Exhibit 10.1

 

 

 

 

 

 

EPICOR SOFTWARE CORPORATION

2007 STOCK INCENTIVE PLAN

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TABLE OF CONTENTS

 

               Page

SECTION 1 BACKGROUND AND PURPOSE

   1    1.1    Background and Effective Date    1    1.2    Purpose of the Plan
   1

SECTION 2 DEFINITIONS

   1    2.1    “1934 Act”    1    2.2    “Administrator”.    1    2.3   
“Applicable Laws”    1    2.4    “Award”    1    2.5    “Award Agreement”    1
   2.6    “Board” or “Board of Directors”    1    2.7    “Change of Control”   
1    2.8    “Code”    2    2.9    “Committee”    2    2.10    “Common Stock”   
2    2.11    “Company”    2    2.12    “Consultant”    2    2.13    “Director”
   2    2.14    “Disability”    2    2.15    “EBITDA”    2    2.16    “Employee”
   2    2.17    “Exchange Program”    2    2.18    “Exercise Price”    3    2.19
   “Fair Market Value”    3    2.20    “Fiscal Year”    3    2.21    “Free Cash
Flow”.    3    2.22    “Grant Date”    3    2.23    “Incentive Stock Option”   
3    2.24    “Nonqualified Stock Option”    3    2.25    “Option”    3    2.26
   “Participant”    3    2.27    “Performance Goals”    3    2.28   
“Performance Period”    4    2.29    “Performance Share”    4    2.30   
“Performance Unit”    4    2.31    “Period of Restriction”    4    2.32   
“Plan”    4    2.33    “Profit After Tax”    4    2.34    “Restricted Stock”   
4    2.35    “Return on Equity”    4    2.36    “Revenue”    4    2.37    “Rule
16b-3”    4    2.38    “Section 16 Person”    4    2.39    “Service Provider”   
4    2.40    “Shares”    4    2.41    “Stock Appreciation Right” or “SAR”    4
   2.42    “Subsidiary”    4    2.43    “Termination of Service”    4    2.44   
“Total Shareholder Return”    5

 

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TABLE OF CONTENTS

(continued)

 

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SECTION 3 ADMINISTRATION

   5    3.1    Procedure    5    3.2    Powers of the Administrator    5    3.3
   Effect of Administrator’s Decision    6

SECTION 4 SHARES SUBJECT TO THE PLAN

   6    4.1    Number of Shares    6    4.2    Lapsed Awards    6    4.3   
Adjustments in Awards and Authorized Shares    7

SECTION 5 STOCK OPTIONS

   7    5.1    Grant of Options    7    5.2    Award Agreement    7    5.3   
Exercise Price    7    5.4    Expiration of Options    8    5.5   
Exercisability of Options    8    5.6    Exercise of Option    8    5.7   
Restrictions on Share Transferability    10    5.8    Certain Additional
Provisions for Incentive Stock Options    10

SECTION 6 STOCK APPRECIATION RIGHTS

   10    6.1    Grant of SARs    10    6.2    SAR Agreement    10    6.3   
Expiration of SARs    11    6.4    Payment of SAR Amount    11

SECTION 7 RESTRICTED STOCK

   11    7.1    Grant of Restricted Stock    11    7.2    Restricted Stock
Agreement    11    7.3    Transferability    11    7.4    Other Restrictions   
11    7.5    Removal of Restrictions    12    7.6    Voting Rights    12    7.7
   Dividends and Other Distributions    12    7.8    Return of Restricted Stock
to Company    12

SECTION 8 PERFORMANCE UNITS

   12    8.1    Grant of Performance Units    12    8.2    Value of Performance
Units    12    8.3    Performance Objectives and Other Terms    12    8.4   
Earning of Performance Units    13    8.5    Form and Timing of Payment of
Performance Units    13    8.6    Cancellation of Performance Units    13

SECTION 9 PERFORMANCE SHARES

   13    9.1    Grant of Performance Shares    13    9.2    Value of Performance
Shares    13    9.3    Performance Share Agreement    13    9.4    Performance
Objectives and Other Terms    13

 

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TABLE OF CONTENTS

(continued)

 

               Page    9.5      Earning of Performance Shares    14    9.6     
Form and Timing of Payment of Performance Shares    14    9.7      Cancellation
of Performance Shares    14

SECTION 10 CHANGE OF CONTROL, DISSOLUTION AND LIQUIDATION

   14    10.1    Change of Control    14    10.2    Dissolution or Liquidation
   14

SECTION 11 MISCELLANEOUS

   15    11.1    Deferrals    15    11.2    No Effect on Employment or Service
   15    11.3    Participation    15    11.4    Indemnification    15    11.5   
Successors    15    11.6    Beneficiary Designations    15    11.7    Limited
Transferability of Awards    15    11.8    No Rights as Stockholder    16

SECTION 12 AMENDMENT, TERMINATION, AND DURATION

   16    12.1    Amendment, Suspension, or Termination    16    12.2    Duration
of the Plan    16

SECTION 13 TAX WITHHOLDING

   16    13.1    Withholding Requirements    16    13.2    Withholding
Arrangements    16

SECTION 14 LEGAL CONSTRUCTION

   16    14.1    Gender and Number    16    14.2    Severability    16    14.3
   Requirements of Law    16    14.4    Securities Law Compliance    16    14.5
   Governing Law    17    14.6    Captions    17

 

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EPICOR SOFTWARE CORPORATION

2007 STOCK INCENTIVE PLAN

(Amended and Restated)

SECTION 1

BACKGROUND AND PURPOSE

1.1 Background and Effective Date. The Plan permits the grant of Nonqualified
Stock Options, Incentive Stock Options, SARs, Restricted Stock, Performance
Units, and Performance Shares. The Plan was effective as of March 30, 2007, upon
approval by an affirmative vote of the holders of a majority of the Shares that
are present in person or by proxy and entitled to vote at the 2007 Annual
Meeting of Stockholders of the Company.

1.2 Purpose of the Plan. The Plan is intended to attract, motivate, and retain
(a) employees of the Company and its Subsidiaries, (b) consultants who provide
significant services to the Company and its Subsidiaries, and (c) directors of
the Company who are employees of neither the Company nor any Subsidiary. The
Plan also is designed to encourage stock ownership by Participants, thereby
aligning their interests with those of the Company’s shareholders, and to permit
the payment of compensation that qualifies as performance-based compensation
under Section 162(m) of the Code.

SECTION 2

DEFINITIONS

The following words and phrases shall have the following meanings unless a
different meaning is plainly required by the context:

2.1 “1934 Act” means the Securities Exchange Act of 1934, as amended. Reference
to a specific section of the 1934 Act or regulation thereunder shall include
such section or regulation, any valid regulation promulgated under such section,
and any comparable provision of any future legislation or regulation amending,
supplementing or superseding such section or regulation.

2.2 “Administrator” means the Board or any of its Committees as shall be
administering the Plan, in accordance with Section 4 of the Plan.

2.3 “Applicable Laws” means the requirements relating to the administration of
stock option plans 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.

2.4 “Award” means, individually or collectively, a grant under the Plan of
Incentive Stock Options, Nonqualified Stock Options, SARs, Restricted Stock,
Performance Units, or Performance Shares.

2.5 “Award Agreement” means the written agreement setting forth the terms and
conditions applicable to each Award granted under the Plan.

2.6 “Board” or “Board of Directors” means the Board of Directors of the Company.

2.7 “Change of Control” means the occurrence of any of the following:

2.7.1 Any “person,” as such term is used in Section 13(d) and 14(d) of the
Exchange Act (other than the Company, a Company subsidiary, or a Company
employee benefit plan, including any trustee of such plan acting as trustee) is
or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange

 

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Act), directly or indirectly, of securities of the Company (or a successor to
the Company) representing fifty percent (50%) or more of the combined voting
power of the then outstanding securities of the Company or such successor; or

2.7.2 At least a majority of the directors of the Company constitute persons who
were not at the time of their first election to the Board, candidates proposed
by a majority of the Board of Directors in office prior to the time of such
first election; or

2.7.3 A merger or consolidation in which the Company is not the surviving
entity, except for a transaction, the principal purpose of which is to change
the state in which the Company is incorporated; or

2.7.4 A sale, transfer or other disposition of assets involving fifty percent
(50%) or more in value of the assets of the Company; or

2.7.5 The dissolution of the Company, or liquidation of more than fifty percent
(50%) in value of the Company; or

2.7.6 Any reverse merger in which the Company is a surviving entity but in which
securities possessing more than fifty percent (50%) of the total combined voting
power of the Company’s outstanding securities are transferred to a person or
persons different from the persons holding those securities immediately prior to
such reverse merger.

2.8 “Code” means the Internal Revenue Code of 1986, as amended. Reference to a
specific section of the Code or regulation thereunder shall include such section
or regulation, any valid regulation promulgated under such section, and any
comparable provision of any future legislation or regulation amending,
supplementing or superseding such section or regulation.

2.9 “Committee” means a committee of Directors appointed by the Board in
accordance with Section 3.1 of the Plan to administer the Plan.

2.10 “Common Stock” means the common stock of the Company.

2.11 “Company” means Epicor Software Corporation, a Delaware corporation, or any
successor thereto.

2.12 “Consultant” means any consultant, independent contractor, or other person
who provides significant services to the Company or its Subsidiaries, but who is
neither an Employee nor a Director.

2.13 “Director” means any individual who is a member of the Board of Directors
of the Company.

2.14 “Disability” means a permanent disability as defined in Section 22(e)(3) of
the Code.

2.15 “EBITDA” means as to any Performance Period, the Company’s earnings before
interest, taxes, depreciation and amortization.

2.16 “Employee” means any person employed by the Company or any Subsidiary,
whether such employee is so employed at the time the Plan is adopted or becomes
so employed subsequent to the adoption of the Plan. A person shall 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, any
Subsidiary, or any successor. Neither service as a Director nor payment of a
director’s fee by the Company shall be sufficient to constitute “employment” by
the Company.

2.17 “Exchange Program” means a program established by the Administrator under
which outstanding Awards are amended to provide for a lower Exercise Price or
surrendered or cancelled in exchange for

 

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(a) Awards with a lower Exercise Price, (b) a different type of Award, (c) cash,
or (d) a combination of (a), (b) and/or (c). Notwithstanding the preceding, the
term Exchange Program does not include any (i) action described in Section 4.3,
nor (ii) transfer or other disposition permitted under Section 11.7.

2.18 “Exercise Price” means the price at which a Share may be purchased by a
Participant pursuant to the exercise of an Option.

2.19 “Fair Market Value” means, as of any date, the value of Common Stock
determined as follows:

(a) 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 on the day of determination,
as reported in The Wall Street Journal or such other source as the Administrator
deems reliable;

(b) If the Common Stock is regularly quoted by a recognized securities dealer
but selling prices are not reported, the Fair Market Value of a Share of Common
Stock shall be the mean between the high bid and low asked prices for the Common
Stock on the day of determination, as reported in The Wall Street Journal or
such other source as the Administrator deems reliable; or

(c) In the absence of an established market for the Common Stock, the Fair
Market Value shall be determined in good faith by the Administrator.

2.20 “Fiscal Year” means the fiscal year of the Company.

2.21 “Free Cash Flow” means as to any Performance Period, EBITDA less capital
expenditures, net interest and taxes actually paid by the Company.

2.22 “Grant Date” means, with respect to an Award, the date that the Award was
granted. The Grant Date of an Award shall not be earlier than the date the Award
is approved by the Administrator.

2.23 “Incentive Stock Option” means an Option to purchase Shares that is
designated as an Incentive Stock Option and is intended to meet the requirements
of Section 422 of the Code.

2.24 “Nonqualified Stock Option” means an option to purchase Shares that is not
intended to be an Incentive Stock Option.

2.25 “Option” means an Incentive Stock Option or a Nonqualified Stock Option.

2.26 “Participant” means an Employee, Consultant, or Director who has an
outstanding Award.

2.27 “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) EBITDA, (b) Free Cash Flow,
(c) Profit After Tax, (d) Return on Equity, (e) Revenue, and (f) Total
Shareholder Return. The Performance Goals may differ from Participant to
Participant and from Award to Award. Any criteria used may be measured, as
applicable, (i) in absolute terms, (ii) in relative terms (including, but not
limited to, passage of time and/or against another company or companies),
(iii) on a per-share basis, (iv) against the performance of the Company as a
whole or a business unit of the Company and/or (v) on a pre-tax or after-tax
basis. Prior to the Determination Date, the Administrator shall determine
whether any element(s) or item(s) shall be included in or excluded from the
calculation of any Performance Goal with respect to any Participants.

 

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2.28 “Performance Period” means any Fiscal Year or such longer period as
determined by the Administrator in its sole discretion.

2.29 “Performance Share” means an Award granted to a Participant pursuant to
Section 9.

2.30 “Performance Unit” means an Award granted to a Participant pursuant to
Section 8.

2.31 “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. As provided in Section 7, 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, in its discretion.

2.32 “Plan” means the Epicor Software Corporation 2007 Stock Incentive Plan, as
set forth in this instrument and as hereafter amended from time to time.

2.33 “Profit After Tax” means as to any Performance Period, the Company’s income
after taxes, determined in accordance with generally accepted accounting
principles.

2.34 “Restricted Stock” means an Award granted to a Participant pursuant to
Section  7.

2.35 “Return on Equity” means as to any Performance Period, the percentage equal
to the Company’s Profit After Tax divided by average stockholder’s equity,
determined in accordance with generally accepted accounting principles.

2.36 “Revenue” means as to any Performance Period, the Company’s net revenues
generated from third parties, determined in accordance with generally accepted
accounting principles.

2.37 “Rule 16b-3” means Rule 16b-3 promulgated under the 1934 Act, and any
future regulation amending, supplementing or superseding such regulation.

2.38 “Section 16 Person” means a person who, with respect to the Shares, is
subject to Section  16 of the 1934 Act.

2.39 “Service Provider” means an Employee, Director or Consultant.

2.40 “Shares” means the shares of Common Stock of the Company.

2.41 “Stock Appreciation Right” or “SAR” means an Award, granted alone or in
connection with a related Option, that pursuant to Section 6 is designated as a
SAR.

2.42 “Subsidiary” means any corporation in an unbroken chain of corporations
beginning with the Company as the corporation at the top of the chain, but only
if each of the corporations below the Company (other than the last corporation
in the unbroken chain) then owns stock possessing fifty percent (50%) or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.

2.43 “Termination of Service” means (a) in the case of an Employee, a cessation
of the employee-employer relationship between the Employee and the Company or
any Subsidiary for any reason, including, but not by way of limitation, a
termination by resignation, discharge, death, disability, or the disaffiliation
of a Subsidiary, but excluding any such termination where there is a
simultaneous reemployment by the Company or any Subsidiary; (b) in the case of a
Consultant, a cessation of the service relationship between the Consultant and
the Company or any Subsidiary for any reason, including, but not by way of
limitation, a termination by resignation, discharge, death, Disability, or the
disaffiliation of a Subsidiary, but excluding any such termination where there
is a

 

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simultaneous re-engagement of the consultant by the Company or a Subsidiary; or
(c) in the case of a Director, a cessation of the Director’s service on the
Board for any reason, including, but not by way of limitation, a termination by
resignation, death, Disability, or non-reelection to the Board.

2.44 “Total Shareholder Return” means as to any Performance Period, the total
return (change in share price plus reinvestment of any dividends) of a Share.

SECTION 3

ADMINISTRATION

3.1 Procedure.

3.1.1 Multiple Administrative Bodies. Different Committees with respect to
different groups of Service Providers may administer the Plan.

3.1.2 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.

3.1.3 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.

3.1.4 Other Administration. Other than as provided above, the Plan shall be
administered by (a) the Board or (b) a Committee, which Committee shall be
constituted to satisfy Applicable Laws.

3.2 Powers of the Administrator. Subject to the provisions of the Plan, and in
the case of a Committee, subject to the specific duties delegated by the Board
to such Committee, the Administrator shall have the authority, in its
discretion:

3.2.1 to determine the Fair Market Value of the Common Stock;

3.2.2 to select the Service Providers to whom Awards may be granted hereunder;

3.2.3 to determine whether and to what extent Awards are granted hereunder;

3.2.4 to determine the number of Shares to be covered by each Award granted
hereunder;

3.2.5 to approve forms of Award Agreement for use under the Plan;

3.2.6 to determine the terms and conditions, not inconsistent with the terms of
the Plan, of any Award granted hereunder. Such terms and conditions include, but
are not limited to, the grant date, the exercise price, the time or times when
Awards may be exercised or earned (which may be based on performance criteria),
any vesting acceleration or waiver of forfeiture or repurchase restrictions, and
any restriction or limitation regarding any Award or the Shares relating
thereto, based in each case on such factors as the Administrator will determine;

3.2.7 to institute an Exchange Program; however, the Administrator may not
institute an Exchange Program without shareholder approval;

3.2.8 to construe and interpret the terms of the Plan and Awards granted
pursuant to the Plan;

 

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3.2.9 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 qualifying for preferred tax treatment under foreign tax laws;

3.2.10 to modify or amend each Award (subject to the limitations set forth in
Section 5.4.1 of the Plan concerning the maximum term of Options and SARs),
including the discretionary authority to extend the post-termination
exercisability period of Options and SARs longer than is otherwise provided for
in the Plan subject to the maximum term permitted under Section 5.4.1 of the
Plan;

3.2.11 to authorize any person to execute on behalf of the Company any
instrument required to effect the grant of an Award previously granted by the
Administrator;

3.2.12 to determine the terms and restrictions applicable to Awards;

3.2.13 to allow a Participant to satisfy withholding tax obligations by electing
to have the Company withhold from the Shares to be issued upon exercise or
vesting 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 a Participant 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

3.2.14 to make all other determinations deemed necessary or advisable for
administering the Plan.

3.3 Effect of Administrator’s Decision. The Administrator’s decisions,
determinations and interpretations will be final and binding on all Participants
and any other holders of Awards.

SECTION 4

SHARES SUBJECT TO THE PLAN

4.1 Number of Shares. Subject to adjustment as provided in Section 4.3, the
total number of Shares available for issuance under the Plan shall equal the sum
of (a) 12,000,000 (b) the number of Shares (not to exceed 82,606) that remain
available for grant under the Amended and Restated 1999 Nonstatutory Stock
Option Plan and the number of Shares (not to exceed 545,394) that remain
available for grant under the Company’s 2005 Stock Incentive Plan as of
March 21, 2007, and (c) any Shares (not to exceed 1,933,000) that otherwise
would have been returned to the Amended and Restated 1999 Nonstatutory Stock
Option Plan and any Shares (not to exceed 2,000,000) that otherwise would have
been returned to the 2005 Stock Incentive Plan after March 21, 2007, on account
of the expiration, cancellation or forfeiture of awards granted under the
applicable plan. Any Shares subject to Options or SARs shall be counted against
the numerical limits of this Section 4.1 as one share for every share subject
thereto. With respect to Restricted Stock, Performance Share, or Performance
Unit Awards granted prior to April 21, 2009, and with a per share or unit
purchase price lower than 100% of the Fair Market Value on the Date of Grant,
any Shares or units subject to such Awards shall be counted against the
numerical limits of this Section 4.1 as two (2) Shares for every one (1) Share
subject thereto. With respect to Restricted Stock, Performance Share, or
Performance Unit Awards granted on or after April 21, 2009, and with a per share
or unit purchase price lower than 100% of the Fair Market Value on the Date of
Grant, any Shares or units subject to such Awards shall be counted against the
numerical limits of this Section 4.1 as one and a half (1.5) Shares for every
one (1) Share subject thereto.

4.2 Lapsed Awards. If an Award expires or becomes unexercisable without having
been exercised in full, or is surrendered pursuant to an Exchange Program, or,
with respect to Restricted Stock, Performance Shares or Performance Units, is
forfeited to or repurchased by the Company, the unpurchased Shares (or for
Awards other than Options and SARs, the forfeited or repurchased Shares) which
were subject thereto will become available

 

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for future grant or sale under the Plan (unless the Plan has terminated). With
respect to SARs, Shares actually issued pursuant to a SAR as well as the Shares
that represent payment of the exercise price shall each cease to be available
under the Plan. Shares that have actually been issued under the Plan under any
Award will not be returned to the Plan and will not become available for future
distribution under the Plan; provided, however, that if unvested Shares of
Restricted Stock, Performance Shares or Performance Units are repurchased by the
Company or are forfeited to the Company, such Shares will become available for
future grant under the Plan (in accordance with the number of Shares by which
the total number of Shares available for issuance was reduced pursuant to
Section 4.1). Shares used to pay the tax and exercise price of an Award will not
become available for future grant or sale under the Plan. To the extent an Award
under the Plan is paid out in cash rather than Shares, such cash payment will
not result in reducing the number of Shares available for issuance under the
Plan. Notwithstanding the foregoing and, subject to adjustment provided in
Section 4.3, 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 4.1, plus, to the extent allowable under Section 422 of the Code, any
Shares that become available for issuance under the Plan under this Section 
4.2.

4.3 Adjustments in Awards and Authorized Shares. In the event that any dividend
or other distribution (whether in the form of cash, Shares, other securities, or
other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Shares or other securities of the Company, or other
change in the corporate structure of the Company affecting the Shares such that
an adjustment is determined by the Administrator (in its sole discretion) to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Administrator shall, in such manner as it may deem equitable, adjust the number
and class of Shares which may be delivered under the Plan, the number, class,
and price of Shares subject to outstanding Awards, and the numerical limits of
Sections 5.1, 6.1, 7.1, 8.1, and 9.1. Notwithstanding the preceding, the number
of Shares subject to any Award always shall be a whole number.

SECTION 5

STOCK OPTIONS

5.1 Grant of Options. Subject to the terms and provisions of the Plan, Options
may be granted to Employees, Directors and Consultants at any time and from time
to time as determined by the Administrator in its sole discretion. The
Administrator, in its sole discretion, shall determine the number of Shares
subject to each Option, provided that during any Fiscal Year, no Participant
shall be granted Options (and/or SARs) covering more than a total of 1,500,000
Shares. Notwithstanding the foregoing, during the Fiscal Year in which a
Participant first becomes an Employee, he or she may be granted Options (and/or
SARs) to purchase up to a total of an additional 1,500,000 Shares. The
Administrator may grant Incentive Stock Options, Nonqualified Stock Options, or
a combination thereof.

5.2 Award Agreement. Each Option shall be evidenced by an Award Agreement that
shall specify the Exercise Price, the expiration date of the Option, the number
of Shares covered by the Option, any conditions to exercise the Option, and such
other terms and conditions as the Administrator, in its discretion, shall
determine. The Award Agreement shall also specify whether the Option is intended
to be an Incentive Stock Option or a Nonqualified Stock Option.

5.3 Exercise Price. Subject to the provisions of this Section 5.3, the Exercise
Price for each Option shall be determined by the Administrator in its sole
discretion.

5.3.1 Nonqualified Stock Options. The Exercise Price of each Nonqualified Stock
option shall be determined by the Administrator in its discretion but shall be
not less than one hundred percent (100%) of the Fair Market Value of a Share on
the Grant Date.

5.3.2 Incentive Stock Options. In the case of an Incentive Stock Option, the
Exercise Price shall be not less than one hundred percent (100%) of the Fair
Market Value of a Share on the Grant Date; provided,

 

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however, that if on the Grant Date, the Employee (together with persons whose
stock ownership is attributed to the Employee pursuant to Section 424(d) of the
Code) owns stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company or any of its Subsidiaries, the Exercise
Price shall be not less than one hundred and ten percent (110%) of the Fair
Market Value of a Share on the Grant Date.

5.3.3 Substitute Options. Notwithstanding the provisions of Section 5.3.2, in
the event that the Company or a Subsidiary consummates a transaction described
in Section 424(a) of the Code (e.g., the acquisition of property or stock from
an unrelated corporation), persons who become Employees, Directors or
Consultants on account of such transaction may be granted Options in
substitution for options granted by their former employer. If such substitute
Options are granted, the Administrator, in its sole discretion and consistent
with Section 424(a) of the Code, may determine that such substitute Options
shall have an exercise price less than one hundred percent (100%) of the Fair
Market Value of the Shares on the Grant Date.

5.4 Expiration of Options.

5.4.1 Expiration Dates. Each Option shall terminate no later than the first to
occur of the following events:

(a) The date for termination of the Option set forth in the written Award
Agreement; or

(b) The expiration of ten (10) years from the Grant Date.

5.4.2 Administrator Discretion. Subject to the ten-year limits of
Sections 5.4.1, the Administrator, in its sole discretion, (a) shall provide in
each Award Agreement when each Option expires and becomes unexercisable, and
(b) may, after an Option is granted, extend the maximum term of the Option
(subject to Section 5.8.4 regarding Incentive Stock Options).

5.5 Exercisability of Options. Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions and conditions as
the Administrator shall determine in its sole discretion. After an Option is
granted, the Administrator, in its sole discretion, may accelerate the
exercisability of the Option.

5.6 Exercise of Option.

5.6.1 Payment. Options shall be exercised by the Participant giving notice and
following such procedures as the Company (or its designee) may specify from time
to time. Exercise of an Option also requires that the Participant make
arrangements satisfactory to the Company for full payment of the Exercise Price
for the Shares. All exercise notices shall be given in the form and manner
specified by the Company from time to time. The Administrator shall determine
the acceptable form of consideration for exercising an Option, including the
method of payment. In the case of an Incentive Stock Option, the Administrator
shall determine the acceptable form of consideration at the time of grant.
Subject to Applicable Laws, such consideration may consist entirely of:

(a) cash;

(b) check;

(c) promissory note;

 

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(d) other Shares (A) in the case of Shares acquired upon exercise of an option,
have been owned by the Participant for more than six (6) months on the date of
surrender, and (B) have a Fair Market Value on the date of surrender equal to
the aggregate exercise price of the Shares as to which said Option shall be
exercised;

(e) consideration received by the Company under a cashless exercise program
implemented by the Company in connection with the Plan;

(f) a reduction in the amount of any Company liability to the Participant,
including any liability attributable to the Participant’s participation in any
Company-sponsored deferred compensation program or arrangement;

(g) such other consideration and method of payment for the issuance of Shares to
the extent permitted by Applicable Laws; or

(h) any combination of the foregoing methods of payment.

As soon as practicable after receipt of a notification of exercise satisfactory
to the Company and full payment for the Shares purchased, the Company shall
deliver to the Participant (or the Participant’s designated broker), Share
certificates (which may be in book entry form) representing such Shares.

5.6.2 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,
the Participant may exercise his or her Option, but only within such period of
time as is specified in the Award Agreement, and only 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 such Option as set forth in the Award Agreement). In
the absence of a specified time in the Award 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.

5.6.3 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
Award 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 Award Agreement). In the absence of a specified time in the Award
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.

5.6.4 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 Award
Agreement (but in no event later than the expiration of the term of such Option
as set forth in the Award 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 Award 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.

 

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5.7 Restrictions on Share Transferability. The Administrator may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option as it
may deem advisable, including, but not limited to, restrictions related to
applicable federal securities laws, the requirements of any national securities
exchange or system upon which Shares are then listed or traded, or any blue sky
or state securities laws.

5.8 Certain Additional Provisions for Incentive Stock Options.

5.8.1 Exercisability. The aggregate Fair Market Value (determined on the Grant
Date(s)) of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by any Employee during any calendar year (under
all plans of the Company and its Subsidiaries) shall not exceed $100,000.

5.8.2 Termination of Service. No Incentive Stock Option may be exercised more
than three (3) months after the Participant’s Termination of Service for any
reason other than Disability or death, unless (a) the Participant dies during
such three-month period, and/or (b) the Award Agreement or the Administrator
permits later exercise (in which case the Option instead may be deemed to be a
Nonqualified Stock Option). No Incentive Stock Option may be exercised more than
one (1) year after the Participant’s Termination of Service on account of
Disability, unless (a) the Participant dies during such one-year period, and/or
(b) the Award Agreement or the Administrator permit later exercise (in which
case the option instead may be deemed to be a Nonqualified Stock Option).

5.8.3 Employees Only. Incentive Stock Options may be granted only to persons who
are Employees on the Grant Date.

5.8.4 Expiration. No Incentive Stock Option may be exercised after the
expiration of ten (10) years from the Grant Date; provided, however, that if the
Option is granted to an Employee who, together with persons whose stock
ownership is attributed to the Employee pursuant to Section 424(d) of the Code,
owns stock possessing more than 10% of the total combined voting power of all
classes of the stock of the Company or any of its Subsidiaries, the Option may
not be exercised after the expiration of five (5) years from the Grant Date.

SECTION 6

STOCK APPRECIATION RIGHTS

6.1 Grant of SARs. Subject to the terms and conditions of the Plan, a SAR may be
granted to Employees, Directors and Consultants at any time and from time to
time as shall be determined by the Administrator, in its sole discretion.

6.1.1 Number of Shares. The Administrator shall have complete discretion to
determine the number of SARs granted to any Participant, provided that during
any Fiscal Year, no Participant shall be granted SARs (and/or Options) covering
more than a total of 1,500,000 Shares. Notwithstanding the foregoing, during the
Fiscal Year in which a Participant first becomes an Employee, he or she may be
granted SARs (and/or Options) covering up to a total of an additional 1,500,000
Shares.

6.1.2 Exercise Price and Other Terms. The Administrator, subject to the
provisions of the Plan, shall have complete discretion to determine the terms
and conditions of SARs granted under the Plan. The Exercise Price of each SAR
shall be determined by the Administrator in its discretion but shall not be less
than one hundred percent (100%) of the Fair Market Value of a Share on the Grant
Date.

6.2 SAR Agreement. Each SAR grant shall be evidenced by an Award Agreement that
shall 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, shall determine.

 

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6.3 Expiration of SARs. A SAR granted under the Plan shall 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 5.4 also
shall apply to SARs.

6.4 Payment of SAR Amount. Upon exercise of a SAR, a Participant shall be
entitled to receive payment from the Company in an amount determined by
multiplying:

6.4.1 The difference between the Fair Market Value of a Share on the date of
exercise over the exercise price; times

6.4.2 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.

SECTION 7

RESTRICTED STOCK

7.1 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 Employees, Directors and Consultants as the Administrator,
in its sole discretion, shall determine. The Administrator, in its sole
discretion, shall determine the number of Shares to be granted to each
Participant, provided that during any Fiscal Year, no Participant shall receive
more than a total of 1,000,000 Shares of Restricted Stock (and/or Performance
Shares). Notwithstanding the foregoing, during the Fiscal Year in which a
Participant first becomes an Employee, he or she may be granted up to a total of
an additional 1,000,000 Shares of Restricted Stock (and/or Performance Shares).

7.2 Restricted Stock Agreement. Each Award of Restricted Stock shall be
evidenced by an Award Agreement that shall specify the Period of Restriction,
the number of Shares granted, and such other terms and conditions as the
Administrator, in its sole discretion, shall determine. Unless the Administrator
determines otherwise, Shares of Restricted Stock shall be held by the Company as
escrow agent until the restrictions on such Shares have lapsed.

7.3 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.

7.4 Other Restrictions. The Administrator, in its sole discretion, may impose
such other restrictions on Shares of Restricted Stock as it may deem advisable
or appropriate, in accordance with this Section 7.4.

7.4.1 General Restrictions. The Administrator may set restrictions based upon
continued employment or service with the Company and its affiliates, the
achievement of specific performance objectives (Company-wide, departmental, or
individual), applicable federal or state securities laws, or any other basis
determined by the Administrator in its discretion.

7.4.2 Section 162(m) Performance Restrictions. For purposes of qualifying grants
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 shall be set by the
Administrator on or before the latest date permissible to enable the Restricted
Stock to qualify as “performance-based compensation” under Section 162(m) of the
Code. In granting Restricted Stock which is intended to qualify under
Section 162(m) of the Code, the Administrator shall follow any procedures
determined by it from time to time to be necessary or appropriate to ensure
qualification of the Restricted Stock under Section 162(m) of the Code (e.g., in
determining the Performance Goals).

 

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7.4.3 Legend on Certificates. The Administrator, in its discretion, may legend
the certificates representing Restricted Stock to give appropriate notice of
such restrictions.

7.5 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 shall 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 shall lapse or be removed. After the
restrictions have lapsed, the Participant shall be entitled to have any legend
or legends under Section 7.4.3 removed from his or her Share certificate, and
the Shares shall be freely transferable by the Participant. The Administrator
(in its discretion) may establish procedures regarding the release of Shares
from escrow and the removal of legends, as necessary or appropriate to minimize
administrative burdens on the Company.

7.6 Voting Rights. During the Period of Restriction, Participants holding Shares
of Restricted Stock granted hereunder may exercise full voting rights with
respect to those Shares, unless the Administrator determines otherwise.

7.7 Dividends and Other Distributions. During the Period of Restriction,
Participants holding Shares of Restricted Stock shall be entitled to receive all
dividends and other distributions paid with respect to such Shares unless
otherwise provided in the Award Agreement. Any such dividends or distribution
shall be subject to the same restrictions on transferability and forfeitability
as the Shares of Restricted Stock with respect to which they were paid, unless
otherwise provided in the Award Agreement.

7.8 Return of Restricted Stock to Company. On the date set forth in the Award
Agreement, the Restricted Stock for which restrictions have not lapsed shall
revert to the Company and again shall become available for grant under the Plan.

SECTION 8

PERFORMANCE UNITS

8.1 Grant of Performance Units. Performance Units may be granted to Employees,
Directors and Consultants at any time and from time to time, as shall be
determined by the Administrator, in its sole discretion. The Administrator shall
have complete discretion in determining the number of Performance Units granted
to each Participant provided that during any Fiscal Year, no Participant shall
receive Performance Units having an initial value greater than $14,000,000.

8.2 Value of Performance Units. Each Performance Unit shall have an initial
value that is established by the Administrator on or before the Grant Date.

8.3 Performance Objectives and Other Terms. The Administrator, in its
discretion, shall set performance objectives or other vesting criteria which,
depending on the extent to which they are met, will determine the number or
value of Performance Units that will be paid out to the Participants. Each Award
of Performance Units shall be evidenced by an Award Agreement that shall specify
the Performance Period, and such other terms and conditions as the
Administrator, in its sole discretion, shall determine.

8.3.1 General Performance Objectives or Vesting Criteria. The Administrator may
set performance objectives or vesting criteria based upon the achievement of
Company-wide, departmental, or individual goals, applicable federal or state
securities laws, or any other basis determined by the Administrator in its
discretion (for example, but not by way of limitation, continuous service as an
Employee, Director or Consultant).

8.3.2 Section 162(m) Performance Objectives. For purposes of qualifying grants
of Performance Units as “performance-based compensation” under Section 162(m) of
the Code, the Administrator, in its

 

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discretion, may determine that the performance objectives applicable to
Performance Units shall be based on the achievement of Performance Goals. The
Performance Goals shall be set by the Administrator on or before the latest date
permissible to enable the Performance Units to qualify as “performance-based
compensation” under Section 162(m) of the Code. In granting Performance Units
that are intended to qualify under Section 162(m) of the Code, the Administrator
shall follow any procedures determined by it from time to time to be necessary
or appropriate to ensure qualification of the Performance Units under
Section 162(m) of the Code (e.g., in determining the Performance Goals).

8.4 Earning of Performance Units. After the applicable Performance Period has
ended, the holder of Performance Units shall be entitled to receive a payout of
the number of Performance Units earned by the Participant over the Performance
Period, to be determined as a function of the extent to which the corresponding
performance objectives have been achieved. After the grant of a Performance
Unit, the Administrator, in its sole discretion, may reduce or waive any
performance objectives for such Performance Unit.

8.5 Form and Timing of Payment of Performance Units. Payment of earned
Performance Units shall 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 in the form of cash, in Shares (which have an
aggregate Fair Market Value equal to the value of the earned Performance Units
at the close of the applicable Performance Period) or in a combination thereof.

8.6 Cancellation of Performance Units. On the date set forth in the Award
Agreement, all unearned or unvested Performance Units shall be forfeited to the
Company, and again shall be available for grant under the Plan.

SECTION 9

PERFORMANCE SHARES

9.1 Grant of Performance Shares. Performance Shares may be granted to Employees,
Directors and Consultants at any time and from time to time, as shall be
determined by the Administrator, in its sole discretion. The Administrator shall
have complete discretion in determining the number of Performance Shares granted
to each Participant, provided that during any Fiscal Year, no Participant shall
be granted more than a total of 1,000,000 Performance Shares (and/or Shares of
Restricted Stock). Notwithstanding the foregoing, during the Fiscal Year in
which a Participant first becomes an Employee, he or she may be granted up to a
total of an additional 1,000,000 Performance Shares (and/or Shares of Restricted
Stock).

9.2 Value of Performance Shares. Each Performance Share shall have an initial
value equal to the Fair Market Value of a Share on the Grant Date.

9.3 Performance Share Agreement. Each Award of Performance Shares shall be
evidenced by an Award Agreement that shall specify any vesting conditions, the
number of Performance Shares granted, and such other terms and conditions as the
Administrator, in its sole discretion, shall determine.

9.4 Performance Objectives and Other Terms. The Administrator, in its
discretion, shall set performance objectives or other vesting criteria which,
depending on the extent to which they are met, will determine the number or
value of Performance Shares that will be paid out to the Participants. Each
Award of Performance Shares shall be evidenced by an Award Agreement that shall
specify the Performance Period, and such other terms and conditions as the
Administrator, in its sole discretion, shall determine.

9.4.1 General Performance Objectives or Vesting Criteria. The Administrator may
set performance objectives or vesting criteria based upon the achievement of
Company-wide, departmental, or individual goals, applicable federal or state
securities laws, or any other basis determined by the Administrator in its

 

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discretion (for example, but not by way of limitation, continuous service as an
Employee, Director or Consultant).

9.4.2 Section 162(m) Performance Objectives. For purposes of qualifying grants
of Performance 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 Shares shall be based on the
achievement of Performance Goals. The Performance Goals shall be set by the
Administrator on or before the latest date permissible to enable the Performance
Shares to qualify as “performance-based compensation” under Section 162(m) of
the Code. In granting Performance Shares that are intended to qualify under
Section 162(m) of the Code, the Administrator shall follow any procedures
determined by it from time to time to be necessary or appropriate to ensure
qualification of the Performance Shares under Section 162(m) of the Code (e.g.,
in determining the Performance Goals).

9.5 Earning of Performance Shares. After the applicable Performance Period has
ended, the holder of Performance Shares shall be entitled to receive a payout of
the number of Performance Shares earned by the Participant over the Performance
Period, to be determined as a function of the extent to which the corresponding
performance objectives have been achieved. After the grant of a Performance
Share, the Administrator, in its sole discretion, may reduce or waive any
performance objectives for such Performance Share.

9.6 Form and Timing of Payment of Performance Shares. Payment of vested
Performance Shares shall be made as soon as practicable after vesting (subject
to any deferral permitted under Section 11.1). The Administrator, in its sole
discretion, may pay Performance Shares in the form of cash, in Shares or in a
combination thereof.

9.7 Cancellation of Performance Shares. On the date set forth in the Award
Agreement, all unvested Performance Shares shall be forfeited to the Company,
and except as otherwise determined by the Administrator, again shall be
available for grant under the Plan.

SECTION 10

CHANGE OF CONTROL, DISSOLUTION AND LIQUIDATION

10.1 Change of Control. Except as otherwise provided in the applicable Award
Agreement, in the event that a Change of Control occurs, the Participant,
immediately prior thereto, shall fully vest in and have the right to exercise
all of his or her outstanding Options and Stock Appreciation Rights, including
Shares as to which such Awards would not otherwise be vested or exercisable, all
restrictions on Restricted Stock, Performance Units, and Performance Shares will
lapse, and, with respect to Awards with performance-based vesting, all
performance goals or other vesting criteria will be deemed achieved at one
hundred percent (100%) on-target levels and all other terms and conditions met.
To the extent possible, the Administrator shall cause written notice of the
Change of Control to be given to the persons holding Awards not less than ten
(10) days prior to the anticipated effective date of the Change of Control. In
the event of a Change of Control, the Administrator may take such other action
as is equitable and fair, in its sole discretion.

10.2 Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Administrator will notify each Participant as
soon as practicable prior to the effective date of such proposed transaction. To
the extent it has not been previously exercised, an Award will terminate
immediately prior to the consummation of such proposed action.

 

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SECTION 11

MISCELLANEOUS

11.1 Deferrals. The Administrator, in its sole discretion, may permit a
Participant to defer receipt of the payment of cash or the delivery of Shares
that would otherwise be due to such Participant under an Award. Any such
deferral elections shall be subject to such rules and procedures as shall be
determined by the Administrator in its sole discretion.

11.2 No Effect on Employment or Service. Nothing in the Plan shall interfere
with or limit in any way the right of the Company to terminate any Participant’s
employment or service at any time, with or without cause. For purposes of the
Plan, transfer of employment of a Participant between the Company and any one of
its Subsidiaries (or between Subsidiaries) shall not be deemed a Termination of
Service. Employment with the Company and its Subsidiaries is on an at-will basis
only.

11.3 Participation. No Employee, Director or Consultant shall have the right to
be selected to receive an Award under this Plan, or, having been so selected, to
be selected to receive a future Award.

11.4 Indemnification. Each person who is or shall have been a member of the
Administrator, or of the Board, shall be indemnified and held harmless by the
Company against and from (a) any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him or her in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action taken or
failure to act under the Plan or any Award Agreement, and (b) from any and all
amounts paid by him or her in settlement thereof, with the Company’s approval,
or paid by him or her in satisfaction of any judgment in any such claim, action,
suit, or proceeding against him or her, provided he or she shall give the
Company an opportunity, at its own expense, to handle and defend the same before
he or she undertakes to handle and defend it on his or her own behalf. The
foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Company’s
Certificate of Incorporation or Bylaws, by contract, as a matter of law, or
otherwise, or under any power that the Company may have to indemnify them or
hold them harmless.

11.5 Successors. All obligations of the Company under the Plan, with respect to
Awards granted hereunder, shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation, or otherwise, of all or substantially all of
the business or assets of the Company.

11.6 Beneficiary Designations. If permitted by the Administrator, a Participant
under the Plan may name a beneficiary or beneficiaries to whom any vested but
unpaid Award shall be paid in the event of the Participant’s death. Each such
designation shall revoke all prior designations by the Participant and shall be
effective only if given in a form and manner acceptable to the Administrator. In
the absence of any such designation, any vested benefits remaining unpaid at the
Participant’s death shall be paid to the Participant’s estate and, subject to
the terms of the Plan and of the applicable Award Agreement, any unexercised
vested Award may be exercised by the administrator or executor of the
Participant’s estate.

11.7 Limited Transferability of Awards. No Award granted under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will, by the laws of descent and distribution, or to the limited
extent provided in Section 11.6. All rights with respect to an Award granted to
a Participant shall be available during his or her lifetime only to the
Participant. Notwithstanding the foregoing, a Participant may, if the
Administrator (in its discretion) so permits, transfer an Award to an individual
or entity other than the Company. Any such transfer shall be made in accordance
with such procedures as the Administrator may specify from time to time.

 

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11.8 No Rights as Stockholder. Except to the limited extent provided in
Sections 7.6, no Participant (nor any beneficiary) shall have any of the rights
or privileges of a stockholder of the Company with respect to any Shares
issuable pursuant to an Award (or exercise thereof), unless and until
certificates representing such Shares shall have been issued, recorded on the
records of the Company or its transfer agents or registrars, and delivered to
the Participant (or beneficiary).

SECTION 12

AMENDMENT, TERMINATION, AND DURATION

12.1 Amendment, Suspension, or Termination. The Board, in its sole discretion,
may amend, suspend or terminate the Plan, or any part thereof, at any time and
for any reason. The amendment, suspension, or termination of the Plan shall not,
without the consent of the Participant, alter or impair any rights or
obligations under any Award theretofore granted to such Participant. No Award
may be granted during any period of suspension or after termination of the Plan.

12.2 Duration of the Plan. The Plan shall be effective as of March 30, 2007, and
subject to Section 12.1 (regarding the Board’s right to amend or terminate the
Plan), shall remain in effect thereafter. However, without further stockholder
approval, no Incentive Stock Option may be granted under the Plan after March 
30, 2017.

SECTION 13

TAX WITHHOLDING

13.1 Withholding Requirements. Prior to the delivery of any Shares or cash
pursuant to an Award (or exercise thereof), the Company shall have the power and
the right to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy federal, state, and local taxes
(including the Participant’s FICA obligation) required to be withheld with
respect to such Award (or exercise thereof).

13.2 Withholding Arrangements. The Administrator, in its sole discretion and
pursuant to such procedures as it may specify from time to time, may permit a
Participant to satisfy such tax withholding obligation, in whole or in part by
(a) electing to have the Company withhold otherwise deliverable Shares, or
(b) delivering to the Company already-owned Shares having a Fair Market Value
equal to the minimum amount required to be withheld.

SECTION 14

LEGAL CONSTRUCTION

14.1 Gender and Number. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.

14.2 Severability. In the event any provision of the Plan shall be held illegal
or invalid for any reason, the illegality or invalidity shall not affect the
remaining parts of the Plan, and the Plan shall be construed and enforced as if
the illegal or invalid provision had not been included.

14.3 Requirements of Law. The granting of Awards and the issuance of Shares
under the Plan shall be subject to all applicable laws, rules, and regulations,
and to such approvals by any governmental agencies or national securities
exchanges as may be required.

14.4 Securities Law Compliance. With respect to Section 16 Persons, transactions
under this Plan are intended to qualify for the exemption provided by Rule
16b-3. To the extent any provision of the Plan, Award Agreement or action by the
Administrator fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable or appropriate by the
Administrator.

 

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14.5 Governing Law. The Plan and all Award Agreements shall be construed in
accordance with and governed by the laws of the State of California (with the
exception of its conflict of laws provisions).

14.6 Captions. Captions are provided herein for convenience only, and shall not
serve as a basis for interpretation or construction of the Plan.

 

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