EXHIBIT 99.1
SOFTMAX, INC. 2004 STOCK OPTION PLAN, AS AMENDED
SOFTMAX, INC.
2004 STOCK OPTION PLAN
1. Establishment, Purpose and Term of Plan.
1.1
Establishment. The SoftMax, Inc. 2004 Stock Option Plan (the Plan) is hereby
established effective as of November 3, 2004.
1.2 Purpose. The purpose of the Plan is to advance the interests of the Participating Company
Group and its shareholders by providing an incentive to attract and retain persons performing
services for the Participating Company Group and by motivating such persons to contribute to the
growth and profitability of the Participating Company Group.
1.3 Term of Plan. The Plan shall continue in effect until the earlier of its termination by
the Board or the date on which all of the shares of Stock available for issuance under the Plan
have been issued and all restrictions on such shares under the terms of the Plan and the agreements
evidencing Options granted under the Plan have lapsed. However, all Options shall be granted, if at
all, within ten (10) years from the earlier of the date the Plan is adopted by the Board or the
date the Plan is duly approved by the shareholders of the Company.
2. Definitions and Construction.
2.1 Definitions. Whenever used herein, the following terms shall have their respective
meanings set forth below:
(a) Board means the Board of Directors of the Company. If one or more Committees have been
appointed by the Board to administer the Plan, Board also means such Committee(s).
(b) Code means the Internal Revenue Code of 1986, as amended, and any applicable regulations
promulgated thereunder.
(c) Committee means the Compensation Committee or other committee of the Board duly
appointed to administer the Plan and having such powers as shall be specified by the Board. Unless
the powers of the Committee have been specifically limited, the Committee shall have all of the
powers of the Board granted herein, including, without limitation, the power to amend or terminate
the Plan at any time, subject to the terms of the Plan and any applicable limitations imposed by
law.
(d) Company means SoftMax, Inc., a California corporation, or any successor corporation
thereto.
(e) Consultant means a person engaged to provide consulting or advisory services (other than
as an Employee or a Director) to a Participating Company, provided that the identity of such
person, the nature of such services or the entity to which such services are provided would not
preclude the Company from offering or selling securities to such person pursuant to the Plan in
reliance on either the exemption from registration provided by Rule 701 under the Securities Act
or, if the Company is required to file reports pursuant to
Section 13 or 15(d) of the Exchange Act, registration on a Form S-8 Registration Statement
under the Securities Act.
(f) Director means a member of the Board or of the board of directors of any other
Participating Company.
(g) Disability means the inability of the Optionee, in the opinion of a qualified physician
acceptable to the Company, to perform the major duties of the Optionees position with the
Participating Company Group because of the sickness or injury of the Optionee.
(h) Employee means any person treated as an employee (including an officer or a Director who
is also treated as an employee) in the records of a Participating Company and, with respect to any
Incentive Stock Option granted to such person, who is an employee for purposes of Section 422 of
the Code; provided, however, that neither service as a Director nor payment of a directors fee
shall be sufficient to constitute employment for purposes of the Plan.
(i) Exchange Act means the Securities Exchange Act of 1934, as amended.
(j) Fair Market Value means, as of any date, the value of a share of Stock or other property
as determined by the Board, in its discretion, or by the Company, in its discretion, if such
determination is expressly allocated to the Company herein, subject to the following:
(i) If, on such date, the Stock is listed on a national or regional securities exchange or
market system, the Fair Market Value of a share of Stock shall be the closing price of a share of
Stock (or the mean of the closing bid and asked prices of a share of Stock if the Stock is so
quoted instead) as quoted on the Nasdaq National Market, The Nasdaq SmallCap Market or such other
national or regional securities exchange or market system constituting the primary market for the
Stock, as reported in The Wall Street Journal or such other source as the Company deems
reliable. If the relevant date does not fall on a day on which the Stock has traded on such
securities exchange or market system, the date on which the Fair Market Value shall be established
shall be the last day on which the Stock was so traded prior to the relevant date, or such other
appropriate day as shall be determined by the Board, in its discretion.
(ii) If, on such date, the Stock is not listed on a national or regional securities exchange
or market system, the Fair Market Value of a share of Stock shall be as determined by the Board in
good faith without regard to any restriction other than a restriction which, by its terms, will
never lapse.
(k) Incentive Stock Option means an Option intended to be (as set forth in the Option
Agreement) and which qualifies as an incentive stock option within the meaning of Section 422(b) of
the Code.
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(l) Insider means an officer or a Director of the Company or any other person whose
transactions in Stock are subject to Section 16 of the Exchange Act.
(m) Nonstatutory Stock Option means an Option not intended to be (as set forth in the Option
Agreement) or which does not qualify as an Incentive Stock Option.
(n) Option means a right to purchase Stock (subject to adjustment as provided in Section
4.2) pursuant to the terms and conditions of the Plan. An Option may be either an Incentive Stock
Option or a Nonstatutory Stock Option.
(o) Option Agreement means a written agreement between the Company and an Optionee setting
forth the terms, conditions and restrictions of the Option granted to the Optionee and any shares
acquired upon the exercise thereof. An Option Agreement may consist of a form of Notice of Grant
of Stock Option and a form of Stock Option Agreement incorporated therein by reference, or such
other form or forms as the Board may approve from time to time.
(p) Optionee means a person who has been granted one or more Options.
(q) Parent Corporation means any present or future parent corporation of the Company, as
defined in Section 424(e) of the Code.
(r) Participating Company means the Company or any Parent Corporation or Subsidiary
Corporation.
(s) Participating Company Group means, at any point in time, all corporations collectively
which are then Participating Companies.
(t) Rule 16b-3 means Rule 16b-3 under the Exchange Act, as amended from time to time, or any
successor rule or regulation.
(u) Securities Act means the Securities Act of 1933, as amended.
(v) Service means an Optionees employment or service with the Participating Company Group,
whether in the capacity of an Employee, a Director or a Consultant. An Optionees Service shall not
be deemed to have terminated merely because of a change in the capacity in which the Optionee
renders Service to the Participating Company Group or a change in the Participating Company for
which the Optionee renders such Service, provided that there is no interruption or termination of
the Optionees Service. Furthermore, an Optionees Service with the Participating Company Group
shall not be deemed to have terminated if the Optionee takes any military leave, sick leave, or
other bona fide leave of absence approved by the Company; provided, however, that if any such leave
exceeds ninety (90) days, on the ninety-first (91st) day of such leave the Optionees Service shall
be deemed to have terminated unless the Optionees right to return to Service with the
Participating Company Group is guaranteed by statute or contract. Notwithstanding the foregoing,
unless otherwise designated by the Company or required by law, a leave of absence shall not be
treated as Service for purposes of determining vesting under the Optionees Option Agreement. The
Optionees
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Service shall be deemed to have terminated either upon an actual termination of Service or
upon the corporation for which the Optionee performs Service ceasing to be a Participating Company.
Subject to the foregoing, the Company, in its discretion, shall determine whether the Optionees
Service has terminated and the effective date of such termination.
(w) Stock means the common stock of the Company, as adjusted from time to time in accordance
with Section 42.
(x) Subsidiary Corporation means any present or future subsidiary corporation of the
Company, as defined in Section 424(f) of the Code.
(y) Ten Percent Owner Optionee means an Optionee who, at the time an Option is granted to
the Optionee, owns stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of a Participating Company within the meaning of Section 422(b)(6) of the
Code.
2.2 Construction. Captions and titles contained herein are for convenience only and shall not
affect the meaning or interpretation of any provision of the Plan. Except when otherwise indicated
by the context, the singular shall include the plural and the plural shall include the singular.
Use of the term or is not intended to be exclusive, unless the context clearly requires
otherwise.
3. Administration.
3.1 Administration by the Board. The Plan shall be administered by the Board. All questions of
interpretation of the Plan or of any Option shall be determined by the Board, and such
determinations shall be final and binding upon all persons having an interest in the Plan or such
Option.
3.2 Authority of Officers. Any officer of a Participating Company shall have the authority to
act on behalf of the Company with respect to any matter, right, obligation, determination or
election which is the responsibility of or which is allocated to the Company herein, provided the
officer has apparent authority with respect to such matter, rights obligation, determination or
election.
3.3 Powers of the Board. In addition to any other powers set forth in the Plan and subject to
the provisions of the Plan, the Board shall have the full and final power and authority, in its
discretion:
(a) to determine the persons to whom, and the time or times at which, Options shall be granted
and the number of shares of Stock to be subject to each Option;
(b) to designate Options as Incentive Stock Options or Nonstatutory Stock Options;
(c) to determine the Fair Market Value of shares of Stock or other property;
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(d) to determine the terms, conditions and restrictions applicable to each Option (which need
not be identical) and any shares acquired upon the exercise thereof, including, without limitation,
(i) the exercise price of the Option, (ii) the method of payment for shares purchased upon the
exercise of the Option, (iii) the method for satisfaction of any tax withholding obligation arising
in connection with the Option or such shares, including by the withholding or delivery of shares of
stock, (iv) the timing, terms and conditions of the exercisability of the Option or the vesting of
any shares acquired upon the exercise thereof; (v) the time of the expiration of the Option, (vi)
the effect of the Optionees termination of Service with the Participating Company Group on any of
the foregoing, and (vii) all other terms, conditions and restrictions applicable to the Option or
such shares not inconsistent with the terms of the Plan;
(e) to approve one or more forms of Option Agreement;
(f) to amend, modify, extend, cancel or renew any Option or to waive any restrictions or
conditions applicable to any Option or any shares acquired upon the exercise thereof;
(g) to accelerate, continue, extend or defer the exercisability of any Option or the vesting
of any shares acquired upon the exercise thereof, including with respect to the period following an
Optionees termination of Service with the Participating Company Group;
(h) to prescribe, amend or rescind rules, guidelines and policies relating to the Plan, or to
adopt supplements to, or alternative versions of the Plan, including, without limitation, as the
Board deems necessary or desirable to comply with the laws of, or to accommodate the tax policy or
custom of, foreign jurisdictions whose citizens may be granted Options; and
(i) to correct any defect, supply any omission or reconcile any inconsistency in the Plan or
any Option Agreement and to make all other determinations and take such other actions with respect
to the Plan or any Option as the Board may deem advisable to the extent not inconsistent with the
provisions of the Plan or applicable law.
3.4 Administration with Respect to Insiders. With respect to participation by Insiders in the
Plan, at any time that any class of equity security of the Company is registered pursuant to
Section 12 of the Exchange Act, the Plan shall be administered in compliance with the requirements,
if any, of Rule 16b-3.
3.5 Indemnification. In addition to such other rights of indemnification as they may have as
members of the Board or officers or employees of the Participating Company Group, members of the
Board and any officers or employees of the Participating Company Group to whom authority to act for
the Board or the Company is delegated shall be indemnified by the Company against all reasonable
expenses, including attorneys fees, actually and necessarily incurred in connection with the
defense of any action, suit or proceeding, or in connection with any appeal therein, to which they
or any of them may be a party by reason of any action taken or failure to act under or in
connection with the Plan, or any right granted hereunder, and against all amounts paid by them in
settlement thereof (provided such settlement
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is approved by independent legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as
to which it shall be adjudged in such action, suit or proceeding that such person is liable for
gross negligence, bad faith or intentional misconduct in duties; provided, however, that within
sixty (60) days after the institution of such action, suit or proceeding, such person shall offer
to the Company, in writing, the opportunity at its own expense to handle and defend the same.
4. Shares Subject to Plan.
4.1 Maximum Number of Shares Issuable. Subject to adjustment as provided in Section 4.2, the
maximum aggregate number of shares of Stock that may be issued under the Plan shall be 1,500,000
and shall consist of authorized but unissued or reacquired shares of Stock or any combination
thereof. If an outstanding Option for any reason expires or is terminated or canceled or if shares
of Stock are acquired upon the exercise of an Option subject to a Company repurchase option and are
repurchased by the Company at the Optionees exercise price, the shares of Stock allocable to the
unexercised portion of such Option or such repurchased shares of Stock shall again be available for
issuance under the Plan. Notwithstanding the foregoing, at any such time as the offer and sale of
securities pursuant to the Plan is subject to compliance with Section 260.140.45 of Title 10 of the
California Code of Regulations (Section 260.140.45), the total number of shares of Stock issuable
upon the exercise of all outstanding Options (together with options outstanding under any other
stock option plan of the Company) and the total number of shares provided for under any stock bonus
or similar plan of the Company shall not exceed thirty percent (30%) (or such other higher
percentage limitation as may be approved by the shareholders of the Company pursuant to Section
260.140-45) of the then outstanding shares of the Company as calculated in accordance with the
conditions and exclusions of Section 260.140.45.
4.2 Adjustments for Changes in Capital Structure. In the event of any stock dividend, stock
split, reverse stock split, recapitalization, combination, reclassification or similar change in
the capital structure of the Company, appropriate adjustments shall be made in the number and class
of shares subject to the Plan and to any outstanding Options and in the exercise price per share of
any outstanding Options, If a majority of the shares which are of the same class as the shares that
are subject to outstanding Options are exchanged for, converted into, or otherwise become (whether
or not pursuant to an Ownership Change Event, as defined in Section 8.1) shares of another
corporation (the New Shares), the Board may unilaterally amend the outstanding Options to provide
that such Options are exercisable for New Shares. In the event of any such amendment, the number of
shares subject to, and the exercise price per share of, the outstanding Options shall be adjusted
in a fair and equitable manner as determined by the Board, in its discretion. Notwithstanding the
foregoing, any fractional share resulting from an adjustment pursuant to this Section 4.2 shall be
rounded down to the nearest whole number, and in no event may the exercise price of any Option be
decreased to an amount less than the par value, if any, of the stock subject to the Option. The
adjustments determined by the Board pursuant to this Section 4.2 shall be final, binding and
conclusive.
5. Eligibility and Option Limitations.
5.1 Persons Eligible for Options. Options may be granted only to Employees, Consultants, and
Directors. For purposes of the foregoing sentence, Employees,
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Consultants and Directors shall include prospective Employees, prospective Consultants and
prospective Directors to whom Options are granted in connection with written offers of an
employment or other service relationship with the Participating Company Group. Eligible persons may
be granted more than one (1) Option.
5.2 Option Grant Restrictions. Any person who is not an Employee on the effective date of the
grant of an Option to such person may be granted only a Nonstatutory Stock Option. An Incentive
Stock Option granted to a prospective Employee upon the condition that such person become an
Employee shall be deemed granted effective on the date such person commences Service with a
Participating Company, with an exercise price determined as of such date in accordance with Section
6.1.
5.3 Fair Market Value Limitation. To the extent that options designated as Incentive Stock
Options (granted under all stock option plans of the Participating Company. Group, including the
Plan) become exercisable by an Optionee for the first time during any calendar year for stock
having a Fair Market Value greater than One Hundred Thousand Dollars ($100,000), the portions of
such options which exceed such amount shall be treated as Nonstatutory Stock Options. For purposes
of this Section 5.3, options designated as Incentive Stock Options shall be taken into account in
the order in which they were granted, and the Fair Market Value of stock shall be determined as of
the time the option with respect to such stock is granted. If the Code is amended to provide for a
different limitation from that set forth in this Section 5.3, such different limitation shall be
deemed incorporated herein effective as of the date and with respect to such Options as required or
permitted by such amendment to the Code. If an Option is treated as an Incentive Stock Option in
part and as a Nonstatutory Stock Option in part by reason of the limitation set forth in this
Section 5.3, the Optionee may designate which portion of such Option the Optionee is exercising. In
the absence of such designation, the Optionee shall be deemed to have exercised the Incentive Stock
Option portion of the Option first. Separate certificates representing each such portion shall be
issued upon the exercise of the Option.
6. Terms and Conditions of Options.
Options shall be evidenced by Option Agreements specifying the number of shares of Stock
covered thereby, in such form as the Board shall from time to time establish. No Option or
purported Option shall be a valid and binding obligation of the Company unless evidenced by a fully
executed Option Agreement. Option Agreements may incorporate all or any of the terms of the Plan by
reference and shall comply with and be subject to the following terms and conditions:
6.1 Exercise Price. The exercise price for each Option shall be established in the discretion
of the Board; provided, however, that (a) the exercise price per share for an Incentive Stock
Option shall be not less than the Fair Market Value of a share of Stock on the effective date of
grant of the Option, (b) the exercise price per share for a Nonstatutory Stock Option shall be not
less than eighty-five percent (85%) of the Fair Market Value of a share of Stock on the effective
date of grant of the Option, and (c) no Option granted to a Ten Percent Owner Optionee shall have
an exercise price per share less than one hundred ten percent (110%) of the Fair Market Value of a
share of Stock on the effective date of grant of the Option, Notwithstanding the foregoing, an
Option (whether an Incentive Stock Option or a Nonstatutory
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Stock Option) may be granted with an exercise price lower than the minimum exercise price set
forth above if such Option is granted pursuant to an assumption or substitution for another option
in a manner qualifying under the provisions of Section 424(a) of the Code.
6.2 Exercisability and Terms of Options. Options shall be exercisable at such time or times,
or upon such event or events, and subject to such terms, conditions, performance criteria and
restrictions as shall be determined by the Board and set forth in the Option Agreement evidencing
such Option; provided, however, that (a) no Option shall be exercisable after the expiration of ten
(10) years after the effective date of grant of such Option, (b) no Incentive Stock Option granted
to a Ten Percept Owner Optionee shall be exercisable after the expiration of five (5) years after
the effective date of grant of such Option, (c) no Option granted to a prospective Employee,
prospective Consultant or prospective Director may become exercisable prior to the date on which
such person commences Service with a Participating Company, and (d) with the exception of an Option
granted to an officer, Director or Consultant, no Option shall become exercisable at a rate less
than twenty percent (20%) per year over a period of five (5) years from the effective date of grant
of such Option, subject to the Optionees continued Service. Subject to the foregoing, unless
otherwise specified by the Board in the grant of an Option, any Option granted hereunder shall
terminate ten (10) years after the effective date of grant of the Option, unless earlier terminated
in accordance with its provisions.
6.3 Payment of Exercise Price.
(a) Forms of Consideration Authorized. Except as otherwise provided below, payment of the
exercise price for the number of shares of Stock being purchased pursuant to any Option shall be
made (i) in cash, by check or cash equivalent, (ii) by tender to the Company, or attestation to the
ownership, of shares of Stock owned by the Optionee having a Fair Market Value (as determined by
the Company without regard to any restrictions on transferability applicable to such stock by
reason of federal or state securities laws or agreements with an underwriter for the Company) not
less than the exercise price, (iii) by delivery of a properly executed notice together with
irrevocable instructions to a broker providing for the assignment to the Company of the proceeds of
a sale or loan with respect to some or all of the shares being acquired upon the exercise of the
Option (including, without limitation, through an exercise complying with the provisions of
Regulation T as promulgated from time to time by the Board of Governors of the Federal Reserve
System) (a Cashless Exercise) (iv) provided that the Optionee is an Employee and in the Companys
sole discretion at the time the Option is exercised, by delivery of the Optionees promissory note
in a form approved by the Company for the aggregate exercise price, provided that, if the Company
is incorporated in the State of Delaware, the Optionee shall pay in cash that portion of the
aggregate exercise price not less than the par value of the shares being acquired, (v) by such
other consideration as may be approved by the Board from time to time to the extent permitted by
applicable law, or (vi) by any combination thereof. The Board may at any time or from time to time,
by approval of or by amendment to the standard forms of Option Agreement described in Section .7,
or by other means, grant Options which do not permit all of the foregoing forms of consideration to
be used in payment of the exercise price or which otherwise restrict one or more forms of
consideration.
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(b) Limitations on Forms of Consideration.
(i) Tender of Stock. Notwithstanding the foregoing, an Option may not be exercised by tender
to the Company, or attestation to the ownership, of shares of Stock to the extent such tender or
attestation would constitute a violation of the provisions of any law, regulation or agreement
restricting the redemption of the Companys stock. Unless otherwise provided by the Board, an
Option may not be exercised by tender to the Company, or attestation to the ownership, of shares of
Stock unless such shares either have been owned by the Optionee for more than six (6) months or
were not acquired, directly or indirectly, from the Company.
(ii) Cashless Exercise. The Company reserves, at any and all times, the right, in the
Companys sole and absolute discretion, to establish, decline to approve or terminate any program
or procedures for the exercise of Options by means of a Cashless Exercise.
(iii) Payment by Promissory Note. No promissory note shall be permitted if the exercise of an
Option using a promissory note would be a violation of any law. Any permitted promissory note shall
be on such terms as the Board shall determine at the time the Option is granted. The Board shall
have the authority to permit or require the Optionee to secure any promissory note used to exercise
an Option with the shares of Stock acquired upon the exercise of the Option or with other
collateral acceptable to the Company. Unless otherwise provided by the Board, if the Company at any
time is subject to the regulations promulgated by the Board of Governors of the Federal Reserve
System or any other governmental entity affecting the extension of credit in connection with the
Companys securities, any promissory note shall comply with such applicable regulations, and the
Optionee shall pay the unpaid principal and accrued interest, if any, to the extent necessary to
comply with such applicable regulations.
6.4 Tax Withholding. The Company shall have the right, but not the obligation, to deduct from
the shares of Stock issuable upon the exercise of an Option, or to accept from the Optionee the
tender of, a number of whole shares of Stock having a Fair Market Value, as determined by the
Company, equal to all or any part of the federal, state, local and foreign taxes, if any, required
by law to be withheld by the Participating Company Group with respect to such Option or the shares
acquired upon the exercise thereof. Alternatively or in addition, in its discretion, the Company
shall have the right to require the Optionee, through payroll withholding, cash payment or
otherwise, including by means of a Cashless Exercise, to make adequate provision for any such tax
withholding obligations of the Participating Company Group arising in connection with the Option or
the shares acquired upon the exercise thereof. The Fair Market Value of any shares of Stock
withheld or tendered to satisfy any such tax withholding obligations shall not exceed the amount
determined by the applicable minimum statutory withholding rates. The Company shall have no
obligation to deliver shares of Stock or to release shares of Stock from an escrow established
pursuant to the Option Agreement until the Participating Company Groups tax withholding
obligations have been satisfied by the Optionee.
6.5 Repurchase Rights. Shares issued under the Plan may be subject to a right of first
refusal, one or more repurchase options, or other conditions and restrictions as determined by the
Board in its discretion at the time the Option is granted. The Company shall
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have the right to assign at any time any repurchase right it may have, whether or not such
right is then exercisable, to one or more persons as may be selected by the Company. Upon request
by the Company, each Optionee shall execute any agreement evidencing such transfer restrictions
prior to the receipt of shares of Stock hereunder and shall promptly present to the Company any and
all certificates representing shares of Stock acquired hereunder for the placement on such
certificates of appropriate legends evidencing any such transfer restrictions.
6.6 Effect of Termination of Service.
(a) Option Exercisability. Subject to earlier termination of the Option as otherwise provided
herein and unless otherwise provided by the Board in the grant of an Option and set forth in the
Option Agreement, an Option shall be exercisable after an Optionees termination of Service only
during the applicable time period determined in accordance with this Section 6.6 and thereafter
shall terminate:
(i) Disability. If the Optionees Service with the Participating Company Group terminates
because of the Disability of the Optionee, the Option, to the extent unexercised and exercisable on
the date on which the Optionees Service terminated, may be exercised by the Optionee (or the
Optionees guardian or legal representative) at any time prior to the expiration of twelve (12)
months (or such longer period of time as determined by the Board, in its discretion) after the date
on which the Optionees Service terminated, but in any event no later than the date of expiration
of the Options term as set forth in the Option Agreement evidencing such Option (the Option
Expiration Date).
(ii) Death. If the Optionees Service with the Participating Company Group terminates because
of the death of the Optionee, the Option, to the extent unexercised and exercisable on the date on
which the Optionees Service terminated, may be exercised by the Optionees legal representative or
other person who acquired the right to exercise the Option by reason of the Optionees death at any
time prior to the expiration of twelve (12) months (or such longer period of time as determined by
the Board, in its discretion) after the date on which the Optionees Service terminated, but in any
event no later than the Option Expiration Date. The Optionees Service shall be deemed to have
terminated on account of death if the Optionee dies within three (3) months (or such longer period
of time as determined by the Board, in its discretion) after the Optionees termination of Service.
(iii) Other Termination of Service. If the Optionees Service with the Participating Company
Group terminates for any reason, except Disability or death, the Option, to the extent unexercised
and exercisable by the Optionee on the date on which the Optionees Service terminated, may be
exercised by the Optionee at any time prior to the expiration of three (3) months (or such longer
period of time as determined by the Board, in its discretion) after the date on which the
Optionees Service terminated, but in any event no later than the Option Expiration Date.
(b) Extension if Exercise Prevented by Law. Notwithstanding the foregoing, if the exercise of
an Option within the applicable time periods set forth in Section 6.6(a) is prevented by the
provisions of Section 10 below, the Option shall remain exercisable until three (3) months (or such
longer period of time as determined by the Board, in its
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discretion) after the date the Optionee is notified by the Company that the Option is
exercisable, but in any event no later than the Option Expiration Date.
(c) Extension if Optionee Subject to Section 16(b). Notwithstanding the foregoing, if a sale
within the applicable time periods set forth in Section 6.6(a) of shares acquired upon the exercise
of the Option would subject the Optionee to suit under Section 16(b) of the Exchange Act, the
Option shall remain exercisable until the earliest to occur of (i) the tenth (10th) day following
the date on which a sale of such shares by the Optionee would no longer be subject to such suit,
(ii) the one hundred and ninetieth (190th) day after the Optionees termination of Service, or
(iii) the Option Expiration Date.
6.7 Transferability of Options. During the lifetime of the Optionee, an Option shall be
exercisable only by the Optionee or the Optionees guardian or legal representative. No Option
shall be assignable or transferable by the Optionee, except by will or by the laws of descent and
distribution. Notwithstanding the foregoing, to the extent permitted by the Board, in its
discretion, and set forth in the Option Agreement evidencing such Option, a Nonstatutory Stock
Option shall be assignable or transferable subject to the applicable limitations, if any, described
in Section 260.140.41 of Title 10 of the California Code of Regulations, Rule 701 under the
Securities Act, and the General Instructions to Form S-8 Registration Statement under the
Securities Act.
7. Standard Forms of Option Agreement.
7.1 Option Agreement. Unless otherwise provided by the Board at the time the Option is
granted, an Option shall comply with and be subject to the terms and conditions set forth in the
form of Option Agreement approved by the Board concurrently with its adoption of the Plan and as
amended from time to time.
7.2 Authority to Vary Terms. The Board shall have the authority from time to time to vary the
terms of any standard form of Option Agreement described in this Section 7 either in connection
with the grant or amendment of an individual Option or in connection with the authorization of a
new standard form or forms; provided, however, that the terms and conditions of any such new,
revised or amended standard form or forms of Option Agreement are not inconsistent with the terms
of the Plan.
8. Change in Control.
8.1 Definitions.
(a) An Ownership Change Event shall be deemed to have occurred if any of the following
occurs with respect to the Company: (i) the direct or indirect sale ox exchange in a single or
series of related transactions by the shareholders of the Company of more than fifty percent (50%)
of the voting stock of the Company; (ii) a merger or consolidation in which the Company is a party;
(iii) the sale, exchange, or transfer of all or substantially all of the assets of the Company; or
(iv) a liquidation or dissolution of the Company.
(b) A Change in Control shall mean an Ownership Change Event or a series of related
Ownership Change Events (collectively, a Transaction) wherein the
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shareholders of the Company immediately before the Transaction do not retain immediately after
the Transaction, in substantially the same proportions as their ownership of shares of the
Companys voting stock immediately before the Transaction, direct or indirect beneficial ownership
of more than fifty percent (50%) of the total combined voting power of the outstanding voting stock
of the Company or the corporation or corporations to which the assets of the Company were
transferred (the Transferee Corporation(s)) as the case may be. For purposes of the preceding
sentence, indirect beneficial ownership shall include, without limitation, an interest resulting
from ownership of the voting stock of one or more corporations which, as a result of the
Transaction, own the Company or the Transferee Corporations), as the case may be, either directly
or through one or more subsidiary corporations. The Board shall have the right to determine whether
multiple sales or exchanges of the voting stock of the Company or multiple Ownership Change Events
axe related, and its determination shall be final, binding and conclusive.
8.2 Effect of Change in Control on Options. In the event of a Change in Control, the
surviving, continuing, successor, or purchasing corporation or parent corporation thereof, as the
case may be (the Acquiring Corporation), may either assume the Companys rights and obligations
under outstanding Options or substitute for outstanding Options substantially equivalent options
for the Acquiring Corporations stock. For purposes of this Section 8.2, an Option shall be deemed
assumed if, following the Change in Control, the Option confers the right to purchase in accordance
with its terms and conditions, for each share of Stock subject to the Option immediately prior to
the Change in Control, the consideration (whether stock, cash or other securities or property) to
which a holder of a share of Stock on the effective date of the Change in Control was entitled. The
Board may, in its discretion, provide in any Option Agreement that, in the event of a Change in
Control, the exercisability and vesting of the outstanding Option and any shares acquired upon the
exercise thereof shall accelerate upon such circumstances and to such extent as specified in such
Option Agreement. The exercise or vesting of any Option and any shares acquired upon the exercise
thereof that was permissible solely by reason of this Section 8,2 and the provisions of such Option
Agreement shall be conditioned upon the consummation of the Change in Control. Any Options which
are neither assumed or substituted for by the Acquiring Corporation in connection with the Change
in Control nor exercised as of the date of the Change in Control shall terminate and cease to be
outstanding effective as of the date of the Change in Control. Notwithstanding the foregoing,
shares acquired upon exercise of an Option prior to the Change in Control and any consideration
received pursuant to the Change in Control with respect to such shades shall continue to be subject
to all applicable provisions of the Option Agreement evidencing such Option except as otherwise
provided in such Option Agreement.
9. Provision of Information.
At least annually, copies of the Companys balance sheet and income statement for the just
completed fiscal year shall be made available to each Optionee and purchaser of shares of Stock
upon the exercise of an Option, The Company shall not he required to provide such information to
key employees whose duties in connection with the Company assure them access to equivalent
information.
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10. Compliance with Securities Law.
The grant of Options and the issuance of shares of Stock upon exercise of Options shall be
subject to compliance with all applicable requirements of federal, state and foreign law with
respect to such securities. Options may not be exercised if the issuance of shares of Stock upon
exercise would constitute a violation of any applicable federal state or foreign securities laws or
other law or regulations or the requirements of any stock exchange or market system upon which the
Stock may then be listed. In addition, no Option may be exercised unless (a) a registration
statement under the Securities Act shall at the time of exercise of the Option be in effect with
respect to the shares issuable upon exercise of the Option or (b) in the opinion of legal counsel
to the Company, the shares issuable upon exercise of the Option may be issued in accordance with
the terms of an applicable exemption from the registration requirements of the Securities Act. The
inability of the Company to obtain from any regulatory body having jurisdiction the authority, if
any, deemed by the Companys legal counsel to be necessary to the lawful issuance and sale of any
shares hereunder shall relieve the Company of any liability in respect of the failure to issue or
sell such shares as to which such requisite authority shall not have been obtained. As a condition
to the exercise of any Option, the Company may require the Optionee to satisfy any qualifications
that may be necessary or appropriate, to evidence compliance with any applicable law or regulation
and to make any representation or warranty with respect thereto as may be requested by the Company.
11. Termination or Amendment of Plan.
The Board may terminate or amend the Plan at any time. However, subject to changes in
applicable law, regulations or rules that would permit otherwise, without the approval of the
Companys shareholders, there shall be (a) no increase in the maximum aggregate number of shares of
Stock that may be issued under the Plan (except by operation of the provisions of Section 4.2), (b)
no change in the class of persons eligible to receive Incentive Stock Options, and (c) no other
amendment of the Plan that would require approval of the Companys shareholders under any
applicable law, regulation or rule. No termination or amendment of the Plan shall affect any then
outstanding Option unless expressly provided by the Board. In any event, no termination or
amendment of the Plan may adversely affect any then outstanding Option without the consent of the
Optionee, unless such termination or amendment is required to enable an Option designated as an
Incentive Stock Option to qualify as an Incentive Stock Option or is necessary to comply with any
applicable law, regulation or rule.
12. Shareholder Approval.
The Plan or any increase in the maximum aggregate number of shares of Stock issuable
thereunder as provided in Section 4,1 (the Authorized Shares) shall be approved by the
shareholders of the Company within twelve (12) months of the date of adoption thereof by the Board.
Options granted prior to shareholder approval of the Plan or in excess of the Authorized Shares
previously approved by the shareholders shall become exercisable no earlier than the date of
shareholder approval of the Plan or such increase in the Authorized Shares, as the case may be.
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PLAN HISTORY
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November 3, 2004
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Board adopts Plan, with an initial reserve of 1,500,000 shares. |
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November 3, 2004
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Shareholders approve Plan, with an initial reserve of 1,500.000 shares. |