Exhibit 10.41

 

NUVELO, INC.

 

2004 EQUITY INCENTIVE PLAN

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TABLE OF CONTENTS

 

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1.    Establishment, Purpose and Term of Plan    1      1.1   

Establishment

   1      1.2   

Purpose

   1      1.3   

Term of Plan

   1 2.    Definitions and Construction    1      2.1   

Definitions

   1      2.2   

Construction

   6 3.    Administration    7      3.1   

Administration by the Committee

   7      3.2   

Authority of Officers

   7      3.3   

Administration with Respect to Insiders

   7      3.4   

Committee Complying with Section 162(m)

   7      3.5   

Powers of the Committee

   7      3.6   

No Repricing

   8      3.7   

No Restricted Stock Award Acceleration

   9      3.8   

Indemnification

   9 4.    Shares Subject to Plan    9      4.1   

Maximum Number of Shares Issuable

   9      4.2   

Adjustments for Changes in Capital Structure

   10 5.    Eligibility and Award Limitations    10      5.1   

Persons Eligible for Awards

   10      5.2   

Participation

   10      5.3   

Incentive Stock Option Limitations

   11      5.4   

Award Limits

   11 6.    Terms and Conditions of Options    12      6.1   

Exercise Price

   12      6.2   

Exercisability and Term of Options

   12      6.3   

Payment of Exercise Price

   13      6.4   

Effect of Termination of Service

   14      6.5   

Transferability of Options

   14 7.    Terms and Conditions of Stock Appreciation Rights    14      7.1   

Types of SARs Authorized

   14      7.2   

Exercise Price

   14      7.3   

Exercisability and Term of SARs

   14      7.4   

Exercise of SARs

   15      7.5   

Deemed Exercise of SARs

   15      7.6   

Effect of Termination of Service

   15      7.7   

Nontransferability of SARs

   15

 

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TABLE OF CONTENTS

(continued)

 

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8.    Terms and Conditions of Restricted Stock Awards    15      8.1   

Types of Restricted Stock Awards Authorized

   16      8.2   

Purchase Price

   16      8.3   

Purchase Period

   16      8.4   

Payment of Purchase Price

   16      8.5   

Vesting and Restrictions on Transfer

   17      8.6   

Voting Rights; Dividends and Distributions

   17      8.7   

Effect of Termination of Service

   17      8.8   

Nontransferability of Restricted Stock Award Rights

   17 9.    Terms and Conditions of Performance Awards    18      9.1   

Types of Performance Awards Authorized

   18      9.2   

Initial Value of Performance Shares and Performance Units

   18      9.3   

Establishment of Performance Period, Performance Goals and Performance Award
Formula

   18      9.4   

Measurement of Performance Goals

   19      9.5   

Settlement of Performance Awards

   20      9.6   

Voting Rights; Dividend Equivalent Rights and Distributions

   21      9.7   

Effect of Termination of Service

   21      9.8   

Nontransferability of Performance Awards

   21 10.    Terms and Conditions of Restricted Stock Unit Awards    22     
10.1   

Grant of Restricted Stock Unit Awards

   22      10.2   

Purchase Price

   22      10.3   

Vesting

   22      10.4   

Voting Rights, Dividend Equivalent Rights and Distributions

   22      10.5   

Effect of Termination of Service

   23      10.6   

Settlement of Restricted Stock Unit Awards

   23      10.7   

Nontransferability of Restricted Stock Unit Awards

   23 11.    Deferred Stock Units    23      11.1   

Establishment of Deferred Stock Unit Program

   23      11.2   

Terms and Conditions of Deferred Stock Units

   24 12.    Standard Forms of Award Agreement    25      12.1   

Award Agreements

   25      12.2   

Authority to Vary Terms

   25 13.    Change in Control    25      13.1   

Definitions

   25      13.2   

Effect of Change in Control on Options and SARs

   26      13.3   

Effect of Change in Control on Restricted Stock Awards

   27      13.4   

Effect of Change in Control on Performance Awards

   27      13.5   

Effect of Change in Control on Restricted Stock Unit Awards

   27      13.6   

Effect of Change in Control on Deferred Stock Units

   28 14.    Compliance with Securities Law    28

 

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TABLE OF CONTENTS

(continued)

 

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15.    Tax Withholding    28      15.1   

Tax Withholding in General

   28      15.2   

Withholding in Shares

   28 16.    Amendment or Termination of Plan    29 17.    Miscellaneous
Provisions    29      17.1   

Repurchase Rights

   29      17.2   

Provision of Information

   29      17.3   

Rights as Employee, Consultant or Director

   29      17.4   

Rights as a Stockholder

   29      17.5   

Fractional Shares

   30      17.6   

Severability

   30      17.7   

Beneficiary Designation

   30      17.8   

Unfunded Obligation

   30

 

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AMENDED AND RESTATED

NUVELO, INC.

2004 EQUITY INCENTIVE PLAN

 

1. ESTABLISHMENT, PURPOSE AND TERM OF PLAN

 

1.1 Establishment. The Nuvelo, Inc. 2004 Equity Incentive Plan (the “Plan”) is
hereby established effective as of May 6, 2004, the date of its approval by the
stockholders of the Company (the “Effective Date”).

 

1.2 Purpose. The purpose of the Plan is to advance the interests of the
Participating Company Group and its stockholders by providing an incentive to
attract, retain and reward persons performing services for the Participating
Company Group and by motivating such persons to contribute to the growth and
profitability of the Participating Company Group. The Plan seeks to achieve this
purpose by providing for Awards in the form of Options, Indexed Options, Stock
Appreciation Rights, Restricted Stock Purchase Rights, Restricted Stock Bonuses,
Performance Shares, Performance Units, Restricted Stock Units and Deferred Stock
Units. After the Effective Date, the Company shall terminate, and no longer
issue any awards from under, the Company’s 2002 Equity Incentive Plan, Director
Stock Option Plan, Scientific Advisory Board/Consultants Stock Option Plan, 1995
Stock Option Plan and the Variagenics 1997 Employee, Director & Consultant Stock
Option Plan.

 

1.3 Term of Plan. The Plan shall continue in effect until the earlier of its
termination by the Board or the date on which all of the shares of Stock
available for issuance under the Plan have been issued and all restrictions on
such shares under the terms of the Plan and the agreements evidencing Awards
granted under the Plan have lapsed. However, all Incentive Stock Options shall
be granted, if at all, within ten (10) years from the Effective Date.

 

2. DEFINITIONS AND CONSTRUCTION.

 

2.1 Definitions. Whenever used herein, the following terms shall have their
respective meanings set forth below:

 

(a) “Affiliate” means (i) an entity, other than a Parent Corporation, that
directly, or indirectly through one or more intermediary entities, controls the
Company or (ii) an entity, other than a Subsidiary Corporation, that is
controlled by the Company directly, or indirectly through one or more
intermediary entities. For this purpose, the term “control” (including the term
“controlled by”) means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of the relevant
entity, whether through the ownership of voting securities, by contract or
otherwise; or shall have such other meaning assigned such term for the purposes
of registration on Form S-8 under the Securities Act.

 

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(b) “Award” means any Option, Indexed Option, SAR, Restricted Stock Purchase
Right, Restricted Stock Bonus, Performance Share, Performance Unit, Restricted
Stock Unit or Deferred Stock Unit granted under the Plan.

 

(c) “Award Agreement” means a written agreement between the Company and a
Participant setting forth the terms, conditions and restrictions of the Award
granted to the Participant. An Award Agreement may be an “Option Agreement,” an
“Indexed Option Agreement,” a “SAR Agreement,” a “Restricted Stock Purchase
Agreement,” a “Restricted Stock Bonus Agreement,” a “Performance Share
Agreement,” a “Performance Unit Agreement,” a “Restricted Stock Unit Agreement,”
or a “Deferred Stock Unit Agreement.”

 

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

 

(e) “Code” means the Internal Revenue Code of 1986, as amended, and any
applicable regulations promulgated thereunder.

 

(f) “Committee” means the Compensation Committee or other committee of the Board
duly appointed to administer the Plan and having such powers as shall be
specified by the Board. If no committee of the Board has been appointed to
administer the Plan, the Board shall exercise all of the powers of the Committee
granted herein, and, in any event, the Board may in its discretion exercise any
or all of such powers.

 

(g) “Company” means Nuvelo, Inc., a Nevada corporation, or any successor
corporation thereto.

 

(h) “Consultant” means a person engaged to provide consulting or advisory
services (other than as an Employee or a member of the Board) to a Participating
Company, provided that the identity of such person, the nature of such services
or the entity to which such services are provided would not preclude the Company
from offering or selling securities to such person pursuant to the Plan in
reliance on a Form S-8 Registration Statement under the Securities Act.

 

(i) “Deferred Stock Unit” means a bookkeeping entry representing a right granted
to a Participant pursuant to Section 11 of the Plan to receive a share of Stock
on a date determined in accordance with the provisions of Section 11 and the
Participant’s Award Agreement.

 

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

 

(k) “Disability” means the permanent and total disability of the Participant,
within the meaning of Section 22(e)(3) of the Code.

 

(l) “Dividend Equivalent” means a credit, made at the discretion of the
Committee or as otherwise provided by the Plan, to the account of a Participant
in an amount equal to the cash dividends paid on one share of Stock for each
share of Stock represented by an Award held by such Participant.

 

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(m) “Employee” means any person treated as an employee (including an Officer or
a Director who is also treated as an employee) in the records of a Participating
Company and, with respect to any Incentive Stock Option granted to such person,
who is an employee for purposes of Section 422 of the Code; provided, however,
that neither service as a Director nor payment of a Director’s fee shall be
sufficient to constitute employment for purposes of the Plan. The Company shall
determine in good faith and in the exercise of its discretion whether an
individual has become or has ceased to be an Employee and the effective date of
such individual’s employment or termination of employment, as the case may be.
For purposes of an individual’s rights, if any, under the Plan as of the time of
the Company’s determination, all such determinations by the Company shall be
final, binding and conclusive, notwithstanding that the Company or any court of
law or governmental agency subsequently makes a contrary determination.

 

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

 

(o) “Fair Market Value” means, as of any date, the value of a share of Stock or
other property as determined by the Committee, in its discretion, or by the
Company, in its discretion, if such determination is expressly allocated to the
Company herein, subject to the following:

 

(i) If, on such date, the Stock is listed on a national or regional securities
exchange or market system, the Fair Market Value of a share of Stock shall,
unless expressly determined otherwise by the Committee, in its discretion, be
the average of the high and low price of a share of Stock on such date, as
quoted on the Nasdaq National Market, The Nasdaq SmallCap Market or such other
national or regional securities exchange or market system constituting the
primary market for the Stock, as reported in The Wall Street Journal or such
other source as the Company deems reliable. If the relevant date does not fall
on a day on which the Stock has traded on such securities exchange or market
system, the date on which the Fair Market Value shall be established shall be
the last day on which the Stock was so traded prior to the relevant date, or
such other appropriate day as shall be determined by the Committee, in its
discretion.

 

(ii) If, on such date, the Stock is not listed on a national or regional
securities exchange or market system, the Fair Market Value of a share of Stock
shall be as determined by the Committee in good faith without regard to any
restriction other than a restriction which, by its terms, will never lapse.

 

(p) “Incentive Stock Option” means an Option intended to be (as set forth in the
Award Agreement) and which qualifies as an incentive stock option within the
meaning of Section 422(b) of the Code.

 

(q) “Indexed Option” means an Option with an exercise price which either
increases by a fixed percentage over time or changes by reference to a published
index, as determined by the Committee and set forth in the Option Agreement.

 

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(r) “Insider” means an Officer, a Director or any other person whose
transactions in Stock are subject to Section 16 of the Exchange Act.

 

(s) “Nonstatutory Stock Option” means an Option not intended to be (as set forth
in the Award Agreement) an incentive stock option within the meaning of Section
422(b) of the Code.

 

(t) “Officer” means any person designated by the Board as an officer of the
Company.

 

(u) “Option” means the right to purchase Stock at a stated price for a specified
period of time granted to a Participant pursuant to Section 6 of the Plan. An
Option may be either an Incentive Stock Option, a Nonstatutory Stock Option or
an Indexed Option.

 

(v) “Parent Corporation” means any present or future “parent corporation” of the
Company, as defined in Section 424(e) of the Code.

 

(w) “Participant” means any eligible person who has been granted one or more
Awards.

 

(x) “Participating Company” means the Company or any Parent Corporation,
Subsidiary Corporation or Affiliate.

 

(y) “Participating Company Group” means, at any point in time, all entities
collectively which are then Participating Companies.

 

(z) “Performance Award” means an Award of Performance Shares or Performance
Units.

 

(aa) “Performance Award Formula” means, for any Performance Award, a formula or
table established by the Committee pursuant to Section 9.3 of the Plan which
provides the basis for computing the value of a Performance Award at one or more
threshold levels of attainment of the applicable Performance Goal(s) measured as
of the end of the applicable Performance Period.

 

(bb) “Performance Goal” means a performance goal established by the Committee
pursuant to Section 9.3 of the Plan.

 

(cc) “Performance Period” means a period established by the Committee pursuant
to Section 9.3 of the Plan at the end of which one or more Performance Goals are
to be measured.

 

(dd) “Performance Share” means a bookkeeping entry representing a right granted
to a Participant pursuant to Section 9 of the Plan to receive a payment equal to
the value of a Performance Share, as determined by the Committee, based on
performance.

 

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(ee) “Performance Unit” means a bookkeeping entry representing a right granted
to a Participant pursuant to Section 9 of the Plan to receive a payment equal to
the value of a Performance Unit, as determined by the Committee, based upon
performance.

 

(ff) “Prior Plan Options” means any option or other award granted by the Company
which is subject to vesting or repurchase by the Company, including
specifically, all such options and awards granted pursuant to the Company’s 2002
Equity Incentive Plan, Director Stock Option Plan, Scientific Advisory
Board/Consultants Stock Option Plan, 1995 Stock Option Plan and the Variagenics
1997 Employee, Director & Consultant Stock Option Plan which is outstanding on
or after the Effective Date.

 

(gg) “Restricted Stock Award” means an Award of a Restricted Stock Bonus or a
Restricted Stock Purchase Right.

 

(hh) “Restricted Stock Bonus” means Stock granted to a Participant pursuant to
Section 8 of the Plan.

 

(ii) “Restricted Stock Purchase Right” means a right to purchase Stock granted
to a Participant pursuant to Section 8 of the Plan.

 

(jj) “Restricted Stock Unit” or “Stock Unit” means a bookkeeping entry
representing a right granted to a Participant pursuant to Section 10 of the Plan
to receive a share of Stock on a date determined in accordance with the
provisions of Section 10 and the Participant’s Award Agreement.

 

(kk) “Restriction Period” means the period established in accordance with
Section 8.5 of the Plan during which shares subject to a Restricted Stock Award
are subject to Vesting Conditions.

 

(ll) “Retirement” means a Participant’s termination of Service, if as of the
date of such termination, the Participant has reached the age of fifty-eight
(58) and has completed eight (8) years of continuous Service to the
Participating Company Group. A Participant who terminates Service with the
Participating Company Group and resumes Service more than six (6) months after
his or her original termination date, will not have his or her Service with the
Participant Company Group prior to his or her original termination date count
for purposes of determining Retirement. Notwithstanding the foregoing, the Board
shall have the discretion to determine on a case by case basis whether such
prior Service with the Participant Company Group may be counted for purposes of
Retirement. The Board will notify any rehired Participant if the Board has
determined such prior Service will count towards Retirement, and in the absence
of such notification from the Board, such Service shall not be counted for
purposes of Retirement.

 

(mm) “Rule 16b-3” means Rule 16b-3 under the Exchange Act, as amended from time
to time, or any successor rule or regulation.

 

(nn) “SAR” or “Stock Appreciation Right” means a bookkeeping entry representing,
for each share of Stock subject to such SAR, a right granted to a Participant
pursuant to Section 7 of the Plan to receive payment of an amount equal to the
excess, if any, of

 

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the Fair Market Value of a share of Stock on the date of exercise of the SAR
over the exercise price.

 

(oo) “Section 162(m)” means Section 162(m) of the Code.

 

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

 

(qq) “Service” means a Participant’s employment or service with the
Participating Company Group, whether in the capacity of an Employee, a Director
or a Consultant. A Participant’s Service shall not be deemed to have terminated
merely because of a change in the capacity in which the Participant renders such
Service or a change in the Participating Company for which the Participant
renders such Service, provided that there is no interruption or termination of
the Participant’s Service. Furthermore, a Participant’s Service shall not be
deemed to have terminated if the Participant takes any military leave, sick
leave, or other bona fide leave of absence approved by the Company. However, if
any such leave taken by a Participant exceeds ninety (90) days, then on the one
hundred eighty-first (181st) day following the commencement of such leave any
Incentive Stock Option held by the Participant shall cease to be treated as an
Incentive Stock Option and instead shall be treated thereafter as a Nonstatutory
Stock Option, unless the Participant’s right to return to Service with the
Participating Company Group is guaranteed by statute or contract.
Notwithstanding the foregoing, unless otherwise designated by the Company or
required by law, a leave of absence shall not be treated as Service for purposes
of determining vesting under the Participant’s Award Agreement. A Participant’s
Service shall be deemed to have terminated either upon an actual termination of
Service or upon the entity for which the Participant performs Service ceasing to
be a Participating Company. In addition, a Participant’s Service shall be deemed
to have terminated if, in the Committee’s sole discretion, the Participant’s
employment relationship is transferred to an Affiliate or Subsidiary Corporation
and the Participant is offered a replacement equity award from the Affiliate or
Subsidiary Corporation. Subject to the foregoing, the Company, in its
discretion, shall determine whether the Participant’s Service has terminated and
the effective date of such termination.

 

(rr) “Stock” means the common stock of the Company, as adjusted from time to
time in accordance with Section 4.2 of the Plan.

 

(ss) “Subsidiary Corporation” means any present or future “subsidiary
corporation” of the Company, as defined in Section 424(f) of the Code.

 

(tt) “Ten Percent Owner” means a Participant who, at the time an Incentive Stock
Option is granted to the Participant, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of a
Participating Company (other than an Affiliate) within the meaning of Section
422(b)(6) of the Code.

 

(uu) “Vesting Conditions” mean those conditions established in accordance with
Section 8.5 or Section 10.3 of the Plan prior to the satisfaction of which
shares subject to a Restricted Stock Award or Restricted Stock Unit Award,
respectively, remain subject to forfeiture or a repurchase option in favor of
the Company upon the Participant’s termination of Service.

 

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2.2 Construction. Captions and titles contained herein are for convenience only
and shall not affect the meaning or interpretation of any provision of the Plan.
Except when otherwise indicated by the context, the singular shall include the
plural and the plural shall include the singular. Use of the term “or” is not
intended to be exclusive, unless the context clearly requires otherwise.

 

3. ADMINISTRATION

 

3.1 Administration by the Committee. The Plan shall be administered by the
Committee. All questions of interpretation of the Plan or of any Award shall be
determined by the Committee, and such determinations shall be final and binding
upon all persons having an interest in the Plan or such Award.

 

3.2 Authority of Officers. Any Officer shall have the authority to act on behalf
of the Company with respect to any matter, right, obligation, determination or
election which is the responsibility of or which is allocated to the Company
herein, provided the Officer has apparent authority with respect to such matter,
right, obligation, determination or election. The Board may, in its discretion,
delegate to a committee comprised of one or more Officers the authority to grant
one or more Awards, without further approval of the Board or the Committee, to
any Employee, other than a person who, at the time of such grant, is an Insider;
provided, however, that (a) such Awards shall not be granted for shares in
excess of the maximum aggregate number of shares of Stock authorized for
issuance pursuant to Section 4.1, (b) the exercise price per share of each
Option shall be not less than the Fair Market Value per share of the Stock on
the effective date of grant (or, if the Stock has not traded on such date, on
the last day preceding the effective date of grant on which the Stock was
traded), and (iii) each such Award shall be subject to the terms and conditions
of the appropriate standard form of Award Agreement approved by the Board or the
Committee and shall conform to the provisions of the Plan and such other
guidelines as shall be established from time to time by the Board or the
Committee.

 

3.3 Administration with Respect to Insiders. With respect to participation by
Insiders in the Plan, at any time that any class of equity security of the
Company is registered pursuant to Section 12 of the Exchange Act, the Plan shall
be administered in compliance with the requirements, if any, of Rule 16b-3.

 

3.4 Committee Complying with Section 162(m). If the Company is a “publicly held
corporation” within the meaning of Section 162(m), the Board may establish a
Committee of “outside directors” within the meaning of Section 162(m) to approve
the grant of any Award which might reasonably be anticipated to result in the
payment of employee remuneration that would otherwise exceed the limit on
employee remuneration deductible for income tax purposes pursuant to Section
162(m).

 

3.5 Powers of the Committee. In addition to any other powers set forth in the
Plan and subject to the provisions of the Plan, the Committee shall have the
full and final power and authority, in its discretion:

 

(a) to determine the persons to whom, and the time or times at which, Awards
shall be granted and the number of shares of Stock or units to be subject to
each Award;

 

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(b) to determine the type of Award granted and to designate Options as Incentive
Stock Options, Nonstatutory Stock Options or Indexed Options;

 

(c) to determine the Fair Market Value of shares of Stock or other property;

 

(d) to determine the terms, conditions and restrictions applicable to each Award
(which need not be identical) and any shares acquired pursuant thereto,
including, without limitation, (i) the exercise or purchase price of shares
purchased pursuant to any Award, (ii) the method of payment for shares purchased
pursuant to any Award, (iii) the method for satisfaction of any tax withholding
obligation arising in connection with Award, including by the withholding or
delivery of shares of Stock, (iv) the timing, terms and conditions of the
exercisability or vesting of any Award or any shares acquired pursuant thereto,
(v) the Performance Award Formula and Performance Goals applicable to any Award
and the extent to which such Performance Goals have been attained, (vi) the time
of the expiration of any Award, (vii) the effect of the Participant’s
termination of Service on any of the foregoing, and (viii) all other terms,
conditions and restrictions applicable to any Award or shares acquired pursuant
thereto not inconsistent with the terms of the Plan;

 

(e) to determine whether an Award of Restricted Stock Units, SARs, Performance
Shares or Performance Units will be settled in shares of Stock, cash, or in any
combination thereof;

 

(f) to approve one or more forms of Award Agreement;

 

(g) to amend, modify, extend, cancel or renew any Award or to waive any
restrictions or conditions applicable to any Award or any shares acquired
pursuant thereto;

 

(h) to accelerate, continue, extend or defer the exercisability or vesting of
any Award or any shares acquired pursuant thereto, including with respect to the
period following a Participant’s termination of Service;

 

(i) to prescribe, amend or rescind rules, guidelines and policies relating to
the Plan, or to adopt sub-plans or supplements to, or alternative versions of,
the Plan, including, without limitation, as the Committee deems necessary or
desirable to comply with the laws or regulations of or to accommodate the tax
policy, accounting principles or custom of, foreign jurisdictions whose citizens
may be granted Awards;

 

(j) to authorize, in conjunction with any applicable Company deferred
compensation plan, that the receipt of cash or Stock subject to any Award under
this Plan, may be deferred under the terms and conditions of such Company
deferred compensation plan; and

 

(k) to correct any defect, supply any omission or reconcile any inconsistency in
the Plan or any Award Agreement and to make all other determinations and take

 

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such other actions with respect to the Plan or any Award as the Committee may
deem advisable to the extent not inconsistent with the provisions of the Plan or
applicable law.

 

3.6 No Repricing. Without the affirmative vote of holders of a majority of the
shares of Stock cast in person or by proxy at a meeting of the stockholders of
the Company at which a quorum representing a majority of all outstanding shares
of Stock is present or represented by proxy, the Board shall not approve a
program providing for either (a) the cancellation of outstanding Options and/or
SARs and the grant in substitution therefore of any new Awards, including
specifically any new Options and/or SARs having a lower exercise price or (b)
the amendment of outstanding Options and/or SARs to reduce the exercise price
thereof. This paragraph shall not be construed to apply to “issuing or assuming
a stock option in a transaction to which section 424(a) applies,” within the
meaning of Section 424 of the Code.

 

3.7 No Restricted Stock Award Acceleration. Notwithstanding any provision of the
Plan to the contrary, no Restricted Stock Award may be granted which provides,
or subsequently amended to provide, for (i) any acceleration of vesting for any
reason other than upon a Change in Control or after the Participant’s death or
Disability and (ii) vesting of one hundred percent (100%) of any such Restricted
Stock Award prior to the passage of three (3) years of Service (unless such
Restricted Stock Award will vest in accordance with the satisfaction of any
Performance Measure set forth in Section 9.4).

 

3.8 Indemnification. In addition to such other rights of indemnification as they
may have as members of the Board or the Committee or as officers or employees of
the Participating Company Group, members of the Board or the Committee and any
officers or employees of the Participating Company Group to whom authority to
act for the Board, the Committee or the Company is delegated shall be
indemnified by the Company against all reasonable expenses, including attorneys’
fees, actually and necessarily incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal therein, to which
they or any of them may be a party by reason of any action taken or failure to
act under or in connection with the Plan, or any right granted hereunder, and
against all amounts paid by them in settlement thereof (provided such settlement
is approved by independent legal counsel selected by the Company) or paid by
them in satisfaction of a judgment in any such action, suit or proceeding,
except in relation to matters as to which it shall be adjudged in such action,
suit or proceeding that such person is liable for gross negligence, bad faith or
intentional misconduct in duties; provided, however, that within sixty (60) days
after the institution of such action, suit or proceeding, such person shall
offer to the Company, in writing, the opportunity at its own expense to handle
and defend the same.

 

4. SHARES SUBJECT TO PLAN.

 

4.1 Maximum Number of Shares Issuable. Subject to adjustment as provided in
Section 4.2, the maximum aggregate number of shares of Stock that may be granted
under the Plan shall be Seven Million Two Hundred and Four Thousand and
Eighty-Five (7,204,085), reduced at any time by the number of shares subject to
the Prior Plan Options (which as of the Effective Date equaled approximately Two
Million Four Hundred and Fifty-Four Thousand and Eighty-Five (2,454,085)). Such
shares shall consist of authorized but unissued or reacquired shares of Stock or
any combination thereof. If any outstanding Award,

 

9

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including any Prior Plan Options, for any reason expires or is terminated or
canceled without having been exercised or settled in full, or if shares of Stock
acquired pursuant to an Award subject to forfeiture or repurchase, including any
Prior Plan Options, are forfeited or repurchased by the Company, the shares of
Stock allocable to the terminated portion of such Award, including any Prior
Plan Options, or such forfeited or repurchased shares of Stock shall again be
available for grant under the Plan. Shares of Stock shall not be deemed to have
been granted pursuant to the Plan (a) with respect to any portion of an Award
that is settled in cash or (b) to the extent such shares are withheld in
satisfaction of tax withholding obligations pursuant to Section 15.2. Upon
payment in shares of Stock pursuant to the exercise of a SAR, the number of
shares available for grant under the Plan shall be reduced only by the number of
shares actually issued in such payment. If the exercise price of an Option is
paid by tender to the Company, or attestation to the ownership, of shares of
Stock owned by the Participant, the number of shares available for grant under
the Plan shall be reduced by the net number of shares for which the Option is
exercised.

 

4.2 Adjustments for Changes in Capital Structure. Subject to any required action
by the stockholders of the Company, in the event of any change in the Stock
effected without receipt of consideration by the Company, whether through
merger, consolidation, reorganization, reincorporation, recapitalization,
reclassification, stock dividend, stock split, reverse stock split, split-up,
split-off, spin-off, combination of shares, exchange of shares, or similar
change in the capital structure of the Company, or in the event of payment of a
dividend or distribution to the stockholders of the Company in a form other than
Stock (excepting normal cash dividends) that has a material effect on the Fair
Market Value of shares of Stock, appropriate adjustments shall be made in the
number and class of shares subject to the Plan and to any outstanding Awards,
and in the exercise or purchase price per share under any outstanding Award in
order to prevent dilution or enlargement of Participants’ rights under the Plan.
For purposes of the foregoing, conversion of any convertible securities of the
Company shall not be treated as “effected without receipt of consideration by
the Company.” Any fractional share resulting from an adjustment pursuant to this
Section 4.2 shall be rounded down to the nearest whole number, and in no event
may the exercise or purchase price under any Award be decreased to an amount
less than the par value, if any, of the stock subject to such Award. The
adjustments determined by the Committee pursuant to this Section 4.2 shall be
final, binding and conclusive.

 

5. ELIGIBILITY AND AWARD LIMITATIONS.

 

5.1 Persons Eligible for Awards. Awards may be granted only to Employees,
Consultants and Directors. For purposes of the foregoing sentence,
“Employees,”“Consultants”and “Directors” shall include prospective Employees,
prospective Consultants and prospective Directors to whom Awards are granted in
connection with written offers of an employment or other service relationship
with the Participating Company Group; provided, however, that no Stock subject
to any such Award shall vest, become exercisable or be issued prior to the date
on which such person commences Service.

 

5.2 Participation. Awards are granted solely at the discretion of the Committee.
Eligible persons may be granted more than one (1) Award. However, eligibility in

 

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accordance with this Section shall not entitle any person to be granted an
Award, or, having been granted an Award, to be granted an additional Award.

 

5.3 Incentive Stock Option Limitations.

 

(a) Persons Eligible. An Incentive Stock Option may be granted only to a person
who, on the effective date of grant, is an Employee of the Company, a Parent
Corporation or a Subsidiary Corporation (each being an “ISO-Qualifying
Corporation”). Any person who is not an Employee of an ISO-Qualifying
Corporation on the effective date of the grant of an Option to such person may
be granted only a Nonstatutory Stock Option. An Incentive Stock Option granted
to a prospective Employee upon the condition that such person become an Employee
of an ISO-Qualifying Corporation shall be deemed granted effective on the date
such person commences Service with an ISO-Qualifying Corporation, with an
exercise price determined as of such date in accordance with Section 6.1.

 

(b) Fair Market Value Limitation. To the extent that options designated as
Incentive Stock Options (granted under all stock option plans of the
Participating Company Group, including the Plan) become exercisable by a
Participant for the first time during any calendar year for stock having a Fair
Market Value greater than One Hundred Thousand dollars ($100,000), the portion
of such options which exceeds such amount shall be treated as Nonstatutory Stock
Options. For purposes of this Section, options designated as Incentive Stock
Options shall be taken into account in the order in which they were granted, and
the Fair Market Value of stock shall be determined as of the time the option
with respect to such stock is granted. If the Code is amended to provide for a
different limitation from that set forth in this Section, such different
limitation shall be deemed incorporated herein effective as of the date and with
respect to such Options as required or permitted by such amendment to the Code.
If an Option is treated as an Incentive Stock Option in part and as a
Nonstatutory Stock Option in part by reason of the limitation set forth in this
Section, the Participant may designate which portion of such Option the
Participant is exercising. In the absence of such designation, the Participant
shall be deemed to have exercised the Incentive Stock Option portion of the
Option first. Upon exercise, shares issued pursuant to each such portion shall
be separately identified.

 

5.4 Award Limits.

 

(a) Aggregate Limit on Restricted Stock Awards and Performance Awards. Subject
to adjustment as provided in Section 4.2, in no event shall more than One
Million (1,000,000) shares of Stock in the aggregate be issued under the Plan
pursuant to the exercise or settlement of Restricted Stock Awards and
Performance Awards.

 

(b) Section 162(m) Award Limits. The following limits shall apply to the grant
of any Award if, at the time of grant, the Company is a “publicly held
corporation” within the meaning of Section 162(m).

 

(i) Options and SARs. Subject to adjustment as provided in Section 4.2, no
Employee shall be granted within any fiscal year of the Company one or more
Options or Freestanding SARs which in the aggregate are for more than Seven
Hundred and Fifty Thousand (750,000) shares of Stock, provided, however, that
the Company may make an

 

11

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additional one-time grant to any newly-hired Employee of an Option and/or SAR
for the purchase of up to an additional Five Hundred Thousand (500,000) shares
of Stock. An Option which is canceled (or a Freestanding SAR as to which the
exercise price is reduced to reflect a reduction in the Fair Market Value of the
Stock) in the same fiscal year of the Company in which it was granted shall
continue to be counted against such limit for such fiscal year.

 

(ii) Restricted Stock Awards and Restricted Stock Units. Subject to adjustment
as provided in Section 4.2, no Employee shall be granted within any fiscal year
of the Company one or more Restricted Stock Awards or Restricted Stock Units,
subject to Vesting Conditions based on the attainment of Performance Goals, for
more than Four Hundred Thousand (400,000) shares of Stock, provided, however,
that the Company may make an additional one-time grant to any newly-hired
Employee of a Restricted Stock Award or Restricted Stock Units of up to an
additional One Hundred and Fifty Thousand (150,000) shares of Stock.

 

(iii) Performance Awards. Subject to adjustment as provided in Section 4.2, no
Employee shall be granted (A) Performance Shares which could result in such
Employee receiving more than Four Hundred Thousand (400,000) shares of Stock for
each full fiscal year of the Company contained in the Performance Period for
such Award, or (B) Performance Units which could result in such Employee
receiving more than Two Million dollars ($2,000,000) for each full fiscal year
of the Company contained in the Performance Period for such Award. No
Participant may be granted more than one Performance Award for the same
Performance Period.

 

6. TERMS AND CONDITIONS OF OPTIONS.

 

Options shall be evidenced by Award Agreements specifying the number of shares
of Stock covered thereby, in such form as the Committee shall from time to time
establish. No Option or purported Option shall be a valid and binding obligation
of the Company unless evidenced by a fully executed Award Agreement. Award
Agreements evidencing Options may incorporate all or any of the terms of the
Plan by reference and shall comply with and be subject to the following terms
and conditions:

 

6.1 Exercise Price. The exercise price for each Option shall be established in
the discretion of the Committee; provided, however, that (a) the exercise price
per share shall be not less than the Fair Market Value of a share of Stock on
the effective date of grant of the Option, (b) no Incentive Stock Option granted
to a Ten Percent Owner shall have an exercise price per share less than one
hundred ten percent (110%) of the Fair Market Value of a share of Stock on the
effective date of grant of the Option, and (c) notwithstanding anything to the
contrary in this Section 6.1, in the case of an Indexed Option, the Committee
shall determine the exercise price of such Indexed Option and the terms and
conditions that affect, if any, any adjustments to the exercise price of such
Indexed Option. Notwithstanding the foregoing, an Option may be granted with an
exercise price lower than the minimum exercise price set forth above if such
Option is granted pursuant to an assumption or substitution for another option
in a manner qualifying under the provisions of Section 424(a) of the Code.

 

12

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6.2 Exercisability and Term of Options. Options shall be exercisable at such
time or times, or upon such event or events, and subject to such terms,
conditions, performance criteria and restrictions as shall be determined by the
Committee and set forth in the Award Agreement evidencing such Option; provided,
however, that (a) no Option shall be exercisable after the expiration of ten
(10) years after the effective date of grant of such Option, (b) no Incentive
Stock Option granted to a Ten Percent Owner shall be exercisable after the
expiration of five (5) years after the effective date of grant of such Option,
and (c) no Option granted to a prospective Employee, prospective Consultant or
prospective Director may become exercisable prior to the date on which such
person commences Service. Subject to the foregoing, unless otherwise specified
by the Committee in the grant of an Option, any Option granted hereunder shall
terminate ten (10) years after the effective date of grant of the Option, unless
earlier terminated in accordance with its provisions.

 

6.3 Payment of Exercise Price.

 

(a) Forms of Consideration Authorized. Except as otherwise provided below,
payment of the exercise price for the number of shares of Stock being purchased
pursuant to any Option shall be made (i) in cash, by check or in cash
equivalent, (ii) by tender to the Company, or attestation to the ownership, of
shares of Stock owned by the Participant having a Fair Market Value not less
than the exercise price, (iii) by delivery of a properly executed notice of
exercise together with irrevocable instructions to a broker providing for the
assignment to the Company of the proceeds of a sale or loan with respect to some
or all of the shares being acquired upon the exercise of the Option (including,
without limitation, through an exercise complying with the provisions of
Regulation T as promulgated from time to time by the Board of Governors of the
Federal Reserve System) (a “Cashless Exercise”), (iv) by such other
consideration as may be approved by the Committee from time to time to the
extent permitted by applicable law, or (v) by any combination thereof. The
Committee may at any time or from time to time grant Options which do not permit
all of the foregoing forms of consideration to be used in payment of the
exercise price or which otherwise restrict one or more forms of consideration.

 

(b) Limitations on Forms of Consideration.

 

(i) Tender of Stock. Notwithstanding the foregoing, an Option may not be
exercised by tender to the Company, or attestation to the ownership, of shares
of Stock to the extent such tender or attestation would constitute a violation
of the provisions of any law, regulation or agreement restricting the redemption
of the Company’s stock. Unless otherwise provided by the Committee, an Option
may not be exercised by tender to the Company, or attestation to the ownership,
of shares of Stock unless such shares either have been owned by the Participant
for more than six (6) months (and not used for another Option exercise by
attestation during such period) or were not acquired, directly or indirectly,
from the Company.

 

(ii) Cashless Exercise. The Company reserves, at any and all times, the right,
in the Company’s sole and absolute discretion, to establish, decline to approve
or terminate any program or procedures for the exercise of Options by means of a
Cashless Exercise, including with respect to one or more Participants specified
by the Company notwithstanding that such program or procedures may be available
to other Participants.

 

13

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6.4 Effect of Termination of Service. An Option shall be exercisable after a
Participant’s termination of Service to such extent and during such period as
determined by the Committee, in its discretion, and set forth in the Award
Agreement evidencing such Option.

 

6.5 Transferability of Options. During the lifetime of the Participant, an
Option shall be exercisable only by the Participant or the Participant’s
guardian or legal representative. Prior to the issuance of shares of Stock upon
the exercise of an Option, the Option shall not be subject in any manner to
anticipation, alienation, sale, exchange, transfer, assignment, pledge,
encumbrance, or garnishment by creditors of the Participant or the Participant’s
beneficiary, except transfer by will or by the laws of descent and distribution.
Notwithstanding the foregoing, to the extent permitted by the Committee, in its
discretion, and set forth in the Award Agreement evidencing such Option, a
Nonstatutory Stock Option shall be assignable or transferable subject to the
applicable limitations, if any, described in the General Instructions to Form
S-8 Registration Statement under the Securities Act. Notwithstanding any of the
foregoing, the Board may permit further transferability of any Option, on a
general or specific basis, and may impose conditions and limitations on any
permitted transferability.

 

7. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS.

 

Stock Appreciation Rights shall be evidenced by Award Agreements specifying the
number of shares of Stock subject to the Award, in such form as the Committee
shall from time to time establish. No SAR or purported SAR shall be a valid and
binding obligation of the Company unless evidenced by a fully executed Award
Agreement. Award Agreements evidencing SARs may incorporate all or any of the
terms of the Plan by reference and shall comply with and be subject to the
following terms and conditions:

 

7.1 Types of SARs Authorized. SARs may be granted in tandem with all or any
portion of a related Option (a “Tandem SAR”) or may be granted independently of
any Option (a “Freestanding SAR”). A Tandem SAR may be granted either
concurrently with the grant of the related Option or at any time thereafter
prior to the complete exercise, termination, expiration or cancellation of such
related Option.

 

7.2 Exercise Price. The exercise price for each SAR shall be established in the
discretion of the Committee; provided, however, that (a) the exercise price per
share subject to a Tandem SAR shall be the exercise price per share under the
related Option and (b) the exercise price per share subject to a Freestanding
SAR shall be not less than the Fair Market Value of a share of Stock on the
effective date of grant of the SAR.

 

7.3 Exercisability and Term of SARs.

 

(a) Tandem SARs. Tandem SARs shall be exercisable only at the time and to the
extent, and only to the extent, that the related Option is exercisable, subject
to such provisions as the Committee may specify where the Tandem SAR is granted
with respect to less than the full number of shares of Stock subject to the
related Option. The Committee may, in its discretion, provide in any Award
Agreement evidencing a Tandem SAR that such SAR may not be exercised without the
advance approval of the Company and, if such approval is not given, then the
Option shall nevertheless remain exercisable in accordance with its terms. A

 

14

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Tandem SAR shall terminate and cease to be exercisable no later than the date on
which the related Option expires or is terminated or canceled. Upon the exercise
of a Tandem SAR with respect to some or all of the shares subject to such SAR,
the related Option shall be canceled automatically as to the number of shares
with respect to which the Tandem SAR was exercised. Upon the exercise of an
Option related to a Tandem SAR as to some or all of the shares subject to such
Option, the related Tandem SAR shall be canceled automatically as to the number
of shares with respect to which the related Option was exercised.

 

(b) Freestanding SARs. Freestanding SARs shall be exercisable at such time or
times, or upon such event or events, and subject to such terms, conditions,
performance criteria and restrictions as shall be determined by the Committee
and set forth in the Award Agreement evidencing such SAR; provided, however,
that no Freestanding SAR shall be exercisable after the expiration of ten (10)
years after the effective date of grant of such SAR.

 

7.4 Exercise of SARs. Upon the exercise (or deemed exercise pursuant to Section
7.5) of a SAR, the Participant (or the Participant’s legal representative or
other person who acquired the right to exercise the SAR by reason of the
Participant’s death) shall be entitled to receive payment of an amount for each
share with respect to which the SAR is exercised equal to the excess, if any, of
the Fair Market Value of a share of Stock on the date of exercise of the SAR
over the exercise price. Payment of such amount shall be made in cash, shares of
Stock, or any combination thereof as determined by the Committee. Unless
otherwise provided in the Award Agreement evidencing such SAR, payment shall be
made in a lump sum as soon as practicable following the date of exercise of the
SAR. The Award Agreement evidencing any SAR may provide for deferred payment in
a lump sum or in installments. When payment is to be made in shares of Stock,
the number of shares to be issued shall be determined on the basis of the Fair
Market Value of a share of Stock on the date of exercise of the SAR. For
purposes of Section 7, a SAR shall be deemed exercised on the date on which the
Company receives notice of exercise from the Participant.

 

7.5 Deemed Exercise of SARs. If, on the date on which a SAR would otherwise
terminate or expire, the SAR by its terms remains exercisable immediately prior
to such termination or expiration and, if so exercised, would result in a
payment to the holder of such SAR, then any portion of such SAR which has not
previously been exercised shall automatically be deemed to be exercised as of
such date with respect to such portion.

 

7.6 Effect of Termination of Service. Subject to earlier termination of the SAR
as otherwise provided herein a SAR shall be exercisable after a Participant’s
termination of Service to such extent and during such period as determined by
the Committee, in its discretion, and set forth in the Award Agreement
evidencing such SAR and thereafter shall terminate.

 

7.7 Nontransferability of SARs. During the lifetime of the Participant, a SAR
shall be exercisable only by the Participant or the Participant’s guardian or
legal representative. Prior to the exercise of a SAR, the SAR shall not be
subject in any manner to anticipation, alienation, sale, exchange, transfer,
assignment, pledge, encumbrance, or garnishment by creditors of the Participant
or the Participant’s beneficiary, except transfer by will or by the laws of
descent and distribution. Notwithstanding any of the foregoing, the Board

 

15

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may permit further transferability of any SAR, on a general or specific basis,
and may impose conditions and limitations on any permitted transferability.

 

8. TERMS AND CONDITIONS OF RESTRICTED STOCK AWARDS.

 

Restricted Stock Awards shall be evidenced by Award Agreements specifying
whether the Award is a Restricted Stock Bonus or a Restricted Stock Purchase
Right and the number of shares of Stock subject to the Award, in such form as
the Committee shall from time to time establish. No Restricted Stock Award or
purported Restricted Stock Award shall be a valid and binding obligation of the
Company unless evidenced by a fully executed Award Agreement. Award Agreements
evidencing Restricted Stock Awards may incorporate all or any of the terms of
the Plan by reference and shall comply with and be subject to the following
terms and conditions:

 

8.1 Types of Restricted Stock Awards Authorized. Restricted Stock Awards may be
in the form of either a Restricted Stock Bonus or a Restricted Stock Purchase
Right. Restricted Stock Awards may be granted upon such conditions as the
Committee shall determine, including, without limitation, upon the attainment of
one or more Performance Goals described in Section 9.4. If either the grant of a
Restricted Stock Award or the lapsing of the Restriction Period is to be
contingent upon the attainment of one or more Performance Goals, the Committee
shall follow procedures substantially equivalent to those set forth in Sections
9.3. through 9.5(a).

 

8.2 Purchase Price. The purchase price for shares of Stock issuable under each
Restricted Stock Purchase Right shall be established by the Committee in its
discretion. No monetary payment (other than applicable tax withholding) shall be
required as a condition of receiving shares of Stock pursuant to a Restricted
Stock Bonus, the consideration for which shall be services actually rendered to
a Participating Company or for its benefit. Notwithstanding the foregoing, the
Participant shall furnish consideration in the form of cash or past services
rendered to a Participating Company or for its benefit having a value not less
than the par value of the shares of Stock subject to such Restricted Stock
Award.

 

8.3 Purchase Period. A Restricted Stock Purchase Right shall be exercisable
within a period established by the Committee, which shall in no event exceed
thirty (30) days from the effective date of the grant of the Restricted Stock
Purchase Right; provided, however, that no Restricted Stock Purchase Right
granted to a prospective Employee, prospective Consultant or prospective
Director may become exercisable prior to the date on which such person commences
Service.

 

8.4 Payment of Purchase Price. Except as otherwise provided below, payment of
the purchase price for the number of shares of Stock being purchased pursuant to
any Restricted Stock Purchase Right shall be made (a) in cash, by check, or in
cash equivalent, (b) by such other consideration as may be approved by the
Committee from time to time to the extent permitted by applicable law, or (iii)
by any combination thereof. The Committee may at any time or from time to time
grant Restricted Stock Purchase Rights which do not permit all of the foregoing
forms of consideration to be used in payment of the purchase price or which
otherwise

 

16

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restrict one or more forms of consideration. Restricted Stock Bonuses shall be
issued in consideration for past services actually rendered to a Participating
Company or for its benefit.

 

8.5 Vesting and Restrictions on Transfer. Shares issued pursuant to any
Restricted Stock Award may or may not be made subject to Vesting Conditions
based upon the satisfaction of such Service requirements, conditions,
restrictions or performance criteria, including, without limitation, Performance
Goals as described in Section 9.4, as shall be established by the Committee and
set forth in the Award Agreement evidencing such Award. During any Restriction
Period in which shares acquired pursuant to a Restricted Stock Award remain
subject to Vesting Conditions, such shares may not be sold, exchanged,
transferred, pledged, assigned or otherwise disposed of other than pursuant to
an Ownership Change Event, as defined in Section 13.1, or as provided in Section
8.8. Upon request by the Company, each Participant shall execute any agreement
evidencing such transfer restrictions prior to the receipt of shares of Stock
hereunder and shall promptly present to the Company any and all certificates
representing shares of Stock acquired hereunder for the placement on such
certificates of appropriate legends evidencing any such transfer restrictions.

 

8.6 Voting Rights; Dividends and Distributions. Except as provided in this
Section, Section 8.5 and any Award Agreement, during the Restriction Period
applicable to shares subject to a Restricted Stock Award, the Participant shall
have all of the rights of a stockholder of the Company holding shares of Stock,
including the right to vote such shares and to receive all dividends and other
distributions paid with respect to such shares. However, in the event of a
dividend or distribution paid in shares of Stock or any other adjustment made
upon a change in the capital structure of the Company as described in Section
4.2, then any and all new, substituted or additional securities or other
property (other than normal cash dividends) to which the Participant is entitled
by reason of the Participant’s Restricted Stock Award shall be immediately
subject to the same Vesting Conditions as the shares subject to the Restricted
Stock Award with respect to which such dividends or distributions were paid or
adjustments were made.

 

8.7 Effect of Termination of Service. Unless otherwise provided by the Committee
in the grant of a Restricted Stock Award and set forth in the Award Agreement,
if a Participant’s Service terminates for any reason, whether voluntary or
involuntary (including the Participant’s death or Disability), then (a) the
Company shall have the option to repurchase for the purchase price paid by the
Participant any shares acquired by the Participant pursuant to a Restricted
Stock Purchase Right which remain subject to Vesting Conditions as of the date
of the Participant’s termination of Service and (b) the Participant shall
forfeit to the Company any shares acquired by the Participant pursuant to a
Restricted Stock Bonus which remain subject to Vesting Conditions as of the date
of the Participant’s termination of Service. The Company shall have the right to
assign at any time any repurchase right it may have, whether or not such right
is then exercisable, to one or more persons as may be selected by the Company.

 

8.8 Nontransferability of Restricted Stock Award Rights. Prior to the issuance
of shares of Stock pursuant to a Restricted Stock Award, rights to acquire such
shares shall not be subject in any manner to anticipation, alienation, sale,
exchange, transfer, assignment, pledge, encumbrance or garnishment by creditors
of the Participant or the Participant’s beneficiary, except transfer by will or
the laws of descent and distribution. All

 

17

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rights with respect to a Restricted Stock Award granted to a Participant
hereunder shall be exercisable during his or her lifetime only by such
Participant or the Participant’s guardian or legal representative.

 

9. TERMS AND CONDITIONS OF PERFORMANCE AWARDS.

 

Performance Awards shall be evidenced by Award Agreements in such form as the
Committee shall from time to time establish. No Performance Award or purported
Performance Award shall be a valid and binding obligation of the Company unless
evidenced by a fully executed Award Agreement. Award Agreements evidencing
Performance Awards may incorporate all or any of the terms of the Plan by
reference and shall comply with and be subject to the following terms and
conditions:

 

9.1 Types of Performance Awards Authorized. Performance Awards may be in the
form of either Performance Shares or Performance Units. Each Award Agreement
evidencing a Performance Award shall specify the number of Performance Shares or
Performance Units subject thereto, the Performance Award Formula, the
Performance Goal(s) and Performance Period applicable to the Award, and the
other terms, conditions and restrictions of the Award.

 

9.2 Initial Value of Performance Shares and Performance Units. Unless otherwise
provided by the Committee in granting a Performance Award, each Performance
Share shall have an initial value equal to the Fair Market Value of one (1)
share of Stock, subject to adjustment as provided in Section 4.2, on the
effective date of grant of the Performance Share, and each Performance Unit
shall have an initial value of one hundred dollars ($100). The final value
payable to the Participant in settlement of a Performance Award determined on
the basis of the applicable Performance Award Formula will depend on the extent
to which Performance Goals established by the Committee are attained within the
applicable Performance Period established by the Committee.

 

9.3 Establishment of Performance Period, Performance Goals and Performance Award
Formula. In granting each Performance Award, the Committee shall establish in
writing the applicable Performance Period, Performance Award Formula and one or
more Performance Goals which, when measured at the end of the Performance
Period, shall determine on the basis of the Performance Award Formula the final
value of the Performance Award to be paid to the Participant. Unless otherwise
permitted in compliance with the requirements under Section 162(m) with respect
to “performance-based compensation,” the Committee shall establish the
Performance Goal(s) and Performance Award Formula applicable to each Performance
Award no later than the earlier of (a) the date ninety (90) days after the
commencement of the applicable Performance Period or (b) the date on which 25%
of the Performance Period has elapsed, and, in any event, at a time when the
outcome of the Performance Goals remains substantially uncertain. Once
established, the Performance Goals and Performance Award Formula shall not be
changed during the Performance Period. The Company shall notify each Participant
granted a Performance Award of the terms of such Award, including the
Performance Period, Performance Goal(s) and Performance Award Formula.

 

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9.4 Measurement of Performance Goals. Performance Goals shall be established by
the Committee on the basis of targets to be attained (“Performance Targets”)
with respect to one or more measures of business or financial performance (each,
a “Performance Measure”), subject to the following:

 

(a) Performance Measures. Performance Measures shall have the same meanings as
used in the Company’s financial statements, or, if such terms are not used in
the Company’s financial statements, they shall have the meaning applied pursuant
to generally accepted accounting principles, or as used generally in the
Company’s industry. Performance Measures shall be calculated with respect to the
Company and each Subsidiary Corporation consolidated therewith for financial
reporting purposes or such division or other business unit as may be selected by
the Committee. For purposes of the Plan, the Performance Measures applicable to
a Performance Award shall be calculated in accordance with generally accepted
accounting principles, but prior to the accrual or payment of any Performance
Award for the same Performance Period and excluding the effect (whether positive
or negative) of any change in accounting standards or any extraordinary, unusual
or nonrecurring item, as determined by the Committee, occurring after the
establishment of the Performance Goals applicable to the Performance Award.
Performance Measures may be one or more of the following, or a combination of
the any of the following, as determined by the Committee:

 

(i) revenue;

(ii) gross margin;

(iii) operating margin;

(iv) operating income;

(v) pre-tax profit;

(vi) earnings before interest, taxes and depreciation;

(vii) net income;

(viii) cash flow;

(ix) expenses;

(x) the market price of the Stock;

(xi) earnings per share;

(xii) return on stockholder equity;

(xiii) return on capital;

(xiv) return on net assets;

(xv) economic value added;

(xvi) number of customers;

(xvii) market share;

(xviii) return on investment

(xix) profit after tax

(xx) product approval; and

(xxi) customer satisfaction.

 

(b) Performance Targets. Performance Targets may include a minimum, maximum,
target level and intermediate levels of performance, with the final value of a
Performance Award determined under the applicable Performance Award Formula by
the level attained during the applicable Performance Period. A Performance
Target may be stated as an absolute value or as a value determined relative to a
standard selected by the Committee.

 

19

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9.5 Settlement of Performance Awards.

 

(a) Determination of Final Value. As soon as practicable following the
completion of the Performance Period applicable to a Performance Award, the
Committee shall certify in writing the extent to which the applicable
Performance Goals have been attained and the resulting final value of the Award
earned by the Participant and to be paid upon its settlement in accordance with
the applicable Performance Award Formula.

 

(b) Discretionary Adjustment of Award Formula. In its discretion, the Committee
may, either at the time it grants a Performance Award or at any time thereafter,
provide for the positive or negative adjustment of the Performance Award Formula
applicable to a Performance Award granted to any Participant who is not a
“covered employee” within the meaning of Section 162(m) (a “Covered Employee”)
to reflect such Participant’s individual performance in his or her position with
the Company or such other factors as the Committee may determine. If permitted
under a Covered Employee’s Award Agreement, the Committee shall have the
discretion, on the basis of such criteria as may be established by the
Committee, to reduce some or all of the value of the Performance Award that
would otherwise be paid to the Covered Employee upon its settlement
notwithstanding the attainment of any Performance Goal and the resulting value
of the Performance Award determined in accordance with the Performance Award
Formula. No such reduction may result in an increase in the amount payable upon
settlement of another Participant’s Performance Award.

 

(c) Effect of Leaves of Absence. Unless otherwise required by law, payment of
the final value, if any, of a Performance Award held by a Participant who has
taken in excess of thirty (30) days in leaves of absence during a Performance
Period shall be prorated on the basis of the number of days of the Participant’s
Service during the Performance Period during which the Participant was not on a
leave of absence.

 

(d) Notice to Participants. As soon as practicable following the Committee’s
determination and certification in accordance with Sections 9.5 (a) and (b), the
Company shall notify each Participant of the determination of the Committee.

 

(e) Payment in Settlement of Performance Awards. As soon as practicable
following the Committee’s determination and certification in accordance with
Sections 9.5(a) and (b), payment shall be made to each eligible Participant (or
such Participant’s legal representative or other person who acquired the right
to receive such payment by reason of the Participant’s death) of the final value
of the Participant’s Performance Award. Payment of such amount shall be made in
cash, shares of Stock, or a combination thereof as determined by the Committee.
Unless otherwise provided in the Award Agreement evidencing a Performance Award,
payment shall be made in a lump sum. An Award Agreement may provide for deferred
payment in a lump sum or in installments. If any payment is to be made on a
deferred basis, the Committee may, but shall not be obligated to, provide for
the payment during the deferral period of Dividend Equivalents or interest.

 

(f) Provisions Applicable to Payment in Shares. If payment is to be made in
shares of Stock, the number of such shares shall be determined by dividing the
final value of the Performance Award by the value of a share of Stock determined
by the method

 

20

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specified in the Award Agreement. Such methods may include, without limitation,
the closing market price on a specified date (such as the settlement date) or an
average of market prices over a series of trading days. Shares of Stock issued
in payment of any Performance Award may be fully vested and freely transferable
shares or may be shares of Stock subject to Vesting Conditions as provided in
Section 8.5. Any shares subject to Vesting Conditions shall be evidenced by an
appropriate Award Agreement and shall be subject to the provisions of Sections
8.5 through above.

 

9.6 Voting Rights; Dividend Equivalent Rights and Distributions. Participants
shall have no voting rights with respect to shares of Stock represented by
Performance Share Awards until the date of the issuance of such shares, if any
(as evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company). However, the Committee, in its
discretion, may provide in the Award Agreement evidencing any Performance Share
Award that the Participant shall be entitled to receive Dividend Equivalents
with respect to the payment of cash dividends on Stock having a record date
prior to the date on which the Performance Shares are settled or forfeited. Such
Dividend Equivalents, if any, shall be credited to the Participant in the form
of additional whole Performance Shares as of the date of payment of such cash
dividends on Stock. The number of additional Performance Shares (rounded to the
nearest whole number) to be so credited shall be determined by dividing (a) the
amount of cash dividends paid on such date with respect to the number of shares
of Stock represented by the Performance Shares previously credited to the
Participant by (b) the Fair Market Value per share of Stock on such date.
Dividend Equivalents may be paid currently or may be accumulated and paid to the
extent that Performance Shares become nonforfeitable, as determined by the
Committee. Settlement of Dividend Equivalents may be made in cash, shares of
Stock, or a combination thereof as determined by the Committee, and may be paid
on the same basis as settlement of the related Performance Share as provided in
Section 9.5. Dividend Equivalents shall not be paid with respect to Performance
Units. In the event of a dividend or distribution paid in shares of Stock or any
other adjustment made upon a change in the capital structure of the Company as
described in Section 4.2, appropriate adjustments shall be made in the
Participant’s Performance Share Award so that it represents the right to receive
upon settlement any and all new, substituted or additional securities or other
property (other than normal cash dividends) to which the Participant would
entitled by reason of the shares of Stock issuable upon settlement of the
Performance Share Award, and all such new, substituted or additional securities
or other property shall be immediately subject to the same Performance Goals as
are applicable to the Award.

 

9.7 Effect of Termination of Service. The effect of a Participant’s termination
of Service on the Performance Award shall be determined by the Committee, in its
discretion, and set forth in the Award Agreement evidencing such Performance
Award.

 

9.8 Nontransferability of Performance Awards. Prior to settlement in accordance
with the provisions of the Plan, no Performance Award shall be subject in any
manner to anticipation, alienation, sale, exchange, transfer, assignment,
pledge, encumbrance, or garnishment by creditors of the Participant or the
Participant’s beneficiary, except transfer by will or by the laws of descent and
distribution. All rights with respect to a Performance Award granted to a
Participant hereunder shall be exercisable during his or her lifetime only by
such Participant or the Participant’s guardian or legal representative.

 

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10. TERMS AND CONDITIONS OF RESTRICTED STOCK UNIT AWARDS.

 

Restricted Stock Unit Awards shall be evidenced by Award Agreements specifying
the number of Restricted Stock Units subject to the Award, in such form as the
Committee shall from time to time establish. No Restricted Stock Unit Award or
purported Restricted Stock Unit Award shall be a valid and binding obligation of
the Company unless evidenced by a fully executed Award Agreement. Award
Agreements evidencing Restricted Stock Units may incorporate all or any of the
terms of the Plan by reference and shall comply with and be subject to the
following terms and conditions:

 

10.1 Grant of Restricted Stock Unit Awards. Restricted Stock Unit Awards may be
granted upon such conditions as the Committee shall determine, including,
without limitation, upon the attainment of one or more Performance Goals
described in Section 9.4. If either the grant of a Restricted Stock Unit Award
or the Vesting Conditions with respect to such Award is to be contingent upon
the attainment of one or more Performance Goals, the Committee shall follow
procedures substantially equivalent to those set forth in Sections 9.3 through
9.5(a).

 

10.2 Purchase Price. No monetary payment (other than applicable tax withholding,
if any) shall be required as a condition of receiving a Restricted Stock Unit
Award, the consideration for which shall be services actually rendered to a
Participating Company or for its benefit.

 

10.3 Vesting. Restricted Stock Units may or may not be made subject to Vesting
Conditions based upon the satisfaction of such Service requirements, conditions,
restrictions or performance criteria, including, without limitation, Performance
Goals as described in Section 9.4, as shall be established by the Committee and
set forth in the Award Agreement evidencing such Award.

 

10.4 Voting Rights, Dividend Equivalent Rights and Distributions. Participants
shall have no voting rights with respect to shares of Stock represented by
Restricted Stock Units until the date of the issuance of such shares (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company). However, the Committee, in its
discretion, may provide in the Award Agreement evidencing any Restricted Stock
Unit Award that the Participant shall be entitled to receive Dividend
Equivalents with respect to the payment of cash dividends on Stock having a
record date prior to date on which Restricted Stock Units held by such
Participant are settled. Such Dividend Equivalents, if any, shall be paid by
crediting the Participant with additional whole Restricted Stock Units as of the
date of payment of such cash dividends on Stock. The number of additional
Restricted Stock Units (rounded to the nearest whole number) to be so credited
shall be determined by dividing (a) the amount of cash dividends paid on such
date with respect to the number of shares of Stock represented by the Restricted
Stock Units previously credited to the Participant by (b) the Fair Market Value
per share of Stock on such date. Such additional Restricted Stock Units shall be
subject to the same terms and conditions and shall be settled in the same manner
and at the same time (or as soon thereafter as practicable) as the Restricted
Stock Units originally subject to the Restricted Stock Unit Award. In the event
of a dividend or distribution paid in shares of Stock or any other adjustment
made upon a change in the capital structure of the Company as described in

 

22

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Section 4.2, appropriate adjustments shall be made in the Participant’s
Restricted Stock Unit Award so that it represents the right to receive upon
settlement any and all new, substituted or additional securities or other
property (other than normal cash dividends) to which the Participant would
entitled by reason of the shares of Stock issuable upon settlement of the Award,
and all such new, substituted or additional securities or other property shall
be immediately subject to the same Vesting Conditions as are applicable to the
Award.

 

10.5 Effect of Termination of Service. Unless otherwise provided by the
Committee in the grant of a Restricted Stock Unit Award and set forth in the
Award Agreement, if a Participant’s Service terminates for any reason, whether
voluntary or involuntary (including the Participant’s death or Disability), then
the Participant shall forfeit to the Company any Restricted Stock Units pursuant
to the Award which remain subject to Vesting Conditions as of the date of the
Participant’s termination of Service.

 

10.6 Settlement of Restricted Stock Unit Awards. The Company shall issue to a
Participant on the date on which Restricted Stock Units subject to the
Participant’s Restricted Stock Unit Award vest or on such other date determined
by the Committee, in its discretion, and set forth in the Award Agreement one
(1) share of Stock (and/or any other new, substituted or additional securities
or other property pursuant to an adjustment described in Section 10.4) for each
Restricted Stock Unit then becoming vested or otherwise to be settled on such
date, subject to the withholding of applicable taxes. Notwithstanding the
foregoing, if permitted by the Committee and set forth in the Award Agreement,
the Participant may elect in accordance with terms specified in the Award
Agreement to defer receipt of all or any portion of the shares of Stock or other
property otherwise issuable to the Participant pursuant to this Section.

 

10.7 Nontransferability of Restricted Stock Unit Awards. Prior to the issuance
of shares of Stock in settlement of a Restricted Stock Unit Award, the Award
shall not be subject in any manner to anticipation, alienation, sale, exchange,
transfer, assignment, pledge, encumbrance, or garnishment by creditors of the
Participant or the Participant’s beneficiary, except transfer by will or by the
laws of descent and distribution. All rights with respect to a Restricted Stock
Unit Award granted to a Participant hereunder shall be exercisable during his or
her lifetime only by such Participant or the Participant’s guardian or legal
representative.

 

11. DEFERRED STOCK UNITS.

 

11.1 Establishment of Deferred Stock Unit Program. The Committee, in its
discretion and upon such terms and conditions as it may determine, may establish
one or more programs pursuant to the Plan under which:

 

(a) Participants designated by the Committee who are Insiders or otherwise among
a select group of highly compensated Employees may irrevocably elect, prior to a
date specified by the Committee, to reduce such Participant’s compensation
otherwise payable in cash (subject to any minimum or maximum reductions imposed
by the Committee) and to be granted automatically at such time or times as
specified by the Committee one or more Awards of Deferred Stock Units with
respect to such numbers of shares of Stock as determined

 

23

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in accordance with the rules of the program established by the Committee and
having such other terms and conditions as established by the Committee.

 

(b) Participants designated by the Committee who are Insiders or otherwise among
a select group of highly compensated Employees may irrevocably elect, prior to a
date specified by the Committee, to be granted automatically an Award of
Deferred Stock Units with respect to such number of shares of Stock and upon
such other terms and conditions as established by the Committee in lieu of:

 

(i) shares of Stock otherwise issuable to such Participant upon the exercise of
an Option;

 

(ii) cash or shares of Stock otherwise issuable to such Participant upon the
exercise of a SAR; or

 

(iii) cash or shares of Stock otherwise issuable to such Participant upon the
settlement of a Performance Award.

 

11.2 Terms and Conditions of Deferred Stock Units. Deferred Stock Units granted
pursuant to this Section 11 shall be evidenced by Award Agreements in such form
as the Committee shall from time to time establish. No such Deferred Stock Unit
or purported Deferred Stock Unit shall be a valid and binding obligation of the
Company unless evidenced by a fully executed Award Agreement. Award Agreements
evidencing Deferred Stock Units may incorporate all or any of the terms of the
Plan by reference and shall comply with and be subject to the following terms
and conditions:

 

(a) Vesting Conditions. Deferred Stock Units shall not be subject to any vesting
conditions.

 

(b) Terms and Conditions of Deferred Stock Units.

 

(i) Voting Rights; Dividend Equivalent Rights and Distributions. Participants
shall have no voting rights with respect to shares of Stock represented by
Deferred Stock Units until the date of the issuance of such shares (as evidenced
by the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company). However, a Participant shall be entitled to
receive Dividend Equivalents with respect to the payment of cash dividends on
Stock having a record date prior to date on which Deferred Stock Units held by
such Participant are settled. Such Dividend Equivalents shall be paid by
crediting the Participant with additional whole and/or fractional Deferred Stock
Units as of the date of payment of such cash dividends on Stock. The method of
determining the number of additional Deferred Stock Units to be so credited
shall be specified by the Committee and set forth in the Award Agreement. Such
additional Deferred Stock Units shall be subject to the same terms and
conditions and shall be settled in the same manner and at the same time (or as
soon thereafter as practicable) as the Deferred Stock Units originally subject
to the Deferred Stock Unit Award. In the event of a dividend or distribution
paid in shares of Stock or any other adjustment made upon a change in the
capital structure of the Company as described in Section 4.2, appropriate
adjustments shall be made in the Participant’s Deferred Stock Unit Award so that
it represent the right to receive upon settlement any and all new, substituted
or

 

24

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additional securities or other property (other than normal cash dividends) to
which the Participant would entitled by reason of the shares of Stock issuable
upon settlement of the Award.

 

(ii) Settlement of Deferred Stock Unit Awards. A Participant electing to receive
an Award of Deferred Stock Units pursuant to this Section 11, shall specify at
the time of such election a settlement date with respect to such Award. The
Company shall issue to the Participant as soon as practicable following the
earlier of the settlement date elected by the Participant or the date of
termination of the Participant’s Service, a number of whole shares of Stock
equal to the number of whole Deferred Stock Units subject to the Deferred Stock
Unit Award. Such shares of Stock shall be fully vested, and the Participant
shall not be required to pay any additional consideration (other than applicable
tax withholding) to acquire such shares. Any fractional Deferred Stock Unit
subject to the Deferred Stock Unit Award shall be settled by the Company by
payment in cash of an amount equal to the Fair Market Value as of the payment
date of such fractional share.

 

(iii) Nontransferability of Deferred Stock Unit Awards. Prior to their
settlement in accordance with the provision of the Plan, no Deferred Stock Unit
Award shall be subject in any manner to anticipation, alienation, sale,
exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors
of the Participant or the Participant’s beneficiary, except transfer by will or
by the laws of descent and distribution. All rights with respect to a Deferred
Stock Unit Award granted to a Participant hereunder shall be exercisable during
his or her lifetime only by such Participant or the Participant’s guardian or
legal representative.

 

12. STANDARD FORMS OF AWARD AGREEMENT.

 

12.1 Award Agreements. Each Award shall comply with and be subject to the terms
and conditions set forth in the appropriate form of Award Agreement approved by
the Committee and as amended from time to time. Any Award Agreement may consist
of an appropriate form of Notice of Grant and a form of Agreement incorporated
therein by reference, or such other form or forms as the Committee may approve
from time to time.

 

12.2 Authority to Vary Terms. The Committee shall have the authority from time
to time to vary the terms of any standard form of Award Agreement either in
connection with the grant or amendment of an individual Award or in connection
with the authorization of a new standard form or forms; provided, however, that
the terms and conditions of any such new, revised or amended standard form or
forms of Award Agreement are not inconsistent with the terms of the Plan.

 

13. CHANGE IN CONTROL.

 

13.1 Definitions.

 

(a) An “Ownership Change Event” shall be deemed to have occurred if any of the
following occurs with respect to the Company: (i) the direct or indirect sale or
exchange in a single or series of related transactions by the stockholders of
the Company of more than fifty percent (50%) of the voting stock of the Company;
(ii) a merger or consolidation in

 

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which the Company is a party; (iii) the sale, exchange, or transfer of all or
substantially all of the assets of the Company (other than a sale, exchange or
transfer to one or more subsidiaries of the Company); or (iv) a liquidation or
dissolution of the Company.

 

(b) A “Change in Control” shall mean an Ownership Change Event or series of
related Ownership Change Events (collectively, a “Transaction”) in which the
stockholders of the Company immediately before the Transaction do not retain
immediately after the Transaction, in substantially the same proportions as
their ownership of shares of the Company’s voting stock immediately before the
Transaction, direct or indirect beneficial ownership of more than fifty percent
(50%) of the total combined voting power of the outstanding voting securities of
the Company or, in the case of an Ownership Change Event described in Section
13.1(a)(iii), the entity to which the assets of the Company were transferred
(the “Transferee”), as the case may be. For purposes of the preceding sentence,
indirect beneficial ownership shall include, without limitation, an interest
resulting from ownership of the voting securities of one or more corporations or
other business entities which own the Company or the Transferee, as the case may
be, either directly or through one or more subsidiary corporations or other
business entities. The Committee shall have the right to determine whether
multiple sales or exchanges of the voting securities of the Company or multiple
Ownership Change Events are related, and its determination shall be final,
binding and conclusive.

 

13.2 Effect of Change in Control on Options and SARs.

 

(a) Accelerated Vesting. Notwithstanding any other provision of the Plan to the
contrary, the Committee, in its sole discretion, may provide in any Award
Agreement or, in the event of a Change in Control, may take such actions as it
deems appropriate to provide for the acceleration of the exercisability and
vesting in connection with such Change in Control of any or all outstanding
Options and SARs and shares acquired upon the exercise of such Options and SARs
upon such conditions and to such extent as the Committee shall determine.

 

(b) Assumption or Substitution. In the event of a Change in Control, the
surviving, continuing, successor, or purchasing corporation or other business
entity or parent corporation thereof, as the case may be (the “Acquiring
Corporation”), may, without the consent of the Participant, either assume the
Company’s rights and obligations under outstanding Options and SARs or
substitute for outstanding Options and SARs substantially equivalent options and
stock appreciation rights for the Acquiring Corporation’s stock. In the event
that the Acquiring Corporation elects not to assume or substitute for
outstanding Options and SARs in connection with a Change in Control, or if the
Acquiring Corporation is not a “publicly held corporation” within the meaning of
Section 162(m), the exercisability and vesting of each such outstanding Option,
SAR and any shares acquired upon the exercise thereof held by a Participant
whose Service has not terminated prior to such date shall be accelerated,
effective as of the date ten (10) days prior to the date of the Change in
Control. The exercise or vesting of any Option, SAR and any shares acquired upon
the exercise thereof that was permissible solely by reason of this Section 13.2
and the provisions of such applicable Award Agreement shall be conditioned upon
the consummation of the Change in Control. Any Options and SARs which are
neither assumed or substituted for by the Acquiring Corporation in connection
with the Change in Control nor exercised as of the date of the Change in Control
shall terminate and cease to be outstanding effective as of the date of the
Change in Control. Notwithstanding the foregoing,

 

26

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shares acquired upon exercise of an Option or SAR prior to the Change in Control
and any consideration received pursuant to the Change in Control with respect to
such shares shall continue to be subject to all applicable provisions of the
applicable Award Agreement evidencing such Option or SAR except as otherwise
provided in such applicable Award Agreement. Furthermore, notwithstanding the
foregoing, if the corporation the stock of which is subject to the outstanding
Options and SARs immediately prior to an Ownership Change Event described in
Section 13.1(a)(i) constituting a Change in Control is the surviving or
continuing corporation and immediately after such Ownership Change Event less
than fifty percent (50%) of the total combined voting power of its voting stock
is held by another corporation or by other corporations that are members of an
affiliated group within the meaning of Section 1504(a) of the Code without
regard to the provisions of Section 1504(b) of the Code, the outstanding Options
and SARs shall not terminate unless the Committee otherwise provides in its
discretion.

 

(c) Cash-Out. The Committee may, in its sole discretion and without the consent
of any Participant, determine that, upon the occurrence of a Change in Control,
each or any Option or SAR outstanding immediately prior to the Change in Control
shall be canceled in exchange for a payment with respect to each vested share of
Stock subject to such canceled Option or SAR in (i) cash, (ii) stock of the
Company or of a corporation or other business entity a party to the Change in
Control, or (iii) other property which, in any such case, shall be in an amount
having a Fair Market Value equal to the excess of the Fair Market Value of the
consideration to be paid per share of Stock in the Change in Control over the
exercise price per share under such Option or SAR (the “Spread”). In the event
such determination is made by the Committee, the Spread (reduced by applicable
withholding taxes, if any) shall be paid to Participants in respect of their
canceled Options and SARs as soon as practicable following the date of the
Change in Control.

 

13.3 Effect of Change in Control on Restricted Stock Awards. The Committee may,
in its discretion, provide in any Award Agreement evidencing a Restricted Stock
Award that, in the event of a Change in Control, the lapsing of the Restriction
Period applicable to the shares subject to the Restricted Stock Award held by a
Participant whose Service has not terminated prior to the Change in Control
shall be accelerated effective immediately prior to the consummation of the
Change in Control to such extent as specified in such Award Agreement. Any
acceleration of the lapsing of the Restriction Period that was permissible
solely by reason of this Section 13.3 and the provisions of such Award Agreement
shall be conditioned upon the consummation of the Change in Control.

 

13.4 Effect of Change in Control on Performance Awards. The Committee may, in
its discretion, provide in any Award Agreement evidencing a Performance Award
that, in the event of a Change in Control, the Performance Award held by a
Participant whose Service has not terminated prior to the Change in Control
shall become payable effective as of the date of the Change in Control to such
extent as specified in such Award Agreement.

 

13.5 Effect of Change in Control on Restricted Stock Unit Awards. The Committee
may, in its discretion, provide in any Award Agreement evidencing a Restricted
Stock Unit Award that, in the event of a Change in Control, the Restricted Stock
Unit Award held by a Participant whose Service has not terminated prior to such
date shall be settled

 

27

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effective as of the date of the Change in Control to such extent as specified in
such Award Agreement.

 

13.6 Effect of Change in Control on Deferred Stock Units. The Committee may, in
its discretion, provide in any Award Agreement evidencing a Deferred Stock Unit
Award that, in the event of a Change in Control, the Deferred Stock Units
pursuant to such Award shall be settled effective as of the date of the Change
in Control to such extent as specified in such Award Agreement.

 

14. COMPLIANCE WITH SECURITIES LAW.

 

The grant of Awards and the issuance of shares of Stock pursuant to any Award
shall be subject to compliance with all applicable requirements of federal,
state and foreign law with respect to such securities and the requirements of
any stock exchange or market system upon which the Stock may then be listed. In
addition, no Award may be exercised or shares issued pursuant to an Award unless
(a) a registration statement under the Securities Act shall at the time of such
exercise or issuance be in effect with respect to the shares issuable pursuant
to the Award or (b) in the opinion of legal counsel to the Company, the shares
issuable pursuant to the Award may be issued in accordance with the terms of an
applicable exemption from the registration requirements of the Securities Act.
The inability of the Company to obtain from any regulatory body having
jurisdiction the authority, if any, deemed by the Company’s legal counsel to be
necessary to the lawful issuance and sale of any shares hereunder shall relieve
the Company of any liability in respect of the failure to issue or sell such
shares as to which such requisite authority shall not have been obtained. As a
condition to issuance of any Stock, the Company may require the Participant to
satisfy any qualifications that may be necessary or appropriate, to evidence
compliance with any applicable law or regulation and to make any representation
or warranty with respect thereto as may be requested by the Company.

 

15. TAX WITHHOLDING.

 

15.1 Tax Withholding in General. The Company shall have the right to deduct from
any and all payments made under the Plan, or to require the Participant, through
payroll withholding, cash payment or otherwise, including by means of a Cashless
Exercise of an Option, to make adequate provision for, the federal, state, local
and foreign taxes, if any, required by law to be withheld by the Participating
Company Group with respect to an Award or the shares acquired pursuant thereto.
The Company shall have no obligation to deliver shares of Stock, to release
shares of Stock from an escrow established pursuant to an Award Agreement, or to
make any payment in cash under the Plan until the Participating Company Group’s
tax withholding obligations have been satisfied by the Participant.

 

15.2 Withholding in Shares. The Company shall have the right, but not the
obligation, to deduct from the shares of Stock issuable to a Participant upon
the exercise or settlement of an Award, or to accept from the Participant the
tender of, a number of whole shares of Stock having a Fair Market Value, as
determined by the Company, equal to all or any part of the tax withholding
obligations of the Participating Company Group. The Fair Market Value of any
shares of Stock withheld or tendered to satisfy any such tax withholding
obligations shall not exceed the amount determined by the applicable minimum
statutory withholding rates.

 

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16. AMENDMENT OR TERMINATION OF PLAN.

 

The Committee may amend, suspend or terminate the Plan at any time. However,
without the approval of the Company’s stockholders, there shall be (a) no
increase in the maximum aggregate number of shares of Stock that may be issued
under the Plan (except by operation of the provisions of Section 4.2, (b) no
change in the class of persons eligible to receive Incentive Stock Options, (c)
no Option and/or SAR repricing as described in Section 3.6, (d) no amendment to
permit the granting of Options (other than Indexed Options) with exercise prices
less than Fair Market Value on the date of grant, and (e) no other amendment of
the Plan that would require approval of the Company’s stockholders under any
applicable law, regulation or rule. No amendment, suspension or termination of
the Plan shall affect any then outstanding Award unless expressly provided by
the Committee. In any event, no amendment, suspension or termination of the Plan
may adversely affect any then outstanding Award without the consent of the
Participant unless necessary to comply with any applicable law, regulation or
rule.

 

17. MISCELLANEOUS PROVISIONS.

 

17.1 Repurchase Rights. Shares issued under the Plan may be subject to one or
more repurchase options, or other conditions and restrictions as determined by
the Committee in its discretion at the time the Award is granted. The Company
shall have the right to assign at any time any repurchase right it may have,
whether or not such right is then exercisable, to one or more persons as may be
selected by the Company. Upon request by the Company, each Participant shall
execute any agreement evidencing such transfer restrictions prior to the receipt
of shares of Stock hereunder and shall promptly present to the Company any and
all certificates representing shares of Stock acquired hereunder for the
placement on such certificates of appropriate legends evidencing any such
transfer restrictions.

 

17.2 Provision of Information. Each Participant shall be given access to
information concerning the Company equivalent to that information generally made
available to the Company’s common stockholders.

 

17.3 Rights as Employee, Consultant or Director. No person, even though eligible
pursuant to Section 5, shall have a right to be selected as a Participant, or,
having been so selected, to be selected again as a Participant. Nothing in the
Plan or any Award granted under the Plan shall confer on any Participant a right
to remain an Employee, Consultant or Director or interfere with or limit in any
way any right of a Participating Company to terminate the Participant’s Service
at any time. To the extent that an Employee of a Participating Company other
than the Company receives an Award under the Plan, that Award shall in no event
be understood or interpreted to mean that the Company is the Employee’s employer
or that the Employee has an employment relationship with the Company.

 

17.4 Rights as a Stockholder. A Participant shall have no rights as a
stockholder with respect to any shares covered by an Award until the date of the
issuance of such shares (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company). No
adjustment shall be made for dividends, distributions or other rights for which
the record date is prior to the date such shares are issued, except as provided
in Section 4.2 or another provision of the Plan.

 

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17.5 Fractional Shares. The Company shall not be required to issue fractional
shares upon the exercise or settlement of any Award.

 

17.6 Severability. If any one or more of the provisions (or any part thereof) of
this Plan or of any Award Agreement issued hereunder, shall be held to be
invalid, illegal or unenforceable in any respect, such provision shall be
modified so as to make it valid, legal and enforceable, and the validity,
legality and enforceability of the remaining provisions (or any part thereof) of
the Plan or of any Award Agreement shall not in any way be affected or impaired
thereby. The Company may, without the consent of any Participant, and in a
manner determined necessary solely in the discretion of the Company, amend the
Plan and any outstanding Award Agreement as the Company deems necessary to
ensure the Plan and all Awards remain valid, legal or enforceable in all
respects.

 

17.7 Beneficiary Designation. Subject to local laws and procedures, each
Participant may file with the Company a written designation of a beneficiary who
is to receive any benefit under the Plan to which the Participant is entitled in
the event of such Participant’s death before he or she receives any or all of
such benefit. Each designation will revoke all prior designations by the same
Participant, shall be in a form prescribed by the Company, and will be effective
only when filed by the Participant in writing with the Company during the
Participant’s lifetime. If a married Participant designates a beneficiary other
than the Participant’s spouse, the effectiveness of such designation may be
subject to the consent of the Participant’s spouse. If a Participant dies
without an effective designation of a beneficiary who is living at the time of
the Participant’s death, the Company will pay any remaining unpaid benefits to
the Participant’s legal representative.

 

17.8 Unfunded Obligation. Participants shall have the status of general
unsecured creditors of the Company. Any amounts payable to Participants pursuant
to the Plan shall be unfunded and unsecured obligations for all purposes,
including, without limitation, Title I of the Employee Retirement Income
Security Act of 1974. No Participating Company shall be required to segregate
any monies from its general funds, or to create any trusts, or establish any
special accounts with respect to such obligations. The Company shall retain at
all times beneficial ownership of any investments, including trust investments,
which the Company may make to fulfill its payment obligations hereunder. Any
investments or the creation or maintenance of any trust or any Participant
account shall not create or constitute a trust or fiduciary relationship between
the Committee or any Participating Company and a Participant, or otherwise
create any vested or beneficial interest in any Participant or the Participant’s
creditors in any assets of any Participating Company. The Participants shall
have no claim against any Participating Company for any changes in the value of
any assets which may be invested or reinvested by the Company with respect to
the Plan.

 

30

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PLAN HISTORY AND NOTES TO COMPANY

 

                    , 2004    Board adopts Plan with a reserve of Seven Million
Two Hundred and Four Thousand and Eighty-Five (7,204,085), reduced at any time
by the number of shares subject to the Prior Plan Options (which as of the
Effective Date equaled approximately Two Million Four Hundred and Fifty-Four
Thousand and Eighty-Five (2,454,085)). Such shares shall consist of authorized
but unissued or reacquired shares of Stock or any combination thereof. If any
outstanding Award, including any Prior Plan Options, for any reason expires or
is terminated or canceled without having been exercised or settled in full, or
if shares of Stock acquired pursuant to an Award subject to forfeiture or
repurchase, including any Prior Plan Options, are forfeited or repurchased by
the Company, the shares of Stock allocable to the terminated portion of such
Award, including any Prior Plan Options, or such forfeited or repurchases shares
of Stock shall again be available for issuance under the Plan
                    , 2004    Stockholders approve Plan. IMPORTANT NOTE:
Implementation of Section 11—Deferred Stock Units    The establishment of a
Deferred Stock Unit program pursuant to Section Error! Reference source not
found. requires that the Company determine whether such program will constitute
a “top-hat” pension plan under ERISA. If so, file notice with Dept. of Labor
under ERISA Reg. 2520.104-23 within 120 days of adoption of resolutions by the
Committee to establish the program to obtain exemption from reporting and
disclosure requirements of ERISA.