Common use of Treatment of Options Clause in Contracts

Treatment of Options. (a) The Board of Directors of the Company (or, if appropriate, any committee thereof) shall take all action necessary and appropriate to provide that, at the Closing and contingent upon the consummation of the Contemplated Transactions, each holder of an Option which is outstanding and unexercised (whether or not exercisable) immediately prior thereto shall, in cancellation and full settlement thereof, be entitled to receive the consideration due such Option Holder pursuant to this Section 2.3. (b) At the Closing, the following events shall occur: (i) the Company shall pay a portion of the Net Proceeds, if any, to the Option Holders in the amounts set forth on Schedule 2.3 hereto under the heading “Closing Date Payments” through its normal payroll processing procedures and subject to all applicable payroll and withholding taxes required by applicable Tax Law to be withheld; and (ii) Purchaser shall pay to the Company an amount in cash equal to (x) the Aggregate Option Holder Closing Date Payments minus (y) the amount, if any, paid by the Company to the Option Holders pursuant to Section 2.3(b)(i), to an account designated by the Company, and, upon receipt of such funds, the Company shall pay the amounts set forth on Schedule 2.3 hereto under the heading “Closing Date Payments” to the Option Holders, to the extent not previously paid pursuant to Section 2.3(b)(i), through its normal payroll processing procedures and subject to all applicable payroll and withholding taxes required by applicable Tax Law to be withheld. (c) The Company shall also pay any additional funds paid to it under Section l0.2(i) on behalf of the Option Holders, subject to all applicable payroll and withholding taxes required by applicable Tax Law to be withheld.

Treatment of Options. Pursuant to the terms of an Option Cancellation and Payment Acknowledgement in the form attached to this Agreement as Exhibit 1.1(b) (athe “Option Cancellation and Payment Acknowledgement“) The Board of Directors of the Company (or, if appropriate, any committee thereof) shall take all action necessary and appropriate to provide that, at the Closing and contingent upon the consummation of the Contemplated Transactions, be executed by each holder of an Option which is Options (the “Optionholders“) to purchase Common Shares of Parent, each option to purchase Common Shares of the Parent (“Options“) issued and outstanding and unexercised (whether or not exercisable) immediately prior thereto shall, in cancellation to the Closing Date shall be cancelled and full settlement thereof, shall be entitled converted solely into the right to receive the consideration due such Option Holder pursuant cash in an amount equal to this Section 2.3. (b) At the Closing, the following events shall occur: (i) the Company shall pay a portion product of (X) the aggregate number of shares of Common Stock of the Net ProceedsCompany that would be issued to the Optionholder if such Option were exercised, multiplied by (Y) the Per Share Price Per Option, without any interest thereon, plus (ii) subject to Article VI, the Per Share Indemnity Escrow Consideration, plus (iii) the Per Share Working Capital Excess, if any. On the direction of the Company, Buyer will deduct and withhold from the consideration otherwise payable with respect to the conversion of the Options such amounts as the Parent is required to deduct and withhold with respect to the making of such payment under the Code, or any applicable provision of state, local, or foreign Tax law. The initial payments of the net consideration to be paid to holders of the Options under Section 1.2(b) shall be made by Company checks through the Company’s payroll process. All other payments, if any, shall be made by the Escrow Agent. To the extent amounts are so withheld, such withheld amounts shall be timely paid to the Option Holders appropriate taxing authority and shall be treated for all purposes of this Agreement as giving been paid to the Person in the amounts set forth on Schedule 2.3 hereto under the heading “Closing Date Payments” through its normal payroll processing procedures and subject to all applicable payroll respect of whom such deduction and withholding taxes required by applicable Tax Law to be withheld; and (ii) Purchaser shall pay to the Company an amount in cash equal to (x) the Aggregate Option Holder Closing Date Payments minus (y) the amount, if any, paid by the Company to the Option Holders pursuant to Section 2.3(b)(i), to an account designated by the Company, and, upon receipt of such funds, the Company shall pay the amounts set forth on Schedule 2.3 hereto under the heading “Closing Date Payments” to the Option Holders, to the extent not previously paid pursuant to Section 2.3(b)(i), through its normal payroll processing procedures and subject to all applicable payroll and withholding taxes required by applicable Tax Law to be withheldwas made. (c) The Company shall also pay any additional funds paid to it under Section l0.2(i) on behalf of the Option Holders, subject to all applicable payroll and withholding taxes required by applicable Tax Law to be withheld.

Treatment of Options. (a) The Board of Directors Prior to the Closing, the Company shall take all actions necessary so that all options to purchase shares of the Company then outstanding (or, if appropriate, any committee thereofthe “Options”) shall take all action necessary become fully vested and appropriate to provide thatexercisable (whether or not currently exercisable) and, at the Closing and contingent Effective Time, each Option not theretofore exercised shall be cancelled upon the consummation of Closing (the Contemplated Transactions“Option Cancellation”) without any future liability to Buyer, the Company or any other Person, and each holder of an Option which that is outstanding and unexercised (whether or not exercisable) immediately prior thereto cancelled shall, in cancellation and full settlement thereofrespect of each such Option, be entitled to receive (i) at, or as soon as practicable after, the consideration due Closing a cash payment in an amount equal to the product of (A) the excess, if any, of subtracting (x) the applicable Exercise Price of such Option Holder from (y) the Closing Per Share Merger Consideration, multiplied by (B) the number of shares of Common Stock underlying such holder’s Options (such product, the “Closing Option Consideration”) and (ii) the aggregate portion, if any, of the Indemnity Escrow Amount, the Special Indemnity Escrow Amount, the Working Capital Escrow Amount, the Shareholders’ Representative Fund Amount and any XL Health Receivables Consideration, in each case paid in respect of such Option at the times set forth and in accordance with this Agreement and the Escrow Agreement (the amounts in clauses (i) and (ii) collectively being referred to herein as the “Option Consideration” with respect to such Option). The Company shall be entitled to, and shall, deduct and withhold from the amounts otherwise payable to any holder of Options (each an “Optionholder”) pursuant to this Section 2.3. 1.6(d) such amounts (bthe “Withholding Amounts”) At the Closing, the following events shall occur: (i) as the Company shall pay a portion of is required to deduct and withhold in connection with the Net Proceeds, if any, Option Cancellation or with respect to the Option Holders in making of such payment under the amounts Code or any provision of any state, local or other U.S. or non-U.S. Tax law and to properly remit such amount to the appropriate Taxing authority, as set forth on Schedule 2.3 hereto under in Section 1.11. To the heading “Closing Date Payments” through its normal payroll processing procedures extent that any Withholding Amounts are so deducted and subject to all applicable payroll and withholding taxes required by applicable Tax Law to be withheld; and (ii) Purchaser shall pay to the Company an amount in cash equal to (x) the Aggregate Option Holder Closing Date Payments minus (y) the amount, if any, paid by the Company to the Option Holders pursuant to Section 2.3(b)(i), to an account designated withheld by the Company, and, upon receipt such Withholding Amounts shall be treated for all purposes of such funds, the Company shall pay the amounts set forth on Schedule 2.3 hereto under the heading “Closing Date Payments” to the Option Holders, to the extent not previously paid pursuant to this Agreement in accordance with Section 2.3(b)(i), through its normal payroll processing procedures and subject to all applicable payroll and withholding taxes required by applicable Tax Law to be withheld1.11. (c) The Company shall also pay any additional funds paid to it under Section l0.2(i) on behalf of the Option Holders, subject to all applicable payroll and withholding taxes required by applicable Tax Law to be withheld.

Treatment of Options. (ai) The Board At the Effective Time, each vested Option outstanding as of Directors immediately prior to the Effective Time and each Ungranted Option shall, automatically and without any required action on the part of the Company (or, if appropriate, any committee thereof) shall take all action necessary and appropriate to provide that, at the Closing and contingent upon the consummation of the Contemplated Transactions, each holder of an Option which is outstanding and unexercised (whether or not exercisable) immediately prior thereto shall, in cancellation and full settlement thereof, be entitled cancelled (each a “Cancelled Option”) and, subject to receive the consideration due applicable Option Holder signing a Joinder Agreement, such Option Holder pursuant to this Section 2.3. (b) At the Closingshall receive, the following events shall occurin full satisfaction of any rights such holder may have under such Option: (iA) the Company shall pay a portion of the Net Proceeds, if any, to the Option Holders in the amounts set forth on Schedule 2.3 hereto under the heading “Closing Date Payments” through its normal payroll processing procedures and subject to all applicable payroll and withholding taxes required by applicable Tax Law to be withheld; and (ii) Purchaser shall pay to the Company an amount in cash equal to the Option Cancellation Payment applicable to such Cancelled Option; and * Omitted information is the subject of a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been filed separately with the Securities and Exchange Commission. (xB) when, as and if any of the Aggregate following become payable pursuant to the terms of this Agreement: (1) an amount in cash equal to the Per Share Adjustment Surplus Amount multiplied by the number of shares of Common Stock subject to such Cancelled Option, which amount will be paid in accordance with Section 3.4; (2) at such time and only to the extent that an Earn-Out Payment is made pursuant to Section 3.8, an amount in cash equal to the Per Share Earn-Out Amount associated with such Earn-Out Payment, which amount will be paid in accordance with Section 3.4; and (3) an amount in cash equal to the Per Share Escrow Fund Release Amount and/or the Per Share Representative Expense Fund Release Amount, as applicable, multiplied by the number of shares of Common Stock subject to such Cancelled Option, which each such amount will be paid in accordance with Section 3.4 and/or Section 3.9, without interest and subject to any applicable withholding Taxes; provided, that each payment under this Section 3.1(b)(i)(B) shall be made in accordance with Treasury Regulation 1.409A-3(i)(5)(iv)(A), and to the extent that any payment under this Section 3.1(b)(i)(B) would be made later than five years following the Effective Time such payment shall not be made unless Buyer determines reasonably in good faith that payment complies with the requirements of such regulation. Notwithstanding anything in this Agreement to the contrary, in the event that a payment under this Section 3.1(b)(i)(B) shall fail to comply with the requirements of Treasury Regulation 1.409A-3(i)(5)(iv)(A), such payment shall be deemed forfeited by such Option Holder Closing Date Payments minus and reallocated to the Stockholders in accordance with his, her or its Pro Rata Share (ywhich, for the avoidance of doubt, shall be recalculated to exclude in both the numerator and denominator the Cancelled Options to which such forfeited payment relates). (ii) At the amountEffective Time, if anyeach Option outstanding as of immediately prior to the Effective Time that is not vested shall be canceled without payment of any consideration whatsoever being made in respect thereof. (iii) Any payments made pursuant to this Section 3.1(b) shall be treated as compensation income to the holder of Cancelled Options receiving such payments and shall be made without interest and subject to any applicable withholding Tax. (iv) As of the Effective Time, paid (A) each agreement evidencing Options or Ungranted Options entered into by the Company (including the Equity Plan) shall terminate and all rights under any provision of any other plan, program or arrangement of the Company or any of its Subsidiaries providing for the issuance or grant of any other interest in respect of the capital stock of the Company or any of its Subsidiaries shall be cancelled, (B) each Cancelled Option shall terminate and (C) all rights under any provision of any other plan, program or arrangement of the Company or any of its Subsidiaries providing for the issuance or grant of any other interest in respect of the capital stock of the Company or any of its Subsidiaries shall be cancelled. * Omitted information is the subject of a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been filed separately with the Securities and Exchange Commission. (v) Prior to the Option Holders pursuant to Section 2.3(b)(i), to an account designated by the Company, and, upon receipt of such fundsEffective Time, the Company shall pay take any actions necessary to effect the amounts set forth on Schedule 2.3 hereto transactions contemplated by this Section 3.1(b) under the heading “Closing Date Payments” to the Option Holders, to the extent not previously paid pursuant to Section 2.3(b)(i), through its normal payroll processing procedures Equity Plan and subject to all applicable payroll and withholding taxes required by applicable Tax Law to be withheldagreements evidencing Options or Ungranted Options. (c) The Company shall also pay any additional funds paid to it under Section l0.2(i) on behalf of the Option Holders, subject to all applicable payroll and withholding taxes required by applicable Tax Law to be withheld.

Treatment of Options. (a) The Board of Directors of Immediately prior to the Closing, the Company (or, if appropriate, any committee thereof) shall take all action actions necessary so that all Options then outstanding shall become fully vested and appropriate exercisable (whether or not currently exercisable) and, immediately prior to provide that, at the Closing and contingent upon the consummation of the Contemplated TransactionsClosing, each Option not theretofore exercised shall be cancelled without any future liability to the Buyer, the Company or any other Person after the Closing, except as provided herein, in exchange for the right to receive from the Company the payment described in the following sentence (such payments in the aggregate, the “Aggregate Option Consideration” and, such amount payable with respect to each Option holder, such holder’s “Option Consideration” and, together with the aggregate Share Consideration payable to the Sellers, the “Aggregate Consideration”). Each holder of an Option which that is outstanding and unexercised (whether or not exercisable) immediately prior thereto cancelled pursuant to the preceding sentence shall, in cancellation respect of each Option and full settlement thereofsubject to the terms and conditions of this Agreement, be entitled to receive a cash payment in an amount equal to the consideration due product of (x) the excess, if any, of the Per Share Price over the applicable Exercise Price of each Option, multiplied by (y) the number of shares of Common Stock underlying such Option Holder pursuant to this Section 2.3Option. (b) At The Company shall be entitled to, and the Closing, the following events shall occur: (i) Buyer will cause the Company shall pay a portion at the Closing to, deduct and withhold from the amounts otherwise payable to any Option holder in respect of Options pursuant to this Agreement such amounts (the “Withholding Amounts”) as the Company is required to deduct and withhold in connection with the exercise of the Net Proceeds, if any, underlying Option or with respect to the Option Holders in the amounts set forth on Schedule 2.3 hereto making of such payment under the heading “Closing Date Payments” through its normal payroll processing procedures Code, or any provision of state, local or foreign tax law and subject to all applicable payroll and withholding taxes required by applicable Tax Law to be withheld; and (ii) Purchaser shall pay properly remit such amount to the Company an amount in cash equal to (x) appropriate Tax authority. To the Aggregate Option Holder Closing Date Payments minus (y) the amount, if any, paid by the Company to the Option Holders pursuant to Section 2.3(b)(i), to an account designated extent that Withholding Amounts are so deducted and withheld by the Company, and, upon receipt such Withholding Amounts shall be treated for all purposes of such funds, this Agreement and shall be included in the Company shall pay the amounts set forth on Schedule 2.3 hereto under the heading “Closing Date Payments” Option Consideration as having been paid to the Option Holders, to the extent not previously paid pursuant to Section 2.3(b)(i), through its normal payroll processing procedures and subject to all applicable payroll holder in respect of which such deduction and withholding taxes required were made by applicable Tax Law to be withheldthe Company. (c) The Company shall also pay any additional funds paid to it under Section l0.2(i) on behalf of the Option Holders, subject to all applicable payroll and withholding taxes required by applicable Tax Law to be withheld.

Treatment of Options. (a) The Section 2.08 of the Disclosure Schedule sets forth, with respect to each outstanding Option, the name of the holder, the number of shares subject to the Option, the exercise price and the vesting schedule. Prior to the Closing Date, the Board of Directors of the Company (or, if appropriate, any or an authorized committee thereof) shall take all action actions necessary to ensure that all Options that were outstanding immediately prior to the Closing, whether vested, unvested or exercisable, to be cancelled effective as of such date and appropriate in consideration for such cancellation were converted into the right to provide thatreceive, at without interest, a cash payment, if any, as jointly determined by the Closing Seller’s Representative and contingent upon the consummation of Company in accordance with the Contemplated Transactionsrespective Option agreements and the Company’s Long Term Incentive Share Option Plan (the “Option Plan”) and as set forth on a statement prepared by the Company and the Sellers’ Representative (the “Option Payment Statement”) and attached hereto as Schedule D. In accordance with Section 2.04, Section 2.07 and this Section 2.08, each holder of an outstanding vested Option which is outstanding and unexercised (whether or not exercisable) immediately prior thereto shall, in cancellation and full settlement thereof, be shall become entitled to receive net of withholding required under applicable law on (or as soon as reasonably practicable following) the consideration due such Option Holder pursuant to this Section 2.3. (b) At the Closing, the following events shall occur: Closing Date (i) a cash payment in an amount equal to the Company shall pay a portion Option Closing Payment as set forth on the Option Payment Statement, (ii) any amount distributed to such holder of Options pursuant to Section 2.07 in respect of the Net ProceedsOption Holdback Amount and (iii) any amount distributed to the Sellers’ Representative (on behalf of such holder of Options), if any, from time to time payable to such Person in respect of Options as determined by the Option Holders Sellers’ Representative in the its discretion. The Sellers’ Representative shall pay any amounts set forth on Schedule 2.3 hereto under the heading “Closing Date Payments” through its normal payroll processing procedures and subject to all applicable payroll and withholding taxes required by applicable Tax Law to be withheld; and (ii) Purchaser shall pay further distributed in respect of Options to the Company an amount for further distribution to holders of Options after the application of applicable withholdings through the applicable Company Entity’s payroll system; provided, however, that payments to the holders of Options that are not employees and that are not included in cash equal to (x) the Aggregate Option Holder Closing Date Payments minus (y) the amount, if any, paid a Company Entity’s payroll system will be made by the Company by check to the Option Holders pursuant to Section 2.3(b)(i), to an account designated by the Company, and, upon receipt such holders of such funds, the Company shall pay the amounts set forth on Schedule 2.3 hereto under the heading “Closing Date Payments” to the Option Holders, to the extent not previously paid pursuant to Section 2.3(b)(i), through its normal payroll processing procedures and subject to all applicable payroll and withholding taxes required by applicable Tax Law to be withheldOptions. (c) The Company shall also pay any additional funds paid to it under Section l0.2(i) on behalf of the Option Holders, subject to all applicable payroll and withholding taxes required by applicable Tax Law to be withheld.

Treatment of Options. (a) The Board At the Effective Time, each In-the-Money Option that is outstanding immediately prior to the Effective Time shall be cancelled, and in full consideration of Directors such cancellation, shall automatically be converted into and thereafter evidence the right to receive an amount in cash, without interest, equal to (i) the Closing Option Merger Consideration allocable to such Option, and (ii) the product of (A) the Per Share Portion of the Company (orAdditional Merger Consideration, if appropriateany, any committee thereofand (B) shall take all action necessary and appropriate to provide thatthe number of shares of Common Stock underlying such In-the-Money Option. Each such outstanding In-the-Money Option, at the Closing and contingent upon the consummation of the Contemplated Transactions, each holder of an Option which is outstanding and unexercised (whether or not exercisable) immediately prior thereto shall, when converted in cancellation and full settlement thereof, be entitled to receive the consideration due such Option Holder pursuant to accordance with this Section 2.32.06, shall no longer be outstanding, shall automatically be cancelled and shall cease to exist. (b) At the ClosingEffective Time, each Option that is outstanding immediately prior to the following events Effective Time that is not an In-the-Money Option will automatically and without any action on the part of the holder thereof be cancelled and terminated at the Effective Time for no consideration and shall occur:no longer be outstanding and shall cease to exist, and each holder of any such Option shall cease to have any rights with respect thereto. (ic) At the Effective Time, Purchaser shall fund the Company shall with cash sufficient to pay a portion the aggregate Closing Option Merger Consideration in respect of each In-the-Money Option. As promptly as reasonably practicable following the Effective Time (and in any event no later than the end of the Net ProceedsCompany’s first regular payroll cycle that ends at least five (5) Business Days after Closing), if any, to the Option Holders in the amounts set forth on Schedule 2.3 hereto under the heading “Closing Date Payments” through its normal payroll processing procedures and subject to all applicable payroll and withholding taxes required by applicable Tax Law to be withheld; and (ii) Purchaser shall pay to each Optionholder through the Company payroll system of the Surviving Corporation (other than with respect of Optionholders that are non-employee service providers, who Purchaser shall pay at the Effective Time but who need not be paid through such payroll system) an aggregate amount in cash equal to (x) the Aggregate Closing Option Holder Closing Date Payments minus (y) Merger Consideration payable in respect of the amount, if any, paid In-the-Money Options held by the Company such Optionholder immediately prior to the Option Holders pursuant Effective Time. (d) Prior to Section 2.3(b)(i), to an account designated by the Company, and, upon receipt of such fundsEffective Time, the Company or its board of directors shall pay take all actions necessary to effectuate the amounts set forth on Schedule 2.3 hereto under the heading “Closing Date Payments” to the Option Holders, to the extent not previously paid pursuant to Section 2.3(b)(i), through its normal payroll processing procedures and subject to all applicable payroll and withholding taxes required treatment of Options as contemplated by applicable Tax Law to be withheld. (c) The Company shall also pay any additional funds paid to it under Section l0.2(i) on behalf of the Option Holders, subject to all applicable payroll and withholding taxes required by applicable Tax Law to be withheld.this

Treatment of Options. As promptly as reasonably practicable after the date hereof, the Company shall send a notice (athe “Option Notice”) The Board of Directors to all Selling Optionholders, which Option Notice shall notify such Selling Optionholder of the Company following: (ori) that Buyer will not be assuming any Options following the Closing or substituting new options therefor and (ii) the number of Shares with respect to the Options that shall become vested and exercisable at the Closing (whether in accordance with the terms of the applicable Option Agreement or at the discretion of the Company) in connection with the transactions contemplated under this Agreement (each such Share, if appropriatea “Vested Option Share”). Subject to this Section 2.4, any committee thereofat the Closing, the Selling Optionholders shall sell, transfer and deliver to Buyer, and Buyer shall purchase and acquire from the Selling Optionholders, all of the In-the-Money Vested Options in exchange for the In-the-Money Vested Option Transfer Payment, subject to adjustments following the Closing as specified in this Agreement (including release of amounts held in the Adjustment Escrow Account, the Indemnity Escrow Account or the Representative Fund). Each Selling Optionholder hereby agrees and acknowledges that it (A) approves of this Agreement (including the liabilities of such Selling Optionholder set forth in this Agreement), the Escrow Agreement, the other Ancillary Documents and all of the arrangements relating thereto, (B) approves the appointment of the Seller Representative in accordance with the terms of this Agreement, (C) represents and warrants that it is the owner of all such In-the-Money Vested Options free and clear of all Liens, (D) acknowledges that such Selling Optionholder’s portion of the In-the-Money Vested Option Transfer Payment as set forth in the Estimated Closing Statement constitutes all of the consideration such Selling Optionholder is entitled to receive with respect to the In-the-Money Vested Options held by such Selling Optionholder, subject to adjustments following the Closing as specified in this Agreement (including release of amounts held in the Adjustment Escrow Account, the Indemnity Escrow Account or the Representative Fund), and (E) acknowledges and agrees that the applicable payor will be entitled to withhold Taxes from consideration otherwise payable to such Selling Optionholder pursuant to this Agreement. Each Optionholder further agrees to transfer to Buyer, and Buyer shall take all action necessary and appropriate to provide thatacquire from such Selling Optionholder, at the Closing all Options held by such Selling Optionholder other than In-the-Money Vested Options for no additional consideration. Each Selling Optionholder agrees that he, she or it shall not exercise, and contingent upon the consummation Company agrees that it shall not permit any Selling Optionholder to exercise, any Options held as of the Contemplated Transactions, each holder date hereof prior to the earlier of an Option which is outstanding the termination of this Agreement and unexercised (whether or not exercisable) immediately prior thereto shall, in cancellation and full settlement thereof, be entitled to receive the consideration due such Option Holder pursuant to this Section 2.3. (b) At the Closing, the following events shall occur: (i) the Company shall pay a portion of the Net Proceeds, if any, to the Option Holders in the amounts set forth on Schedule 2.3 hereto under the heading “Closing Date Payments” through its normal payroll processing procedures and subject to all applicable payroll and withholding taxes required by applicable Tax Law to be withheld; and (ii) Purchaser shall pay to the Company an amount in cash equal to (x) the Aggregate Option Holder Closing Date Payments minus (y) the amount, if any, paid by the Company to the Option Holders pursuant to Section 2.3(b)(i), to an account designated by the Company, and, upon receipt of such funds, the Company shall pay the amounts set forth on Schedule 2.3 hereto under the heading “Closing Date Payments” to the Option Holders, to the extent not previously paid pursuant to Section 2.3(b)(i), through its normal payroll processing procedures and subject to all applicable payroll and withholding taxes required by applicable Tax Law to be withheld. (c) The Company shall also pay any additional funds paid to it under Section l0.2(i) on behalf of the Option Holders, subject to all applicable payroll and withholding taxes required by applicable Tax Law to be withheld.

Treatment of Options. (a) The Board of Directors At the Effective Time and by virtue of the Company (or, if appropriate, Merger and without any committee thereof) shall take all action necessary and appropriate to provide that, at on the Closing and contingent upon the consummation part of the Contemplated Transactions, each holder of an Option which is outstanding and unexercised (whether or not exercisable) immediately prior thereto shall, in cancellation and full settlement thereof, be entitled to receive the consideration due such Option Holder pursuant to this Section 2.3. (b) At the Closing, the following events shall occur: (i) the Company shall pay a portion of the Net Proceeds, if any, to the Option Holders in the amounts set forth on Schedule 2.3 hereto under the heading “Closing Date Payments” through its normal payroll processing procedures and subject to all applicable payroll and withholding taxes required by applicable Tax Law to be withheld; and (ii) Purchaser shall pay to the Company an amount in cash equal to (x) the Aggregate Option Holder Closing Date Payments minus (y) the amount, if any, paid by the Company to the Option Holders pursuant to Section 2.3(b)(i), to an account designated by the Company, and, upon receipt of such funds, the Company shall pay the amounts set forth on Schedule 2.3 hereto under the heading “Closing Date Payments” Purchaser or PurchaserSub with respect to the Option Holders, each outstanding Company Option shall be cancelled and terminated and each Option Holder shall be entitled to receive: (a) an amount equal to (i) (A) the Per Share Merger Consideration MINUS (B) the applicable exercise price of such Company Option PLUS the Per Option Escrow Portion, MULTIPLIED BY (ii) the number of shares of Company Common Stock such Option Holder could have purchased if such Option Holder had exercised such Company Option in full immediately prior to the extent not previously paid pursuant Effective Time; (b) the right to Section 2.3(b)(ireceive a portion of the Positive Adjustment Amount, if any, in accordance with SECTION 1.8(e), through its normal payroll processing procedures and subject to all applicable payroll and withholding taxes required by applicable Tax Law to be withheld.; and (c) the right to receive such Option Holder's Allocable Portion of the cash distributed from the Escrow Account and the Expense Reserve Account. The aggregate consideration to be paid to the Option Holders as provided for above in this SECTION 1.7 is collectively referred to herein as the "OPTION MERGER CONSIDERATION." The Company shall also pay act as the paying agent for purposes of effectuating the payments contemplated by SUBSECTIONS 1.7(a) and (b). The Company, in its capacity as paying agent, shall be entitled to deduct and withhold from the Option Merger Consideration otherwise payable hereunder to any additional funds Person such amounts as the Company is required to deduct and withhold with respect to the making of such payment under any provision of Federal, state or local income tax law, including any applicable FICA withholding. To the extent that the Company, in its capacity as paying agent, so withholds those amounts, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to it under Section l0.2(i) on behalf the Option Holder in respect of which such deduction and withholding was made. Notwithstanding anything herein to the contrary, upon confirmation that the Articles of Merger have been filed with the Secretary, Purchaser shall deposit with the Escrow Agent the aggregate amount of Option Merger Consideration to be paid to the Option Holders as provided for above in this SECTION 1.7 in cash payable by wire transfer of immediately available funds for deposit in the Closing Escrow Account in accordance with the terms and conditions of the Escrow Agreement. Upon confirmation by the Secretary that the Articles of Merger have been accepted by the Secretary, Purchaser and the Shareholder Representative shall jointly deliver to the Escrow Agent a Joint Written Notice, which JOINT WRITTEN NOTICE shall direct the Escrow Agent to disburse the Option Holders, subject Merger Consideration to all applicable payroll and withholding taxes required by applicable Tax Law to be withheldthe Option Holder in the manner contemplated above.

Treatment of Options. (a) The Board of Directors of the Company Each option to purchase PhotoWorks Common Shares (oreach, if appropriate, any committee thereofan “Option”) shall take all action necessary and appropriate to provide that, at the Closing and contingent upon the consummation of the Contemplated Transactions, each holder of an Option which that is outstanding and unexercised immediately prior to the Effective Time (whether or not exercisablethen vested or exercisable and without regard to the exercise price of such Options) immediately prior thereto shallwill be cancelled as of the Effective Time, and shall solely represent the right to receive from the Surviving Corporation, in cancellation and full settlement thereof, be entitled to receive the consideration due such Option Holder pursuant to accordance with this Section 2.3. (b) At the Closing4.3(a), the following events shall occur: (i) the Company shall pay a portion of the Net ProceedsOption Consideration, if any, described below, with respect to such Option. At the Effective Time, each Option Holders that is cancelled in accordance with the amounts set forth on Schedule 2.3 hereto under foregoing sentence will be converted into the heading “Closing Date Payments” through its normal payroll processing procedures and subject right to all applicable payroll and withholding taxes required by applicable Tax Law to be withheld; and receive: (iiA) Purchaser shall pay to the Company an amount in cash equal to (x) the Aggregate Option Holder Closing Date Payments minus excess, if any, of the Merger Consideration over the exercise price per PhotoWorks Common Share of such Option, multiplied by (y) the amountnumber of PhotoWorks Common Shares subject to such Option (with the aggregate amount of such payment to each holder in respect of all Options held rounded down to the nearest whole cent) (the “Option Consideration”). The Option Consideration, if any, paid payable with respect to any Option shall be payable by the Company Surviving Corporation at the time the related payment of the Merger Consideration is payable to holders of Certificates, subject to the conditions of this Section 4.3. The holders of Options will have no further rights in respect of any Options from and after the Effective Time. In order to receive the amount to which a holder of an Option Holders is entitled under this Section, the holder must deliver to PhotoWorks (1) any award agreement, certificate or other document evidencing such Option and (2) a document pursuant to Section 2.3(b)(i), which the holder acknowledges that the payment the holder is receiving or is to an account designated by receive is in full satisfaction of any rights the Company, and, upon receipt of such funds, the Company shall pay the amounts set forth on Schedule 2.3 hereto holder may have under the heading “Closing Date Payments” or with regard to the Option Holders, to the extent not previously paid pursuant to Section 2.3(b)(i), through its normal payroll processing procedures and subject to all applicable payroll and withholding taxes required by applicable Tax Law to be withheldOption. (cb) The Company Prior to the Effective Time, the Board of Directors of PhotoWorks, or an appropriate committee thereof, will adopt such resolutions and will take such other actions as shall also pay be required to effectuate the actions contemplated by this Section 4.3, without paying any additional funds paid to it under Section l0.2(i) consideration or incurring any debts or obligations on behalf of PhotoWorks or the Surviving Corporation other than the payment of the Option Holders, subject to all applicable payroll and withholding taxes required by applicable Tax Law to be withheldConsideration as provided in this Section 4.3.

Treatment of Options. (a) The Board of Directors of At the Company Closing, each Option (or, if appropriate, any committee or portion thereof) shall take all action necessary and appropriate to provide that, at the Closing and contingent upon the consummation of the Contemplated Transactions, each holder of an Option which that is outstanding and unexercised (whether or not exercisable) immediately prior thereto to the Closing, whether then vested or unvested, shall, in cancellation by virtue of the Merger and full settlement thereofwithout any action on the part of Parent, Merger Sub, the Company, the holders of such Options or any other Person, be entitled to receive automatically cancelled, and the consideration due holder of each such Option Holder pursuant shall cease to have any rights with respect thereto other than the right to receive, subject to delivery of an executed Option Termination Agreement, (i) an amount in cash, without interest, equal to the product of (A) the aggregate number of shares of Company Common Stock subject to such cancelled Option immediately prior to the Closing, multiplied by (B) the excess of the Closing Per Share Common Merger Consideration over the per share exercise price under such Exchanged Option, and (ii) any amounts that may become payable in respect of such Exchanged Option in the future from the Adjustment Escrow Fund or the Indemnification Escrow Fund as provided in this Section 2.3Agreement and the Escrow Agreement, in each case at the respective times and subject to the terms and conditions specified herein and therein, as applicable. (b) At The Exchanged Options Exercise Price shall, notwithstanding the Closingfact that such amount will not be paid to the Company or Themis by the holders thereof, the following events shall occur: (i) be taken into account for purposes of (A) determining the Closing Participation Merger Consideration payable to the Former Holders of Company shall pay a portion Capital Stock and Exchanged Options, as applicable, as part of the Net ProceedsClosing Merger Consideration and (B) allocating such Closing Merger Consideration among all Former Holders of Company Capital Stock and Exchanged Options in accordance with the terms hereof, if any, to the Option Holders in the amounts set forth on Schedule 2.3 hereto under the heading “Closing Date Payments” through its normal payroll processing procedures and subject to all applicable payroll and withholding taxes required by applicable Tax Law to be withheld; and (ii) Purchaser shall pay be subtracted from the Closing Merger Consideration otherwise payable at Closing to the Company an amount in cash equal to Former Holders of Exchanged Options. (xc) Promptly after the Aggregate Option Holder Closing Date Payments minus (y) the amount, if any, paid by the Company to the Option Holders pursuant to Section 2.3(b)(i), to an account designated by the Company, and, upon receipt of such fundsAgreement Date, the Company and the Company Board, as applicable, shall pay adopt any resolutions and take any actions necessary to (i) effectuate the amounts set forth on Schedule 2.3 hereto under provisions of Section 2.7(a) and (ii) cause the heading “Closing Date Payments” Stock Option Plans to terminate at or prior to the Option Holders, to the extent not previously paid pursuant to Section 2.3(b)(i), through its normal payroll processing procedures and subject to all applicable payroll and withholding taxes required by applicable Tax Law to be withheldClosing. (c) The Company shall also pay any additional funds paid to it under Section l0.2(i) on behalf of the Option Holders, subject to all applicable payroll and withholding taxes required by applicable Tax Law to be withheld.