EXHIBIT B
2002 STOCK OPTION PLAN
2KSOUNDS CORPORATION
2002 STOCK OPTION PLAN
Section 1. Description of Plan. This is the 2002 Stock Option Plan
(the "Plan") of 2KSOUNDS CORPORATION, a Nevada corporation (the "Company").
Under the Plan employees, directors, consultants and advisors of the Company or
any of its subsidiaries, to be selected as below set forth, may be granted
options ("Options") to purchase shares of the Common Stock of the Company
("Common Stock"). For purposes of the Plan, the term "subsidiary" means any
corporation 50% or more of the voting stock of which is owned by the Company or
by a subsidiary (as so defined) of the Company. It is intended that the Options
under the Plan will either qualify for treatment as incentive stock options
under Section 422 (as from time to time amended or superceded) of the Internal
Revenue Code of 1986, as amended (the "Code"), and be designated Incentive Stock
Options, or not qualify for such treatment and be designated Nonqualified Stock
Options.
Section 2. Purpose of the Plan. The purpose of the Plan and of
granting options to employees, directors, consultants and advisors is to further
the growth, development and financial success of the Company and its
subsidiaries by providing additional incentives to such persons by assisting
them to acquire shares of Common Stock and to benefit directly from the
Company's growth, development and financial success.
Section 3. Eligibility. The persons who shall be eligible to receive
grants of Options under the Plan shall be all employees, directors, consultants
and advisors of the Company or any of its subsidiaries. A person who holds an
Option is herein referred to as a "Participant." More than one Option may be
granted to any one Participant. Notwithstanding the foregoing, no Option may be
granted to any person who then owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or of a subsidiary
unless (a) the Option Price (as hereinafter defined) is at least 110% of the
Fair Market Value (as defined in Section 6 of this Plan) of the Common Stock on
the date of grant, and (b) in the case of an Incentive Stock Option, the
termination date of such Option is not later than five years after the date such
Option is granted. For purposes of the preceding sentence, a person's stock
ownership will be determined using the constructive ownership rules contained in
Code Section 424(d), as from time to time amended or superceded.
Only employees of the Company or a subsidiary may be granted Incentive
Stock Options under the Plan. The exercise of an Incentive Stock Option will not
qualify for favorable income tax treatment unless the Participant remains an
employee of the Company or a subsidiary at all times during the period beginning
on the date of the grant of the Incentive Stock Option and ending on the date
three months before the date of the exercise of the Incentive Stock Option. For
this purpose, a Participant who is on a leave of absence that exceeds 90 days
will be considered to have terminated his or her employment on the ninety-first
day of the leave of absence, unless the Participant's rights to reemployment are
guaranteed by statute or contract. However, a Participant will not be considered
to have incurred a termination of employment because of a transfer of employment
between the Company and a subsidiary (or vice versa).
The aggregate Fair Market Value (as defined in Section 6 of this Plan)
(determined as of the time an Option is granted) of the Common Stock for which
any Participant may be granted
Incentive Stock Options first exercisable in any
calendar year under this Plan and any other incentive stock option plans (which
qualify under Section 422 of the Code) of the Company or any subsidiary shall
not exceed $100,000.
Section 4. Administration. The Plan shall be administered by the Board
of Directors of the Company (the "Board") or, at the discretion of the Board,
(in whole or in part, or with respect to one or more designated groups or
classes of Participants), by a committee appointed by the Board (the
"Committee") which shall be composed of two or more directors of the Company.
The membership of the Committee shall be constituted so as to comply at all
times with the then applicable requirements for "outside directors" of Rule
16b-3 promulgated under the Securities Exchange Act of 1934, as amended and
Section 162(m) of the Code. The Committee shall serve at the pleasure of the
Board and shall have the powers designated herein and such other powers as the
Board may from time to time confer upon it. All references herein to the "Board"
shall, with respect to any Plan matters so administered by a committee of the
Board, be deemed to be references to such committee as so constituted. The Board
is authorized and empowered to administer the Plan, and subject to the Plan, (a)
to select the Participants, to specify the number of shares of Common Stock with
respect to which Options are granted to each such Participant, to specify the
Option Price (as hereinafter defined) and the terms of Options, and in general
to grant Options; (b) to determine, subject to the limits of Section 3 hereof,
whether Options will be Incentive Stock Options or Nonqualified Stock Options;
(c) to determine the dates upon which Options shall be granted and to provide
for the terms and conditions of the Options in a manner consistent with the
Plan, which terms and conditions need not be identical as to the various Options
granted; (d) to interpret the Plan; (e) to prescribe, amend and rescind rules
relating to the Plan; and (f) to determine the rights and obligations of
Participants under the Plan. The interpretation and construction by the Board of
any provision of the Plan or of any Option granted thereunder shall be final. No
member of the Board shall be liable for any action or determination made in good
faith with respect to the Plan or any Option granted under it.
Section 5. Shares Subject to the Plan. The number of shares of Common
Stock which may be purchased pursuant to the exercise of Options granted under
the Plan shall not exceed 60,000,000 shares, subject to adjustment as provided
in Section 11 to reflect all stock splits, stock dividends or similar capital
changes. Upon the expiration or termination for any reason of an outstanding
Option which shall not have been exercised in full, any shares of Common Stock
then remaining unissued which shall have been reserved for issuance upon such
exercise shall again become available for the granting of additional Options
under the Plan. The maximum number of shares of Common Stock issuable upon
exercise of Options that may be granted to any Participant shall be 1,000,000.
For purposes of the preceding sentence and to the extent required by Section
162(m) of the Code (as from time to time amended or superseded), the repricing
of an Option shall be treated as the grant of a new option and the cancellation
of the repriced Option, and an Option shall be deemed continued to be
outstanding despite any cancellation, including any cancellation in connection
with any such repricing.
Section 6. Option Price. The purchase price per share (the "Option
Price") of the shares of Common Stock underlying each Option shall be determined
by the Board in each case and (a) in the case of Nonqualified Stock Options,
shall be not less than 85% of the Fair Market Value (as hereafter defined in
second paragraph of this Section 6) of such shares on the
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grant date, and (b) in the case of Incentive Stock Options, shall be not less
than the Fair Market Value of such shares on the grant date. The Option Price
shall be subject to the requirement set forth in Section 3 of the Plan, if
applicable, with respect to certain Participants. In the event that the Company
acquires another entity, the Board may authorize the issuance of Options
("Substitute Options") to the individuals performing services for the acquired
entity in substitution of stock options previously granted to those individuals
in connection with their performance of services for such entity upon such terms
and conditions as the Board shall determine, taking into account the conditions
of Code Section 424(a), as from time to time amended or superceded, in the case
of a Substitute Option that is intended to be an Incentive Stock Option.
For purposes of this Plan, "Fair Market Value" of a share of Common Stock
on any date of reference shall mean the "Closing Price" (as defined below) of
the Common Stock on the business day immediately preceding the date of
reference, unless the Committee or the Board in its sole discretion shall
determine otherwise in a fair and uniform manner. For the purpose of determining
Fair Market Value, the "Closing Price" of the Common Stock on any business day
shall be (i) if the Common Stock is listed or admitted for trading on any United
States national securities exchange, or if actual transactions are otherwise
reported on a consolidated transaction reporting system, the last reported sale
price of Common Stock on such exchange or reporting system, as reported in any
newspaper of general circulation, (ii) if the Common Stock is quoted on the
National Association of Securities Dealers Automated Quotation System
("NASDAQ"), or any similar system of automated dissemination of quotations of
securities prices in common use, the last reported sale price of Common Stock on
such system or, if sales prices are not reported, the mean between the high bid
and low asked quotations for such day of Common Stock on such system, as
reported in any newspaper of general circulation or (iii) if neither clause (i)
or (ii) is applicable, the mean between the high bid and low asked quotations
for the Common Stock as reported by the National Quotation Bureau, Incorporated
if at least two securities dealers have inserted both bid and asked quotations
for Common Stock on at least five of the ten preceding days. If neither (i),
(ii), or (iii) above is applicable, then Fair Market Value shall be determined
by the Committee or the Board in a fair and uniform manner.
Section 7. Vesting of Options. Subject to all other provisions of the
Plan and unless otherwise provided in the written stock option agreement, each
Option shall become exercisable ("vest") for the full number of shares of Common
Stock subject thereto, or any part thereof, as to one-fourth (1/4) of the full
number of shares subject thereto one year after the date of grant and thereafter
as to the balance in thirty-six (36) equal cumulative monthly installments
following such first anniversary date (provided the Participant is continuously
employed by the Company through and including the time of each vesting), or in
such other installments and at such other intervals as the Board may in any
specific case or cases otherwise specifically determine in granting such Option;
provided, however, that each Option shall provide that it shall become
exercisable as to at least twenty percent (20%) of the full number of shares
subject thereto on each anniversary date of the date of grant, and thus become
fully exercisable not more than five years after the date of grant.
If the Company is acquired by another entity (the "Acquirer") by means of
any transaction or series of related transactions (including, without
limitation, any reorganization, merger or consolidation) that results in the
transfer, directly or indirectly, of 50% or more of the
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outstanding voting power of the Company (other than a transaction or series of
related transactions whereby the shareholders of the Company immediately before
the transaction or series of related transactions own at least 50% of the voting
power of the Acquirer, in substantially the same proportions, immediately after
the transaction or series of related transactions) or by means of the sale of
all or substantially all of the assets of the Company (an "Acquisition"), with
respect to each Option which is not yet vested as to at least 50% of the full
number of shares of Common Stock subject thereto, such Option shall
automatically vest as to 50% of the full number of shares of Common Stock
subject thereto, and vesting shall thereafter continue at the monthly, annual or
other rate originally specified in the Option. Additionally, if there is an
Acquisition and in such event either (a) the Participant is not offered
full-time employment with the surviving or acquiring entity, or (b) such
employment is offered to and accepted by the Participant but such employment is
terminated by such surviving or acquiring corporation within 12 months after
such event other than for Cause (as hereinafter defined), then upon the date of
such acquisition or sale (in the case of the failure by the surviving or
acquiring corporation to offer such employment) or the date of such termination
other than for Cause, as applicable, the Option shall accelerate and become
exercisable as to the full number of shares of Common Stock subject thereto. For
purposes of the foregoing, "Cause" shall mean (i) any criminal act by the
Participant which is punishable by imprisonment of 12 months or more, (ii) any
act of fraud or dishonesty committed by the Participant in the course of his or
her employment, or (iii) the Participant's continued failure to perform his or
her material duties of employment after written notice has been provided to the
Participant.
Section 8. Form of Option. Each Option granted under the Plan shall
be evidenced by a written stock option agreement executed by the Company and the
Participant, which shall be in a form specified by the Board or the Committee.
Section 9. Exercise of Options. An Option may be exercised by the
Participant only by giving written notice to the Company specifying the number
of full shares to be purchased and accompanied by payment of the full purchase
price therefor (together with such amounts in respect of taxes as the Company
may be required to collect and withhold, as provided in Section 17 of the Plan),
(i) in cash, (ii) by certified or official bank check, (iii) by money order,
(iv) by shares of Common Stock that have been held by the Participant for at
least six (6) months (or such other shares of Common Stock as the Company
determines will not cause the Company to recognize for financial accounting
purposes a charge for compensation expense), (v) the withholding of shares of
Common Stock issuable upon exercise of the Option, (vi) pursuant to a "cashless
exercise" procedure, by delivery of a properly executed exercise notice together
with such other documentation, and subject to such guidelines, as the Board or
the Committee shall require to effect an exercise of the Option and delivery to
the Company by a licensed broker acceptable to the Company of proceeds from the
sale of shares of Common Stock or a margin loan sufficient to pay the exercise
price and any applicable income or employment taxes, or (vii) in such other
consideration as the Committee or the Board deems appropriate, or by a
combination of the above. The Committee or the Board in its sole discretion may
accept a personal check in full or partial payment of any shares of Common
Stock. If the exercise price is paid, and/or the Participant's tax withholding
obligation is satisfied, in whole or in part with shares, or through the
withholding of shares of Common Stock issuable upon exercise of the Option, the
value of the shares of Common Stock surrendered or withheld shall be their Fair
Market Value on the date the Option is exercised.
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The Committee or the Board in its sole discretion may, on an individual
basis or pursuant to a general program established in connection with this Plan,
cause the Company to lend money to a Participant, guarantee a loan to a
Participant, or otherwise assist a Participant to obtain the cash necessary to
exercise all or a portion of an Option granted hereunder or to pay any tax
liability of the Participant attributable to such exercise. If the exercise
price is paid in whole or part with the Participant's promissory note, such note
shall (i) provide for full recourse to the maker, (ii) be collateralized by the
pledge of the shares of Common Stock that the Participant purchases upon
exercise of the Option, (iii) bear interest at the prime rate of the Company's
principal lender, and (iv) contain such other terms as the Committee or the
Board in its sole discretion shall reasonably require.
The Company's obligation to issue shares of Common Stock upon the exercise
of an Option is expressly conditioned upon the making of such representations,
agreements and related undertakings by the Participant (or his or her legal
representative, heir or legatee, as the case may be) in order to comply with the
requirements of any exemption from any securities law registration or other
qualification of such shares which the Company in its sole discretion shall deem
necessary or advisable or to confirm any agreements, undertakings or
restrictions applicable to the Participant with respect to the shares of Common
Stock issuable upon the exercise of an Option as provided in the Plan. Such
required representations and undertakings may include representations and
agreements that such Participant (or his or her legal representative, heir or
legatee): (a) is purchasing such shares for investment and not with any present
intention of selling or otherwise disposing thereof; (b) acknowledges and agrees
to all restrictions and other conditions applicable to such shares of Common
Stock pursuant to the Plan; and (c) agrees to have placed upon the face and/or
reverse of any certificates evidencing such shares a legend setting forth (i)
any representations, agreements and undertakings which such Participant has
given to the Company or are provided in the Plan or a reference thereto, and
(ii) that, prior to effecting any sale or other disposition of any such shares,
and in addition to any additional requirements applicable to any sale or
disposition of such shares of Common Stock pursuant to the Plan, the Participant
must furnish to the Company an opinion of counsel, satisfactory to the Company
and its counsel, to the effect that such sale or disposition will not violate
the applicable requirements of state and federal laws and regulatory agencies.
Without limiting the foregoing, the Company may require, as a condition to any
exercise of an Option, that the Participant execute and deliver to the Company a
notice of option exercise in such form as specified by the Board or the
Committee generally or in any specific instance.
Section 10. Nontransferability. No Option shall be assignable or
transferable except by will or by the laws of descent and distribution. During
the lifetime of a Participant, any Option granted to him or her shall be
exercisable only by him or her. After the death of a Participant, the Option
granted to him or her may be exercised, prior to its termination as provided by
Section 13(b), only by his or her legal representative, his or her legatee or a
person who acquired the right to exercise the Option by reason of the death of
the Participant.
Section 11. Recapitalization, Reorganization, Merger or
Consolidation. If the outstanding shares of Common Stock of the Company are
increased, decreased or exchanged for different securities through
reorganization, merger, consolidation, combination, recapitalization,
reclassification, stock split, reverse stock split, stock dividend or like
capital adjustment, a proportionate adjustment shall be made (a) in the
aggregate number of shares of Common Stock
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which may be purchased pursuant to the exercise of Options under the Plan, as
provided in Section 5, and (b) in the number, price, and kind of shares subject
to any outstanding Option granted under the Plan.
Upon the record or effective date applicable to the right to receive cash,
securities or other property following the sale of all or substantially all of
the assets of the Company (and pursuant to a liquidating distribution and
dissolution of the Company in connection therewith) or with respect to any
reorganization, merger or consolidation in which the Company does not survive,
the Plan and each outstanding Option shall automatically terminate, except
solely as provided in the next sentence. Notwithstanding the preceding sentence,
each Option which has not been assumed or an equivalent option substituted
therefor, as provided in the next sentence, by a corporation acquiring all or
substantially all of the assets of the Company (in connection with which there
is a liquidating distribution and dissolution of the Company) or by a surviving
corporation in the case of a reorganization, merger or consolidation, shall
automatically accelerate and become exercisable in whole or in part without
regard to the installment provisions of Section 7 of the Plan or any option
agreement (except as provided below in this Section 11) until one business day
before the record or effective date applicable to such right to receive cash,
securities or other property, unless the acquiring or surviving corporation, in
its sole and absolute discretion, assumes all Options or issues in respect of
all Options substitute options to purchase shares of the acquiring or surviving
corporation, which assumed or substitute options contain such terms and
provisions as substantially preserve the rights and benefits of the assumed or
substituted Options, and in such event the assumed or substituted Options shall
not automatically accelerate or become exercisable pursuant to the preceding
sentence; provided, however, that the accelerated vesting provisions of Section
7 shall apply in the case of any Acquisition.
In any case in which an Option automatically accelerates and becomes
exercisable without regard to its installment provisions pursuant to the
preceding paragraph, the Participant holding the applicable Option shall be
given written notice thereof by the Company at least ten days prior to such
record or effective date, which notice shall advise such Participant of the
proposed event and the rights of the Participant pursuant to this paragraph. If
such notice is not given, the Company or, if applicable, any such acquiring or
surviving corporation, shall make such arrangements as are equitable under the
circumstances to avoid or reverse any economic detriment suffered by such
Participant as the result of any failure to give such notice, but in no event
shall any failure to give such notice affect the validity or effectiveness of
any such sale, reorganization, merger or consolidation.
The Board may, in any specific case or cases, specifically provide, in an
option agreement or otherwise, for the treatment of an Option in a manner
different than that set forth above upon the occurrence of any such sale,
reorganization, merger or consolidation, but in the absence thereof the above
provisions of this Section 11 shall govern the Option.
To the extent that the foregoing adjustments relate to stock or securities
of the Company, such adjustments shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided above in this Section 11, the Participant shall have no rights by
reason of any subdivision or consolidation of shares of stock of any class or
the payment of any stock dividend or any other increase or decrease in the
number of shares of
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stock of any class, and the number or price of shares of Common Stock subject to
any Option shall not be affected by, and no adjustment shall be made by reason
of, any dissolution, liquidation, reorganization, merger or consolidation, or
any issue by the Company of shares of stock of any class, or rights to purchase
or subscribe for stock of any class, or securities convertible into shares of
stock of any class.
The grant of an Option pursuant to the Plan shall not affect in any way
the right or power of the Company to make adjustments, reclassifications or
changes in its capital or business structures or to merge, consolidate,
dissolve, or liquidate or to sell or transfer all or any part of its business or
assets.
Section 12. No Rights as a Shareholder. A Participant holding an
Option, or a transferee of an Option, shall have no rights as a-shareholder with
respect to any shares covered by his or her Option until the date of the
issuance of a stock certificate to him or her for such shares, and no adjustment
shall be made for dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distributions or other rights for which the
record date is prior to the date such stock certificate is issued, except as
expressly provided in Section 11.
Section 13. Termination of Options. All Options shall terminate and
expire upon the first to occur of the following events:
(a) the date of expiration of the term of the Option, which
expiration date shall be ten (10) years after the date the Option is granted (or
shall be such earlier date as may be required, with respect to certain
Participants, pursuant to Section 3 of the Plan, or such earlier date as the
Board may otherwise specifically determine in granting such Option);
(b) the expiration of 60 days from the date of the Participant's
termination of employment, either voluntary or involuntary and either with or
without cause (other than by reason of death), except that if the Participant is
disabled (within the meaning of Section 422(e)(3) of the Code, as from time to
time amended or superseded) at the time of the Participant's termination of
employment, the expiration of twelve months from the date of the Participant's
termination of employment;
(c) the expiration of twelve months from the date of the death of
such Participant if his or her death occurs while he or she is employed by the
Company or any of its subsidiaries; or
(d) the termination of the Option pursuant to Section 11 of the
Plan.
The Board may, in any specific case or cases, specifically determine, in
granting such Option, to modify the 60-day period referred to in Section 13(b)
above, provided that (i) such period shall be at least 30 days in all cases, and
(ii) in the case of an Incentive Stock Option, any Option not exercised within
three months after the date of termination of employment (other than by reason
of death or disability) shall automatically convert to a Nonqualified Stock
Option.
The termination of employment of a Participant by death, disability or
otherwise shall not accelerate or otherwise affect the number of shares with
respect to which an Option may be exercised, and the Option may only be
exercised with respect to that number of shares which
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could have been purchased under the Option had the Option been exercised by the
Participant on the date of such termination.
For purposes of the Plan and any Option granted under the Plan to any
director, consultant or advisor who is not an employee of the Company,
references to "employment" in the case of such director, consultant or advisor
shall mean service as a director or the consulting or advisory engagement of
such person, respectively, substantially as in effect at the time of the grant
of an applicable Option, and references to any "termination of employment" or
similar words shall refer to a termination of such service as a director or such
consulting or advisory engagement, respectively, substantially as in effect at
the date of the grant of an applicable Option.
Section 14. Amendment of Plan. The Board may at any time amend the
Plan, subject to the provisions of Section 20 of the Plan.
Section 15. Amendment of Outstanding Options. The Board may modify an
outstanding Option, including a modification to (a) change the Option Price, (b)
accelerate the right to exercise the Option, (c) extend or renew the Option, or
(d) cancel the Option and issue a new Option. However, no modification may be
made to an outstanding Option that would impair the rights of the Participant
holding the Option without his or her consent.
Section 16. Termination of Plan. The Plan shall terminate when all
Options granted under the Plan either have been fully exercised, and all shares
of Common Stock which may be purchased pursuant to the exercise of such Options
have been so purchased, or have expired; provided, however, that (1) the Plan
shall in any event terminate not later than ten years from the date of the
adoption of the Plan or the date of approval of the Plan by the shareholders of
the Company pursuant to Section 19, whichever is earlier, and (2) the Board may
in its absolute discretion terminate the Plan at any time. No such termination,
other than as provided for in Section 11 hereof, shall in any way affect any
Option then outstanding.
Section 17. Withholding of Taxes. The Company shall deduct and
withhold from the wages, salary, bonus and other income paid by the Company to
the Participant the requisite tax upon the amount of taxable income, if any,
recognized by the Participant in connection with the exercise in whole or in
part of any Option or the sale of Common Stock issued to the Participant upon
exercise of the Option, all as may be required from time to time under any
federal or state tax laws and regulations. This withholding of tax shall be made
from the Company's concurrent or next payment of wages, salary, bonus or other
income to the Participant or by payment to the Company by the Participant of
required withholding tax, as the Board may determine.
Section 18. Compliance with ISO and California Securities
Requirements. The Company intends that the Plan (a) comply with the requirements
of the Code and all applicable governmental rules, regulations and
interpretations thereunder as from time to time in effect for treatment as
incentive stock options (the "ISO Requirements") with respect solely to Options
designated as Incentive Stock Options, (b) comply with the requirements of
Section 25102(o), as from time to time amended or superseded, of the California
Corporate Securities Law of 1968, as amended, and all applicable governmental
rules, regulations and interpretations
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with respect thereto from time to time in effect for the exemption of all
Options granted under the Plan (and all Common Stock issuable upon exercise of
such Options) from the qualification requirements of Section 25110 of such law
(the "California Securities Requirements"), and (c) subject to the foregoing
clauses (a) and (b), grant maximum authority and discretion in all respects to
the Board in administering the Plan. Accordingly, the provisions of the Plan
shall, with respect to Incentive Stock Options as to the ISO Requirements and
with respect to all Options as to the California Securities Requirements, be
interpreted and construed in such manner as shall ensure compliance with the ISO
Requirements and the California Securities Requirements, respectively, but
otherwise grant maximum authority and discretion in all respects to the Board in
administering the Plan.
Section 19. Information to Participants and Purchasers. The Company
annually shall provide to each Participant financial statements, to the extent
required by the California Securities Requirements, which have been approved by
the Board. Such financial statements also shall be provided to each individual
who was a Participant in the Plan, has acquired shares of Common Stock pursuant
to the Plan and still owns such shares, to the extent required by the California
Securities Requirements. By accepting the grant of an Option, the Participant
agrees not to disclose any information contained in such financial statements,
not to duplicate or transmit such information to any other person, and not to
use such information for any purpose adverse to the Company.
Section 20. Shareholder Approval Requirement. This Plan and the grant
of Options hereunder is subject to approval by the shareholders of the Company
to the extent required by the ISO Requirements and the California Securities
Requirements. Any Option exercised before shareholder approval is obtained shall
be rescinded if shareholder approval is not obtained within twelve months after
the adoption of this Plan, as and to the extent required by the California
Securities Requirements. Shareholder approval of any amendments to the Plan,
including any amendments increasing the number of shares of Common Stock which
may be purchased pursuant to the exercise of Options granted under the Plan,
shall be required only to the extent determined necessary by the Company in
order to comply with any applicable requirements of law, including to the extent
necessary to establish any exemptions from registration or qualification
requirements of applicable federal or state securities law or to comply with the
listing or similar requirements of any stock exchange, quotation system or
similar self-regulatory organization.
Section 21. Restricted Stock Grants. As an alternative or in addition
to granting Options under the Plan, the Board may instead offer to one or more
Participants the right to purchase shares of Common Stock subject to the
condition and agreement of the Participant that the Company shall have a
repurchase option exercisable upon the voluntary or involuntary termination of
the Participant's service with the Company for any reason (including death or
disability), or upon such additional or different events as the Board may
determine. Such Common Stock is referred to as "Restricted Stock." Unless the
Board otherwise determines, the purchase price for Restricted Stock repurchased
by the Company shall be the original price paid by the Participant. The
repurchase option of the Company shall lapse at the same rate as which shares
subject to Options may become exercisable ("vest") under the Plan, in each case
as the Board determines, subject to any applicable requirements of the Plan with
respect to the vesting rate of Options. Additionally, the Board may permit the
full exercise of an
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Option even though the Option is not yet exercisable in full in accordance with
its vesting schedule, subject to the condition and agreement of the Optionee
that the Company shall have the right to repurchase the Common Stock issued upon
exercise of the Option, at the same option exercise price per share being paid
pursuant to the exercise, at any time when the exercise rights of the Optionee
under the Option would have terminated in accordance with the original terms of
the Option and the Plan; provided, however, that in such case the repurchase
right of the Company shall only apply to that portion of the Shares which the
Participant would not have had the right to acquire by exercise, pursuant to the
original terms and vesting schedule of the Option, immediately prior to such
termination. Shares issued upon Option exercise pursuant to the preceding
sentence shall similarly be referred to as "Restricted Stock." All shares of
Restricted Stock shall be issued pursuant to a form of agreement established by
the Board which sets forth the provisions of this paragraph in greater detail
and provides for an escrow of the Restricted Stock to support the repurchase
right of the Company. Shares issued as Restricted Stock pursuant to this
paragraph shall be deemed shares issued pursuant to, and subject to the
applicable provisions of, the Plan.
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