EXHIBIT 10.3
NEUROCRINE BIOSCIENCES, INC.
2003 INCENTIVE STOCK PLAN
Restricted Stock Unit Agreement
Grant Notice
     Neurocrine Biosciences, Inc. (the “Company”) hereby grants you,
[                    ] (the “Employee”), an award of Restricted Stock Units
(“RSUs”) under the Company’s 2003 Incentive Stock Plan, as amended (the “Plan”),
the terms of which are hereby incorporated by reference. The date of this
Restricted Stock Unit Agreement, which includes Appendix A attached hereto and
incorporated herein (the “Agreement”), is September 26, 2006 (the “Effective
Date”). Subject to the remaining terms of this Agreement and of the Plan, the
principal features of this award are as follows:
Number of RSUs:                     
Vesting of RSUs: The RSUs will vest according to the following schedule:
So long as you remain in Continuous Status as an Employee or Consultant through
each such date, 1/3rd of the RSUs shall vest on each of the thirteen (13),
twenty-four (24) and thirty-six (36) month anniversaries of the Effective Date,
so that the RSUs will become fully vested on the thirty-six (36) month
anniversary of the Effective Date (the “Vesting Schedule”). The RSUs are also
subject to the vesting conditions set forth in paragraph 4 of the attached
Appendix A.
Unless otherwise defined herein or in Appendix A, capitalized terms herein or in
Appendix A shall have the defined meanings ascribed to them in the Plan.
Your signature below indicates your agreement and understanding that this award
is subject to all of the terms and conditions contained in this Agreement
(including Appendix A) and the Plan. For example, important additional
information on vesting and forfeiture of the RSUs is contained in Paragraphs 4
through 6 of Appendix A. PLEASE BE SURE TO READ ALL OF APPENDIX A, WHICH
CONTAINS THE SPECIFIC TERMS AND CONDITIONS OF THIS AGREEMENT.

                  NEUROCRINE BIOSCIENCES, INC.   EMPLOYEE      
 
                          Tim Coughlin   [NAME]         Address:        
 
               
 
                         
VP and CFO
                         
Date:                9/26/06                        
  Date:                          

 

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APPENDIX A
TERMS AND CONDITIONS OF RESTRICTED STOCK UNITS
     1. Grant. The Company hereby grants to the Employee under the Plan an award
of that number of RSUs set forth on the first page of this Agreement, subject to
all of the terms and conditions in this Agreement and the Plan.
     2. Plan Governs. The RSUs are issued pursuant to, and the terms of this
Agreement are subject to, all terms and provisions of the Plan, including
without limitation Section 15 of the Plan. Except as provided in paragraph 4(b)
below, in the event of a conflict between one or more provisions of this
Agreement and one or more provisions of the Plan, the provisions of the Plan
will govern.
     3. Company’s Obligation to Pay. Each RSU has a value equal to the fair
market value of a share of Common Stock on the date the shares subject thereto
are distributed. Unless and until the RSUs will have vested in the manner set
forth in paragraphs 4 and 5, the Employee will have no right to payment of any
such RSUs. Prior to actual payment of any vested RSUs, such RSUs will represent
an unsecured obligation of the Company, payable (if at all) only from the
general assets of the Company. Nothing contained in this Agreement, and no
action taken pursuant to its provisions, shall create or be construed to create
a trust of any kind or fiduciary relationship between Employee and the Company
or any other person.
     4. Vesting.
     (a) Subject to paragraph 5, the RSUs awarded by this Agreement will vest in
the Employee according to the Vesting Schedule set forth on the first page of
this Agreement, subject to the Employee’s remaining in Continuous Status as an
Employee or Consultant through such vesting periods or dates.
     (b) Notwithstanding anything to the contrary set forth in the Plan, the
vesting of the RSUs awarded by this Agreement shall not accelerate in accordance
with Section 9(d) of the Plan in connection with a termination of Employee’s
Continuous Status as an Employee as a result of Employee’s retirement from the
Company.
     (c) In the event of a Change in Control of the Company approved by the
majority of the members of the Board on the Board prior to the commencement of
such Change in Control, the RSUs shall be assumed or an equivalent award or
right substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation; provided, however, in the event that within one year of
the date of the completion of the Change in Control, the successor corporation
or a Parent or Subsidiary of the successor corporation terminates the Employee
without Cause, the RSUs shall become immediately fully vested. In the event that
the successor corporation refuses to assume or substitute the RSUs, the RSUs
shall become immediately fully vested and the shares subject to the RSUs shall
be issued to Employee immediately prior to the Change in Control, provided that
such transaction also qualifies as a change in the ownership or effective
control of the Company, or in the ownership of a substantial portion of the
assets of the Company, in each case for purposes of Section 409A(a)(2)(A)(v) of
the Internal Revenue Code and the regulations and other guidance thereunder
(“Section 409A Change of Control”).
     (d) In the event of a Change in Control which is not approved by the
majority of the members of the Board on the Board prior to the commencement of a
Change in Control, the RSUs shall immediately fully vest. In the event that the
successor corporation refuses to assume or substitute the RSUs, the shares
subject to the RSUs shall be issued to Employee immediately prior to the Change
in Control , provided that such transaction also qualifies as a Section 409A
Change of Control.
     (e) The RSUs shall be considered assumed if, following the Change in
Control, the RSUs confer the right to receive, for each Share of Common Stock
subject to the RSUs immediately prior to the Change in Control, the
consideration (whether stock, cash, or other securities or property) received in
the Change in Control 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 Change in Control is not solely common stock of the successor corporation
or its Parent, the Board may, with the consent of the successor corporation,
provide for the consideration to be issued pursuant to the RSUs, for each Share
of Common Stock subject to the RSUs, 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 Change in Control.
     5. Forfeiture upon Termination as Service Provider. Notwithstanding any
contrary provision of this Agreement, if the Employee terminates Continuous
Status as an Employee or Consultant for any or no reason, the then-unvested RSUs
awarded by this Agreement will thereupon be forfeited at no cost to the Company
and the Employee shall have no further rights thereunder. To the extent not
already paid, RSUs that vest in accordance with the Vesting Schedule shall be
paid following the Employee’s termination of Continuous Status as an Employee or
Consultant in accordance with paragraph 6 or 8 below, as applicable.

 

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     6. Issuance after Vesting. If Employee does not elect to defer his or her
distribution of the shares subject to the RSUs in accordance with paragraph 8
below, shares of Common Stock subject to any RSUs that vest in accordance with
the Vesting Schedule will be issued to the Employee (or in the event of the
Employee’s death, to his or her estate) in whole shares of Common Stock on each
of the thirteen (13), twenty-four (24) and thirty-six (36) month anniversaries
of the Effective Date (each a “Vesting Distribution Date”), in each case not
later than ten (10) days following each Vesting Distribution Date, with respect
to shares of Common Stock subject to those RSUs that have vested on each such
date.
     7. Tax Withholding. On or before the time Employee receives a distribution
of shares of Common Stock pursuant to the RSUs, or at any time thereafter as
requested by the Company, the Employee must make adequate provision, as
determined by the Company, for any sums required to satisfy the federal, state,
local and foreign tax withholding obligations of the Company or a Subsidiary, if
any, which arise in connection with the vesting and/or issuance of the shares
subject to the RSUs. Unless the tax withholding obligations of the Company
and/or any Subsidiary are satisfied, the Company shall have no obligation to
issue the shares of Common Stock subject to the RSU. If the Employee does not
satisfy the tax withholding obligations of the Company and/or any Subsidiary
within thirty (30) days following receipt of notice from the Company, then the
RSU will automatically terminate and the Employee will not be issued any shares
pursuant to the RSU.
     8. Deferral Election.
     (a) Election Whether to Defer Distribution of RSU Shares. Each Employee
must elect whether to defer his or her distribution of the RSU shares to a date
following the Vesting Distribution Date in accordance with paragraph 8(b) or
8(c) below, as applicable. Employees who are not eligible to participate in the
Amended and Restated Neurocrine Biosciences, Inc. Nonqualified Deferred
Compensation Plan (the “Deferred Compensation Plan”), as amended, must make an
election pursuant to paragraph 8(b) below. Employees who are eligible to
participate in the Deferred Compensation Plan (“Selected Employees”) must make
an election pursuant to paragraph 8(c) below. If an Employee does not make a
valid, timely election pursuant to paragraph 8(b) or 8(c) below, as applicable,
the Employee will be deemed to have affirmatively elected not to defer his or
her distribution of the RSU shares, and the shares will be delivered to Employee
in accordance with paragraph 6.
     (b) Standard Deferral Election. Employees who are not Selected Employees
must make an election whether to defer receipt of the RSU shares pursuant to the
terms and conditions of the Standard Deferral Election Agreement attached hereto
as Exhibit A. Subject to a valid deferral election made within thirty (30) days
following the Effective Date, the Employee may elect to defer the timing of the
receipt of shares under this Agreement and have such shares issued at a later
date pursuant to the terms and conditions of the Standard Deferral Election
Agreement. Such deferral elections must also comply with the requirements of
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and
the related Treasury Regulations or other guidance issued thereunder.
     (c) Deferral Election Under Deferred Compensation Plan by Selected
Employees. Selected Employees must make an election whether to defer receipt of
the RSU shares pursuant to the terms and conditions of the Deferred Compensation
Plan Deferral Election Agreement attached hereto as Exhibit B. Subject to a
valid deferral election made within thirty (30) days following the Effective
Date, Selected Employees may elect to defer the timing of the receipt of the
shares under this Agreement and have such shares issued at a later date pursuant
to the terms and conditions of the Deferred Compensation Plan and the Deferred
Compensation Plan Deferral Election Agreement. Such deferral elections must also
comply with the requirements of Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”), and the related Treasury Regulations or other
guidance issued thereunder. To make a valid deferral election pursuant to this
paragraph 8(c), Employee must also complete a Deferred Compensation Plan
Beneficiary Designation form, in substantially the form attached hereto as
Exhibit C.
     (d) Deferred Distribution Date. The date upon which the shares of Common
Stock are scheduled to be delivered pursuant to any deferral election made under
this paragraph 8 is the “Deferred Distribution Date.” Shares of Common Stock
subject to any RSUs that are subject to any deferral election made under this
paragraph 8 will be issued to the Employee (or in the event of the Employee’s
death, to his or her estate) in whole shares of Common Stock in each case not
later than ten (10) days following the Deferred Distribution Date
     9. Delay in Issuance of Shares. Notwithstanding anything to the contrary
set forth herein, if the Company determines that the Employee’s sale of shares
of Common Stock on the date the shares subject to the RSUs are scheduled to be
delivered, whether on the Vesting Distribution Date or a Deferred Distribution
Date selected pursuant to paragraph 8 above (in either case, the “Original
Distribution Date”) would violate its policy regarding insider trading of the
Company’s stock, as determined by the Company in accordance with such policy,
then such shares shall not be delivered on such Original Distribution Date and
shall instead be delivered as soon as practicable on or after the earliest date
on which the Employee could sell such shares pursuant to such policy; provided,
however, that in no event shall the delivery of the shares be delayed pursuant
to this provision beyond the later of: (1) December 31st of the same calendar
year of the Original Distribution Date, or (2) the 15th day of the third
calendar month following the Original Distribution Date.

 

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     10. Rights as Stockholder. Neither the Employee nor any person claiming
under or through the Employee will have any of the rights or privileges of a
stockholder of the Company in respect of any shares of Common Stock deliverable
hereunder unless and until certificates representing such shares of Common Stock
will have been issued, recorded on the records of the Company or its transfer
agents or registrars, and delivered to the Employee.
     11. No Effect on Employment. This Agreement is not an employment contract,
and nothing herein shall be deemed to create in any way whatsoever any
obligation on the Employee’s part to continue in the employ of the Company, or
of the Company to continue the Employee’s employment with the Company. The
Employee’s employment with the Company is on an at will basis only. The Company
will have the right, which is hereby expressly reserved, to terminate or change
the terms of the employment of the Employee at any time for any reason
whatsoever, with or without good cause.
     12. Address for Notices. Any notice to be given to the Company under the
terms of this Agreement will be addressed to the Company at its principal place
of business (attention: General Counsel), or at such other address as the
Company may hereafter designate in writing. Any notices provided for in this
Agreement or the Plan shall be given in writing and shall be deemed effectively
given upon receipt or, in the case of notices delivered by the Company to the
Employee, five (5) days after deposit in the United States mail, postage
prepaid, addressed to the Employee at the address specified on the first page of
this Agreement or at such other address as the Employee may hereafter designate
by written notice to the Company.
     13. Transferability. Unless determined otherwise by the Board, this grant
and the rights and privileges conferred hereby, including without limitation the
shares of Common Stock issuable following the vesting of the RSUs, will not be
sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner
(whether by operation of law or otherwise) and will not be subject to sale under
execution, attachment or similar process until, with respect to whole shares of
Common Stock issuable following the vesting of the RSUs, such shares are issued
pursuant to paragraph 6 or 8 above. Upon any attempt to sell, pledge, assign,
hypothecate, transfer, or dispose of this grant, or any right or privilege
conferred hereby, or upon any attempted sale under any execution, attachment or
similar process, this grant and the rights and privileges conferred hereby
immediately will become null and void.
     14. Binding Agreement. Subject to the limitations on the transferability of
this grant contained herein, this Agreement will be binding upon and inure to
the benefit of the heirs, legatees, legal representatives, successors and
assigns of the parties hereto.
     15. Additional Conditions to Issuance of Stock. If at any time the Company
will determine, in its discretion, that the listing, registration or
qualification of the shares of Common Stock upon any securities exchange or
under any state or federal law, or the consent or approval of any governmental
regulatory authority, is necessary or desirable as a condition to the issuance
of shares of Common Stock to the Employee (or his or her estate), such issuance
will not occur unless and until such listing, registration, qualification,
consent or approval will have been effected or obtained free of any conditions
not acceptable to the Company. The Company will make all reasonable efforts to
meet the requirements of any such state or federal law or securities exchange
and to obtain any such consent or approval of any such governmental authority.
     16. Committee Authority. The Committee will have the power to interpret the
Plan and this Agreement and to adopt such rules for the administration,
interpretation and application of the Plan and this Agreement as are consistent
therewith and to interpret or revoke any such rules. All actions taken and all
interpretations and determinations made by the Committee in good faith will be
final and binding upon Employee, the Company and all other interested persons.
No member of the Committee will be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan or
this Agreement.
     17. Captions. Captions provided herein are for convenience only and are not
to serve as a basis for interpretation or construction of this Agreement.
     18. Agreement Severable. In the event that any provision in this Agreement
will be held invalid or unenforceable, such provision will be severable from,
and such invalidity or unenforceability will not be construed to have any effect
on, the remaining provisions of this Agreement.
     19. Amendment. The Committee may amend, terminate or revoke this Agreement
in any respect to the extent determined necessary or desirable by the Committee
in its discretion to comply with the requirements of Section 409A of the Code
and the Treasury Regulations or other guidance issued thereunder. Employee
expressly understands and agrees that no additional consent of Employee shall be
required in connection with such amendment, termination or revocation.

 

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EXHIBIT A
Standard Deferral Election Agreement
Please complete this Standard Deferral Election Agreement (“Election Agreement”)
and return a signed copy to Steve Zug no later than the thirtieth (30th) day
following the Effective Date as indicated on your Restricted Stock Unit
Agreement.

I.   Deferral Election (check one)       Election to Defer:

  ___    Employee hereby irrevocably elects to defer receipt of the shares of
Common Stock associated with the RSUs provided for in the Grant Notice and
Appendix A thereto, to which this Exhibit A is attached, until the fifth
anniversary of the Effective Date.

    Decline:

  ___    Employee hereby irrevocably elects not to defer receipt of the shares
of Common Stock associated with the RSUs provided for in the Grant Notice and
Appendix A thereto, to which this Exhibit A is attached (shares will be issued
to Employee as the RSU award vests in accordance with the Restricted Stock Unit
Agreement).

II.   Terms and Conditions of Deferral Election

If Employee elects to defer receipt of the shares subject to the RSU pursuant to
this Election Agreement, by signing this Election Agreement, Employee hereby
acknowledges his or her understanding and acceptance of each of the following:

1.   Acceleration of Issuance of Shares Upon Termination of Continuous Status as
an Employee or Consultant. In the event of Employee’s termination of Continuous
Status as an Employee or Consultant prior to the fifth anniversary of the
Effective Date that qualifies as a “separation from service” within the meaning
of Code Section 409A(a)(2)(A)(i) and the regulations and other guidance
promulgated thereunder, then any vested shares of Common Stock subject to the
RSUs shall instead be delivered to Employee on the date of his or her
termination of Continuous Status as an Employee or Consultant.   2.  
Acceleration of Issuance of Shares Upon Change in Control. Notwithstanding
Employee’s deferral election pursuant to this Election Agreement, in the event
that a successor corporation refuses to assume or substitute the RSUs in
connection with a Change in Control, the shares subject to the RSUs shall
instead be issued to Employee immediately prior to the Change in Control to the
extent provided in paragraph 4 of the Appendix.   3.   Delay in Distribution for
Specified Employees. Notwithstanding anything to the contrary set forth herein,
if at the time the shares of Common Stock would otherwise be issued to Employee
as a result of termination of Continuous Status as an Employee or Consultant,
Employee is subject to the distribution limitations contained in Section 409A of
the Code applicable to “specified employees,” share issuances resulting from a
termination of Continuous Status as an Employee or Consultant shall not be made
before the date which is six (6) months following the date of termination of
Continuous Status as an Employee or Consultant, or, if earlier, the date of
Employee’s death that occurs within such six (6) month period.   4.   Delay in
Distribution for Insiders. Notwithstanding the foregoing election, as described
in paragraph 9 of the Appendix to the RSU Agreement, the distribution of shares
may be delayed if the Company determines that Employee’s sale of the shares on
such date would violate the Company’s policy regarding insider trading of the
Company’s stock, as determined by the Company in accordance with such policy.  
5.   Effective Election. In order for the foregoing deferral election to become
effective, this Election Agreement must be submitted by Employee to Steve Zug on
or before thirty (30) days following the Effective Date of the RSUs.   6.  
Withholding. The Company shall require that Employee make adequate provision for
any federal, state, or local tax required by law to be withheld prior to the
issuance of the shares of Common Stock.   7.   Nonassignable. Employee’s rights
and interests under this Election Agreement may not be assigned, pledged, or
transferred.   8.   Termination of this Election Agreement. The Company reserves
the right to terminate this Election Agreement at any time. In such case, any
vested shares of Common Stock granted to Employee pursuant to the Restricted
Stock Unit Agreement may be issued to Employee immediately, to the extent
permitted by Section 409A of the Code and the regulations and other guidance
promulgated thereunder.

 

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9.   Bookkeeping Account. The Company will establish a bookkeeping account to
reflect the number of shares of Common Stock that Employee may acquire pursuant
to the RSUs and the fair market value of such shares of Common Stock that are
subject to this Election Agreement.   10.   Governing Law. This Election
Agreement shall be construed and administered according to the internal laws of
the State of California, without regard to its conflicts of laws principles.  
III.   Authorization and Signature

By completing and executing this Election Agreement, Employee authorizes the
Company to defer or not defer, as applicable, the issuance of the shares subject
to the RSU award. Employee acknowledges that the Company has not made any
representations concerning future performance of the Company’s Common Stock.
Further, Employee has not relied upon advice from the Company in making
Employee’s election. By executing this Election Agreement, the Employee hereby
acknowledges his or her understanding of and agreement with all the terms and
provisions set forth herein.

                  Employee   Neurocrine Biosciences, Inc.    
 
               
 
      By:                      
 
      Name:        
 
               
 
      Title:        
 
               
Date:
      Date:        
 
               

 

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EXHIBIT B
Deferred Compensation Plan Deferral Election Agreement (RSU Awards)
Please complete this Deferred Compensation Plan Deferral Election Agreement
(“Election Agreement”) and return a signed copy to Steve Zug no later than the
thirtieth (30th) day following the Effective Date as indicated on your
Restricted Stock Unit Agreement (“RSU Agreement”).
Defined terms not explicitly defined in this Election Agreement but defined in
the Company’s 2003 Incentive Stock Plan (“Plan”), the Company’s Amended and
Restated Nonqualified Deferred Compensation Plan (“Deferred Compensation Plan”),
or your RSU Agreement shall have the same definitions as in such documents.

I.   Deferral Election (check one)       Election to Defer:

  ___    Employee hereby irrevocably elects to defer receipt of the shares of
Common Stock associated with the RSUs provided for in the Grant Notice and
Appendix A thereto, to which this Exhibit B is attached, in accordance with the
terms of the Deferred Compensation Plan.

    Decline:

  ___    Employee hereby irrevocably elects not to defer receipt of the shares
of Common Stock associated with the RSUs provided for in the Grant Notice and
Appendix A thereto, to which this Exhibit B is attached (shares will be issued
to Employee as the RSU award vests in accordance with the RSU Agreement).

If Employee elects above to defer receipt of the shares subject to the RSUs,
Employee must complete Deferral Alternative #1 (Termination of Service).
Selecting Deferral Alternative #2 is optional. If Employee selects Deferral
Alternative #2, Employee must also complete the applicable portion that follows
such selection.
All Employees Who Elect To Defer Receipt Of Their RSUs Must Complete This
Section
Deferral Alternative #1 (Termination of Service):

o   Employee elects to receive the vested shares of Common Stock associated with
the RSUs upon his or her termination of service.

PLEASE NOTE: The above election will apply in the event of Employee’s
termination of service for any reason, including due to Employee’s Death,
Disability or Retirement. The shares subject to the RSUs will be issued in a
single lump sum upon termination of service. However, for termination of service
distributions Employee may (but is not required to) instead elect annual
installment distribution of the shares, as follows:

  o   Employee elects to receive the vested shares of Common Stock associated
with the RSUs upon his or her termination of service in substantially equal
annual installments as follows:

  o             annual installments (elect 2-15)     PLEASE NOTE: The above
election to receive a distribution of shares in annual installments instead of a
lump sum will only apply if the number of shares subject to each annual
installment is at least 2,500 shares. If the number of shares to be distributed
pursuant to any annual installment would be less than 2,500 shares, the shares
subject to the RSUs will be issued in a single lump sum upon termination of
service.

 

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Completion Of This Section Is Optional
Deferral Alternative #2: (Specified Date(S) — Check boxes that apply)

                              o   Employee elects to receive the vested shares
of Common Stock associated with the RSUs on the following specified dates (must
be year 2013 or later) for the following number of shares:                      
       
 
  A.   o                                          
 
          Number of shares   Month   Day   Year       
 
  B.   o                                          
 
          Number of shares   Month   Day   Year       
 
  C.   o                                          
 
          Number of shares   Month   Day   Year       
 
  D.   o                                          
 
          Number of shares   Month   Day   Year       

PLEASE NOTE: If Employee’s Retirement, Death, Disability, or Termination of
Employment occurs before the elected specified date(s), the shares will not be
issued to Employee on the specified date(s) elected above, but will instead be
issued to Employee in accordance with Employee’s deferral election under
Alternative #1 (Termination of Service). Employee may elect up to four separate
specified dates, and may not elect that fewer than 5,000 shares be issued to
Employee on any specified date.
II. Election Conditions
The following conditions apply to the foregoing deferral election:

  1.   Employee may elect a Deferred Distribution Date that occurs after the
date of vesting of the RSUs. The “Deferred Distribution Date” is the date as of
which Employee will receive the shares of vested Common Stock associated with
the RSUs that Employee elects to defer. Unless Employee timely elects otherwise
on this Election Agreement, such shares will be issued to Employee on or about
the date or dates upon which they vest as indicated in the RSU Agreement.
Notwithstanding the foregoing, as described in paragraph 9 of the Appendix to
the RSU Agreement, the distribution of such shares may be delayed if the Company
determines that Employee’s sale of the shares on such date would violate the
Company’s policy regarding insider trading of the Company’s stock, as determined
by the Company in accordance with such policy.     2.   Employee may elect as
the Deferred Distribution Date a termination of Employee’s service that
qualifies as a “separation from service” for purposes of Section 409A of the
Code.     3.   As an alternative to 2 above, Employee may elect up to four
different specified dates as Deferred Distribution Dates. However, if prior to
such Deferred Distribution Date, there is a termination of Employee’s service
with the Company that is a “separation from service” for purposes of
Section 409A of the Code, Employee will receive all shares of vested Common
Stock associated with the RSUs in accordance with Employee’s election under
Deferral Alternative #1, notwithstanding any deferral election Employee makes on
this Election Agreement under Alternative #2 to receive shares on a specified
date.     4.   If no Deferred Distribution Date is elected, then the issuance of
vested Common Stock will occur upon or about the vesting date(s) as indicated in
the RSU Agreement.     5.   Notwithstanding anything to the contrary set forth
herein, if at the time the shares of Common Stock would otherwise be issued to
Employee as a result of termination of service, Employee is subject to the
distribution limitations contained in Section 409A of the Code applicable to
“specified employees,” share issuances resulting from a termination of service
shall not be made before the date which is six (6) months following the date of
termination of Employee’s service, or, if earlier, the date of Employee’s death
that occurs within such six (6) month period.

 

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  6.   Notwithstanding anything to the contrary that may be set forth in
Section 4.6 of the Deferred Compensation Plan, and notwithstanding Employee’s
deferral election pursuant to this Election Agreement, in the event that a
successor corporation refuses to assume or substitute the RSUs in connection
with a Change in Control (as defined in the 2003 Incentive Stock Plan), the
shares subject to the RSUs shall instead be issued to Employee immediately prior
to the Change in Control to the extent provided in paragraph 4 of the Appendix.

III. Acknowledgement
Employee further acknowledges and agrees as follows:

  1.   In order for the foregoing deferral election to become effective, this
Election Agreement must be submitted by Employee to Steve Zug on or before
thirty (30) days following the Effective Date of the RSUs.     2.   The Company
shall require that Employee make adequate provision for any federal, state, or
local tax required by law to be withheld prior to the issuance of the shares of
Common Stock.     3.   Employee’s rights and interests under this Election
Agreement may not be assigned, pledged, or transferred.     4.   The Company
reserves the right to terminate this Election Agreement at any time. In such
case, any vested shares of Common Stock granted to Employee pursuant to the RSU
Agreement may be issued to Employee immediately, to the extent permitted by
Section 409A of the Code and the regulations and other guidance promulgated
thereunder.     5.   The Company will establish a bookkeeping account to reflect
the number of shares of Common Stock that Employee may acquire pursuant to the
RSUs and the fair market value of such shares of Common Stock that are subject
to this Election Agreement.     6.   This Election Agreement shall be construed
and administered according to the internal laws of the State of California,
without regard to its conflicts of laws principles.

IV. Authorization and Signature
By completing and executing this Election Agreement, Employee authorizes the
Company to defer or not defer, as applicable, the issuance of the shares subject
to the RSU award. Employee acknowledges that the Company has not made any
representations concerning future performance of the Company’s Common Stock.
Further, Employee has not relied upon advice from the Company in making
Employee’s election. Additionally, Employee acknowledges that the terms of the
Deferred Compensation Plan document, as reasonably interpreted by the Company,
governs all aspects of this election. By executing this Election Agreement, the
Employee hereby acknowledges his or her understanding of and agreement with all
the terms and provisions set forth herein.

         
 
•
 
 
   
 
Signature of Employee
 
 
Date    

 

--------------------------------------------------------------------------------

 

Exhibit C
Beneficiary Designation
Personal Information

                 
   Last
  First   Middle Initial   Social Security Number
 
            I hereby designate the following Beneficiary(ies) to receive any
benefit payable under the Plan by reason of my death, as provided in the Plan
document.
 
            Primary Beneficiary(ies)
 
               
   Beneficiary
      Percentage    
 
               
   Relationship to Participant
      Social Security Number    
 
               
   Beneficiary
      Percentage    
 
               
   Relationship to Participant
      Social Security Number    
 
               
   Beneficiary
      Percentage    
 
               
   Relationship to Participant
      Social Security Number    
 
               
   Beneficiary
      Percentage    
 
               
   Relationship to Participant
      Social Security Number    
 
            Contingent Beneficiary(ies)
 
               
   Beneficiary
      Percentage    
 
               
   Relationship to Participant
      Social Security Number    
 
               
   Beneficiary
      Percentage    
 
               
   Relationship to Participant
      Social Security Number    
 
            Please Sign Below

If no percentage is indicated, all beneficiaries will be deemed to have an equal
interest in the benefits payable under the Plan.

         
 
•
 
 
   
 
Signature of Employee
 
 
Date