the Plan Agency will be effective
  in accordance with the policies and procedures of the Plan Agency.  An “Exercise Notice” filed with the
  Company will be effective when the Company receives it together with payment
  made in accordance with this Agreement and the Plan for the full purchase
  price of the shares to be purchased.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If another person wants to exercise this option
  after it has been transferred to him or her (a “Transferee”), that person
  must prove to the Company’s satisfaction that he or she is entitled to
  exercise this option, and must then select one of the exercise alternatives
  specified above; provided that exercise by a Transferee may not be available
  through the Plan Agency, and if it is available, such exercise may require
  additional procedures or documentation established by the Company or the Plan
  Agency.

  

 

5

 

	
  Form
  of Payment

  	
   

  	
  When you exercise your option, you must pay the
  option exercise price for the shares that you are purchasing.  Payment may be made in one or a
  combination of the following forms:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •                                          Your
  personal check, a cashier’s check or a money order.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •                                          Irrevocable
  directions to a securities broker (such as the Plan Agency) approved by the
  Company to sell all or part of your option shares and to deliver to the
  Company from the sale proceeds an amount sufficient to pay the option
  exercise price and any withholding taxes. 
  (The balance of the sale proceeds, if any, will be delivered to you.)
  This procedure will be permitted only if you utilize the services of the Plan
  Agency, or another securities broker pre-approved by the Company in its sole
  discretion.  You will not be permitted
  to use this procedure if you are an “Officer” or “Director” (each as defined
  in the Plan) and this procedure would be deemed an extension of credit or the
  arranging of an extension of credit in the form of a personal loan by the
  Company.

  
	
   

  	
   

  	
   

  
	
  Withholding
  Taxes and Stock Withholding

  	
   

  	
  You will not be allowed to exercise this option
  unless you make arrangements acceptable to the Company to pay any withholding
  taxes that may be due as a result of the option exercise.  With the Company’s consent, these
  arrangements may include withholding shares of Company stock that otherwise
  would be issued to you when you exercise this option.  The value of these shares, determined as
  of the effective date of the option exercise, will be applied to the
  withholding taxes.

  
	
   

  	
   

  	
   

  
	
  Restrictions
  on Resale

  	
   

  	
  You agree not to sell any option shares at a time
  when Applicable Law, Company policies or an agreement between the Company and
  its underwriters prohibit a sale.  This restriction will apply as long as your Service continues
  and for such period of time after the termination of your Service as the
  Company may specify.

  
	
   

  	
   

  	
   

  
	
  Transfer
  of Option

  	
   

  	
  In general, only you may exercise this option prior
  to your death.  You may not transfer
  or assign this option,  unless one of
  the provisions below applies. For instance, you may not sell this option or
  use it as security for a loan.  If you
  attempt to do any of these things, this option will immediately become
  invalid.  You may, however, dispose of
  this option in your will or in a beneficiary designation.

  

 

6

 

	
   

  	
   

  	
  If this option is designated as a nonstatutory stock
  option in the Notice of Stock Option Grant, then the Committee may, in its
  sole discretion, allow you to transfer this option as a gift to one or more
  family members.  For purposes of this
  Agreement, “family member” means a child, stepchild, grandchild, parent,
  stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
  mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or
  sister-in-law (including adoptive relationships), any individual sharing your
  household (other than a tenant or employee), a trust in which one or more of
  these individuals have more than 50% of the beneficial interest, a foundation
  in which you or one or more of these persons control the management of
  assets, and any entity in which you or one or more of these persons own more
  than 50% of the voting interest.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If this option is designated as an incentive stock
  option, the Committee may, in its sole discretion, allow you to transfer this
  option to a trust, where under Section 671 of the Code and other Applicable
  Law you are considered the sole beneficial owner of this option while it is
  held in trust.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Regardless of any marital property settlement
  agreement, the Company is not obligated to honor a notice of exercise from
  your former spouse, nor is the Company obligated to recognize your former
  spouse’s interest in your option in any other way, except pursuant to a
  Domestic Relations Order.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The Committee will allow you to transfer this option
  only if both you and the transferee(s) execute the forms prescribed by the
  Committee, which include the consent of the transferee(s) to be bound by this
  Agreement.

  
	
   

  	
   

  	
   

  
	
  Retention
  Rights

  	
   

  	
  Your option or this Agreement does not give you the
  right to be retained by the Company or a subsidiary of the Company in any
  capacity.  The Company and its
  subsidiaries reserve the right to terminate your Service at any time, with or
  without cause.

  
	
   

  	
   

  	
   

  
	
  Shareholder
  Rights

  	
   

  	
  You (or your estate, heirs or transferee) have no
  rights as a shareholder of the Company until you (or your estate, heirs or
  transferee) have exercised this option by giving the required notice to the
  Company and paying the exercise price. 
  No adjustments are made for dividends or other rights if the
  applicable record date occurs before this option is exercised, except as
  described in the Plan.

  

 

7

 

	
  Adjustments

  	
   

  	
  In the event of a stock split, a stock dividend or a
  similar change in Company stock, the number of shares covered by this option
  and the exercise price per share may be adjusted pursuant to the Plan.

  
	
   

  	
   

  	
   

  
	
  Governing
  Law

  	
   

  	
  This Agreement will be interpreted and enforced
  under the laws of the State of California (without regard to its
  choice-of-law provisions).

  
	
   

  	
   

  	
   

  
	
  The
  Plan and Other Agreements

  	
   

  	
  The text of the Plan is incorporated in this
  Agreement by reference.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  This Agreement and the Plan constitute the entire
  understanding between you and the Company regarding this option.  Any prior agreements, commitments or
  negotiations concerning this option are superseded.  This Agreement may be amended only by another written agreement
  between the parties.

  

 

By signing your Notice of Stock Option Grant form which
precedes this Agreement, you agree to all of the terms and conditions described
above and in the Plan.

 

8

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