Exhibit 10.28

 

OMNICELL, INC.

 

2004 Equity Incentive Plan

 

Adopted by the Board of Directors:  February 27, 2004

 

1.             Purposes.

 

(a)           General Purpose.  The Company, by means of the Plan, seeks to
retain the services of persons not previously an employee or director of the
Company, or following a bona fide period of non-employment, as an inducement
material to the individual’s entering into employment with the Company within
the meaning of Rule 4350(i)(1)(A)(iv) of the NASD Marketplace Rules, and to
provide incentives for such persons to exert maximum efforts for the success of
the Company and its Affiliates.

 

(b)           Eligible Stock Award Recipients.  The persons eligible to receive
Stock Awards are the Employees of the Company and its Affiliates subject to the
limitations set forth in Section 5.

 

(c)           Available Stock Awards.  The purpose of the Plan is to provide a
means by which eligible recipients of Stock Awards may be given an opportunity
to benefit from increases in value of the Common Stock through the granting of
the following Stock Awards:  (i) Options, (ii) Stock Bonus Awards, (iii) Stock
Purchase Awards, (iv) Stock Appreciation Rights, (v) Stock Unit Awards and
(vi) Other Stock Awards.

 

2.             Definitions.

 

(a)           “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.

 

(b)           “Board” means the Board of Directors of the Company.

 

(c)           “Capitalization Adjustment” has the meaning ascribed to that term
in Section 11(a).

 

(d)           “Change in Control” means the occurrence, in a single transaction
or in a series of related transactions, of any one or more of the following
events:

 

(i)            any Exchange Act Person becomes the Owner, directly or
indirectly, of securities of the Company representing more than fifty percent
(50%) of the combined voting power of the Company’s then outstanding securities
other than by virtue of a merger, consolidation or similar transaction. 
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
(A) on account of the acquisition of securities of the Company by an investor,
any affiliate thereof or any other Exchange Act Person from the Company in a
transaction or series of related transactions the primary purpose of which is to
obtain financing

 

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for the Company through the issuance of equity securities or (B) solely because
the level of Ownership held by any Exchange Act Person (the “Subject Person”)
exceeds the designated percentage threshold of the outstanding voting securities
as a result of a repurchase or other acquisition of voting securities by the
Company reducing the number of shares outstanding, provided that if a Change in
Control would occur (but for the operation of this sentence) as a result of the
acquisition of voting securities by the Company, and after such share
acquisition, the Subject Person becomes the Owner of any additional voting
securities that, assuming the repurchase or other acquisition had not occurred,
increases the percentage of the then outstanding voting securities Owned by the
Subject Person over the designated percentage threshold, then a Change in
Control shall be deemed to occur;

 

(ii)           there is consummated a merger, consolidation or similar
transaction involving (directly or indirectly) the Company and, immediately
after the consummation of such merger, consolidation or similar transaction, the
stockholders of the Company immediately prior thereto do not Own, directly or
indirectly, either (A) outstanding voting securities representing more than
fifty percent (50%) of the combined outstanding voting power of the surviving
Entity in such merger, consolidation or similar transaction or (B) more than
fifty percent (50%) of the combined outstanding voting power of the parent of
the surviving Entity in such merger, consolidation or similar transaction, in
each case in substantially the same proportions as their Ownership of the
outstanding voting securities of the Company immediately prior to such
transaction;

 

(iii)         the stockholders of the Company approve or the Board approves a
plan of complete dissolution or liquidation of the Company, or a complete
dissolution or liquidation of the Company shall otherwise occur;

 

(iv)          there is consummated a sale, lease, license or other disposition
of all or substantially all of the consolidated assets of the Company and its
Subsidiaries, other than a sale, lease, license or other disposition of all or
substantially all of the consolidated assets of the Company and its Subsidiaries
to an Entity, more than fifty percent (50%) of the combined voting power of the
voting securities of which are Owned by stockholders of the Company in
substantially the same proportions as their Ownership of the outstanding voting
securities of the Company immediately prior to such sale, lease, license or
other disposition; or

 

(v)            individuals who, on the date this Plan is adopted by the Board,
are members of the Board (the “Incumbent Board”) cease for any reason to
constitute at least a majority of the members of the Board; provided, however,
that if the appointment or election (or nomination for election) of any new
Board member was approved or recommended by a majority vote of the members of
the Incumbent Board then still in office, such new member shall, for purposes of
this Plan, be considered as a member of the Incumbent Board.

 

Notwithstanding the foregoing or any other provision of this Plan, the
definition of Change in Control (or any analogous term) in an individual written
agreement between the Company or any Affiliate and the Participant shall
supersede the foregoing definition with respect to Stock Awards subject to such
agreement (it being understood, however, that if no definition of Change

 

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in Control or any analogous term is set forth in such an individual written
agreement, the foregoing definition shall apply).

 

(e)           “Code” means the Internal Revenue Code of 1986, as amended.

 

(f)            “Committee” means a committee of one (1) or more members of the
Board appointed by the Board in accordance with Section 3(c).

 

(g)           “Common Stock” means the common stock of the Company.

 

(h)           “Company” means Omnicell, Inc., a Delaware corporation.

 

(i)            “Consultant” means any person, including an advisor, (i) engaged
by the Company or an Affiliate to render consulting or advisory services and who
is compensated for such services or (ii) serving as a member of the Board of
Directors of an Affiliate and who is compensated for such services.  However,
the term “Consultant” shall not include Directors who are not compensated by the
Company for their services as Directors, and the payment of a director’s fee by
the Company solely for services as a Director shall not cause a Director to be
considered a “Consultant” for purposes of the Plan.

 

(j)            “Continuous Service” means that the Participant’s service with
the Company or an Affiliate, whether as an Employee, Director or Consultant, is
not interrupted or terminated.  A change in the capacity in which the
Participant renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Participant
renders such service, provided that there is no interruption or termination of
the Participant’s service with the Company or an Affiliate, shall not terminate
a Participant’s Continuous Service.  For example, a change in status from an
Employee of the Company to a Consultant of an Affiliate or a Director shall not
constitute an interruption of Continuous Service.  The Board or the chief
executive officer of the Company, in that party’s sole discretion, may determine
whether Continuous Service shall be considered interrupted in the case of any
leave of absence approved by that party, including sick leave, military leave or
any other personal leave.  Notwithstanding the foregoing, an approved leave of
absence shall be treated as Continuous Service for purposes of vesting in a
Stock Award only to such extent as may be provided in the Company’s leave of
absence policy or in the written terms of the Participant’s leave of absence.

 

(k)           “Corporate Transaction” means the occurrence, in a single
transaction or in a series of related transactions, of any one or more of the
following events:

 

(i)            a sale or other disposition of all or substantially all, as
determined by the Board in its discretion, of the consolidated assets of the
Company and its Subsidiaries;

 

(ii)           a sale or other disposition of at least ninety percent (90%) of
the outstanding securities of the Company;

 

(iii)         a merger, consolidation or similar transaction following which the
Company is not the surviving corporation; or

 

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(iv)          a merger, consolidation or similar transaction following which the
Company is the surviving corporation but the shares of Common Stock outstanding
immediately preceding the merger, consolidation or similar transaction are
converted or exchanged by virtue of the merger, consolidation or similar
transaction into other property, whether in the form of securities, cash or
otherwise.

 

(l)            “Director” means a member of the Board.

 

(m)          “Disability” means, with respect to a Participant, such
Participant’s permanent and total disability within the meaning of the Company’s
long-term disability plan, as it may be amended from time to time, or, if there
is no such plan, as determined by the Board.

 

(n)           “Employee” means any person employed by the Company or an
Affiliate.  Service as a Director or as a Consultant shall not be sufficient to
constitute “employment” by the Company or an Affiliate.

 

(o)           “Entity” means a corporation, partnership or other entity.

 

(p)           “Exchange Act” means the Securities Exchange Act of 1934, as
amended.

 

(q)           “Exchange Act Person” means any natural person, Entity or “group”
(within the meaning of Section 13(d) or 14(d) of the Exchange Act), except that
“Exchange Act Person” shall not include (A) the Company or any Subsidiary of the
Company, (B) any employee benefit plan of the Company or any Subsidiary of the
Company or any trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any Subsidiary of the Company, (C) an underwriter
temporarily holding securities pursuant to an offering of such securities, or
(D) an Entity Owned, directly or indirectly, by the stockholders of the Company
in substantially the same proportions as their Ownership of stock of the
Company.

 

(r)           Fair Market Value” means, as of any date, the value of the Common
Stock determined as follows:

 

(i)            If the Common Stock is listed on any established stock exchange
or traded on the Nasdaq National Market or the Nasdaq SmallCap Market, the Fair
Market Value of a share of Common Stock shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or market (or the exchange or market with the greatest volume of
trading in 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.

 

(ii)           In the absence of such markets for the Common Stock, the Fair
Market Value shall be determined in good faith by the Board.

 

(s)           “Non-Employee Director” means a Director who either (i) is not a
current Employee or Officer of the Company or an Affiliate, does not receive
compensation (directly or indirectly) from the Company or an Affiliate for
services rendered as a Consultant or in any

 

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capacity other than as a Director (except for an amount as to which disclosure
would not be required under Item 404(a) of Regulation S-K promulgated pursuant
to the Securities Act (“Regulation S-K”)), does not possess an interest in any
other transaction as to which disclosure would be required under Item 404(a) of
Regulation S-K and is not engaged in a business relationship as to which
disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a “non-employee director” for purposes of Rule 16b-3.

 

(t)            “Officer” means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

 

(u)           “Option” means a nonstatutory stock option granted pursuant to the
Plan that is not intended to qualify as an incentive stock option under Section
422 of the Code and the regulations promulgated thereunder.

 

(v)            “Option Agreement” means a written agreement between the Company
and an Optionholder evidencing the terms and conditions of an individual Option
grant.  Each Option Agreement shall be subject to the terms and conditions of
the Plan.

 

(w)           “Optionholder” means a person to whom an Option is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Option.

 

(x)           “Other Stock Award” means an award based in whole or in part by
reference to the Common Stock which is granted pursuant to the terms and
conditions of Section 7(e).

 

(y)           “Other Stock Award Agreement” means a written agreement between
the Company and a holder of an Other Stock Award evidencing the terms and
conditions of an individual Other Stock Award grant.  Each Other Stock Award
Agreement shall be subject to the terms and conditions of the Plan.

 

(z)           “Own,” “Owned,” “Owner,” “Ownership”  A person or Entity shall be
deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired
“Ownership” of securities if such person or Entity, directly or indirectly,
through any contract, arrangement, understanding, relationship or otherwise, has
or shares voting power, which includes the power to vote or to direct the
voting, with respect to such securities.

 

(aa)         “Participant” means a person to whom a Stock Award is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Stock Award.

 

(bb)         “Plan” means this Omnicell, Inc. 2004 Equity Incentive Plan.

 

(cc)         “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or
any successor to Rule 16b-3, as in effect from time to time.

 

(dd)         “Securities Act” means the Securities Act of 1933, as amended.

 

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(ee)         “Stock Appreciation Right” means a right to receive the
appreciation of Common Stock which is granted pursuant to the terms and
conditions of Section 7(d).

 

(ff)           “Stock Appreciation Right Agreement” means a written agreement
between the Company and a holder of a Stock Appreciation Right evidencing the
terms and conditions of an individual Stock Appreciation Right grant.  Each
Stock Appreciation Right Agreement shall be subject to the terms and conditions
of the Plan.

 

(gg)         “Stock Award” means any right granted under the Plan, including an
Option,  Stock Purchase Award, Stock Bonus Award, Stock Unit Award, a Stock
Appreciation Right and an Other Stock Award.

 

(hh)         “Stock Award Agreement” means a written agreement between the
Company and a Participant evidencing the terms and conditions of an individual
Stock Award grant.  Each Stock Award Agreement shall be subject to the terms and
conditions of the Plan.

 

(ii)           “Stock Bonus Award” means an award of shares of Common Stock
which is granted pursuant to the terms and conditions of Section 7(a).

 

(jj)           “Stock Bonus Award Agreement” means a written agreement between
the Company and a holder of a Stock Bonus Award evidencing the terms and
conditions of an individual Stock Bonus Award grant.  Each Stock Bonus Award
Agreement shall be subject to the terms and conditions of the Plan.

 

(kk)        “Stock Purchase Award” means an award of shares of Common Stock
which is granted pursuant to the terms and conditions of Section 7(b).

 

(ll)           “Stock Purchase Award Agreement” means a written agreement
between the Company and a holder of a Stock Purchase Award evidencing the terms
and conditions of an individual Stock Purchase Award grant.  Each Stock Purchase
Award Agreement shall be subject to the terms and conditions of the Plan.

 

(mm)       “Stock Unit Award” means a right to receive shares of Common Stock
which is granted pursuant to the terms and conditions of Section 7(c).

 

(nn)         “Stock Unit Award Agreement” means a written agreement between the
Company and a holder of a Stock Unit Award evidencing the terms and conditions
of an individual Stock Unit Award grant.  Each Stock Unit Award Agreement shall
be subject to the terms and conditions of the Plan.

 

(oo)         “Subsidiary” means, with respect to the Company, (i) any
corporation of which more than fifty percent (50%) of the outstanding capital
stock having ordinary voting power to elect a majority of the board of directors
of such corporation (irrespective of whether, at the time, stock of any other
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time, directly or
indirectly, Owned by the Company, and (ii) any partnership in which the Company
has a direct or indirect interest

 

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(whether in the form of voting or participation in profits or capital
contribution) of more than fifty percent (50%).

 

3.             Administration.

 

(a)           Administration by Board.  The Board shall administer the Plan
unless and until the Board delegates administration of the Plan to a committee,
as provided in Section 3(c).

 

(b)           Powers of Board.  The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:

 

(i)            Subject to Section 5 herein, to determine from time to time which
of the persons eligible under the Plan shall be granted Stock Awards; when and
how each Stock Award shall be granted; what type or combination of types of
Stock Award shall be granted; the provisions of each Stock Award granted (which
need not be identical), including the time or times when a person shall be
permitted to receive Common Stock pursuant to a Stock Award; and the number of
shares of Common Stock with respect to which a Stock Award shall be granted to
each such person.

 

(ii)           To construe and interpret the Plan and Stock Awards 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 Stock Award Agreement,
in a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.

 

(iii)         To effect, at any time and from time to time, with the consent of
any adversely affected Optionholder, (1) the reduction of the exercise price of
any outstanding Option under the Plan or (2) any other action that is treated as
a repricing under generally accepted accounting principles to the extent such
action complies with Rule 4350(i)(1)(A)(iv) of the NASD Marketplace Rules.

 

(iv)          To amend the Plan or a Stock Award as provided in Section 12.

 

(v)            To terminate or suspend the Plan as provided in Section 13.

 

(vi)          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
and that are not in conflict with the provisions of the Plan.

 

(vii)         To adopt such procedures and sub-plans as are necessary or
appropriate to permit participation in the Plan by employees who are foreign
nationals or employed outside the United States.

 

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(c)           Delegation to Committee.

 

(i)            General.  The Board may delegate some or all of the
administration of the Plan to a Committee or Committees of one (1) or more
members of the Board, and the term “Committee” shall apply to any person or
persons to whom such authority has been delegated.  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 that
have been delegated to the Committee, including the power to delegate to a
subcommittee any of the administrative powers the Committee is authorized to
exercise (and references in this Plan to the Board shall thereafter be to the
Committee or subcommittee), 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 retain the authority to concurrently
administer the Plan with the Committee and may, at any time, revest in the Board
the administration of the Plan.

 

(ii)           Rule 16b-3 Compliance.  In the discretion of the Board, the
Committee may consist solely of two (2) or more Non-Employee Directors, in
accordance with Rule 16b-3.

 

(d)           Effect of Board’s Decision. All determinations, interpretations
and constructions made by the Board in good faith shall not be subject to review
by any person and shall be final, binding and conclusive on all persons.

 

4.             Shares Subject to the Plan.

 

(a)           Share Reserve.  Subject to the provisions of Section 11(a)
relating to Capitalization Adjustments, the shares of Common Stock that may be
issued pursuant to Stock Awards shall not exceed in the aggregate two hundred
thousand (200,000) shares of Common Stock.

 

(b)           Reversion of Shares to the Share Reserve.  If any Stock Award
shall for any reason expire or otherwise terminate, in whole or in part, without
having been exercised in full, or if any shares of Common Stock issued to a
Participant pursuant to a Stock Award are forfeited back to or repurchased by
the Company, including, but not limited to, any repurchase or forfeiture caused
by the failure to meet a contingency or condition required for the vesting of
such shares, then the shares of Common Stock not acquired under such Stock Award
shall revert to and again become available for issuance under the Plan.  If any
shares subject to a Stock Award are not delivered to a Participant because such
shares are withheld for taxes or the Stock Award is exercised through a
reduction of shares subject to the Stock Award (i.e., “net exercised”), then the
shares that are not delivered shall revert to and again become available for
issuance under the Plan.  If the exercise price of any Stock Award is satisfied
by tendering shares of Common Stock held by the Participant (either by actual
delivery or attestation), then the number of such tendered shares shall revert
to and again become available for issuance under the Plan.

 

(c)           Source of Shares.  The shares of Common Stock subject to the Plan
may be unissued shares or reacquired shares, bought on the market or otherwise.

 

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5.             Eligibility.  Persons eligible for Stock Awards shall consist of
Employees whose potential contribution, in the judgment of the Board, will
benefit the future success of the Company and/or an Affiliate.   Stock Awards
may be granted only to persons not previously an Employee or Director of the
Company, or following a bona fide period of non-employment, as an inducement
material to the individual’s entering into employment with the Company within
the meaning of Rule 4350(i)(1)(A)(iv) of the NASD Marketplace Rules.  In
addition, notwithstanding any other provision of the Plan to the contrary, all
Stock Awards must be granted either by a majority of the Company’s independent
directors or a committee comprised of a majority of independent directors.

 

6.             Option Provisions.

 

Each Option shall be in such form and shall contain such terms and conditions as
the Board shall deem appropriate.  All Options shall be designated as
nonstatutory stock options at the time of grant.  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:

 

(a)           Term.  The Board shall determine the term of an Option.

 

(b)           Exercise Price of an Option.  The Board, in its discretion, shall
determine the exercise price of each Option.

 

(c)           Consideration.  The purchase price of Common Stock acquired
pursuant to an Option shall be paid, to the extent permitted by applicable law,
either (i) in cash at the time the Option is exercised or (ii) at the discretion
of the Board (1) by delivery to the Company of other Common Stock, (2) by a “net
exercise” of the Option (as further described below), (3) pursuant to a program
developed under Regulation T as promulgated by the Federal Reserve Board that,
prior to the issuance of Common Stock, results in either the receipt of cash (or
check) by the Company or the receipt of irrevocable instructions to pay the
aggregate exercise price to the Company from the sales proceeds, (4) according
to a deferred payment or other similar arrangement with the Optionholder or (5)
in any other form of legal consideration that may be acceptable to the Board. 
Unless otherwise specifically provided in the Option, the purchase price of
Common Stock acquired pursuant to an Option that is paid by delivery to the
Company of other Common Stock acquired, directly or indirectly from the Company,
shall be paid only by shares of the Common Stock of the Company that have been
held for more than six (6) months (or such longer or shorter period of time
required to avoid a charge to earnings for financial accounting purposes).

 

In the case of a “net exercise” of an Option, the Company will not require a
payment of the exercise price of the Option from the Participant but will reduce
the number of shares of Common Stock issued upon the exercise by the largest
number of whole shares that has a Fair Market Value that does not exceed the
aggregate exercise price.  With respect to any remaining balance of the
aggregate exercise price, the Company shall accept a cash payment from the
Participant.  The shares of Common Stock so used to pay the exercise price of an
Option under a “net exercise” and any shares withheld for taxes will be
considered to have been withheld from

 

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the exercise of the Option.  Accordingly, the Option will not again be
exercisable with respect to the shares deemed withheld to satisfy the exercise
price, the shares actually delivered to the Participant or any shares withheld
for purposes of tax withholding.

 

In the case of any deferred payment arrangement, interest shall be compounded 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.

 

(c)           Transferability of an Option.  An Option shall be transferable to
the extent provided in the Option Agreement.  If the Option does not provide for
transferability, then the Option shall not be transferable except by (i) will,
(ii) the laws of descent and distribution, or (iii) upon dissolution of the
Optionholder’s marriage pursuant to a domestic relations order.  Also, during
the Optionholder’s lifetime, only the Optionholder is entitled to exercise his
or her Option.  Notwithstanding the foregoing, by delivering written notice to
the Company, in a form satisfactory to the Company, an Optionholder may
designate a third party who, in the event of such Optionholder’s death, shall
thereafter be entitled to exercise the Option.

 

(d)           Vesting Generally.  The total number of shares of Common Stock
subject to an Option may, but need not, vest and therefore become exercisable in
periodic installments that may, but need not, be equal.  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 or other criteria) as the Board may
deem appropriate.  The vesting provisions of individual Options may vary.  The
provisions of this Section 6(e) are subject to any Option provisions governing
the minimum number of shares of Common Stock as to which an Option may be
exercised.

 

(e)           Termination of Continuous Service.  In the event that an
Optionholder’s Continuous Service terminates (other than upon the Optionholder’s
death or Disability), the Optionholder may exercise his or her Option (to the
extent that the Optionholder was entitled to exercise such Option as of the date
of termination of Continuous Service) but only within such period of time ending
on the earlier of (i) the date three (3) months following the termination of the
Optionholder’s Continuous Service (or such longer or shorter period specified in
the Option Agreement) or (ii) the expiration of the term of the Option as set
forth in the Option Agreement.  If, after termination of Continuous Service, the
Optionholder does not exercise his or her Option within the time specified in
the Option Agreement, the Option shall terminate.

 

(f)            Extension of Termination Date.  An Optionholder’s Option
Agreement may (but need not) provide that if the exercise of the Option
following the termination of the Optionholder’s Continuous Service (other than
upon the Optionholder’s death or Disability) would be prohibited at any time
solely because the issuance of shares of Common Stock would violate the
registration requirements under the Securities Act, then the Option shall
terminate on the earlier of (i) the expiration of the term of the Option set
forth in the Option Agreement or (ii) the expiration of a period of three (3)
months after the termination of the Optionholder’s Continuous Service during
which the exercise of the Option would not be in violation of such registration
requirements.

 

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(g)           Disability of Optionholder.  In the event that an Optionholder’s
Continuous Service terminates as a result of the Optionholder’s Disability, the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise such Option as of the date of termination of Continuous
Service), but only within such period of time ending on the earlier of (i) the
date twelve (12) months following such termination of Continuous Service (or
such longer or shorter period specified in the Option Agreement) or (ii) the
expiration of the term of the Option as set forth in the Option Agreement.  If,
after termination of Continuous Service, the Optionholder does not exercise his
or her Option within the time specified herein, the Option shall terminate.

 

(h)           Death of Optionholder.  In the event that (i) an Optionholder’s
Continuous Service terminates as a result of the Optionholder’s death or (ii)
the Optionholder dies within the period (if any) specified in the Option
Agreement after the termination of the Optionholder’s Continuous Service for a
reason other than death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise such Option as of the date of death) by
the Optionholder’s estate, by a person who acquired the right to exercise the
Option by bequest or inheritance or by a person designated to exercise the
option upon the Optionholder’s death pursuant to Section 6(d), but only within
the period ending on the earlier of (1) the date eighteen (18) months following
the date of death (or such longer or shorter period specified in the Option
Agreement) or (2) the expiration of the term of such Option as set forth in the
Option Agreement.  If, after death, the Option is not exercised within the time
specified herein, the Option shall terminate.

 

(i)            Early Exercise.  The Option may, but need not, include a
provision whereby the Optionholder may elect at any time before the
Optionholder’s Continuous Service terminates to exercise the Option as to any
part or all of the shares of Common Stock subject to the Option prior to the
full vesting of the Option.  Any unvested shares of Common Stock so purchased
may be subject to a repurchase option in favor of the Company or to any other
restriction the Board determines to be appropriate.  The Company shall not be
required to exercise its repurchase option until at least six (6) months (or
such longer or shorter period of time required to avoid a charge to earnings for
financial accounting purposes) have elapsed following exercise of the Option
unless the Board otherwise specifically provides in the Option.

 

7.             Provisions of Stock Awards other than Options.

 

(a)           Stock Bonus Awards.  Each Stock Bonus Award Agreement shall be in
such form and shall contain such terms and conditions as the Board shall deem
appropriate.  At the Board’s election, shares of Common Stock may be (i) held in
book entry form subject to the Company’s instructions until any restrictions
relating to the Stock Bonus Award lapse; or (ii) evidenced by a certificate,
which certificate shall be held in such form and manner as determined by the
Board.  The terms and conditions of Stock Bonus Award Agreements may change from
time to time, and the terms and conditions of separate Stock Bonus Award
Agreements need not be identical, but each Stock Bonus Award Agreement shall
include (through incorporation of provisions hereof by reference in the
agreement or otherwise) the substance of each of the following provisions:

 

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(i)            Consideration.  A Stock Bonus Award may be awarded in
consideration for past services actually rendered to the Company or an Affiliate
for its benefit or in any other form of legal consideration that may be
acceptable to the Board in its discretion.

 

(ii)           Vesting.  Shares of Common Stock awarded under the Stock Bonus
Award Agreement may, but need not, be subject to forfeiture to the Company or a
share repurchase option in favor of the Company in accordance with a vesting
schedule to be determined by the Board.

 

(iii)         Termination of Participant’s Continuous Service.  In the event a
Participant’s Continuous Service terminates, the Company may reacquire (or
receive via  a forfeiture condition) any or all of the shares of Common Stock
held by the Participant which have not vested as of the date of termination of
Continuous Service under the terms of the Stock Bonus Award Agreement.

 

(iv)          Transferability.  Rights to acquire shares of Common Stock under
the Stock Bonus Award Agreement shall be transferable by the Participant only
upon such terms and conditions as are set forth in the Stock Bonus Award
Agreement, as the Board shall determine in its discretion, so long as Common
Stock awarded under the Stock Bonus Award Agreement remains subject to the terms
of the Stock Bonus Award Agreement.

 

(b)           Stock Purchase Awards.  Each Stock Purchase Award Agreement shall
be in such form and shall contain such terms and conditions as the Board shall
deem appropriate.  At the Board’s election, shares of Common Stock may be (i)
held in book entry form subject to the Company’s instructions until any
restrictions relating to the Stock Purchase Award lapse; or (ii) evidenced by a
certificate, which certificate shall be held in such form and manner as
determined by the Board.  The terms and conditions of Stock Purchase Award
Agreements may change from time to time, and the terms and conditions of
separate Stock Purchase Award Agreements need not be identical, provided,
however, that each Stock Purchase Award Agreement shall include (through
incorporation of the provisions hereof by reference in the agreement or
otherwise) the substance of each of the following provisions:

 

(i)            Purchase Price.  At the time of the grant of a Stock Purchase
Award, the Board will determine the price to be paid by the Participant for each
share subject to the Stock Purchase Award. To the extent required by applicable
law, the price to be paid by the Participant for each share of the Stock
Purchase Award will not be less than the par value of a share of Common Stock.

 

(ii)           Consideration.  At the time of the grant of a Stock Purchase
Award, the Board will determine the consideration permissible for the payment of
the purchase price of the Stock Purchase Award.  The purchase price of Common
Stock acquired pursuant to the Stock Purchase Award shall be paid either: (i) in
cash at the time of purchase or (ii) in any other form of legal consideration
that may be acceptable to the Board in its discretion.

 

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(iii)         Vesting. Shares of Common Stock acquired under a Stock Purchase
Award may, but need not, be subject to forfeiture to the Company or a share
repurchase option in favor of the Company in accordance with a vesting schedule
to be determined by the Board.

 

(iv)          Termination of Participant’s Continuous Service. In the event that
a Participant’s Continuous Service terminates, the Company shall have the right,
but not the obligation, to repurchase or otherwise reacquire, any or all of the
shares of Common Stock held by the Participant that have not vested as of the
date of termination under the terms of the Stock Purchase Award Agreement.  At
the Board’s election, the repurchase price, if any, paid by the Company may be
at the lower of: (i) the Fair Market Value on the relevant date; or (ii) the
Participant’s original cost.  The Company shall not be required to exercise its
repurchase option until at least six (6) months (or such longer or shorter
period of time required to avoid a charge to earnings for financial accounting
purposes) have elapsed following the purchase of the restricted stock unless
otherwise determined by the Board or provided in the Stock Purchase Award
Agreement.

 

(v)            Transferability. Rights to purchase or receive shares of Common
Stock granted under a Stock Purchase Award shall be transferable by the
Participant only upon such terms and conditions as are set forth in the Stock
Purchase Award Agreement, as the Board shall determine in its discretion, and so
long as Common Stock awarded under the Stock Purchase Award remains subject to
the terms of the Stock Purchase Award Agreement.

 

(c)           Stock Unit Awards.  Each Stock Unit Award Agreement shall be in
such form and shall contain such terms and conditions as the Board shall deem
appropriate.  The terms and conditions of Stock Unit Award Agreements may change
from time to time, and the terms and conditions of separate Stock Unit Award
Agreements need not be identical, provided, however, that each Stock Unit Award
Agreement shall include (through incorporation of the provisions hereof by
reference in the agreement or otherwise) the substance of each of the following
provisions:

 

(i)            Consideration.  At the time of grant of a Stock Unit Award, the
Board will determine the consideration, if any, to be paid by the Participant
upon delivery of each share of Common Stock subject to the Stock Unit Award. To
the extent required by applicable law, the consideration to be paid by the
Participant for each share of Common Stock subject to a Stock Unit Award will
not be less than the par value of a share of Common Stock.  The consideration
may be paid in any form permitted under applicable law.

 

(ii)           Vesting.  At the time of the grant of a Stock Unit Award, the
Board may impose such restrictions or conditions to the vesting of the Stock
Unit Award as it, in its absolute discretion, deems appropriate.

 

(iii)         Additional Restrictions.  At the time of the grant of Stock Unit,
the Board may impose such restrictions or conditions that delay the delivery of
the consideration after its vesting as the Board, in its absolute discretion,
deems appropriate, with such terms to be contained in the Stock Unit agreement.

 

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(iv)          Payment.  Stock Unit Awards may be settled in Common Stock or in
cash or any combination of the two, or in any other form of consideration as
determined by the Board and contained in the Stock Unit Award Agreement.

 

(v)            Dividend Equivalents.  Dividend equivalents may be credited in
respect of shares covered by a Stock Unit Award, as determined by the Board and
contained in the Stock Unit Award Agreement.  At the discretion of the Board,
such dividend equivalents may be converted into additional shares covered by the
Stock Unit Award in such manner as determined by the Board.  Any additional
shares covered by the Stock Unit Award credited by reason of such dividend
equivalents will be subject to all the terms and conditions of the underlying
Stock Unit Award Agreement to which they relate.

 

(vi)          Termination of Participant’s Continuous Service.  Except as
otherwise provided in the applicable Stock Unit Award Agreement, such portion of
the Stock Unit Award that has not vested will be forfeited upon the
Participant’s termination of Continuous Service for any reason.

 

(d)           Stock Appreciation Rights.  Each Stock Appreciation Right
Agreement shall be in such form and shall contain such terms and conditions as
the Board shall deem appropriate.  The terms and conditions of Stock
Appreciation Right Agreements may change from time to time, and the terms and
conditions of separate Stock Appreciation Right Agreements need not be
identical, but each Stock Appreciation Right Agreement shall include (through
incorporation of provisions hereof by reference in the agreement or otherwise)
the substance of each of the following provisions:

 

(i)            Strike Price and Calculation of Appreciation. Each Stock
Appreciation Right will be denominated in share of Common Stock equivalents. 
The appreciation distribution payable on the exercise of a Stock Appreciation
Right will be not greater than an amount equal to the excess of (A) the
aggregate Fair Market Value (on the date of the exercise of the Stock
Appreciation Right) of a number of shares of Common Stock equal to the number of
share of Common Stock equivalents in which the Participant is vested under such
Stock Appreciation Right and with respect to which the Participant is exercising
the Stock Appreciation Right on such date, over (B) an amount that will be
determined by the Board at the time of grant of the Stock Appreciation Right.

 

(ii)           Vesting.  At the time of the grant of a Stock Appreciation Right,
the Board may impose such restrictions or conditions to the vesting of such
Stock Appreciate Right as it, in its absolute discretion, deems appropriate.

 

(iii)         Exercise.  To exercise any outstanding Stock Appreciation Right,
the Participant must provide written notice of exercise to the Company in
compliance with the provisions of the Stock Appreciation Right Agreement
evidencing such Stock Appreciation Right.

 

(iv)          Payment.  The appreciation distribution in respect to a Stock
Appreciation Right may be paid in Common Stock, in cash, in any combination of
the two or in any other

 

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form of consideration as determined by the Board and contained in the Stock
Appreciation Right Agreement evidencing such Stock Appreciation Right.

 

(v)            Termination of Continuous Service.  In the event that a
Participant’s Continuous Service terminates, the Participant may exercise his or
her Stock Appreciation Right (to the extent that the Participant was entitled to
exercise such Stock Appreciation Right as of the date of termination) but only
within such period of time ending on the earlier of (i) the date three (3)
months following the termination of the Participant’s Continuous Service (or
such longer or shorter period specified in the Stock Appreciation Right
Agreement) or (ii) the expiration of the term of the Stock Appreciation Right as
set forth in the Stock Appreciation Right Agreement.  If, after termination, the
Participant does not exercise his or her Stock Appreciation Right within the
time specified in the Stock Appreciation Right Agreement, the Stock Appreciation
Right shall terminate.

 

(e)           Other Stock Awards.  Other forms of Stock Awards valued in whole
or in part by reference to, or otherwise based on, Common Stock may be granted
either alone or in addition to Stock Awards provided for under Section 6 and the
preceding provisions of this Section 7.  Subject to the provisions of the Plan,
the Board shall have sole and complete authority to determine the persons to
whom and the time or times at which such Other Stock Awards will be granted, the
number of shares of Common Stock (or the cash equivalent thereof) to be granted
pursuant to such Awards and all other terms and conditions of such Awards.

 

8.             Securities Law Compliance.

 

The Company shall seek to obtain from each regulatory commission or agency
having jurisdiction over the Plan such authority as may be required to grant
Stock Awards and to issue and sell shares of Common Stock upon exercise of the
Stock Awards; provided, however, that this undertaking shall not require the
Company to register under the Securities Act the Plan, any Stock Award or any
Common Stock issued or issuable pursuant to any such Stock Award.  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 Common Stock under the Plan, the Company
shall be relieved from any liability for failure to issue and sell Common Stock
upon exercise of such Stock Awards unless and until such authority is obtained.

 

9.             Use of Proceeds from Stock.

 

Proceeds from the sale of Common Stock pursuant to Stock Awards shall constitute
general funds of the Company.

 

10.          Miscellaneous.

 

(a)           Acceleration of Exercisability and Vesting.  The Board shall have
the power to accelerate the time at which a Stock Award may first be exercised
or the time during which a Stock Award or any part thereof will vest in
accordance with the Plan, notwithstanding the

 

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provisions in the Stock Award stating the time at which it may first be
exercised or the time during which it will vest.

 

(b)           Shareholder Rights.  No Participant shall be deemed to be the
holder of, or to have any of the rights of a holder with respect to, any shares
of Common Stock subject to such Stock Award unless and until such Participant
has satisfied all requirements for exercise of the Stock Award pursuant to its
terms.

 

(c)           No Employment or other Service Rights.  Nothing in the Plan or any
instrument executed or Stock Award granted pursuant thereto shall confer upon
any Participant any right to continue to serve the Company or an Affiliate in
the capacity in effect at the time the Stock Award was granted or shall affect
the right of the Company or an Affiliate to terminate (i) the employment of an
Employee with or without notice and with or without cause, (ii) the service of a
Consultant pursuant to the terms of such Consultant’s agreement with the Company
or an Affiliate or (iii) the service of a Director pursuant to the Bylaws of the
Company or an Affiliate, and any applicable provisions of the corporate law of
the state in which the Company or the Affiliate is incorporated, as the case may
be.

 

(d)           Investment Assurances.  The Company may require a Participant, as
a condition of exercising or acquiring Common Stock under any Stock Award, (i)
to give written assurances satisfactory to the Company as to the Participant’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 Stock Award; and (ii) to
give written assurances satisfactory to the Company stating that the Participant
is acquiring Common Stock subject to the Stock Award for the Participant’s own
account and not with any present intention of selling or otherwise distributing
the Common Stock.  The foregoing requirements, and any assurances given pursuant
to such requirements, shall be inoperative if (1) the issuance of the shares of
Common Stock upon the exercise or acquisition of Common Stock under the Stock
Award has been registered under a then currently effective registration
statement under the Securities Act or (2) 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.  The
Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of the Common Stock.

 

(e)           Withholding Obligations.  To the extent provided by the terms of a
Stock Award Agreement, the Participant shall, as may be determined by the
Company in its sole discretion, satisfy any federal, state or local tax
withholding obligation relating to a Stock Award by any of the following means
(in addition to the Company’s right to withhold from any compensation paid to
the Participant by the Company) or by a combination of such means:  (i)
tendering a cash payment; (ii) authorizing the Company to withhold shares of
Common Stock from the shares of

 

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Common Stock issued or otherwise issuable to the Participant in connection with
the Stock Award; or (iii) such other consideration as may be set forth in the
Stock Award Agreement.

 

11.          Adjustments upon Changes in Stock.

 

(a)           Capitalization Adjustments.  If any change is made in, or other
event occurs with respect to, the Common Stock subject to the Plan or subject to
any Stock Award without the receipt of consideration by the Company (through
merger, consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by the
Company (each a “Capitalization Adjustment”), the Plan will be appropriately
adjusted in the class(es) and maximum number of securities subject to the Plan
pursuant to Section 4(a) and the outstanding Stock Awards will be appropriately
adjusted in the class(es) and number of securities and price per share of Common
Stock subject to such outstanding Stock Awards.  The Board shall make such
adjustments, and its determination shall be final, binding and conclusive.  (The
conversion of any convertible securities of the Company shall not be treated as
a transaction “without receipt of consideration” by the Company.)

 

(b)           Dissolution or Liquidation.  In the event of a dissolution or
liquidation of the Company, then all outstanding Stock Awards shall terminate
immediately prior to the completion of such dissolution or liquidation

 

(c)           Corporate Transaction.  In the event of a Corporate Transaction,
any surviving corporation or acquiring corporation may assume or continue any or
all Stock Awards outstanding under the Plan or may substitute similar stock
awards for Stock Awards outstanding under the Plan (it being understood that
similar stock awards include, but are not limited to, awards to acquire the same
consideration paid to the stockholders or the Company, as the case may be,
pursuant to the Corporate Transaction), and any reacquisition or repurchase
rights held by the Company in respect of Common Stock issued pursuant to Stock
Awards may be assigned by the Company to the successor of the Company (or the
successor’s parent company), if any, in connection with such Corporate
Transaction.  In the event that any surviving corporation or acquiring
corporation does not assume or continue all such outstanding Stock Awards or
substitute similar stock awards for all such outstanding Stock Awards, then with
respect to Stock Awards that have been not assumed, continued or substituted and
that are held by Participants whose Continuous Service has not terminated prior
to the effective time of the Corporate Transaction, the vesting of such Stock
Awards (and, if applicable, the time at which such Stock Awards may be
exercised) shall (contingent upon the effectiveness of the Corporate
Transaction) be accelerated in full to a date prior to the effective time of
such Corporate Transaction as the Board shall determine (or, if the Board shall
not determine such a date, to the date that is five (5) days prior to the
effective time of the Corporate Transaction), the Stock Awards shall terminate
if not exercised (if applicable) at or prior to such effective time, and any
reacquisition or repurchase rights held by the Company with respect to such
Stock Awards held by Participants whose Continuous Service has not terminated
shall (contingent upon the effectiveness of the Corporate Transaction) lapse.

 

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(d)           Change in Control.  A Stock Award may be subject to additional
acceleration of vesting and exercisability upon or after a Change in Control as
may be provided in the Stock Award Agreement for such Stock Award or as may be
provided in any other written agreement between the Company or any Affiliate and
the Participant, but in the absence of such provision, no such acceleration
shall occur.

 

12.          Amendment of the Plan and Stock Awards.

 

(a)           Amendment of Plan.  Subject to the limitations, if any, of
applicable law, the Board at any time, and from time to time, may amend the
Plan.  The Board may, in its discretion, provide that any such amendment is
effective upon obtaining the approval of the stockholders of the Company.

 

(b)           No Impairment of Rights.  Rights under any Stock Award granted
before amendment of the Plan shall not be impaired by any amendment of the Plan
unless (i) the Company requests the consent of the Participant and (ii) the
Participant consents in writing.

 

(c)           Amendment of Stock Awards.  The Board at any time, and from time
to time, may amend the terms of any one or more Stock Awards; provided, however,
that the rights under any Stock Award shall not be impaired by any such
amendment unless (i) the Company requests the consent of the Participant and
(ii) the Participant consents in writing.

 

13.          Termination or Suspension of the Plan.

 

(a)           Plan Term.  The Board may suspend or terminate the Plan at any
time.  No Stock Awards may be granted under the Plan while the Plan is suspended
or after it is terminated.

 

(b)           No Impairment of Rights.  Suspension or termination of the Plan
shall not impair rights and obligations under any Stock Award granted while the
Plan is in effect except with the consent of the Participant.

 

14.          Effective Date of Plan.

 

The Plan shall become effective as determined by the Board.

 

15.          Choice of Law.

 

The law of the State of California shall govern all questions concerning the
construction, validity and interpretation of this Plan, without regard to such
state’s conflict of laws rules.

 

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