ABC Corp.

2008 Equity Incentive Plan

Option Agreement
(Incentive Stock Option or on!tatutory Stock Option"
Pursuant to your Stock Option Grant Notice (Grant Notice) and this Option
Agreement, ABC Corp (the Company) has granted you an option under its !""# $%uity
&ncenti'e P(an (the Plan) to purchase the num)er o* shares o* the Company+s Common Stock
indicated in your Grant Notice at the e,ercise price indicated in your Grant Notice -e*ined
terms not e,p(icit(y de*ined in this Option Agreement )ut de*ined in the P(an sha(( ha'e the same
de*initions as in the P(an
.he detai(s o* your option are as *o((o/s0
#. $ES%I&. Su)1ect to the (imitations contained herein, your option /i(( 'est as
pro'ided in your Grant Notice, pro'ided that 'esting /i(( cease upon the termination o* your
Continuous Ser'ice
2. '(BE) O* S+A)ES A, E-E)CISE P)ICE. .he num)er o* shares o* Common
Stock su)1ect to your option and your e,ercise price per share re*erenced in your Grant Notice
may )e ad1usted *rom time to time *or Capita(i2ation Ad1ustments
.. E-E)CISE )ES%)IC%IO *O) O/E-E(P% E(P0O1EES. &n the e'ent that you
are an $mp(oyee e(igi)(e *or o'ertime compensation under the 3air 4a)or Standards Act o* 567#,
as amended (i.e., a Non-Exempt Employee), you may not e,ercise your option unti( you ha'e
comp(eted at (east si, (8) months o* Continuous Ser'ice measured *rom the -ate o* Grant
speci*ied in your Grant Notice, not/ithstanding any other pro'ision o* your option
2. E-E)CISE P)IO) %O $ES%I& (3EA)01 E-E)CISE4". &* permitted in your Grant
Notice (i.e., the $,ercise Schedu(e indicates $ar(y $,ercise Permitted) and su)1ect to the
pro'isions o* your option, you may e(ect at any time that is )oth (i) during the period o* your
Continuous Ser'ice and (ii) during the term o* your option, to e,ercise a(( or part o* your option,
inc(uding the un'ested portion o* your option9 provided, however, that0
(a" a partia( e,ercise o* your option sha(( )e deemed to co'er *irst 'ested
shares o* Common Stock and then the ear(iest 'esting insta((ment o* un'ested shares o* Common
Stock9
(5" any shares o* Common Stock so purchased *rom insta((ments that ha'e not
'ested as o* the date o* e,ercise sha(( )e su)1ect to the purchase option in *a'or o* the Company
as descri)ed in the Company+s *orm o* $ar(y $,ercise Stock Purchase Agreement9
(c" you sha(( enter into the Company+s *orm o* $ar(y $,ercise Stock Purchase
Agreement /ith a 'esting schedu(e that /i(( resu(t in the same 'esting as i* no ear(y e,ercise had
occurred9 and
(6" i* your option is an &ncenti'e Stock Option, then, to the e,tent that the
aggregate 3air :arket ;a(ue (determined at the time o* grant) o* the shares o* Common Stock
/ith respect to /hich your option p(us a(( other &ncenti'e Stock Options you ho(d are e,ercisa)(e
*or the *irst time )y you during any ca(endar year (under a(( p(ans o* the Company and its
A**i(iates) e,ceeds one hundred thousand do((ars (<5"","""), your option(s) or portions thereo*
that e,ceed such (imit (according to the order in /hich they /ere granted) sha(( )e treated as
Nonstatutory Stock Options
7. (E%+O, O* PA1(E%. Payment o* the e,ercise price is due in *u(( upon
e,ercise o* a(( or any part o* your option =ou may e(ect to make payment o* the e,ercise price
in cash or )y check or in any other manner permitted by your Grant Notice, /hich may inc(ude
one or more o* the *o((o/ing0
(a" Pro'ided that at the time o* e,ercise the Common Stock is pu)(ic(y traded
and %uoted regu(ar(y in The Wall Street Journal, pursuant to a program de'e(oped under
>egu(ation . as promu(gated )y the 3edera( >eser'e Board that, prior to the issuance o*
Common Stock, resu(ts in either the receipt o* cash (or check) )y the Company or the receipt o*
irre'oca)(e instructions to pay the aggregate e,ercise price to the Company *rom the sa(es
proceeds
(5" Pro'ided that at the time o* e,ercise the Common Stock is pu)(ic(y traded
and %uoted regu(ar(y in The Wall Street Journal, )y de(i'ery to the Company (either )y actua(
de(i'ery or attestation) o* a(ready?o/ned shares o* Common Stock that are o/ned *ree and c(ear
o* any (iens, c(aims, encum)rances or security interests, and that are 'a(ued at 3air :arket ;a(ue
on the date o* e,ercise Not/ithstanding the *oregoing, you may not e,ercise your option )y
tender to the Company o* Common Stock to the e,tent such tender /ou(d 'io(ate the pro'isions
o* any (a/, regu(ation or agreement restricting the redemption o* the Company+s stock
8. 9+O0E S+A)ES. =ou may e,ercise your option on(y *or /ho(e shares o*
Common Stock
:. SEC')I%IES 0A9 CO(P0IACE. Not/ithstanding anything to the contrary
contained herein, you may not e,ercise your option un(ess the shares o* Common Stock issua)(e
upon such e,ercise are then registered under the Securities Act or, i* such shares o* Common
Stock are not then so registered, the Company has determined that such e,ercise and issuance
/ou(d )e e,empt *rom the registration re%uirements o* the Securities Act .he e,ercise o* your
option a(so must comp(y /ith other app(ica)(e (a/s and regu(ations go'erning your option, and
you may not e,ercise your option i* the Company determines that such e,ercise /ou(d not )e in
materia( comp(iance /ith such (a/s and regu(ations
8. %E)(. =ou may not e,ercise your option )e*ore the commencement o* its term
or a*ter its term e,pires .he term o* your option commences on the -ate o* Grant and e,pires
upon the ear(iest o* the *o((o/ing0
(a" immediate(y upon the termination o* your Continuous Ser'ice *or Cause9
(5" three (7) months a*ter the termination o* your Continuous Ser'ice *or any
reason other than Cause, -isa)i(ity or death, pro'ided that i* during any part o* such three (7)?
month period you may not e,ercise your option so(e(y )ecause o* the condition set *orth in the
preceding paragraph re(ating to Securities 4a/ Comp(iance, your option sha(( not e,pire unti(
the ear(ier o* the $,piration -ate or unti( it sha(( ha'e )een e,ercisa)(e *or an aggregate period o*
three (7) months a*ter the termination o* your Continuous Ser'ice9
(c" t/e('e (5!) months a*ter the termination o* your Continuous Ser'ice due
to your -isa)i(ity9
(6" eighteen (5#) months a*ter your death i* you die either during your
Continuous Ser'ice or /ithin three (7) months a*ter your Continuous Ser'ice terminates *or any
reason other than Cause9
(e" the $,piration -ate indicated in your Grant Notice9 or
(;" the day )e*ore the tenth (5"th) anni'ersary o* the -ate o* Grant
&* your option is an &ncenti'e Stock Option, note that, to o)tain the *edera( income ta,
ad'antages associated /ith an &ncenti'e Stock Option, the Code re%uires that at a(( times
)eginning on the date o* grant o* your option and ending on the day three (7) months )e*ore the
date o* your option+s e,ercise, you must )e an emp(oyee o* the Company or an A**i(iate, e,cept
in the e'ent o* death or your permanent and tota( disa)i(ity, as de*ined in Section !!(e)(7) o* the
Code (.he de*inition o* disa)i(ity in Section !!(e)(7) o* the Code is di**erent *rom the
de*inition o* the -isa)i(ity under the P(an) .he Company has pro'ided *or e,tended
e,ercisa)i(ity o* your option under certain circumstances *or your )ene*it )ut cannot guarantee
that your option /i(( necessari(y )e treated as an &ncenti'e Stock Option i* you continue to
pro'ide ser'ices to the Company or an A**i(iate as a Consu(tant or -irector a*ter your
emp(oyment terminates or i* you other/ise e,ercise your option more than three (7) months a*ter
the date your emp(oyment terminates
<. E-E)CISE.
(a" =ou may e,ercise the 'ested portion o* your option (and the un'ested
portion o* your option i* your Grant Notice so permits) during its term )y de(i'ering a Notice o*
$,ercise (in a *orm designated )y the Company) together /ith the e,ercise price to the Secretary
o* the Company, or to such other person as the Company may designate, during regu(ar )usiness
hours, together /ith such additiona( documents as the Company may then re%uire
(5" By e,ercising your option you agree that, as a condition to any e,ercise o*
your option, the Company may re%uire you to enter into an arrangement pro'iding *or the
payment )y you to the Company o* any ta, /ithho(ding o)(igation o* the Company arising )y
reason o* (5) the e,ercise o* your option, (!) the (apse o* any su)stantia( risk o* *or*eiture to
/hich the shares o* Common Stock are su)1ect at the time o* e,ercise, or (7) the disposition o*
shares o* Common Stock ac%uired upon such e,ercise
(c" &* your option is an &ncenti'e Stock Option, )y e,ercising your option you
agree that you /i(( noti*y the Company in /riting /ithin *i*teen (5@) days a*ter the date o* any
disposition o* any o* the shares o* the Common Stock issued upon e,ercise o* your option that
occurs /ithin t/o (!) years a*ter the date o* your option grant or /ithin one (5) year a*ter such
shares o* Common Stock are trans*erred upon e,ercise o* your option
(6" By e,ercising your option you agree that you sha(( not se((, dispose o*,
trans*er, make any short sa(e o*, grant any option *or the purchase o*, or enter into any hedging or
simi(ar transaction /ith the same economic e**ect as a sa(e, any shares o* Common Stock or
other securities o* the Company he(d )y you, *or a period o* one hundred eighty (5#") days
*o((o/ing the e**ecti'e date o* a registration statement o* the Company *i(ed under the Securities
Act or such (onger period as necessary to permit comp(iance /ith NAS- >u(e !A55 or N=S$
:em)er >u(e BA! and simi(ar ru(es and regu(ations (the Lock-Up Period)9 provided, however,
that nothing contained in this section sha(( pre'ent the e,ercise o* a repurchase option, i* any, in
*a'or o* the Company during the 4ock?Cp Period =ou *urther agree to e,ecute and de(i'er such
other agreements as may )e reasona)(y re%uested )y the Company andDor the under/riter(s) that
are consistent /ith the *oregoing or that are necessary to gi'e *urther e**ect thereto &n order to
en*orce the *oregoing co'enant, the Company may impose stop?trans*er instructions /ith respect
to your shares o* Common Stock unti( the end o* such period .he under/riters o* the
Company+s stock are intended third party )ene*iciaries o* this Section 6(d) and sha(( ha'e the
right, po/er and authority to en*orce the pro'isions hereo* as though they /ere a party hereto
#0. %)AS*E)ABI0I%1. =our option is not trans*era)(e, e,cept )y /i(( or )y the (a/s
o* descent and distri)ution, and is e,ercisa)(e during your (i*e on(y )y you Not/ithstanding the
*oregoing, )y de(i'ering /ritten notice to the Company, in a *orm satis*actory to the Company,
you may designate a third party /ho, in the e'ent o* your death, sha(( therea*ter )e entit(ed to
e,ercise your option &n addition, i* permitted )y the Company you may trans*er your option to a
trust i* you are considered to )e the so(e )ene*icia( o/ner (determined under Section 8A5 o* the
Code and app(ica)(e state (a/) /hi(e the option is he(d in the trust, pro'ided that you and the
trustee enter into a trans*er and other agreements re%uired )y the Company
##. )I&+% O* *I)S% )E*'SA0. Shares o* Common Stock that you ac%uire upon
e,ercise o* your option are su)1ect to any right o* *irst re*usa( that may )e descri)ed in the
Company+s )y(a/s in e**ect at such time the Company e(ects to e,ercise its right9 provided,
however, that i* your option is an &ncenti'e Stock Option and the right o* *irst re*usa( descri)ed in
the Company+s )y(a/s in e**ect at the time the Company e(ects to e,ercise its right is more
)ene*icia( to you than the right o* *irst re*usa( descri)ed in the Company+s )y(a/s on the -ate o*
Grant, then the right o* *irst re*usa( descri)ed in the Company+s )y(a/s on the -ate o* Grant
sha(( app(y .he Company+s right o* *irst re*usa( sha(( e,pire on the *irst date upon /hich any
security o* the Company is (isted (or appro'ed *or (isting) upon notice o* issuance on a nationa(
securities e,change or %uotation system
#2. )I&+% O* )EP')C+ASE. .o the e,tent pro'ided in the Company+s )y(a/s in
e**ect at such time the Company e(ects to e,ercise its right, the Company sha(( ha'e the right to
repurchase a(( or any part o* the shares o* Common Stock you ac%uire pursuant to the e,ercise o*
your option
#.. OP%IO O% A SE)$ICE CO%)AC%. =our option is not an emp(oyment or
ser'ice contract, and nothing in your option sha(( )e deemed to create in any /ay /hatsoe'er any
o)(igation on your part to continue in the emp(oy o* the Company or an A**i(iate, or o* the
Company or an A**i(iate to continue your emp(oyment &n addition, nothing in your option sha((
o)(igate the Company or an A**i(iate, their respecti'e stockho(ders, Boards o* -irectors, O**icers
or $mp(oyees to continue any re(ationship that you might ha'e as a -irector or Consu(tant *or
the Company or an A**i(iate
#2. 9I%++O0,I& OB0I&A%IOS.
(a" At the time you e,ercise your option, in /ho(e or in part, or at any time
therea*ter as re%uested )y the Company, you here)y authori2e /ithho(ding *rom payro(( and any
other amounts paya)(e to you, and other/ise agree to make ade%uate pro'ision *or (inc(uding )y
means o* a cash(ess e,ercise pursuant to a program de'e(oped under >egu(ation . as
promu(gated )y the 3edera( >eser'e Board to the e,tent permitted )y the Company), any sums
re%uired to satis*y the *edera(, state, (oca( and *oreign ta, /ithho(ding o)(igations o* the
Company or an A**i(iate, i* any, /hich arise in connection /ith the e,ercise o* your option
(5" Cpon your re%uest and su)1ect to appro'a( )y the Company, in its so(e
discretion, and comp(iance /ith any app(ica)(e (ega( conditions or restrictions, the Company
may /ithho(d *rom *u((y 'ested shares o* Common Stock other/ise issua)(e to you upon the
e,ercise o* your option a num)er o* /ho(e shares o* Common Stock ha'ing a 3air :arket ;a(ue,
determined )y the Company as o* the date o* e,ercise, not in e,cess o* the minimum amount o*
ta, re%uired to )e /ithhe(d )y (a/ (or such (o/er amount as may )e necessary to a'oid
c(assi*ication o* your option as a (ia)i(ity *or *inancia( accounting purposes) &* the date o*
determination o* any ta, /ithho(ding o)(igation is de*erred to a date (ater than the date o*
e,ercise o* your option, share /ithho(ding pursuant to the preceding sentence sha(( not )e
permitted un(ess you make a proper and time(y e(ection under Section #7()) o* the Code,
co'ering the aggregate num)er o* shares o* Common Stock ac%uired upon such e,ercise /ith
respect to /hich such determination is other/ise de*erred, to acce(erate the determination o*
such ta, /ithho(ding o)(igation to the date o* e,ercise o* your option Not/ithstanding the *i(ing
o* such e(ection, shares o* Common Stock sha(( )e /ithhe(d so(e(y *rom *u((y 'ested shares o*
Common Stock determined as o* the date o* e,ercise o* your option that are other/ise issua)(e to
you upon such e,ercise Any ad'erse conse%uences to you arising in connection /ith such share
/ithho(ding procedure sha(( )e your so(e responsi)i(ity
(c" =ou may not e,ercise your option un(ess the ta, /ithho(ding o)(igations
o* the Company andDor any A**i(iate are satis*ied According(y, you may not )e a)(e to e,ercise
your option /hen desired e'en though your option is 'ested, and the Company sha(( ha'e no
o)(igation to issue a certi*icate *or such shares o* Common Stock or re(ease such shares o*
Common Stock *rom any escro/ pro'ided *or herein un(ess such o)(igations are satis*ied
#7. %A- COSE='ECES =ou here)y agree that the Company does not ha'e a duty
to design or administer the P(an or its other compensation programs in a manner that minimi2es
your ta, (ia)i(ities =ou sha(( not make any c(aim against the Company, or any o* its O**icers,
-irectors, $mp(oyees or A**i(iates re(ated to ta, (ia)i(ities arising *rom your option or your other
compensation &n particu(ar, you ackno/(edge that this option is e,empt *rom Section B"6A o*
the Code on(y i* the e,ercise price per share speci*ied in the Grant Notice is at (east e%ua( to the
*air market 'a(ue per share o* the Common Stock on the -ate o* Grant and there is no other
impermissi)(e de*erra( o* compensation associated /ith the option Because the Common Stock
is not traded on an esta)(ished securities market, the 3air :arket ;a(ue is determined )y the
Board, perhaps in consu(tation /ith an independent 'a(uation *irm retained )y the Company =ou
ackno/(edge that there is no guarantee that the &nterna( >e'enue Ser'ice /i(( agree /ith the
'a(uation as determined )y the Board, and you sha(( not make any c(aim against the Company, or
any o* its O**icers, -irectors, $mp(oyees or A**i(iates in the e'ent that the &nterna( >e'enue
Ser'ice asserts that the 'a(uation determined )y the Board is (ess than the *air market 'a(ue as
su)se%uent(y determined )y the &nterna( >e'enue Ser'ice
#8. O%ICES. Any notices pro'ided *or in your option or the P(an sha(( )e gi'en in
/riting and sha(( )e deemed e**ecti'e(y gi'en upon receipt or, in the case o* notices de(i'ered )y
mai( )y the Company to you, *i'e (@) days a*ter deposit in the Cnited States mai(, postage
prepaid, addressed to you at the (ast address you pro'ided to the Company
#:. &O$E)I& P0A ,OC'(E%. =our option is su)1ect to a(( the pro'isions o*
the P(an, the pro'isions o* /hich are here)y made a part o* your option, and is *urther su)1ect to
a(( interpretations, amendments, ru(es and regu(ations, /hich may *rom time to time )e
promu(gated and adopted pursuant to the P(an &n the e'ent o* any con*(ict )et/een the
pro'isions o* your option and those o* the P(an, the pro'isions o* the P(an sha(( contro(