EXHIBIT 10.5C

 

NPS PHARMACEUTICALS, INC.

 

1998 STOCK OPTION PLAN

(reflects all amendments by the Board of Directors through June 2003)

 

1. GENERAL.

 

  1.1 Purpose. The 1998 Stock Option Plan has been established by the Company to
provide a means by which employees, directors, and consultants of the Company
and its Affiliates may be given the opportunity to benefit from increases in
value of NPS stock through the granting of Options. NPS seeks to (a) retain the
services of present employees, directors, and consultants; (b) secure and retain
the services of new employees, directors, and consultants; and (c) provide
incentives for such persons to exert maximum efforts for the success of the
Company and thereby promote the long-term interest of the Company, including the
growth in value of the Company’s equity and enhancement of long-term stockholder
return.

 

  1.2 Types of Options. The Company intends that the Options issued under the
Plan shall, in the discretion of the Board or any Board Committee (see paragraph
3.2), be either Incentive Stock Options or Nonstatutory Stock Options (defined
below).

 

  1.3 Definitions. Unless otherwise defined, capitalized terms shall have the
meaning set forth in Section 2.

 

2. DEFINITIONS.

 

  2.1 Affiliate means any parent corporation or subsidiary corporation of the
Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f) respectively, of the Code.

 

  2.2 Board means the Board of Directors of the Company.

 

  2.3 Code means the Internal Revenue Code of 1986, as amended.

 

  2.4 Committee means a Committee appointed by the Board in accordance with
paragraph 3.2 herein.

 

  2.5 Company means NPS Pharmaceuticals, Inc., a Delaware corporation.

 

  2.6 Consultant means any person (including an advisor) engaged by the Company
or an Affiliate to render consulting services under arrangements intended to
compensate such person for such services. The term “Consultant” shall not
include a Director who is paid only a director’s fee by the Company or who is
not compensated by the Company for services as a Director.

 

  2.7 Continuous Status as an Employee, Director, or Consultant means the
employment or relationship as an Employee, Director, or Consultant is not
interrupted or terminated by the Company or any Affiliate. The Board, in its
sole discretion, may determine whether Continuous Status as an Employee,
Director, or Consultant shall be considered interrupted in the case of:

 

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  2.7.1 any leave of absence approved by the Board, including sick leave,
military leave, or any other personal leave; provided, however, that for
purposes of Incentive Stock Options, any such leave may not exceed 90 days
unless reemployment upon the expiration of such leave is guaranteed by contract
(including certain Company policies) or statute; or

 

  2.7.2 transfers between locations of the Company or between the Company,
Affiliates or its successor.

 

  2.8 Day of Determination means the date of the occurrence of an event that
requires the determination of the Fair Market Value of an award made hereunder.

 

  2.9 Director means a member of the Board.

 

  2.10 Disability means total and permanent disability as defined in Section
22(e)(3) of the Code.

 

  2.11 Employee means any person, including Officers and Directors, employed by
the Company or any Affiliate. Neither service as a Director nor payment of a
director’s fee by the Company shall be sufficient to constitute “employment” by
the Company.

 

  2.12 Exchange Act means the Securities Exchange Act of 1934, as amended.

 

  2.13 Fair Market Value means, as of any date, the value of the common stock of
the Company as determined as follows:

 

  2.13.1 If the common stock is listed on any established stock exchange or a
national market system, including without limitation, the National Market System
of the National Association of Securities Dealers, Inc. Automated Quotation
(“Nasdaq”) System, the Fair Market Value of a share of common stock shall be the
closing price for such stock on the Day of Determination as quoted on such
system as reported in the Wall Street Journal or such other source as the Board
deems reliable. In the event the Day of Determination falls on a date that the
Nasdaq system is closed, then the Fair Market Value shall be the closing sales
price for such stock on the last market trading day prior to the Day of
Determination as quoted on such system as reported in the Wall Street Journal or
such other source as the Board deems reliable.

 

  2.13.2 If the common stock is quoted on Nasdaq (but not on the National Market
System thereof) or is regularly quoted by a recognized securities dealer but
selling prices are not reported, the Fair Market Value of a share of common
stock shall be the mean between the bid and asked prices for the common stock on
the last market trading day prior to the day of determination, as reported in
the Wall Street Journal or such other source as the Board deems reliable;

 

  2.13.3 In the absence of an established market for the common stock, the Fair
Market Value shall be determined in good faith by the Board.

 

  2.14 Incentive Stock Option (or “ISO”) means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

 

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  2.15 Non-Employee Director means a Director who is considered to be a
“Non-Employee Director” in accordance with Rule 16b-3(b)(3), or any other
applicable rules, regulations or interpretations of the Securities and Exchange
Commission.

 

  2.16 Nonstatutory Stock Option (or “NSO”) means an Option not intended to
qualify or not eligible to qualify as an ISO or an ISO which, subsequent to its
date of grant, no longer qualifies as an ISO under Section 422 of the Code.

 

  2.17 Officer means a person who is an officer of the Company within the
meaning of Section 16a-1(f) of the Exchange Act and the rules and regulations
promulgated thereunder.

 

  2.18 Option means a stock option granted pursuant to the Plan.

 

  2.19 Option Agreement means a written agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant.

 

  2.20 Optionee means an Employee, Director, or Consultant who holds an
outstanding Option.

 

  2.21 Outside Director means a Director who is considered to be an “Outside
Director” in accordance with Section 162(m) of the Code, or any other applicable
Code sections, regulations, or interpretations of the IRS.

 

  2.22 Plan means this 1998 Stock Option Plan.

 

  2.23 Rule 16b-3 means Rule 16b-3 of the Exchange Act or any successor to Rule
16b-3, as in effect when discretion is being exercised with respect to the Plan.

 

  2.24 Securities Act means the Securities Act of 1933, as amended.

 

3. ADMINISTRATION.

 

  3.1 Powers and Authority. The Plan shall be administered by or under the
direction of the Board unless and until the Board delegates administration to a
Committee, as provided in paragraph 3.2. The Board shall have the power subject
to and within the limitations of the express provisions of the Plan:

 

  3.1.1 To determine from time to time: (a) which of the persons eligible under
the Plan shall be granted Options; (b) when and how Options shall be granted;
(c) whether an Option shall be intended to qualify as an ISO; (d) the provisions
of each Option granted (which need not be identical) including the time or times
when a person shall be permitted to receive stock pursuant to the exercise of
such Option; (e) whether a person shall be permitted to exercise such Option;
and (f) the number of shares with respect to which Options shall be granted to
each such person.

 

  3.1.2 To construe and interpret the Plan and Options granted under it, and to
establish, amend, and revoke rules and regulations for its administration. The
Board, in the exercise of this power, may correct any defect, omission, or
inconsistency in the Plan or in any Option Agreement, in a manner and to the
extent it shall deem necessary or expedient to make the Plan fully effective.

 

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  3.1.3 To amend the Plan as provided in Section 12.

 

  3.1.4 Generally, to exercise such powers and to perform such acts as the Board
deems necessary or expedient to promote the best interests of the Company.

 

  3.2 Delegation. The Board may delegate administration of the Plan to a Board
committee composed of not fewer than two members (the “Committee”). All members
of the Committee shall be Outside Directors or Non-Employee Directors, to the
extent necessary to comply with the applicable provisions of Rule 16b-3 and
Section 162(m). If administration is delegated to a Committee, the Committee
shall have, in connection with the administration of the Plan, the powers
theretofore possessed by the Board (and references in this Plan to the Board
shall in such event, be to the Committee), subject, however, to such
resolutions, not inconsistent with the provisions of the Plan, as may be adopted
from time to time by the Board. The Board may abolish the Committee at any time
and revest in the Board the administration of the Plan.

 

  3.3 Director Status. Any requirement that an administrator of the Plan be a
Non-Employee Director or an Outside Director shall not apply if the Board or the
Committee expressly declares that such requirement shall not apply.

 

4. SHARES SUBJECT TO THE PLAN.

 

  4.1 Available Shares. Subject to the provisions of Section 11, the number of
shares that may be issued pursuant to Options granted hereunder shall not exceed
in the aggregate six million five hundred thousand (6,500,000) shares of the
Company’s common stock.

 

  4.2 Forfeited or Canceled Shares. Any shares of stock for which an Option has
been granted under the Plan that are forfeited because of the failure to meet an
Option grant contingency or condition shall again be available for delivery
pursuant to new grants under the Plan. To the extent any shares of stock covered
by an Option are not delivered to an Optionee or beneficiary because the award
is forfeited or canceled, or the shares of stock are not delivered because the
award is settled in cash, such shares shall not be deemed to have been delivered
for purposes of determining the maximum number of shares of stock available for
delivery under the Plan.

 

  4.3 Payment with Shares. If the exercise price of any Option granted under the
Plan is satisfied by tendering shares of stock to the Company (by either actual
delivery or by attestation), only the number of shares of stock issued net of
the shares of stock tendered shall be deemed delivered for purposes of
determining the maximum number of shares of stock available for delivery under
the Plan.

 

  4.4 Plan Limits. Shares of stock delivered under the Plan in settlement,
assumption, or substitution of outstanding awards (or obligations to grant
future awards) under the plans or arrangements of another entity shall not
reduce the maximum number of shares of stock available for delivery under the
Plan, to the extent that such settlement, assumption, or substitution is a
result of the Company or Affiliate acquiring another entity (or an interest in
another entity). Subject to the provisions of Section 11, the maximum number of
shares that may be covered by grants to any one individual shall be 750,000
shares during any three consecutive calendar years.

 

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5. ELIGIBILITY.

 

  5.1 Option Type. ISOs may be granted only to Employees. NSOs may be granted to
Employees, Directors, or Consultants.

 

  5.2 Section 16 Compliance. No Officer or Director shall be eligible for the
benefits of the Plan unless at the time discretion is exercised in the selection
of an Officer or Director as a person to whom Options may be granted, or in the
determination of the number of shares which may be covered by Options granted to
the Officer or Director, the Plan otherwise complies with the requirements of
Rule 16b-3. This paragraph 5.2 shall not apply if the Board or Committee
expressly declares that it shall not apply.

 

6. OPTION PROVISIONS. Each Option shall be in such form and shall contain such
terms and conditions as the Board shall deem appropriate. The provisions of
separate Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:

 

  6.1 Term. No Option shall be exercisable after the expiration of ten years
from the date it was granted.

 

  6.2 Price. The exercise price of each Option shall be not less than 100% of
the Fair Market Value of the stock subject to the Option on the date the Option
is granted.

 

  6.3 Consideration. The purchase price of stock acquired pursuant to an Option
shall be paid, to the extent permitted by applicable statutes and regulations:

 

  6.3.1 in cash; or

 

  6.3.2 by delivery of already-owned shares of common stock of the Company, held
by the Optionee for at least six months, or a combination of cash and
already-owned shares of common stock of the Company; or

 

  6.3.3 according to a deferred payment or other arrangement (which may include,
without limiting the generality of the foregoing, the use of other common stock
of the Company) with the person to whom the Option is granted or to whom the
Option is transferred pursuant to paragraph 6.4; or

 

  6.3.4 pursuant to a broker assisted exercise same-day sales program; or

 

  6.3.5 as required in the discretion of the Board or the Committee, either at
the time of the grant or exercise of the Option; or

 

  6.3.6 any combination of 6.3.1 through 6.3.5 above.

 

       In the case of any deferred payment arrangement, interest shall be
payable at least annually and shall be charged at the minimum rate of interest
necessary to avoid the treatment as interest, under any applicable provisions of
the Code, of any amounts other than amounts stated to be interest under the
deferred payment arrangement.

 

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  6.4 Transferability.

 

  6.4.1 Incentive Stock Options. In order for an Option to qualify for treatment
as an ISO, it may not be transferable except by will or by the laws of descent
and distribution. In the event an Optionee transfers such Option, such transfer
shall constitute a disqualifying event and the Option shall no longer qualify as
an ISO but shall be considered a NSO under the terms of this Plan.

 

  6.4.2 Nonstatutory Stock Option. The Board or Committee may, in its
discretion, authorize all or a portion of the NSOs to be granted to an Optionee
to be on terms that permit transfer by such Optionee to (a) the spouse,
children, or grandchildren of the Optionee (“Immediate Family Members”), (b) a
trust or trusts for the exclusive benefit of such Immediate Family Members, or
(c) a partnership in which such Immediate Family Members are the only partners,
provided that (i) there may be no consideration for any such transfer, (ii) the
Option Agreement pursuant to which such Options are granted must expressly
provide for transferability in a manner consistent with this Section, (iii)
subsequent transfers of transferred Options shall be prohibited except those
occurring by will or the laws of descent and distribution, and (iv) the Options
shall continue to be subject to all the terms and conditions that applied prior
to transfer in the same manner and to the same extent as non-transferred
Options, including paragraphs 6.5 through 6.9. The Options shall be exercisable
by the transferee only to the extent, and for the periods specified in such
sections. The Company expressly disclaims any obligation to provide notice to a
transferee of the termination of the Option.

 

  6.4.3 Unless transfer by an Optionee is specifically provided for in an Option
Agreement, a NSO shall not be transferable except by will or by the laws of
descent and distribution or pursuant to a qualified domestic relations order as
defined by the Code or Title I of the Employee Retirement Income Security Act,
or the rules thereunder (a “QDRO”), and shall be exercisable during the lifetime
of the person to whom the NSO is granted only by such person or any transferee
pursuant to a QDRO.

 

  6.5 Vesting. The total number of shares of stock subject to an Option may, but
need not, be allotted in periodic installments (which may, but need not, be
equal). The Option Agreement may provide that from time to time during each of
such installment periods, the Option may become exercisable (“vest”) with
respect to some or all of the shares allotted to that period, and may be
exercised with respect to some or all of the shares allotted to such period
and/or any prior period as to which the Option became vested but was not fully
exercised. The Option may be subject to such other terms and conditions on the
time or times when it may be exercised (which may be based on performance
criteria) as the Board may deem appropriate. The provisions of this paragraph
6.5 are subject to any Option provisions governing the minimum number of shares
as to which an Option may be exercised.

 

  6.6 Securities Law Compliance. The Company may require any Optionee, or any
person to whom an Option is transferred under paragraph 6.4, as a condition of
exercising any such Option, (a) to give written assurances satisfactory to the
Company as to the Optionee’s knowledge and experience in financial and business
matters and/or to employ a purchaser representative reasonably satisfactory to
the Company who is knowledgeable and experienced in financial and business
matters, and that he or she is capable of evaluating, alone or together with the
purchaser representative, the merits and risks of exercising the Option; and (b)
to give written assurances satisfactory to the Company stating that such

 

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       person is acquiring the stock subject to the Option for such person’s own
account and not with any present intention of selling or otherwise distributing
the stock. These requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (i) the issuance of the shares upon the
exercise of the Option has been registered under a then currently effective
registration statement under the Securities Act, or (ii) as to any particular
requirement, a determination is made by counsel for the Company that such
requirement need not be met in the circumstances under the then applicable
securities laws.

 

  6.7 Termination of Employment or Relationship as an Employee, Director, or
Consultant. In the event an Optionee’s Continuous Status as an Employee,
Director, or Consultant terminates (other than upon the Optionee’s death or
Disability), the Optionee may exercise his or her Option, but only within such
period of time as is determined by the Board, and only to the extent that the
Optionee was entitled to exercise at the date of termination (but in no event
later than the expiration of the term of such Option as set forth in the Option
Agreement). In the case of an ISO, the Board shall determine such period of time
(in no event to exceed three months from the date of termination) when the
Option is granted. If, at the date of termination, the Optionee is not entitled
to exercise his or her entire Option, the shares covered by the unexercisable
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified in the
Option Agreement, the Option shall terminate, and the shares covered by such
Option shall revert to the Plan. Provided, however, that in the event an
employee is a Covered Employee as defined under the Company’s Severance Plan,
and such employee’s status as an employee is terminated as a result of a
change-in-control as defined in the Severance Plan and such employee has elected
to receive the severance benefit provided for in the Severance Plan then all
employee’s vested options shall remain exercisable for a period of two years
from the date of termination of such employee’s employment with the Company.

 

  6.8 Retirement of Optionee. Notwithstanding any contrary Plan provision, in
the event an Optionee’s employment as an Employee, Director, or Consultant
terminates due to Optionee’ s Retirement, the Optionee shall vest in that number
of shares subject to the Option that would have vested had the Optionee remained
an Employee, Director or Consultant for an additional two (2) years from the
date of Retirement. In addition, the Option shall remain exercisable until the
expiration of its term. For purposes of this paragraph, Retirement shall mean
the termination of service with the Company or an Affiliate of an Optionee on or
after the date on which the Optionee’s number of completed years of service with
the Company or Affiliate and age equal or exceed seventy (70) (including
termination due to death or Disability after such time).

 

  6.9 Disability of Optionee. In the event an Optionee’s Continuous Status as an
Employee, Director, or Consultant terminates as a result of the Optionee’s
Disability, the Optionee may exercise his or her Option, but only within twelve
months from the date of such termination (or such shorter period specified in
the Option Agreement), and only to the extent that the Optionee was entitled to
exercise at the date of such termination (but in no event later than the
expiration of the term of such Option as set forth in the Option Agreement). If,
at the date of termination, the Optionee is not entitled to exercise his or her
entire Option, the shares covered by the unexercisable portion of the Option
shall revert to the Plan. If, after termination, the Optionee does not exercise
his or her Option within the time specified herein, the Option shall terminate,
and the shares covered by such Option shall revert to the Plan.

 

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  6.10 Death of Optionee. In the event of the death of an Optionee, the Option
may be exercised, at any time within eighteen months following the date of death
(or such shorter period specified in the Option Agreement, but in no event later
than the expiration of the term of such Option as set forth in the Option
Agreement), by the Optionee’s estate or by a person who acquired the right to
exercise the Option by bequest or inheritance, but only to the extent the
Optionee was entitled to exercise the Option at the date of death. If, at the
time of death, the Optionee was not entitled to exercise his or her entire
Option, the shares covered by the unexercisable portion of the Option shall
revert to the Plan. If, after death, the Optionee’s estate or a person who
acquired the right to exercise the Option by bequest or inheritance, or by
assignment as provided herein, does not exercise the Option within the time
specified herein, the Option shall terminate, and the shares covered by such
Option shall revert to the Plan.

 

  6.11 Early Exercise. The Option Agreement may, but need not, include a
provision whereby the Optionee may elect at any time while an Employee,
Director, or Consultant to exercise the Option as to any part or all of the
shares subject to the Option prior to the full vesting of the Option. Any
nonvested shares so purchased may be subject to a repurchase right in favor of
the Company or to any other restriction the Board determines to be appropriate.

 

  6.12 Withholding. To the extent provided by the terms of an Option Agreement,
the Optionee may satisfy any federal, state, or local tax withholding obligation
relating to the exercise of such Option by any of the following means or by a
combination of such means:

 

  6.12.1 cash payment; or

 

  6.12.2 authorizing the Company to withhold shares from the shares of the
common stock otherwise issuable to the participant as a result of the exercise
of the Option; or

 

  6.12.3 delivering to the Company owned and unencumbered shares of the common
stock of the Company.

 

7. NO REPRICING, CANCELLATION, OR RE-GRANT OF OPTIONS. Except for certain
adjustments due to corporate transactions described in Section 11, the exercise
price for any outstanding Option granted under the Plan may not be decreased
after the Day of Determination for such Option grant nor may an outstanding
Option granted under the Plan be surrendered to the Company as consideration in
exchange for the grant of a new Option with a lower exercise price.

 

8. COVENANTS OF THE COMPANY.

 

  8.1 Stock Availability. During the terms of the Option granted under the Plan,
the Company shall keep available at all times the number of shares of stock
required to satisfy such grants up to the number of shares of stock authorized
under the Plan.

 

  8.2 Authority. The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such authority as may be
required to issue and sell shares of stock acquired under the grants, provided,
however, that this undertaking shall not require the Company to register under
the Securities Act either the Plan or any stock issued or issuable pursuant to
any such Option. If, after reasonable efforts, the Company is unable to obtain
from any such regulatory commission or agency, the authority which counsel for
the Company deems necessary for the lawful issuance and sale of stock under the
Plan, the Company shall be relieved from any liability for failure to issue and
sell stock under such Options unless and until such authority is obtained.

 

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9. USE OF PROCEEDS FROM STOCK. Proceeds from the exercise of Options under the
Plan shall constitute general funds of the Company.

 

10. MISCELLANEOUS.

 

  10.1 Acceleration. The Board or the Committee shall have the power to
accelerate the time at which an Option may first be exercised or the time during
which an Option or any part thereof will vest, notwithstanding the provisions in
the Option Agreement stating the time at which it may first be exercised or the
time during which it will vest.

 

  10.2 Ownership Rights. Neither an Optionee nor any person to whom an Option is
transferred under paragraph 6.4 shall be deemed to be the holder of, or to have
any of the rights of a holder with respect to any shares subject to such Option
unless and until such person has satisfied all requirements for exercise of the
Option pursuant to its terms.

 

  10.3 Employment Rights. Nothing in the Plan or any instrument executed
pursuant thereto shall confer upon any Employee, Director, Consultant, Optionee,
or other holder of Options any right to continue in the employ of the Company or
any Affiliate (or to continue acting as a Director or Consultant) or shall
affect the right of the Company or any Affiliate to terminate the employment or
relationship as a Director or Consultant of any Employee, Director, Consultant,
or Optionee with or without cause.

 

  10.4 ISO Value Limit. To the extent that the aggregate Fair Market Value
(determined at the time of grant) of stock with respect to which ISOs granted
after 1998 are exercisable for the first time by any Optionee during any
calendar year under all plans of the Company and its Affiliates exceeds
$100,000, the Options or portions thereof which exceed such limit (according to
the order in which they were granted) shall be treated as NSOs.

 

11. ADJUSTMENTS UPON CHANGES IN STOCK AND CORPORATE TRANSACTIONS.

 

  11.1 Stock Adjustments. If any change is made in the stock subject to the
Plan, or subject to any Option (through merger, consolidation, reorganization,
recapitalization, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or otherwise), the Plan and outstanding Options will be
appropriately adjusted in the class(es) and maximum number of shares subject to
the Plan and the class(es) and number of shares and price per share of stock
subject to outstanding Options.

 

  11.2 Corporate Transactions. In the event of: (a) a merger or consolidation in
which the Company is not the surviving corporation; (b) a reverse merger in
which the Company is the surviving corporation but the shares of the Company’s
common stock outstanding immediately preceding the merger are converted by
virtue of the merger into other property, whether in the form of securities,
cash, or otherwise; (c) a strategic corporate event, such as a merger or
acquisition, where the Company is technically the surviving entity, but where
other elements of a change of control are present, i.e. change in management
team or board composition; (d) a transaction which the Board determines in its
sole discretion to constitute a change in control of the Company; or (e) any
capital reorganization in which more than fifty percent (50%) of the shares of
the Company entitled to vote are exchanged, then, the time during which Options
outstanding under the Plan become vested shall be accelerated and all
outstanding Options shall become immediately exercisable upon such event and
such Options shall continue to be exercisable until the later of (i) twenty-four
(24) months from the effective date of such event, or (ii) the time specified in
the Option Agreement during which the Option is

 

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       exercisable following an Optionee’s termination of service; provided,
however, that in no event shall the Option be exercisable after the expiration
of its term.

 

12. AMENDMENT OF THE PLAN.

 

  12.1 Amendments. The Board at any time, and from time to time, may amend the
Plan. However, as provided in Section 11, no amendment shall be effective unless
approved by the stockholders of the Company within twelve months before or after
the adoption of the amendment, where the amendment will:

 

  12.1.1 Increase the number of shares reserved for Options under the Plan;

 

  12.1.2 Modify the requirements as to eligibility for participation in the Plan
to the extent such modification requires stockholder approval in order for the
Plan to satisfy the requirements of Sections 162(m) and 422 of the Code;

 

  12.1.3 Modify the Plan in any other way if such modification requires
stockholder approval in order for the Plan to satisfy the requirements of
Section 422 of the Code or to comply with the requirements of Rule 16b-3 or
Nasdaq or other applicable securities exchange listing requirements;

 

  12.1.4 Decrease the minimum exercise price set forth in paragraph 6.2; or

 

  12.1.5 Remove the limitation provided in Section 7.

 

  12.2 Compliance. It is expressly contemplated that the Board may amend the
Plan in any respect the Board deems necessary or advisable to provide under the
provisions of the Code and the regulations promulgated thereunder relating to
ISOs and/or to bring the Plan and/or ISOs granted under it into compliance
therewith.

 

  12.3 Consent. Rights and obligations under any Option granted before amendment
of the Plan shall not be altered or impaired by any amendment of the Plan unless
(a) the Company requests the consent of the person to whom the Option was
granted and (b) such person consents in writing.

 

13. TERMINATION OR SUSPENSION OF THE PLAN.

 

  13.1 Termination. The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on midnight, May 31, 2008. No
Options may be granted under the Plan while the Plan is suspended or after it is
terminated.

 

  13.2 Rights and Obligations. Any Options granted while the Plan is in effect
shall not be altered or impaired by suspension or termination of the Plan,
except with the consent of the holder of the Options.

 

14. EFFECTIVE DATE OF PLAN. The Plan shall become effective as determined by the
Board, but no Options granted under the Plan shall be exercisable unless and
until the Plan has been approved by the stockholders of the Company.

 

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