QUOVADX, INC.
1997 STOCK PLAN
As Amended and Restated Effective February 10, 2000 and
Amended Effective November 19, 2001 and
As Amended and Restated Effective April 23, 2004 and
As Amended and Restated Effective December 12, 2005

  1.   Purposes of the Plan. The purposes of this Plan are:

  §   to attract and retain the best available personnel for positions of
substantial responsibility,     §   to provide additional incentive to
Employees, Directors and Consultants, and     §   to promote the success of the
Company’s business.

          The Plan permits the grant of Incentive Stock Options, Nonstatutory
Stock Options, Restricted Stock, Stock Appreciation Rights, Performance Shares
and Performance Units.

  2.   Definitions. As used herein, the following definitions shall apply:

          (a) “Administrator” means the Board or any of its Committees as shall
be administering the Plan in accordance with Section 4 hereof.
          (b) “Applicable Laws” means the requirements relating to the
administration of equity based awards under U. S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Awards are, or will be, granted under
the Plan.
          (c) “Award” means, individually or collectively, a grant under the
Plan of Options, SARs, Restricted Stock, Performance Units or Performance
Shares.
          (d) “Award Agreement” means the written or electronic agreement
setting forth the terms and provisions applicable to each Award granted under
the Plan and shall include an Option Agreement. The Award Agreement is subject
to the terms and conditions of the Plan.
          (e) “Board” means the Board of Directors of the Company.
          (f) “Cash Position” means as to any Performance Period, the Company’s
level of cash and cash equivalents.
          (g) “Code” means the Internal Revenue Code of 1986, as amended.

 

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          (h) “Committee” means a committee of Directors or of other individuals
satisfying Applicable Laws appointed by the Board in accordance with Section 4
of the Plan.
          (i) “Common Stock” means the common stock of the Company.
          (j) “Company” means Quovadx, Inc., a Delaware corporation.
          (k) “Consultant” means any person who is engaged by the Company or any
Parent or Subsidiary to render consulting or advisory services to such entity.
          (l) “Director” means a member of the Board.
          (m) “Disability” means total and permanent disability as defined in
Section 22(e)(3) of the Code.
          (n) “Earnings Per Share” means as to any Performance Period, the
Company’s or a business unit’s Net Income, divided by a weighted average number
of Common Stock outstanding and dilutive common equivalent Shares deemed
outstanding.
          (o) “Employee” means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. Neither
service as a Director nor payment of a director’s fee by the Company shall be
sufficient to constitute “employment” by the Company.
          (p) “Exchange Act” means the Securities Exchange Act of 1934, as
amended.
          (q) “Fair Market Value” means, as of any date, the value of Common
Stock determined as follows:
                    (i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the day of grant, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;
                    (ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high bid and low asked prices for the Common Stock
on the day of determination; or
                    (iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Administrator.
          (r) “Fiscal Year” means the fiscal year of the Company.
          (s) “Incentive Stock Option” means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.

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          (t) “Net Income” means as to any Performance Period, the Company’s or
a business unit’s income after taxes.
          (u) “Nonstatutory Stock Option” means an Option not intended to
qualify as an Incentive Stock Option.
          (v) “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.
          (w) “Operating Cash Flow” means as to any Performance Period, the
Company’s or a business unit’s sum of Net Income plus depreciation and
amortization less capital expenditures plus changes in working capital comprised
of accounts receivable, inventories, other current assets, trade accounts
payable, accrued expenses, product warranty, advance payments from customers and
long-term accrued expenses.
          (x) “Operating Income” means as to any Performance Period, the
Company’s or a business unit’s income from operations but excluding any unusual
items.
          (y) “Option” means a stock option granted pursuant to the Plan.
          (z) “Option Agreement” means a written or electronic agreement between
the Company and a Participant evidencing the terms and conditions of an
individual Option grant. The Option Agreement is subject to the terms and
conditions of the Plan.
          (aa) “Option Exchange Program” means a program whereby outstanding
Options are exchanged for Options with a lower exercise price.
          (bb) “Optioned Stock” means the Common Stock subject to an Award.
          (cc) “Optionee” means the holder of an outstanding Option or
Restricted Stock granted under the Plan.
          (dd) “Parent” means a “parent corporation,” whether now or hereafter
existing, as defined in Section 424(e) of the Code.
          (ee) “Participant” means the holder of an outstanding Award, which
shall include an Optionee.
          (ff) “Performance Goals” means the goal(s) (or combined goal(s))
determined by the Administrator (in its discretion) to be applicable to a
Participant with respect to an Award. As determined by the Administrator, the
Performance Goals applicable to an Award may provide for a targeted level or
levels of achievement using one or more of the following measures: (a) Cash
Position, (b) Earnings Per Share, (c) Net Income, (d) Operating Cash Flow,
(e) Operating Income, (f) Return on Assets, (g) Return on Equity, (h) Return on
Sales, (i) Revenue, and (j) Total Stockholder Return. The Performance Goals may
differ from Participant to Participant and from Award to Award. Prior to the
Determination Date, the Plan Administrator shall determine whether any
significant element(s) shall be included in or excluded from the calculation of
any Performance Goal with respect to any Participant. For example (but not by
way of limitation), the Administrator may determine that the measures for one or
more Performance Goals shall be based upon the Company’s pro-forma results
and/or results in accordance with generally accepted accounting principles.

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          (gg) “Performance Period” means any Fiscal Year of the Company or such
other period as determined by the Administrator in its sole discretion.
          (a) “Performance Share” means an Award granted to a Participant
pursuant to Section 9.
          (hh) “Performance Unit” means an Award granted to a Participant
pursuant to Section 9.
          (ii) “Period of Restriction” means the period during which the
transfer of Shares of Restricted Stock are subject to restrictions and
therefore, the Shares are subject to a substantial risk of forfeiture. Such
restrictions may be based on the passage of time, the achievement of target
levels of performance, or the occurrence of other events as determined by the
Administrator.
          (jj) “Plan” means this 1997 Stock Plan, as amended and restated.
          (kk) “Restricted Stock” means Shares issued pursuant to a Restricted
Stock award under Section 7 of the Plan, or issued pursuant to the early
exercise of an Option.
          (ll) “Return on Assets” means as to any Performance Period, the
percentage equal to the Company’s or a business unit’s Operating Income before
incentive compensation, divided by average net Company or business unit, as
applicable, assets.
          (mm) “Return on Equity” means as to any Performance Period, the
percentage equal to the Company’s Net Income divided by average stockholder’s
equity.
          (nn) “Return on Sales” means as to any Performance Period, the
percentage equal to the Company’s or a business unit’s Operating Income before
incentive compensation, divided by the Company’s or the business unit’s, as
applicable, revenue.
          (oo) “Revenue” means as to any Performance Period, the Company’s or
business unit’s net sales.
          (pp) “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.
          (qq)“Section 16(b) “ means Section 16(b) of the Exchange Act.
          (rr)“Service Provider” means an Employee, Director or Consultant.
          (ss) “Share” means a share of the Common Stock, as adjusted in
accordance with Section 12 below.

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          (tt) “Stock Appreciation Right” or “SAR” means an Award, granted alone
or in connection with an Option, that pursuant to Section 8 is designated as an
SAR.
          (uu) “Subsidiary” means a “subsidiary corporation,” whether now or
hereafter existing, as defined in Section 424(f) of the Code.
          (vv) “Total Stockholder Return” means as to any Performance Period,
the total return (change in Share price plus reinvestment of any dividends) of a
Share.

  3.   Stock Subject to the Plan.

          (a) Number of Shares. Subject to the provisions of Section 12 of the
Plan, the maximum aggregate number of Shares which may be subject to Awards and
issued under the Plan is 2,200,000 Shares, plus an annual increase to be added
on January 1 of each year, beginning in 2001, equal to the lesser of
(i) 1,224,000 shares, (ii), 5% of the outstanding shares on such date or (iii) a
lesser amount determined by the Board. The Shares may be authorized but
unissued, or reacquired Common Stock. Shares will not be deemed to have been
issued pursuant to the Plan with respect to any portion of an Award that is
settled in cash. Upon payment in Shares pursuant to the exercise of an SAR, the
number of Shares available for issuance under the Plan will be reduced only by
the number of Shares actually issued in such payment. If the exercise price of
an Award is paid by tender to the Company, or attestation to the ownership, of
Shares owned by the Participant, the number of Shares available for issuance
under the Plan will be reduced by the gross number of Shares for which the Award
is exercised.
          (b) Share Usage.
                    (i) If an Award expires or becomes unexercisable without
having been exercised in full, or is surrendered pursuant to an Option Exchange
Program, the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated). However, Shares that have actually been issued under the Plan, upon
exercise of an Award, shall not be returned to the Plan and shall not become
available for future distribution under the Plan, except that if unvested Shares
of Restricted Stock are repurchased by the Company, such Shares shall become
available for future grant under the Plan.
                    (ii) Notwithstanding the foregoing and, subject to
adjustment provided in Section 12, the maximum number of Shares that may be
issued upon the exercise of Incentive Stock Options shall equal the aggregate
Share number stated in Section 3(a), plus, to the extent allowable under
Section 422 of the Code, any Shares that become available for issuance under the
Plan under subsection (i) above.

  4.   Administration of the Plan.

          (a) Procedure.
                    (i) Multiple Administrative Bodies. Different Committees
with respect to different groups of Service Providers may administer the Plan.

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                    (ii) Section 162(m). To the extent that the Administrator
determines it to be desirable to qualify Awards granted hereunder as
“performance-based compensation” within the meaning of Section 162(m) of the
Code, the Plan shall be administered by a Committee of two or more “outside
directors” within the meaning of Section 162(m) of the Code.
                    (iii) Rule 16b-3. To the extent desirable to qualify
transactions hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder shall be structured to satisfy the requirements for exemption under
Rule 16b-3.
                    (iv) Other Administration. Other than as provided above, the
Plan shall be administered by the (A) Board or (B) a Committee appointed by the
Board, which Committee shall be constituted to comply with Applicable Laws.
          (b) Powers of the Administrator. Subject to the provisions of the Plan
and, in the case of a Committee, the specific duties delegated by the Board to
such Committee, and subject to the approval of any relevant authorities, the
Administrator shall have the authority in its discretion:
                    (i) to determine the Fair Market Value;
                    (ii) to select the Service Providers to whom Awards may from
time to time be granted hereunder;
                    (iii) to determine the number of Shares to be covered by
each such Award granted hereunder;
                    (iv) to approve forms of agreement for use under the Plan;
                    (v) to determine the terms and conditions, of any Award
granted hereunder. Such terms and conditions include, but are not limited to,
the exercise price, the time or times when Awards may be exercised (which may be
based on performance criteria), any vesting acceleration or waiver of forfeiture
restrictions, and any restriction or limitation regarding any Award or the
Shares relating thereto, based in each case on such factors as the
Administrator, in its sole discretion, shall determine;
                    (vi) to determine whether and under what circumstances an
Option may be settled in cash under subsection 6(e) instead of Common Stock;
                    (vii) to reduce the exercise price of any Award to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Award has declined since the date the Award was granted;
                    (viii) to initiate an Option Exchange Program;
                    (ix) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of satisfying applicable foreign laws;

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                    (x) to allow Participants to satisfy withholding tax
obligations by electing to have the Company withhold from the Shares to be
issued upon exercise of an Award that number of Shares having a Fair Market
Value equal to the minimum amount required to be withheld. The Fair Market Value
of the Shares to be withheld shall be determined on the date that the amount of
tax to be withheld is to be determined. All elections by Participants to have
Shares withheld for this purpose shall be made in such form and under such
conditions as the Administrator may deem necessary or advisable; and
                    (xi) to construe and interpret the terms of the Plan and
awards granted pursuant to the Plan.
          (c) Effect of Administrator’s Decision. All decisions, determinations
and interpretations of the Administrator shall be final and binding on all
Participants.
     5.   Eligibility. Nonstatutory Stock Options, Restricted Stock, Stock
Appreciation Rights, Performance Shares, and Performance Units may be granted to
Service Providers. Incentive Stock Options may be granted only to Employees.

  6.   Stock Options.

          (a) Limitations.
                    (i) Each Option shall be designated in the Award Agreement
as either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Participant during any calendar year
(under all plans of the Company and any Parent or Subsidiary) exceeds $100,000,
such Options shall be treated as Nonstatutory Stock Options. For purposes of
this Section 6(a), Incentive Stock Options shall be taken into account in the
order in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.
                    (ii) The following limitations shall apply to grants of
Options and Stock Appreciation Rights:
                         (A) No Service Provider shall be granted, in any Fiscal
Year of the Company, Options or SARs to purchase more than 1,500,000 Shares.
                         (B) In connection with his or her initial service, a
Service Provider may be granted Options or SARs to purchase up to an additional
1,500,000 Shares which shall not count against the limit set forth in subsection
(A) above.
                         (C) The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company’s capitalization as
described in Section 12.
                         (D) If an Option is cancelled in the same Fiscal Year
of the Company in which it was granted (other than in connection with a
transaction described in Section 12), the cancelled Option will be counted
against the limits set forth in subsections (A) and (B) above. For this purpose,
if the exercise price of an Option is reduced, the transaction will be treated
as a cancellation of the Option and the grant of a new Option.

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          (b) Term of Option. The term of each Option shall be stated in the
Option Agreement; provided, however, that the term shall be no more than ten
(10) years from the date of grant thereof. In the case of an Incentive Stock
Option granted to a Participant who, at the time the Option is granted, owns
stock representing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or any Parent or Subsidiary, the
term of the Option shall be five (5) years from the date of grant or such
shorter term as may be provided in the Option Agreement.
          (c) Option Exercise Price and Consideration.
                    (i) The per Share exercise price for the Shares to be issued
upon exercise of an Option shall be such price as is determined by the
Administrator, but shall be subject to the following:
                         (A) In the case of an Incentive Stock Option
                              a) granted to an Employee who, at the time of
grant of such Option, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the exercise price shall be no less than 110% of the Fair Market Value per Share
on the date of grant.
                              b) granted to any other Employee, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.
                         (B) In the case of a Nonstatutory Stock Option, the per
Share exercise price shall be determined by the Administrator. In the case of a
Nonstatutory Stock Option intended to qualify as “performance-based
compensation” within the meaning of Section 162(m) of the Code, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.
                         (C) Notwithstanding the foregoing, Incentive Stock
Options may be granted with a per Share exercise price other than as required
above pursuant to a merger or other corporate transaction.
                    (ii) The consideration to be paid for the Shares to be
issued upon exercise of an Option, including the method of payment, shall be
determined by the Administrator (and, in the case of an Incentive Stock Option,
shall be determined at the time of grant). Such consideration may consist of
(1) cash, (2) check, (3) promissory note, (4) other Shares which (x) in the case
of Shares acquired from the Company, have been owned by the Participant and not
subject to a substantial risk of forfeiture for more than six months on the date
of surrender, and (y) have a Fair Market Value on the date of surrender equal to
the aggregate exercise price of the Shares as to which such Option shall be
exercised, (5) consideration received by the Company under a cashless exercise
program implemented by the Company in connection with the Plan, or (6) any
combination of the foregoing methods of payment. In making its determination as
to the type of consideration to accept, the Administrator shall consider if
acceptance of such consideration may be reasonably expected to benefit the
Company.

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          (d) Exercise of Option.
                    (i) Procedure for Exercise; Rights as a Shareholder. Any
Option granted hereunder shall be exercisable according to the terms hereof at
such times and under such conditions as determined by the Administrator and set
forth in the Option Agreement. An Option may not be exercised for a fraction of
a Share.
                    An Option shall be deemed exercised when the Company
receives: (i) written or electronic notice of exercise (in accordance with the
Option Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised (together
with applicable withholding taxes). Full payment may consist of any
consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan. Shares issued upon exercise of
an Option shall be issued in the name of the Participant or, if requested by the
Participant, in the name of the Participant and his or her spouse. Until the
Shares are issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a shareholder shall exist with
respect to the Shares, notwithstanding the exercise of the Option. The Company
shall issue (or cause to be issued) such Shares promptly after the Option is
exercised. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the Shares are issued, except as provided
in Section 12 of the Plan.
                    Exercise of an Option in any manner shall result in a
decrease in the number of Shares thereafter available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
                    (ii) Termination of Relationship as a Service Provider. If a
Participant ceases to be a Service Provider, other than upon the Participant’s
death or Disability, such Participant may exercise his or her Option within such
period of time as is specified in the Option Agreement (of at least thirty
(30) days) to the extent that the Option is vested on the date of termination
(but in no event later than the expiration of the term of the Option as set
forth in the Option Agreement). In the absence of a specified time in the Option
Agreement, the Option shall remain exercisable for three (3) months following
the Participant’s termination. If, on the date of termination, the Participant
is not vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after termination, the
Participant does not exercise his or her Option within the time specified by the
Administrator, the Option shall terminate, and the Shares covered by such Option
shall revert to the Plan.
                    (iii) Disability of Participant. If a Participant ceases to
be a Service Provider as a result of the Participant’s Disability, the
Participant may exercise his or her Option within such period of time as is
specified in the Option Agreement to the extent the Option is vested on 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 absence of a specified time
in the Option Agreement, the Option shall remain exercisable for twelve
(12) months following the Participant’s termination. If, on the date of
termination, the Participant is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.
If, after termination, the Participant 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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                    (iv) Death of Participant. If a Participant dies while a
Service Provider, the Option may be exercised within such period of time as is
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
Participant’s estate or by a person who acquires the right to exercise the
Option by bequest or inheritance, but only to the extent that the Option is
vested on the date of death. In the absence of a specified time in the Option
Agreement, the Option shall remain exercisable for twelve (12) months following
the Participant’s termination. If, at the time of death, the Participant is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall immediately revert to the Plan. The Option may be
exercised by the executor or administrator of the Participant’s estate or, if
none, by the person(s) entitled to exercise the Option under the Participant’s
will or the laws of descent or distribution. If the Option is not so exercised
within the time specified herein, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan.
          (e) Buyout Provisions. The Administrator may at any time offer to buy
out for a payment in cash or Shares, an Option previously granted, based on such
terms and conditions as the Administrator shall establish and communicate to the
Participant at the time that such offer is made.

  7.   Restricted Stock.

          (a) Grant of Restricted Stock. Subject to the terms and provisions of
the Plan, the Administrator, at any time and from time to time, may grant Shares
of Restricted Stock to Service Providers in such amounts as the Administrator,
in its sole discretion, will determine.
          (b) Restricted Stock Agreement. Each Award of Restricted Stock will be
evidenced by an Award Agreement that will specify the Period of Restriction, the
number of Shares granted, and such other terms and conditions as the
Administrator, in its sole discretion, will determine. Notwithstanding the
foregoing, during any Fiscal Year no Participant will receive more than an
aggregate of 500,000 Shares of Restricted Stock; provided, however, that in
connection with a Participant’s initial service as an Employee, an Employee may
be granted an aggregate of up to an additional 500,000 Shares of Restricted
Stock. Unless the Administrator determines otherwise, Shares of Restricted Stock
will be held by the Company as escrow agent until the restrictions on such
Shares have lapsed.
          (c) Transferability. Except as provided in this Section 7, Shares of
Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated until the end of the applicable Period of Restriction.
          (d) Other Provisions. The Award Agreement shall contain such other
terms, provisions and conditions not inconsistent with the Plan as may be
determined by the Administrator in its sole discretion.

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                    (i) General Restrictions. The Administrator may set
restrictions based upon the achievement of specific performance objectives
(Company-wide, divisional, or individual), applicable federal or state
securities laws, or any other basis determined by the Administrator in its
discretion.
                    (ii) Section 162(m) Performance Restrictions. For purposes
of qualifying an Award of Restricted Stock as “performance-based compensation”
under Section 162(m) of the Code, the Administrator, in its discretion, may set
restrictions based upon the achievement of Performance Goals. The Performance
Goals will be set by the Administrator on or before the latest date permissible
to enable the Award of Restricted Stock to qualify as “performance-based
compensation” under Section 162(m) of the Code. In granting Awards of Restricted
Stock which are intended to qualify under Section 162(m) of the Code, the
Administrator will follow any procedures determined by it from time to time to
be necessary or appropriate to ensure qualification of the Award of Restricted
Stock under Section 162(m) of the Code (e.g., in determining the Performance
Goals).
          (e) Removal of Restrictions. Except as otherwise provided in this
Section 7, Shares of Restricted Stock covered by each Restricted Stock grant
made under the Plan will be released from escrow as soon as practicable after
the last day of the Period of Restriction. The Administrator, in its discretion,
may accelerate the time at which any restrictions will lapse or be removed.
          (f) Voting Rights. During the Period of Restriction, Service Providers
holding Shares of Restricted Stock granted hereunder may exercise full voting
rights with respect to those Shares, unless the Administrator determines
otherwise.
          (g) Dividends and Other Distributions. During the Period of
Restriction, Service Providers holding Shares of Restricted Stock will be
entitled to receive all dividends and other distributions paid with respect to
such Shares unless otherwise provided in the Award Agreement. If any such
dividends or distributions are paid in Shares, the Shares will be subject to the
same restrictions on transferability and forfeitability as the Shares of
Restricted Stock with respect to which they were paid.
          (h) Return of Restricted Stock to Company. On the date set forth in
the Award Agreement, the Restricted Stock for which restrictions have not lapsed
will revert to the Company and again will become available for grant under the
Plan.

  8.   Stock Appreciation Rights.

          (a) Grant of SARs. Subject to the terms and conditions of the Plan, an
SAR may be granted to Service Providers at any time and from time to time as
will be determined by the Administrator, in its sole discretion.
          (b) Number of Shares. Subject to Section 6(a)(ii), the Administrator
will have complete discretion to determine the number of SARs granted to any
Service Provider.

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          (c) Exercise Price and Other Terms. The Administrator, subject to the
provisions of the Plan, will have complete discretion to determine the terms and
conditions of SARs granted under the Plan.
          (d) SAR Agreement. Each SAR grant will be evidenced by an Award
Agreement that will specify the exercise price, the term of the SAR, the
conditions of exercise, and such other terms and conditions as the
Administrator, in its sole discretion, will determine.
          (e) Expiration of SARs. An SAR granted under the Plan will expire upon
the date determined by the Administrator, in its sole discretion, and set forth
in the Award Agreement. Notwithstanding the foregoing, the rules of Section 6(d)
also will apply to SARs.
          (f) Payment of SAR Amount. Upon exercise of an SAR, a Participant will
be entitled to receive payment from the Company in an amount determined by
multiplying:
                    (i) The difference between the Fair Market Value of a Share
on the date of exercise over the exercise price; times
                    (ii) The number of Shares with respect to which the SAR is
exercised.
               At the discretion of the Administrator, the payment upon SAR
exercise may be in cash, in Shares of equivalent value, or in some combination
thereof.

  9.   Performance Units and Performance Shares.

          (a) Grant of Performance Units/Shares. Performance Units and
Performance Shares may be granted to Service Providers at any time and from time
to time, as will be determined by the Administrator, in its sole discretion. The
Administrator will have complete discretion in determining the number of
Performance Units and Performance Shares granted to each Participant, provided
that during any Fiscal Year, (a) no Participant will receive Performance Units
having an initial value greater than $1,000,000 and (b) no Participant will
receive more than 500,000 Performance Shares. Notwithstanding the foregoing
limitation, in connection with a Participant’s initial service as an Employee,
an Employee may be granted up to an additional 500,000 Performance Shares.
          (b) Value of Performance Units/Shares. Each Performance Unit will have
an initial value that is established by the Administrator on or before the date
of grant. Each Performance Share will have an initial value equal to the Fair
Market Value of a Share on the date of grant.
          (c) Performance Objectives and Other Terms. The Administrator will set
performance objectives (including, without limitation, continued service) in its
discretion which, depending on the extent to which they are met, will determine
the number or value of Performance Units/Shares that will be paid out to the
Participants. The time period during which the performance objectives must be
met will be called the “Performance Period.” Each Award of Performance
Units/Shares will be evidenced by an Award Agreement that will specify the
Performance Period, and such other terms and conditions as the Administrator, in
its sole discretion, will determine.

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                    (i) General Performance Objectives. The Administrator may
set performance objectives based upon the achievement of Company-wide,
divisional, or individual goals, applicable federal or state securities laws, or
any other basis determined by the Administrator in its discretion.
                    (ii) Section 162(m) Performance Objectives. For purposes of
qualifying grants of Performance Units/Shares as “performance-based
compensation” under Section 162(m) of the Code, the Administrator, in its
discretion, may determine that the performance objectives applicable to
Performance Units/Shares will be based on the achievement of Performance Goals.
The Performance Goals will be set by the Administrator on or before the latest
date permissible to enable the Performance Units/Shares to qualify as
“performance-based compensation” under Section 162(m) of the Code. In granting
Performance Units/Shares which are intended to qualify under Section 162(m) of
the Code, the Administrator will follow any procedures determined by it from
time to time to be necessary or appropriate to ensure qualification of the
Performance Units/Shares under Section 162(m) of the Code (e.g., in determining
the Performance Goals).
          (d) Earning of Performance Units/Shares. After the applicable
Performance Period has ended, the holder of Performance Units/Shares will be
entitled to receive a payout of the number of Performance Units/Shares earned by
the Participant over the Performance Period, to be determined as a function of
the extent to which the corresponding performance objectives or other vesting
provisions have been achieved. After the grant of a Performance Unit/Share, the
Administrator, in its sole discretion, may reduce or waive any performance
objectives or other vesting provisions for such Performance Unit/Share.
          (e) Form and Timing of Payment of Performance Units/Shares. Payment of
earned Performance Units/Shares will be made as soon as practicable after the
expiration of the applicable Performance Period. The Administrator, in its sole
discretion, may pay earned Performance Units/Shares in the form of cash, in
Shares (which have an aggregate Fair Market Value equal to the value of the
earned Performance Units/Shares at the close of the applicable Performance
Period) or in a combination thereof.
          (f) Cancellation of Performance Units/Shares. On the date set forth in
the Award Agreement, all unearned or unvested Performance Units/Shares will be
forfeited to the Company, and again will be available for grant under the Plan.
     10.   Non-Transferability of Awards. Unless determined otherwise by the
Administrator, an Award may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Participant, only by the Participant. If the Administrator makes an Award
transferable, such Award shall contain such additional terms and conditions as
the Administrator deems appropriate.

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     11.   Leaves of Absence. Unless the Administrator provides otherwise,
vesting of Awards granted hereunder will be suspended during any unpaid leave of
absence. A Service Provider will not cease to be an Employee in the case of
(i) any leave of absence approved by the Company or (ii) transfers between
locations of the Company or between the Company, its Parent, or any Subsidiary.
For purposes of Incentive Stock Options, no such leave may exceed ninety (90)
days, unless reemployment upon expiration of such leave is guaranteed by statute
or contract. If reemployment upon expiration of a leave of absence approved by
the Company is not so guaranteed, then three (3) months following the 91st day
of such leave any Incentive Stock Option held by the Participant will cease to
be treated as an Incentive Stock Option and will be treated for tax purposes as
a Nonstatutory Stock Option.

  12.   Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset
Sale.

          (a) Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock that have been
authorized for issuance under the Plan but as to which no Awards have yet been
granted or which have been returned to the Plan upon cancellation or expiration
of an Award, the number of Shares that may be added annually to the Plan
pursuant to Section 3(a), the number of shares of Common Stock as well as the
price per share of Common Stock covered by each such outstanding Award, and the
numerical Share limits in Sections 3, 6(a), 7(a), 8(b), and 9(a), shall be
proportionately adjusted for any change in, or increase or decrease in the
number of issued shares of Common Stock resulting from a stock split, reverse
stock split, stock dividend, spin-off, combination or reclassification of the
Common Stock, or any other change in, or increase or decrease in the number of
issued shares of Common Stock effected without receipt of consideration by the
Company; provided, however, that conversion of any convertible securities of the
Company shall not be deemed to have been “effected without receipt of
consideration.” Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Award.
          (b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Participant as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for a Participant
to have the right to exercise his or her Award until fifteen (15) days prior to
such transaction as to all of the Optioned Stock covered thereby, including
Shares as to which the Award would not otherwise be exercisable. In addition,
the Administrator may provide that all restrictions on Restricted Stock shall
lapse, provided the proposed dissolution or liquidation takes place at the time
and in the manner contemplated. To the extent it has not been previously
exercised, an Award will terminate immediately prior to the consummation of such
proposed action.
          (c) Merger or Asset Sale. In the event of a merger of the Company with
or into another corporation, or the sale of substantially all of the assets of
the Company, each outstanding Award shall be assumed or an equivalent award
substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. In the event that the successor corporation refuses to
assume or substitute for the Award, the Participant shall fully vest in and have
the right to exercise his or her Option or Stock Appreciation Right as to all of
the Optioned Stock, including Shares as to which it would not otherwise be
vested or exercisable, and all restrictions on Restricted Stock and all
performance goals or other vesting criteria with respect to Performance Shares
and Performance Units will be as determined by the Board. In addition, if an
Option or Stock Appreciation Right is not

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assumed or substituted for in the event of a merger or sale of assets, the
Administrator shall notify the Participant in writing or electronically that the
Option or Stock Appreciation Right shall be fully vested and exercisable for a
period of fifteen (15) days from the date of such notice, and the Option or
Stock Appreciation Right shall terminate upon the expiration of such period. For
the purposes of this paragraph, an Award shall be considered assumed if,
following the merger or sale of assets, the Award confers the right to purchase
or receive, for each Share subject to the Award immediately prior to the merger
or sale of assets (and in the case of Performance Units, for each implied share
determined by dividing the value of the Performance Unit by the per Share
consideration received by holders of Common Stock in the merger or asset sale),
an amount of consideration (whether stock, cash, or other securities or
property) equal to the fair market value of the consideration received in the
merger or sale of assets by holders of Common Stock for each Share held on the
effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares); provided, however, that if such consideration received
in the merger or sale of assets is not solely common stock of the successor
corporation or its Parent, the Administrator may, with the consent of the
successor corporation, provide for the consideration to be received upon the
exercise of the Option or Stock Appreciation Right, or upon the payout of a
Performance Share or Performance Unit, for each Share subject to such Award (or
in the case of Performance Units, the number of implied shares determined by
dividing the value of the Performance Units by the per Share consideration
received by holders of Common Stock in the merger or asset sale), to be solely
common stock of the successor corporation or its Parent equal in fair market
value to the per Share consideration received by holders of Common Stock in the
merger or sale of assets.
          Notwithstanding anything in this Section 12(c) to the contrary, an
Award that vests, is earned or paid-out upon the satisfaction of one or more
performance goals will not be considered assumed if the Company or its successor
modifies any of such performance goals without the Participant’s consent;
provided, however, a modification to such performance goals only to reflect the
successor corporation’s post-merger or post-asset sale corporate structure will
not be deemed to invalidate an otherwise valid Award assumption.
     13.   No Effect on Employment or Service. Neither the Plan nor any Award
shall confer upon a Participant any right with respect to continuing the
Participant’s relationship as a Service Provider with the Company, nor shall
they interfere in any way with the Participant’s right or the Company’s right to
terminate such relationship at any time, with or without cause.
     14.   Date of Grant. The date of grant of an Award shall, for all purposes,
be the date on which the Administrator makes the determination granting such
Award, or such other date as is determined by the Administrator. Notice of the
determination shall be given to each Service Provider to whom an Award is so
granted within a reasonable time after the date of such grant.
     15.   Term of Plan. Subject to Section 19 of the Plan, the Plan shall
become effective upon its original adoption by the Board. It shall continue in
effect for a term of ten (10) years unless terminated earlier under Section 16
of the Plan.

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  16.   Amendment and Termination of the Plan.

          (a) Amendment and Termination. The Board may at any time amend, alter,
suspend or terminate the Plan.
          (b) Shareholder Approval. The Board shall obtain shareholder approval
of any Plan amendment to the extent necessary and desirable to comply with
Applicable Laws.
          (c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any
Participant, unless mutually agreed otherwise between the Participant and the
Administrator, which agreement must be in writing and signed by the Participant
and the Company. Termination of the Plan shall not affect the Administrator’s
ability to exercise the powers granted to it hereunder with respect to Awards
granted under the Plan prior to the date of such termination.

  17.   Conditions Upon Issuance of Shares.

          (a) Legal Compliance. Shares shall not be issued pursuant to the
exercise of an Award unless the exercise of such Award and the issuance and
delivery of such Shares shall comply with Applicable Laws and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.
          (b) Investment Representations. As a condition to the exercise of an
Award, the Administrator may require the person exercising such Award to
represent and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required.
          (c) Inability to Obtain Authority. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company’s counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
     18.   Reservation of Shares. The Company, during the term of this Plan,
shall at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
     19.   Shareholder Approval. The Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Such shareholder approval shall be obtained in the degree and manner
required under Applicable Laws.

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