EXHIBIT 10.7
SMITH
MICRO SOFTWARE, INC.
2005 STOCK OPTION/STOCK ISSUANCE PLAN
As Amended and Restated through September 27, 2007
ARTICLE ONE
GENERAL
This 2005 Stock Option/Stock Issuance Plan (the
Plan) is intended to promote the interests of Smith
Micro Software, Inc., a Delaware corporation (the
Corporation), by providing eligible individuals with
the opportunity to acquire a proprietary interest, or otherwise
increase their proprietary interest, in the Corporation as an
incentive for them to remain in the service of the Corporation
(or its parent or subsidiary corporations).
A. For purposes of the Plan, the following definitions
shall be in effect:
Applicable Laws:
the legal requirements
relating to the Plan and the options and direct stock issuances
under applicable provisions of federal securities laws, state
corporate and securities laws, the Code, the rules of any
applicable stock exchange or national market system, and the
rules of any
non-U.S. jurisdiction
applicable to such awards granted to residents therein.
Board:
the Corporations Board of
Directors.
Change in Control:
a change in ownership or
control of the Corporation effected through either of the
following transactions:
(i) the acquisition directly or indirectly by any person or
related group of persons (other than the Corporation or a person
that directly or indirectly controls, is controlled by, or is
under common control with, the Corporation) of beneficial
ownership (within the meaning of Rule
13d-3
of the
1934 Act) of securities possessing more than fifty percent
(50%) of the total combined voting power of the
Corporations outstanding securities pursuant to a tender
or exchange offer made directly to the Corporations
stockholders which the Board does not recommend such
stockholders to accept; or
(ii) a change in the composition of the Board over a period
of thirty-six (36) consecutive months or less such that a
majority of the Board members ceases, by reason of one or more
contested elections for Board membership, to be comprised of
individuals who either (A) have been Board members
continuously since the beginning of such period or (B) have
been elected or nominated for election as Board members during
such period by at least a majority of the Board members
described in clause (A) who were still in office at the
time such election or nomination was approved by the Board.
Code:
the Internal Revenue Code of 1986, as
amended.
Common Stock:
shares of the Corporations
common stock.
Corporate Transaction:
any of the following
stockholder-approved transactions to which the Corporation is a
party:
(i) a merger or consolidation in which securities
possessing more than fifty percent (50%) of the total combined
voting power of the Corporations outstanding securities
are transferred to a person or persons different from the
persons holding those securities immediately prior to such
transaction, or
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporations assets in complete
liquidation or dissolution of the Corporation.
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Disability:
the inability of an individual to
engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which is
expected to result in death or has lasted or can be expected to
last for a continuous period of not less than twelve
(12) months. However, for purposes of the Automatic Option
Grant Program, Disability shall mean the inability of the
non-employee Board member to perform his or her usual duties as
a Board member by reason of any medically determinable physical
or mental impairment expected to result in death or to be of
continuous duration of twelve (12) months or more.
Employee:
an individual who performs services
while in the employ of the Corporation or one or more parent or
subsidiary corporations, subject to the control and direction of
the employer entity not only as to the work to be performed but
also as to the manner and method of performance.
Exercise Date:
the date on which the
Corporation shall have received written notice of the option
exercise.
Fair Market Value:
the Fair Market Value per
share of Common Stock determined in accordance with the
following provisions:
(i) If the Common Stock is listed on one or more
established stock exchanges or national market systems,
including without limitation The NASDAQ Global Select Market,
The NASDAQ Global Market or The NASDAQ Capital Market of The
NASDAQ Stock Market LLC, its Fair Market Value shall be the
closing sales price for such stock (or the closing bid, if no
sales were reported) as quoted on the principal exchange or
system on which the Common Stock is listed (as determined by the
Plan Administrator) on the date of determination (or, if no
closing sales price or closing bid was reported on that date, as
applicable, on the last trading date such closing sales price or
closing bid was reported), as reported in The Wall Street
Journal or such other source as the Plan Administrator deems
reliable;
(ii) If the Common Stock is regularly quoted on an
automated quotation system (including the OTC
Bulletin Board) or by a recognized securities dealer, its
Fair Market Value shall be the closing sales price for such
stock as quoted on such system or by such securities dealer on
the date of determination, but if selling prices are not
reported, the Fair Market Value of a share of Common Stock shall
be the mean between the high bid and low asked prices for the
Common Stock on the date of determination (or, if no such prices
were reported on that date, on the last date such prices were
reported), as reported in The Wall Street Journal or such other
source as the Plan Administrator deems reliable; or
(iii) In the absence of an established market for the
Common Stock of the type described in (i) and (ii), above,
the Fair Market Value thereof shall be determined by the
Administrator in good faith.
Incentive Option:
a stock option which
satisfies the requirements of Code Section 422.
Involuntary Termination:
the termination of
the Service of any individual which occurs by reason of:
(i) such individuals involuntary dismissal or
discharge by the Corporation for reasons other than
Misconduct, or
(ii) such individuals voluntary resignation following
(A) a change in his or her position with the Corporation
which materially reduces his or her level of responsibility,
(B) a reduction in his or her level of compensation
(including base salary, fringe benefits and any
non-discretionary and objective-standard incentive payment or
bonus award) by more than fifteen percent (15%) or (C) a
relocation of such individuals place of employment by more
than fifty (50) miles, provided and only if such change,
reduction or relocation is effected by the Corporation without
the individuals consent.
Misconduct:
the commission of any act of
fraud, embezzlement or dishonesty by the Optionee or
Participant, any unauthorized use or disclosure by such person
of confidential information or trade secrets of the Corporation
(or any parent or subsidiary), or any other intentional
misconduct by such person adversely affecting the business or
affairs of the Corporation (or any parent or subsidiary) in a
material manner. The foregoing definition shall not be deemed to
be inclusive of all the acts or omissions which the Corporation
(or any parent or subsidiary) may consider as grounds for the
dismissal or discharge of any Optionee, Participant or other
person in the Service of the Corporation (or any parent or
subsidiary).
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1934 Act
: the Securities Exchange Act of
1934, as amended from time to time.
Non-Statutory Option:
a stock option not
intended to meet the requirements of Code Section 422.
Optionee:
a person to whom an option is
granted under the Discretionary Option Grant or Automatic Option
Grant Program.
Participant:
a person who is issued Common
Stock under the Stock Issuance Program.
Plan Administrator:
the particular entity,
whether the Primary Committee, the Board or the Secondary
Committee, which is authorized to administer the Discretionary
Option Grant and Stock Issuance Programs with respect to one or
more classes of eligible persons, to the extent such entity is
carrying out its administrative functions under those programs
with respect to the persons under its jurisdiction.
Primary Committee:
the committee of two
(2) or more outside Board members appointed by the Board to
administer the Discretionary Option Grant and Stock Issuance
Programs with respect to Section 16 Insiders. Each member
of the Primary Committee must also be a Non-Employee
Director within the meaning of
Rule 16b-3
and an outside director within the meaning of
Section 162(m) of the Code.
Secondary Committee:
a committee of one
(1) or more Board members appointed by the Board to
administer the Discretionary Option Grant and Stock Issuance
Programs with respect to eligible persons other than
Section 16 Insiders.
Section 12(g) Registration Date:
the date
on which the initial registration of the Common Stock under
Section 12(g) of the 1934 Act became effective.
Section 16 Insider:
an officer or
director of the Corporation subject to the short-swing profit
liabilities of Section 16 of the 1934 Act.
Service:
means that the provision of services
to the Corporation (or any parent or subsidiary corporation) in
any capacity of Employee, a non-employee member of the board of
directors or an independent consultant or advisor is not
interrupted or terminated. In jurisdictions requiring notice in
advance of an effective termination as an Employee, a
non-employee member of the board of directors or an independent
consultant or advisor, Service shall be deemed terminated upon
the actual cessation of providing services to the Corporation
(or any parent or subsidiary corporation) notwithstanding any
required notice period that must be fulfilled before a
termination as an Employee, a non-employee member of the board
of directors or an independent consultant or advisor can be
effective under Applicable Laws. A Participants Service
shall be deemed to have terminated either upon an actual
termination of Service or upon the entity for which the
Participant provides services ceasing to be a parent or
subsidiary corporation. Service shall not be considered
interrupted in the case of (i) any approved leave of
absence, (ii) transfers among the Corporation, any parent
or subsidiary corporation, or any successor, in any capacity of
Employee, a non-employee member of the board of directors or an
independent consultant or advisor, or (iii) any change in
status as long as the individual remains in the service of the
Company or a parent or subsidiary corporation in any capacity of
Employee, a non-employee member of the board of directors or an
independent consultant or advisor (except as otherwise provided
in the agreement evidencing an award). An approved leave of
absence shall include sick leave, military leave, or any other
authorized personal leave. For purposes of each Incentive Option
granted under the Plan, if such leave exceeds three
(3) months, and reemployment upon expiration of such leave
is not guaranteed by statute or contract, then the Incentive
Option shall be treated as a Non-Statutory Option on the day
three (3) months and one (1) day following the
expiration of such three (3) month period.
10% Stockholder
: the owner of stock (as
determined under Code Section 424(d)) possessing more than
ten percent (10%) of the total combined voting power of all
classes of stock of the Corporation or any parent or subsidiary
corporation.
B. The following provisions shall be applicable in
determining the parent and subsidiary corporations of the
Corporation:
Any corporation (other than the Corporation) in an unbroken
chain of corporations ending with the Corporation shall be
considered to be a parent of the Corporation, provided each such
corporation in the
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unbroken chain (other than the Corporation) owns, at the time of
the determination, stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in
one of the other corporations in such chain.
Each corporation (other than the Corporation) in an unbroken
chain of corporations beginning with the Corporation shall be
considered to be a subsidiary of the Corporation, provided each
such corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, stock
possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other
corporations in such chain.
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III.
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STRUCTURE
OF THE PLAN
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A.
Stock Programs.
The Plan shall
be divided into three (3) separate components: the
Discretionary Option Grant Program specified in
Article Two, the Stock Issuance Program specified in
Article Three and the Automatic Option Grant Program
specified in Article Four. Under the Discretionary Option
Grant Program, eligible individuals may, at the discretion of
the Plan Administrator, be granted options to purchase shares of
Common Stock in accordance with the provisions of
Article Two. Under the Stock Issuance Program, eligible
individuals may be issued shares of Common Stock directly,
either through the immediate purchase of such shares at a price
not less than one hundred percent (100%) of the Fair Market
Value of the shares at the time of issuance or as a bonus for
services rendered the Corporation or the Corporations
attainment of financial objectives. Under the Automatic Option
Grant Program, each individual serving as a non-employee Board
member on the Automatic Option Grant Program Effective Date and
each individual who first joins the Board as a non-employee
director at any time after such Effective Date shall at periodic
intervals receive option grants to purchase shares of Common
Stock in accordance with the provisions of Article Four.
B.
General Provisions.
Unless the
context clearly indicates otherwise, the provisions of
Articles One and Five shall apply to the Discretionary
Option Grant Program, the Automatic Option Grant Program and the
Stock Issuance Program and shall accordingly govern the
interests of all individuals under the Plan.
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IV.
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ADMINISTRATION
OF THE PLAN
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A. The Board shall have the authority to administer the
Discretionary Option Grant and Stock Issuance Programs with
respect to Section 16 Insiders but may delegate such
authority in whole or in part to the Primary Committee. Each
member of the Primary Committee must also be a
Non-Employee Director within the meaning of
Rule 16b-3
and an outside director with the meaning of
Section 162(m) of the Code.
B. Members of the Primary Committee shall serve for such
period of time as the Board may determine and may be removed by
the Board at any time. The Board may also at any time terminate
the functions of any Secondary Committee and reassume all powers
and authority previously delegated to such committee.
C. Each Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and
authority (subject to the provisions of the Plan) to establish
rules and regulations for the proper administration of the
Discretionary Option Grant and Stock Issuance Programs and to
make such determinations under, and issue such interpretations
of, the provisions of such programs and any outstanding options
or stock issuances thereunder as it may deem necessary or
advisable. Decisions of the Plan Administrator shall be final
and binding on all parties who have an interest in the
Discretionary Option Grant and Stock Issuance Programs or any
option or share issuance thereunder.
D. Service on the Primary Committee or the Secondary
Committee shall constitute service as a Board member, and
members of each such committee shall accordingly be entitled to
full indemnification and reimbursement as Board members for
their service on such committee. No member of the Primary
Committee or the Secondary Committee shall be liable for any act
or omission made in good faith with respect to the Plan or any
option grants or stock issuances under the Plan.
E. Administration of the Automatic Option Grant Program
shall be self-executing in accordance with the express terms and
conditions of Article Four, and the Plan Administrator
shall exercise no discretionary functions with respect to option
grants made pursuant to that program.
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V.
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OPTION
GRANTS AND STOCK ISSUANCES
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A. The persons eligible to participate in the Discretionary
Option Grant Program under Article Two and the Stock
Issuance Program under Article Three shall be limited to
the following:
(i) officers and other key employees of the Corporation (or
its parent or subsidiary corporations) who render services which
contribute to the management, growth and financial success of
the Corporation (or its parent or subsidiary corporations);
(ii) non-employee members of the Board; and
(iii) those consultants or other independent advisors who
provide valuable services to the Corporation (or its parent or
subsidiary corporations).
B. Only non-employee Board members shall be eligible to
receive automatic option grants pursuant to Article Four.
C. The Plan Administrator shall have full authority to
determine, (i) with respect to the option grants made under
the Discretionary Option Grant Program, which eligible
individuals are to receive option grants, the time or times when
such options are to be granted, the number of shares to be
covered by each such grant, the status of the granted option as
either an Incentive Option or a Non-Statutory Option, the time
or times at which each granted option is to become exercisable
and the maximum term for which the option may remain outstanding
and (ii), with respect to stock issuances under the Stock
Issuance Program, the number of shares to be issued to each
Participant, the vesting schedule (if any) to be applicable to
the issued shares and the consideration for which such shares
are to be issued.
D. For any options or direct stock issuances subject to the
attainment of one or more performance milestones, such
milestones shall be established by the Plan Administrator and
may be based on any one of, or combination of, the following:
(i) increase in share price, (ii) earnings per share,
(iii) total stockholder return, (iv) operating margin,
(v) gross margin, (vi) return on equity,
(vii) return on assets, (viii) return on investment,
(ix) operating income, (x) net operating income,
(xi) pre-tax profit, (xii) cash flow,
(xiii) revenue, (xiv) expenses, (xv) earnings
before interest, taxes and depreciation, (xvi) economic
value added and (xvii) market share. The performance
milestones may be applicable to the Corporation or any parent or
subsidiary corporation
and/or
any
individual business units of the Corporation or any parent or
subsidiary corporation. Partial achievement of the specified
milestone may result in a payment or vesting corresponding to
the degree of achievement as specified in the agreement
evidencing such award.
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VI.
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STOCK
SUBJECT TO THE PLAN
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A. Shares of Common Stock shall be available for issuance
under the Plan and shall be drawn from either the
Corporations authorized but unissued shares of Common
Stock or from reacquired shares of Common Stock, including
shares repurchased by the Corporation on the open market. The
stock issuable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock, including shares
repurchased by the Corporation on the open market. The number of
shares of Common Stock reserved for issuance over the term of
the Plan shall not exceed the sum of
(i) 7,000,000 shares plus (ii) the additional
shares of Common Stock automatically added to the share reserve
each year pursuant to the provisions of Section VI.B. of
this Article One.
B. The number of shares of Common Stock available for
issuance under the Plan shall automatically increase on the
first trading day of January each calendar year during the term
of the Plan, beginning with calendar year 2008, by an amount
equal to two and one-half percent (2.5%) of the total number of
shares of Common Stock outstanding on the last trading day in
December of the immediately preceding calendar year, but in no
event shall any such annual increase exceed 750,000 shares.
C. In no event shall the aggregate number of shares of
Common Stock for which any one individual participating in the
Plan may be granted stock options and direct stock issuances
exceed 400,000 shares per calendar year. In no event shall
the number of Incentive Options granted pursuant to the Plan
exceed 7,000,000 shares.
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D. Should one or more outstanding options under this Plan
expire or terminate for any reason prior to exercise in full
(including any option cancelled in accordance with the
cancellation-regrant provisions of Section IV of
Article Two of the Plan), then the shares subject to the
portion of each option not so exercised shall be available for
subsequent option grants under the Plan. Unvested shares issued
under the Plan and subsequently repurchased by the Corporation
pursuant to its repurchase rights under the Plan, shall be added
back to the number of shares of Common Stock available for
subsequent issuance under the Plan. In addition, should the
exercise price of an outstanding option under the Plan be paid
with shares of Common Stock or should shares of Common Stock
otherwise issuable under the Plan be withheld by the Corporation
in satisfaction of the withholding taxes incurred in connection
with the exercise of an outstanding option under the Plan or the
vesting of a direct share issuance made under the Plan, then the
number of shares of Common Stock available for issuance under
the Plan shall be reduced by the net number of shares of Common
Stock actually issued to the holder of such option or share
issuance.
E. Should any change be made to the Common Stock issuable
under the Plan by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or
other change affecting the outstanding Common Stock as a class
without the Corporations receipt of consideration, then
appropriate adjustments shall be made to (i) the maximum
number
and/or
class
of securities issuable under the Plan, (ii) the maximum
number
and/or
class
of securities for which any one individual participating in the
Plan may be granted stock options and direct stock issuances in
the aggregate per calendar year, (iii) the number
and/or
class
of securities for which automatic option grants are to be
subsequently made per eligible non-employee Board member under
the Automatic Option Grant Program, (iv) the number
and/or
class
of securities and price per share in effect under each option
outstanding under either the Discretionary Option Grant or
Automatic Option Grant Program and (v) the maximum number
and/or
class
of securities by which the share reserve is to increase
automatically each calendar year pursuant to the provisions of
Section VI.B. of this Article One. Such adjustments to
the outstanding options are to be effected in a manner which
shall preclude the enlargement or dilution of rights and
benefits under such options. The adjustments determined by the
Plan Administrator shall be final, binding and conclusive.
ARTICLE TWO
DISCRETIONARY
OPTION GRANT PROGRAM
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I.
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TERMS AND
CONDITIONS OF OPTIONS
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Options granted pursuant to the Discretionary Option Grant
Program shall be authorized by action of the Plan Administrator
and may, at the Plan Administrators discretion, be either
Incentive Options or Non-Statutory Options. Individuals who are
not Employees of the Corporation or its parent or subsidiary
corporations may only be granted Non-Statutory Options. Each
granted option shall be evidenced by one or more instruments in
the form approved by the Plan Administrator; provided, however,
that each such instrument shall comply with the terms and
conditions specified below. Each instrument evidencing an
Incentive Option shall, in addition, be subject to the
applicable provisions of Section II of this
Article Two.
A.
Exercise Price
.
1. The exercise price per share of Common Stock subject to
either an Incentive Option or a Non-Statutory Option shall in no
event be less than one hundred percent (100%) of the Fair Market
Value of such Common Stock on the grant date.
2. The exercise price shall become immediately due upon
exercise of the option and shall, subject to the provisions of
Section I of Article Five, be payable in cash or check
made payable to the Corporation. Should the Corporations
outstanding Common Stock be registered under Section 12(g)
of the 1934 Act at the time the option is exercised, then
the exercise price may also be paid as follows:
(i) in shares of Common Stock held by the Optionee for the
requisite period necessary to avoid a charge to the
Corporations earnings for financial reporting purposes and
valued at Fair Market Value on the Exercise Date,
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(ii) to the extent the option is exercised for vested
shares, through a special sale and remittance procedure pursuant
to which the Optionee shall concurrently provide irrevocable
written instructions (a) to a Corporation-designated
brokerage firm to effect the immediate sale of the purchased
shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the
aggregate exercise price payable for the purchased shares plus
all applicable Federal, state and local income and employment
taxes required to be withheld by the Corporation by reason of
such purchase and (b) to the Corporation to deliver the
certificates for the purchased shares directly to such brokerage
firm in order to complete the sale transaction.
(iii) payment through a net exercise such that,
without the payment of any funds, the Optionee may exercise the
option and receive the net number of shares equal to
(i) the number of shares as to which the option is being
exercised, multiplied by (ii) a fraction, the numerator of
which is the Fair Market Value per share (on such date as is
determined by the Plan Administrator) less the exercise price
per share, and the denominator of which is such Fair Market
Value per share (the number of net shares to be received shall
be rounded down to the nearest whole number of shares); or
(iv) any combination of the foregoing methods of payment.
3. Except to the extent such sale and remittance procedure
is utilized, payment of the exercise price for the purchased
shares must be made on the Exercise Date.
B.
Term and Exercise of
Options
.
Each option granted under this
Discretionary Option Grant Program shall be exercisable at such
time or times and during such period as is determined by the
Plan Administrator and set forth in the instrument evidencing
the grant. No such option, however, shall have a maximum term in
excess of ten (10) years from the grant date.
During the lifetime of the Optionee, Incentive Options shall be
exercisable only by the Optionee and shall not be assignable or
transferable by the Optionee other than by will or by the laws
of descent and distribution following the Optionees death.
However, a Non-Statutory Option may be assigned in whole or in
part during the Optionees lifetime to one or more members
of the Optionees immediate family or to a trust
established exclusively for one or more such family members. The
assigned option may only be exercised by the person or persons
who acquire a proprietary interest in the option pursuant to the
assignment. The terms applicable to the assigned option (or
portion thereof) shall be the same as those in effect for the
option immediately prior to such assignment and shall be set
forth in such documents issued to the assignee as the Plan
Administrator may deem appropriate.
C.
Termination of Service
.
1. Except to the extent otherwise provided pursuant to
subsection C.2 below, the following provisions shall govern the
exercise period applicable to any options held by the Optionee
at the time of cessation of Service or death:
(i) Should the Optionee cease to remain in Service for any
reason other than death or Disability, then the period during
which each outstanding option held by such Optionee is to remain
exercisable shall be limited to the three (3)-month period
following the date of such cessation of Service.
(ii) Should such Service terminate by reason of Disability,
then the period during which each outstanding option held by the
Optionee is to remain exercisable shall be limited to the twelve
(12)-month period following the date of such cessation of
Service.
(iii) Should the Optionee die while holding one or more
outstanding options, then the period during which each such
option is to remain exercisable shall be limited to the twelve
(12)-month period following the date of the Optionees
death. During such limited period, the option may be exercised
by the personal representative of the Optionees estate or
by the person or persons to whom the option is transferred
pursuant to the Optionees will or in accordance with the
laws of descent and distribution.
(iv) Should the Optionees Service be terminated for
Misconduct, then all outstanding options held by the Optionee
shall terminate immediately and cease to be outstanding.
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(v) Under no circumstances, however, shall any such option
be exercisable after the specified expiration date of the option
term.
(vi) Any option designated as an Incentive Option to the
extent not exercised within the time permitted by law for the
exercise of Incentive Options following the termination of a
Participants Service shall convert automatically to a
Non-Statutory Option and thereafter shall be exercisable as such
to the extent set forth herein.
(vii) During the applicable post-Service exercise period,
the option may not be exercised in the aggregate for more than
the number of vested shares for which the option is exercisable
on the date of the Optionees cessation of Service. Upon
the expiration of the applicable exercise period or (if earlier)
upon the expiration of the option term, the option shall
terminate and cease to be exercisable for any vested shares for
which the option has not been exercised. However, the option
shall, immediately upon the Optionees cessation of Service
for any reason, terminate and cease to be outstanding with
respect to any option shares for which the option is not at that
time exercisable or in which the Optionee is not otherwise at
that time vested.
2. The Plan Administrator shall have complete discretion,
exercisable either at the time the option is granted or at any
time while the option remains outstanding,
(i) to extend the period of time for which the option is to
remain exercisable following the Optionees cessation of
Service or death from the limited period in effect under
subsection C.1 of this Article Two to such greater period
of time as the Plan Administrator shall deem appropriate;
provided, that in no event shall such option be exercisable
after the specified expiration date of the option term; and/or
(ii) to permit one or more options held by the Optionee
under this Article Two to be exercised, during the limited
post-Service exercise period applicable under this
paragraph C., not only with respect to the number of vested
shares of Common Stock for which each such option is exercisable
at the time of the Optionees cessation of Service but also
with respect to one or more subsequent installments in which the
Optionee would otherwise have vested had such cessation of
Service not occurred.
D.
Stockholder Rights
.
An Optionee
shall have no stockholder rights with respect to any shares
covered by the option until such individual shall have exercised
the option, paid the exercise price and become the holder of
record of the purchased shares.
E.
Unvested Shares
.
The Plan
Administrator shall have the discretion to authorize the
issuance of unvested shares of Common Stock under this
Discretionary Option Grant Program. Should the Optionee cease
Service while holding such unvested shares, the Corporation
shall have the right to repurchase, at the exercise price paid
per share, all or (at the discretion of the Corporation and with
the consent of the Optionee) any of those unvested shares. The
terms and conditions upon which such repurchase right shall be
exercisable (including the period and procedure for exercise and
the appropriate vesting schedule for the purchased shares) shall
be established by the Plan Administrator and set forth in the
agreement evidencing such repurchase right.
Incentive Options may only be granted to individuals who are
Employees, and the terms and conditions specified below shall be
applicable to all Incentive Options granted under the Plan.
Except as modified by the provisions of this Section II,
all the provisions of Articles One, Two and Five shall be
applicable to Incentive Options. Any Options specifically
designated as Non-Statutory shall not be subject to such terms
and conditions.
A.
Dollar Limitation
.
The
aggregate Fair Market Value (determined as of the respective
date or dates of grant) of the Common Stock for which one or
more options granted to any Employee under this Plan (or any
other option plan of the Corporation or its parent or subsidiary
corporations) may for the first time become exercisable as
incentive stock options under the Federal tax laws during any
one calendar year shall not exceed the sum of One Hundred
Thousand Dollars ($100,000). To the extent the Employee holds
two (2) or more
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such options which become exercisable for the first time in the
same calendar year, the foregoing limitation on the
exercisability of such options as incentive stock options under
the Federal tax laws shall be applied on the basis of the order
in which such options are granted. Should the number of shares
of Common Stock for which any Incentive Option first becomes
exercisable in any calendar year exceed the applicable One
Hundred Thousand Dollar ($100,000) limitation, then that option
may nevertheless be exercised in that calendar year for the
excess number of shares as a Non-Statutory Option under the
Federal tax laws.
B.
10% Stockholder
.
If any
individual to whom an Incentive Option is granted is a 10%
Stockholder, then the exercise price per share shall not be less
than one hundred ten percent (110%) of the Fair Market Value per
share of Common Stock on the grant date, and the option term
shall not exceed five (5) years measured from the grant
date.
III. CORPORATE
TRANSACTION/CHANGE IN CONTROL
A. In the event of any Corporate Transaction, each
outstanding option shall automatically accelerate so that each
such option shall, immediately prior to the effective date of
the Corporate Transaction, become fully exercisable with respect
to the total number of shares of Common Stock at the time
subject to such option and may be exercised for any or all of
those shares as fully-vested shares of Common Stock. However, an
outstanding option shall not so accelerate if and to the extent:
(i) such option is, in connection with the Corporate
Transaction, either to be assumed by the successor corporation
(or parent thereof) or to be replaced with a comparable option
to purchase shares of the capital stock of the successor
corporation (or parent thereof), (ii) such option is to be
replaced with a cash incentive program of the successor
corporation which preserves the spread existing on the unvested
option shares at the time of the Corporate Transaction and
provides for subsequent payout in accordance with the same
vesting schedule applicable to such option or (iii) the
acceleration of such option is subject to other limitations
imposed by the Plan Administrator at the time of the option
grant. The determination of option comparability under
clause (i) above shall be made by the Plan Administrator,
and its determination shall be final, binding and conclusive.
B. All outstanding repurchase rights shall also terminate
automatically, and the shares of Common Stock subject to those
terminated rights shall immediately vest in full, in the event
of any Corporate Transaction, except to the extent:
(i) those repurchase rights are to be assigned to the
successor corporation (or parent thereof) in connection with
such Corporate Transaction or (ii) such accelerated vesting
is precluded by other limitations imposed by the Plan
Administrator at the time the repurchase right is issued.
C. Immediately following the consummation of the Corporate
Transaction, all outstanding options shall terminate and cease
to be outstanding, except to the extent assumed by the successor
corporation (or parent thereof).
D. Each option which is assumed in connection with a
Corporate Transaction shall be appropriately adjusted,
immediately after such Corporate Transaction, to apply to the
number and class of securities which would have been issuable to
the Optionee in consummation of such Corporate Transaction had
the option been exercised immediately prior to such Corporate
Transaction. Appropriate adjustments to reflect such Corporate
Transaction shall also be made to (i) the exercise price
payable per share under each outstanding option, provided the
aggregate exercise price payable for such securities shall
remain the same, (ii) the maximum number
and/or
class
of securities available for issuance under the remaining term of
the Plan, (iii) the maximum number
and/or
class
of securities for which any one person may be granted stock
options and direct stock issuances under the Plan per calendar
year and (iv) the maximum number
and/or
class
of securities by which the share reserve is to increase
automatically each calendar year.
E. The Plan Administrator shall have full power and
authority to grant options under the Discretionary Option Grant
Program which will automatically accelerate in the event the
Optionees Service subsequently terminates by reason of an
Involuntary Termination within a designated period (not to
exceed eighteen (18) months) following the effective date
of any Corporate Transaction in which those options are assumed
or replaced and do not otherwise accelerate. Any options so
accelerated shall remain exercisable for fully-vested shares
until the earlier of (i) the expiration of the option term
or (ii) the expiration of the one (1)-year period measured
from the effective date of the Involuntary Termination. In
addition, the Plan Administrator may
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provide that one or more of the Corporations outstanding
repurchase rights with respect to shares held by the Optionee at
the time of such Involuntary Termination shall immediately
terminate, and the shares subject to those terminated repurchase
rights shall accordingly vest in full.
F. The Plan Administrator shall have full power and
authority to grant options under the Discretionary Option Grant
Program which will automatically accelerate in the event the
Optionees Service subsequently terminates by reason of an
Involuntary Termination within a designated period (not to
exceed eighteen (18) months) following the effective date
of any Change in Control. Each option so accelerated shall
remain exercisable for fully-vested shares until the earlier of
(i) the expiration of the option term or (ii) the
expiration of the one (1)-year period measured from the
effective date of the Involuntary Termination. In addition, the
Plan Administrator may provide that one or more of the
Corporations outstanding repurchase rights with respect to
shares held by the Optionee at the time of such Involuntary
Termination shall immediately terminate, and the shares subject
to those terminated repurchase rights shall accordingly vest in
full.
G. The portion of any Incentive Option accelerated in
connection with a Corporate Transaction or Change in Control
shall remain exercisable as an Incentive Option only to the
extent the applicable One Hundred Thousand Dollar limitation is
not exceeded. To the extent such dollar limitation is exceeded,
the accelerated portion of such option shall be exercisable as a
Non-Statutory Option under the Federal tax laws.
H. The outstanding options shall in no way affect the right
of the Corporation 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.
ARTICLE THREE
STOCK
ISSUANCE PROGRAM
I. TERMS
AND CONDITIONS OF STOCK ISSUANCES
Shares of Common Stock may be issued under the Stock Issuance
Program directly without any intervening option grants. Each
such stock issuance shall be evidenced by a Stock Issuance
Agreement which complies with the terms specified below.
A. The shares shall be issued for such valid consideration
under the Delaware General Corporation Law as the Plan
Administrator may deem appropriate, but the value of such
consideration as determined by the Plan Administrator shall not
be less than one hundred percent (100%) of the Fair Market Value
of the issued shares of Common Stock on the issuance date.
B. The Plan Administrator shall have full power and
authority to issue shares of Common Stock under the Stock
Issuance Program as a bonus for past services rendered to the
Corporation (or any parent or subsidiary). All such bonus shares
shall be fully and immediately vested upon issuance.
C. All other shares of Common Stock authorized for issuance
under the Stock Issuance Program by the Plan Administrator shall
have a minimum vesting schedule determined in accordance with
the following requirements:
(i) For any shares which are to vest solely by reason of
Service to be performed by the Participant, the Plan
Administrator shall impose a minimum Service period of at least
two (2) years measured from the issue date of such shares.
(ii) For any shares which are to vest upon the
Participants completion of a designated Service
requirement and the Corporations attainment of one or more
prescribed performance milestones, the Plan Administrator shall
impose a minimum Service period of at least one (1) year
measured from the issue date of such shares.
D. Any new, substituted or additional securities or other
property (including money paid other than as a regular cash
dividend) which the Participant may have the right to receive
with respect to the Participants unvested shares of Common
Stock by reason of any stock dividend, stock split,
recapitalization, combination
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of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the
Corporations receipt of consideration shall be issued
subject to (i) the same vesting requirements applicable to
the Participants unvested shares of Common Stock and
(ii) such escrow arrangements as the Plan Administrator
shall deem appropriate.
E. The Participant shall have full stockholder rights with
respect to any shares of Common Stock issued to the Participant
under the Stock Issuance Program, whether or not the
Participants interest in those shares is vested.
Accordingly, the Participant shall have the right to vote such
shares and to receive any regular cash dividends paid on such
shares.
F. Should the Participant cease to remain in Service while
holding one or more unvested shares of Common Stock issued under
the Stock Issuance Program or should the performance objectives
not be attained with respect to one or more such unvested shares
of Common Stock, then those shares shall be immediately
surrendered to the Corporation for cancellation, and the
Participant shall have no further stockholder rights with
respect to those shares. To the extent the surrendered shares
were previously issued to the Participant for consideration paid
in cash or cash equivalent (including the Participants
purchase-money indebtedness), the Corporation shall repay to the
Participant the cash consideration paid for the surrendered
shares and shall cancel the unpaid principal balance of any
outstanding purchase-money note of the Participant attributable
to such surrendered shares.
G. The Plan Administrator shall have full power and
authority, exercisable upon a Participants termination of
Service, to waive the surrender and cancellation of any or all
unvested shares of Common Stock (or other assets attributable
thereto) at the time held by that Participant, if the Plan
Administrator determines such waiver to be an appropriate
severance benefit for the Participant.
H. Prior to the vesting of any shares of Common Stock
issued to a Participant under the Stock Issuance Program, rights
to acquire shares may be assigned in whole or in part during the
Participants lifetime to one or more members of the
Participants immediate family or to a trust established
exclusively for one or more such family members. The assigned
right to acquire shares may only be exercised by the person or
persons who acquire a proprietary interest in the shares
pursuant to the assignment. The terms applicable to the assigned
shares (or portion thereof) shall be the same as those in effect
for the shares immediately prior to such assignment and shall be
set forth in such documents issued to the assignee as the Plan
Administrator may deem appropriate.
II. CORPORATE
TRANSACTION/CHANGE IN CONTROL
A. All of the Corporations outstanding
repurchase/cancellation rights under the Stock Issuance Program
shall terminate automatically, and all the shares of Common
Stock subject to those terminated rights shall immediately vest
in full, in the event of any Corporate Transaction, except to
the extent (i) those rights are assigned to the successor
corporation (or parent thereof) in connection with such
Corporate Transaction or (ii) such accelerated vesting is
precluded by other limitations imposed in the Stock Issuance
Agreement.
B. The Plan Administrator shall have the discretionary
authority to structure one or more of the Corporations
repurchase/cancellation rights under the Stock Issuance Program
in such manner that those rights shall automatically terminate,
and all the shares of Common Stock subject to those terminated
rights shall immediately vest in full, in the event the
Participants Service should subsequently terminate by
reason of an Involuntary Termination within eighteen
(18) months following the effective date of any Corporate
Transaction in which those rights are assigned to the successor
corporation (or parent thereof).
C. The Plan Administrator shall have the discretionary
authority to structure one or more of the Corporations
repurchase/cancellation rights under the Stock Issuance Program
in such manner that those rights shall automatically terminate,
and all the shares of Common Stock subject to those terminated
rights shall immediately vest in full, in the event the
Participants Service should subsequently terminate by
reason of an Involuntary Termination within eighteen
(18) months following the effective date of any Change in
Control.
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III. SHARE
ESCROW/LEGENDS
Unvested shares may, in the Plan Administrators
discretion, be held in escrow by the Corporation until the
Participants interest in such shares vests or may be
issued directly to the Participant with restrictive legends on
the certificates evidencing those unvested shares.
ARTICLE FOUR
AUTOMATIC
OPTION GRANT PROGRAM
I. ELIGIBILITY
The individuals eligible to receive automatic option grants
pursuant to the provisions of this Article Four program
shall be limited to those individuals who are serving as
non-employee Board members on the Automatic Option Grant Program
Effective Date or who are first elected or appointed as
non-employee Board members on or after such Effective Date,
whether through appointment by the Board or election by the
Corporations stockholders.
II. TERMS
AND CONDITIONS OF AUTOMATIC OPTION GRANTS
A.
Grant Dates
.
Option grants
shall be made under this Article Four on the dates
specified below:
1.
Initial Grant
.
Each individual
serving as a non-employee Board member on the Automatic Option
Grant Program Effective Date and each individual who is first
elected or appointed as a non-employee Board member after such
Effective Date shall automatically be granted, on the Automatic
Option Grant Program Effective Date or on the date of such
initial election or appointment (as the case may be), a
Non-Statutory Option to purchase 10,000 shares of Common
Stock upon the terms and conditions of this Article Four.
In no event, however, shall a non-employee Board member be
eligible to receive such an initial option grant if such
individual has at any time been in the prior employ of the
Corporation (or any parent or subsidiary corporation).
2.
Annual Grant
.
On the date of
each Annual Stockholders Meeting, beginning with the first
Annual Meeting held after the Section 12(g) Registration
Date, each individual who will continue to serve as a
non-employee Board member shall automatically be granted,
whether or not such individual is standing for re-election as a
Board member at that Annual Meeting, a Non-Statutory Option to
purchase an additional 5,000 shares of Common Stock upon
the terms and conditions of this Article Four, provided he
or she has served as a non-employee Board member for at least
six (6) months prior to the date of such Annual Meeting.
Non-employee Board members who have previously been in the
employ of the Corporation (or any parent or subsidiary) shall be
eligible to receive such annual option grants over their
continued period of Board service through one or more Annual
Stockholders Meetings.
3.
No Limitation
.
There shall be
no limit on the number of shares for which any one non-employee
Board member may be granted stock options under this
Article Four over his or her period of Board service.
B.
Exercise Price
.
The exercise
price per share of Common Stock subject to each automatic option
grant made under this Article Four shall be equal to one
hundred percent (100%) of the Fair Market Value per share of
Common Stock on the automatic grant date.
C.
Payment
.
The exercise price
shall be payable in one of the alternative forms specified below:
(i) full payment in cash or check drawn to the
Corporations order;
(ii) full payment in shares of Common Stock held for the
requisite period necessary to avoid a charge to the
Corporations earnings for financial reporting purposes and
valued at Fair Market Value on the Exercise Date (as such term
is defined below);
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(iii) full payment in a combination of shares of Common
Stock held for the requisite period necessary to avoid a charge
to the Corporations earnings for financial reporting
purposes and valued at Fair Market Value on the Exercise Date
and cash or check drawn to the Corporations order; or
(iv) to the extent the option is exercised for vested
shares, full payment through a sale and remittance procedure
pursuant to which the Optionee shall provide irrevocable written
instructions to (I) a Corporation-designated brokerage firm
to effect the immediate sale of the purchased shares and remit
to the Corporation, out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased shares and
(II) the Corporation to deliver the certificates for the
purchased shares directly to such brokerage firm in order to
complete the sale transaction.
Except to the extent the sale and remittance procedure specified
above is used for the exercise of the option for vested shares,
payment of the exercise price for the purchased shares must
accompany the exercise notice.
D.
Option Term
.
Each automatic
grant under this Article Four shall have a maximum term of
ten (10) years measured from the automatic grant date.
E.
Exercisability/Vesting
.
Each
automatic grant shall be immediately exercisable for any or all
of the option shares. However, any shares purchased under the
option shall be subject to repurchase by the Corporation, at the
exercise price paid per share, upon the Optionees
cessation of Board service prior to vesting in those shares in
accordance with the applicable schedule below:
Initial Grant.
Each initial 10,000-share
automatic grant shall vest, and the Corporations
repurchase right shall lapse, in a series of four (4) equal
and successive annual installments over the Optionees
period of continued service as a Board member, with the first
such installment to vest upon Optionees completion of one
(1) year of Board service measured from the automatic grant
date.
Annual Grant.
Each additional 5,000-share
automatic grant shall vest, and the Corporations
repurchase right shall lapse, upon the Optionees
completion of one (1) year of Board service measured from
the automatic grant date.
F.
Limited Transferability
.
During
the lifetime of the Optionee, each automatic option grant may be
assigned in whole or in part to one or more members of the
Optionees immediate family or to a trust established
exclusively for one or more such family members. The assigned
portion may only be exercised by the person or persons who
acquire a proprietary interest in the option pursuant to the
assignment. The terms applicable to the assigned option (or
portion thereof) shall be the same as those in effect for the
option immediately prior to such assignment and shall be set
forth in such documents issued to the assignee as the Plan
Administrator may deem appropriate.
G.
Effect of Termination of Board
Membership
.
The following provisions shall
govern the exercise of any outstanding options held by the
Optionee under this Article Four at the time the Optionee
ceases to serve as a Board member:
(i) The Optionee (or, in the event of Optionees
death, the personal representative of the Optionees estate
or the person or persons to whom the option is transferred
pursuant to the Optionees will or in accordance with the
laws of descent and distribution) shall have a twelve (12)-month
period following the date of such cessation of Board service in
which to exercise each such option. However, each option shall,
immediately upon the Optionees cessation of Board service,
terminate and cease to remain outstanding with respect to any
option shares in which the Optionee is not vested on the date of
such cessation of Board service.
(ii) During the twelve (12)-month exercise period, the
option may not be exercised in the aggregate for more than the
number of vested shares for which the option is exercisable at
the time of the Optionees cessation of Board service.
However, should the Optionee cease to serve as a Board member by
reason of death or Permanent Disability, then all shares at the
time subject to the option shall
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immediately vest so that such option may, during the twelve
(12)-month exercise period following such cessation of Board
service, be exercised for all or any portion of such shares as
fully-vested shares.
(iii) In no event shall the option remain exercisable after
the expiration of the option term.
H.
Stockholder Rights
.
The holder
of an automatic option grant under this Article Three shall
have none of the rights of a stockholder with respect to any
shares subject to such option until such individual shall have
exercised the option, paid the exercise price and become the
holder of record of the purchased shares.
I.
Remaining Terms
.
The remaining
terms and conditions of each automatic option grant shall be the
same as the terms for option grants made under the Discretionary
Option Grant Program.
III. CORPORATE
TRANSACTION/CHANGE IN CONTROL
A. In the event of any Corporate Transaction, the shares of
Common Stock at the time subject to each outstanding option
under this Article Four but not otherwise vested shall
automatically vest in full so that each such option shall,
immediately prior to the specified effective date for the
Corporate Transaction, become fully exercisable for all of the
shares of Common Stock at the time subject to that option and
may be exercised for all or any portion of those shares as fully
vested shares of Common Stock. Immediately following the
consummation of the Corporate Transaction, all automatic option
grants under this Article Four shall terminate and cease to
be outstanding, except to the extent assumed by the successor
corporation or parent thereof.
B. Each outstanding option under this Article Four
which is assumed in connection with a Corporate Transaction
outstanding shall be appropriately adjusted, immediately after
such Corporate Transaction, to apply and pertain to the number
and class of securities which would have been issuable to the
Optionee in the consummation of such Corporate Transaction, had
the option been exercised immediately prior to such Corporate
Transaction. Appropriate adjustments shall also be made to
(i) the class and number of securities available for
issuance under the Plan following the consummation of such
Corporate Transaction, and (ii) the exercise price payable
per share, provided the aggregate exercise price payable for
such securities shall remain the same.
C. In connection with any Change in Control of the
Corporation, the shares of Common Stock at the time subject to
each outstanding option under this Article Four but not
otherwise vested shall automatically vest in full so that each
such option shall, immediately prior to the specified effective
date for the Change in Control, become fully exercisable for all
of the shares of Common Stock at the time subject to that option
and may be exercised for all or any portion of those shares as
fully vested shares of Common Stock. Each such option shall
remain so exercisable for all the option shares following the
Change in Control, until the expiration or sooner termination of
the option term.
D. The automatic option grants outstanding under this
Article Four shall in no way affect the right of the
Corporation 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.
ARTICLE FIVE
MISCELLANEOUS
I. AMENDMENT
OF THE PLAN AND AWARDS
The Board has complete and exclusive power and authority to
amend or modify the Plan (or any component thereof) in any or
all respects whatsoever. However, no such amendment or
modification shall adversely affect rights and obligations with
respect to options at the time outstanding under the Plan, nor
adversely affect the rights of any Participant with respect to
Common Stock issued under the Stock Issuance Program prior to
such action, unless the Optionee or Participant consents to such
amendment. In addition, certain amendments to the Plan may
require stockholder approval pursuant to Applicable Laws or
regulations.
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II. CONDITIONS
UPON ISSUANCE OF SHARES
If at any time the Plan Administrator determines that the
delivery of shares pursuant to the exercise, vesting or any
other provision of an option or direct stock issuance is or may
be unlawful under Applicable Laws, the vesting or right to
exercise an option or to otherwise receive shares pursuant to
the Plan shall be suspended until the Plan Administrator
determines that such delivery is lawful and shall be further
subject to the approval of counsel for the Corporation with
respect to such compliance. The Corporation shall have no
obligation to effect any registration or qualification of the
shares of Common Stock under federal or state laws.
III. TAX
WITHHOLDING
A. The Corporations obligation to deliver shares of
Common Stock upon the exercise of stock options for such shares
or the vesting of such shares under the Plan shall be subject to
the satisfaction of all applicable Federal, state and local
income tax and employment tax withholding requirements.
B. The Plan Administrator may, in its discretion and in
accordance with the provisions of this Section III of this
Article Five and such supplemental rules as the Plan
Administrator may from time to time adopt (including the
applicable safe-harbor provisions of
Rule 16b-3
of the Securities and Exchange Commission), provide any or all
holders of Non-Statutory Options (other than the automatic
grants made pursuant to Article Four of the Plan) or
unvested shares under the Plan with the right to use shares of
Common Stock in satisfaction of all or part of the Federal,
state and local income and employment tax liabilities incurred
by such holders in connection with the exercise of their options
or the vesting of their shares (the Taxes). Such
right may be provided to any such holder in either or both of
the following formats:
(i) The holder of the Non-Statutory Option or unvested
shares may be provided with the election to have the Corporation
withhold, from the shares of Common Stock otherwise issuable
upon the exercise of such Non-Statutory Option or the vesting of
such shares, a portion of those shares with an aggregate Fair
Market Value equal to the percentage of the applicable Taxes
(not to exceed one hundred percent (100%)) designated by the
holder.
(ii) The Plan Administrator may, in its discretion, provide
the holder of the Non-Statutory Option or the unvested shares
with the election to deliver to the Corporation, at the time the
Non-Statutory Option is exercised or the shares vest, one or
more shares of Common Stock previously acquired by such
individual (other than in connection with the option exercise or
share vesting triggering the Taxes) with an aggregate Fair
Market Value equal to the percentage of the Taxes incurred in
connection with such option exercise or share vesting (not to
exceed one hundred percent (100%)) designated by the holder.
IV. EFFECTIVE
DATE AND TERM OF PLAN
A. The Plan has been approved by the Board and is subject
to approval by the stockholders of the Corporation at the annual
meeting of stockholders to be held on July 28, 2005, and
will become effective as of the date of such stockholder
approval.
B. The Plan shall terminate upon the earlier of
(i) July 27, 2015, or (ii) the date on which all
shares available for issuance under the Plan shall have been
issued pursuant to the exercise of the options granted under the
Plan or the issuance of shares (whether vested or unvested)
under the Stock Issuance Program. If the date of termination is
determined under clause (i) above, then all option grants
and unvested share issuances outstanding on such date shall
thereafter continue to have force and effect in accordance with
the provisions of the instruments evidencing such grants or
issuance.
C. The Board approved an amendment and restatement of the
Plan in July 2007, which is subject to stockholder
approval, to (i) increase the maximum number of shares of
Common Stock reserved under the Plan from 5,000,000 shares
to 7,000,000 shares (plus the annual increase provided
under Article VI.B of the Plan), and (ii) to make such
other administrative changes regarding the operation of the Plan.
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V. REGULATORY
APPROVALS
The implementation of the Plan, the granting of any option under
the Plan, the issuance of any shares under the Stock Issuance
Program, and the issuance of Common Stock upon the exercise of
the option grants made hereunder shall be subject to the
Corporations procurement of all approvals and permits
required by regulatory authorities having jurisdiction over the
Plan, the options granted under it, and the Common Stock issued
pursuant to it.
VI. USE
OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of
shares pursuant to option grants or share issuances under the
Plan shall be used for general corporate purposes.
VII. NO
EMPLOYMENT/SERVICE RIGHTS
Neither the action of the Corporation in establishing the Plan,
nor any action taken by the Plan Administrator hereunder, nor
any provision of the Plan shall be construed so as to grant any
individual the right to remain in the employ or service of the
Corporation (or any parent or subsidiary corporation) for any
period of specific duration, and the Corporation (or any parent
or subsidiary corporation retaining the services of such
individual) may terminate such individuals employment or
service at any time and for any reason, with or without cause.
VIII. MISCELLANEOUS
PROVISIONS
A. Except as otherwise expressly provided under the Plan,
the right to acquire Common Stock or other assets under the Plan
may not be assigned, encumbered or otherwise transferred by any
Optionee or Participant.
B. The provisions of the Plan relating to the exercise of
options and the vesting of shares shall be governed by the laws
of the State of California as such laws are applied to contracts
entered into and performed in such State.
C. The provisions of the Plan shall inure to the benefit
of, and be binding upon, the Corporation and its successors or
assigns, whether by Corporate Transaction or otherwise, and the
Participants and Optionees, the legal representatives of their
respective estates, their respective heirs or legatees and their
permitted assignees.
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