Exhibit 10.2

 

2004 EQUITY INCENTIVE PLAN

OF

DEPOMED, INC.

 

(As Amended through May 23, 2008)

 

1.             Purpose of this Plan

 

The purpose of this 2004 Equity Incentive Plan is to enhance the long-term
shareholder value of Depomed, Inc. by offering opportunities to eligible
participants to share in the growth in value of the equity of Depomed, Inc. and
to provide incentives to eligible Employees, Company Directors and Consultants
to contribute to the success of the Company.

 

2.             Definitions and Rules of Interpretation

 

2.1          DEFINITIONS.  THIS PLAN USES THE FOLLOWING DEFINED TERMS:

 

(A)   “ADMINISTRATOR” MEANS THE BOARD, THE COMMITTEE, OR ANY OFFICER OR EMPLOYEE
OF THE COMPANY TO WHOM THE BOARD OR THE COMMITTEE DELEGATES AUTHORITY TO
ADMINISTER THIS PLAN.

 

(B)   “AFFILIATE” MEANS A “PARENT” OR “SUBSIDIARY” (AS EACH IS DEFINED IN
SECTION 424 OF THE CODE) OF THE COMPANY AND ANY OTHER ENTITY THAT THE BOARD OR
COMMITTEE DESIGNATES AS AN “AFFILIATE” FOR PURPOSES OF THIS PLAN.

 

(C)   “APPLICABLE LAW” MEANS ANY AND ALL LAWS OF WHATEVER JURISDICTION, WITHIN
OR WITHOUT THE UNITED STATES, AND THE RULES OF ANY STOCK EXCHANGE OR QUOTATION
SYSTEM ON WHICH SHARES ARE LISTED OR QUOTED, APPLICABLE TO THE TAKING OR
REFRAINING FROM TAKING OF ANY ACTION UNDER THIS PLAN, INCLUDING THE
ADMINISTRATION OF THIS PLAN AND THE ISSUANCE OR TRANSFER OF AWARDS OR AWARD
SHARES.

 

(D)   “AWARD” MEANS A STOCK AWARD OR OPTION GRANTED IN ACCORDANCE WITH THE TERMS
OF THIS PLAN.

 

(E)   “AWARD AGREEMENT” MEANS THE DOCUMENT EVIDENCING THE GRANT OF AN AWARD.

 

(F)    “AWARD SHARES” MEANS SHARES COVERED BY AN OUTSTANDING AWARD OR PURCHASED
UNDER AN AWARD.

 

(G)   “AWARDEE” MEANS: (I) A PERSON TO WHOM AN AWARD HAS BEEN GRANTED, INCLUDING
A HOLDER OF A SUBSTITUTE AWARD, (II) A PERSON TO WHOM AN AWARD HAS BEEN
TRANSFERRED IN ACCORDANCE WITH ALL APPLICABLE REQUIREMENTS OF SECTIONS 6.5,
7(H), AND 17, OR (III) A PERSON WHO HOLDS AWARD SHARES SUBJECT TO A RIGHT OF
REPURCHASE UNDER SECTION 16.2.

 

(H)   “BOARD” MEANS THE BOARD OF DIRECTORS OF THE COMPANY.

 

(I)    “CHANGE IN CONTROL” MEANS ANY TRANSACTION OR EVENT THAT THE BOARD
SPECIFIES AS A CHANGE IN CONTROL UNDER SECTION 10.4.

 

(J)    “CODE” MEANS THE INTERNAL REVENUE CODE OF 1986.

 

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(K)   “COMMITTEE” MEANS A COMMITTEE COMPOSED OF COMPANY DIRECTORS APPOINTED IN
ACCORDANCE WITH THE COMPANY’S CHARTER DOCUMENTS AND SECTION 4.

 

(L)    “COMPANY” MEANS DEPOMED, INC., A CALIFORNIA CORPORATION.

 

(M)  “COMPANY DIRECTOR” MEANS A MEMBER OF THE BOARD.

 

(N)   “CONSULTANT” MEANS AN INDIVIDUAL WHO, OR AN ENTITY OR EMPLOYEE OF ANY
ENTITY THAT, PROVIDES BONA FIDE SERVICES TO THE COMPANY OR AN AFFILIATE NOT IN
CONNECTION WITH THE OFFER OR SALE OF SECURITIES IN A CAPITAL-RAISING
TRANSACTION, BUT WHO IS NOT AN EMPLOYEE.

 

(O)   “DIRECTOR” MEANS A MEMBER OF THE BOARD OF DIRECTORS OF THE COMPANY OR AN
AFFILIATE.

 

(P)   “DIVESTITURE” MEANS ANY TRANSACTION OR EVENT THAT THE BOARD SPECIFIES AS A
DIVESTITURE UNDER SECTION 10.5.

 

(Q)   “DOMESTIC RELATIONS ORDER” MEANS A “DOMESTIC RELATIONS ORDER” AS DEFINED
IN, AND OTHERWISE MEETING THE REQUIREMENTS OF, SECTION 414(P) OF THE CODE,
EXCEPT THAT REFERENCE TO A “PLAN” IN THAT DEFINITION SHALL BE TO THIS PLAN.

 

(R)    “EMPLOYEE” MEANS A REGULAR EMPLOYEE OF THE COMPANY OR AN AFFILIATE,
INCLUDING AN OFFICER OR DIRECTOR, WHO IS TREATED AS AN EMPLOYEE IN THE PERSONNEL
RECORDS OF THE COMPANY OR AN AFFILIATE, BUT NOT INDIVIDUALS WHO ARE CLASSIFIED
BY THE COMPANY OR AN AFFILIATE AS: (I) LEASED FROM OR OTHERWISE EMPLOYED BY A
THIRD PARTY, (II) INDEPENDENT CONTRACTORS, OR (III) INTERMITTENT OR TEMPORARY
WORKERS.  THE COMPANY’S OR AN AFFILIATE’S CLASSIFICATION OF AN INDIVIDUAL AS AN
“EMPLOYEE” (OR AS NOT AN “EMPLOYEE”) FOR PURPOSES OF THIS PLAN SHALL NOT BE
ALTERED RETROACTIVELY EVEN IF THAT CLASSIFICATION IS CHANGED RETROACTIVELY FOR
ANOTHER PURPOSE AS A RESULT OF AN AUDIT, LITIGATION OR OTHERWISE.  AN AWARDEE
SHALL NOT CEASE TO BE AN EMPLOYEE DUE TO TRANSFERS BETWEEN LOCATIONS OF THE
COMPANY, OR BETWEEN THE COMPANY AND AN AFFILIATE, OR TO ANY SUCCESSOR TO THE
COMPANY OR AN AFFILIATE THAT ASSUMES THE AWARDEE’S OPTIONS UNDER SECTION 10. 
NEITHER SERVICE AS A DIRECTOR NOR RECEIPT OF A DIRECTOR’S FEE SHALL BE
SUFFICIENT TO MAKE A DIRECTOR AN “EMPLOYEE.”

 

(S)   “EXCHANGE ACT” MEANS THE SECURITIES EXCHANGE ACT OF 1934.

 

(T)    “EXECUTIVE” MEANS, IF THE COMPANY HAS ANY CLASS OF ANY EQUITY SECURITY
REGISTERED UNDER SECTION 12 OF THE EXCHANGE ACT, AN INDIVIDUAL WHO IS SUBJECT TO
SECTION 16 OF THE EXCHANGE ACT OR WHO IS A “COVERED EMPLOYEE” UNDER
SECTION 162(M) OF THE CODE, IN EITHER CASE BECAUSE OF THE INDIVIDUAL’S
RELATIONSHIP WITH THE COMPANY OR AN AFFILIATE.  IF THE COMPANY DOES NOT HAVE ANY
CLASS OF ANY EQUITY SECURITY REGISTERED UNDER SECTION 12 OF THE EXCHANGE ACT,
“EXECUTIVE” MEANS ANY (I) DIRECTOR OR (II) OFFICER ELECTED OR APPOINTED BY THE
BOARD.

 

(U)   “EXPIRATION DATE” MEANS, WITH RESPECT TO AN AWARD, THE DATE STATED IN THE
AWARD AGREEMENT AS THE EXPIRATION DATE OF THE AWARD OR, IF NO SUCH DATE IS
STATED IN THE AWARD AGREEMENT, THEN THE LAST DAY OF THE MAXIMUM EXERCISE PERIOD
FOR THE AWARD, DISREGARDING THE EFFECT OF AN AWARDEE’S TERMINATION OR ANY OTHER
EVENT THAT WOULD SHORTEN THAT PERIOD.

 

(V)   “FAIR MARKET VALUE” MEANS THE VALUE OF SHARES AS DETERMINED UNDER
SECTION 18.2.

 

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(W)  “FUNDAMENTAL TRANSACTION” MEANS ANY TRANSACTION OR EVENT DESCRIBED IN
SECTION 10.3.

 

(X)    “GRANT DATE” MEANS THE DATE THE ADMINISTRATOR APPROVES THE GRANT OF AN
AWARD.  HOWEVER, IF THE ADMINISTRATOR SPECIFIES THAT AN AWARD’S GRANT DATE IS A
FUTURE DATE OR THE DATE ON WHICH A CONDITION IS SATISFIED, THE GRANT DATE FOR
SUCH AWARD IS THAT FUTURE DATE OR THE DATE THAT THE CONDITION IS SATISFIED.

 

(Y)   “INCENTIVE STOCK OPTION” MEANS AN OPTION INTENDED TO QUALIFY AS AN
INCENTIVE STOCK OPTION UNDER SECTION 422 OF THE CODE AND DESIGNATED AS AN
INCENTIVE STOCK OPTION IN THE AWARD AGREEMENT FOR THAT OPTION.

 

(Z)    “NONSTATUTORY OPTION” MEANS ANY OPTION OTHER THAN AN INCENTIVE STOCK
OPTION.

 

(AA) “NON-EMPLOYEE DIRECTOR” MEANS ANY PERSON WHO IS A MEMBER OF THE BOARD BUT
IS NOT AN EMPLOYEE OF THE COMPANY OR ANY AFFILIATE OF THE COMPANY AND HAS NOT
BEEN AN EMPLOYEE OF THE COMPANY OR ANY AFFILIATE OF THE COMPANY AT ANY TIME
DURING THE PRECEDING TWELVE MONTHS.  SERVICE AS A DIRECTOR DOES NOT IN ITSELF
CONSTITUTE EMPLOYMENT FOR PURPOSES OF THIS DEFINITION.

 

(BB) “OBJECTIVELY DETERMINABLE PERFORMANCE CONDITION” SHALL MEAN A PERFORMANCE
CONDITION (I) THAT IS ESTABLISHED (A) AT THE TIME AN AWARD IS GRANTED OR (B)  NO
LATER THAN THE EARLIER OF (1) 90 DAYS AFTER THE BEGINNING OF THE PERIOD OF
SERVICE TO WHICH IT RELATES, OR (2) BEFORE THE ELAPSE OF 25% OF THE PERIOD OF
SERVICE TO WHICH IT RELATES, (II) THAT IS UNCERTAIN OF ACHIEVEMENT AT THE TIME
IT IS ESTABLISHED, AND (III) THE ACHIEVEMENT OF WHICH IS DETERMINABLE BY A THIRD
PARTY WITH KNOWLEDGE OF THE RELEVANT FACTS.  EXAMPLES OF MEASURES THAT MAY BE
USED IN OBJECTIVELY DETERMINABLE PERFORMANCE CONDITIONS INCLUDE ACHIEVEMENT OF A
COMPANY GOAL, NET ORDER DOLLARS, NET PROFIT DOLLARS, NET PROFIT GROWTH, NET
REVENUE DOLLARS, REVENUE GROWTH, INDIVIDUAL PERFORMANCE, EARNINGS PER SHARE,
RETURN ON ASSETS, RETURN ON EQUITY, AND OTHER FINANCIAL OBJECTIVES, OBJECTIVE
CUSTOMER SATISFACTION INDICATORS AND EFFICIENCY MEASURES, EACH WITH RESPECT TO
THE COMPANY AND/OR AN AFFILIATE OR INDIVIDUAL BUSINESS UNIT.

 

(CC) “OFFICER” MEANS AN OFFICER OF THE COMPANY AS DEFINED IN RULE 16A-1 ADOPTED
UNDER THE EXCHANGE ACT.

 

(DD) “OPTION” MEANS A RIGHT TO PURCHASE SHARES OF THE COMPANY GRANTED UNDER THIS
PLAN.

 

(EE) “OPTION PRICE” MEANS THE PRICE PAYABLE UNDER AN OPTION FOR SHARES, NOT
INCLUDING ANY AMOUNT PAYABLE IN RESPECT OF WITHHOLDING OR OTHER TAXES.

 

(FF)   “OPTION SHARES” MEANS SHARES COVERED BY AN OUTSTANDING OPTION OR
PURCHASED UNDER AN OPTION.

 

(GG) “PLAN” MEANS THIS 2004 EQUITY INCENTIVE PLAN OF DEPOMED, INC.

 

(HH) “PURCHASE PRICE” MEANS THE PRICE PAYABLE UNDER A STOCK AWARD FOR SHARES,
NOT INCLUDING ANY AMOUNT PAYABLE IN RESPECT OF WITHHOLDING OR OTHER TAXES.

 

(II)   “REVERSE VESTING” MEANS THAT AN OPTION IS OR WAS FULLY EXERCISABLE BUT
THAT, SUBJECT TO A “REVERSE” VESTING SCHEDULE, THE COMPANY HAS A RIGHT TO
REPURCHASE THE OPTION SHARES AS SPECIFIED IN SECTION 16.2(A), WITH THE COMPANY’S
RIGHT OF REPURCHASE EXPIRING IN ACCORDANCE WITH A “FORWARD” VESTING SCHEDULE
THAT WOULD OTHERWISE HAVE APPLIED TO THE OPTION UNDER WHICH THE OPTION SHARES
WERE PURCHASED OR IN ACCORDANCE WITH SOME OTHER VESTING SCHEDULE DESCRIBED IN
THE AWARD AGREEMENT.

 

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(JJ)   “RULE 16B-3” MEANS RULE 16B-3 ADOPTED UNDER SECTION 16(B) OF THE EXCHANGE
ACT.

 

(KK) “SECURITIES ACT” MEANS THE SECURITIES ACT OF 1933.

 

(LL)   “SHARE” MEANS A SHARE OF THE COMMON STOCK OF THE COMPANY OR OTHER
SECURITIES SUBSTITUTED FOR THE COMMON STOCK UNDER SECTION 10.

 

(MM)   “STOCK AWARD” MEANS AN OFFER BY THE COMPANY TO SELL SHARES SUBJECT TO
CERTAIN RESTRICTIONS PURSUANT TO THE AWARD AGREEMENT AS DESCRIBED IN SECTION 8. 
A STOCK AWARD DOES NOT INCLUDE AN OPTION.

 

(NN) “SUBSTITUTE AWARD” MEANS A SUBSTITUTE OPTION OR SUBSTITUTE STOCK AWARD
GRANTED IN ACCORDANCE WITH THE TERMS OF THIS PLAN.

 

(OO) “SUBSTITUTE OPTION” MEANS AN OPTION GRANTED IN SUBSTITUTION FOR, OR UPON
THE CONVERSION OF, AN OPTION GRANTED BY ANOTHER ENTITY TO PURCHASE EQUITY
SECURITIES IN THE GRANTING ENTITY.

 

(PP) “SUBSTITUTE STOCK AWARD” MEANS A STOCK AWARD GRANTED IN SUBSTITUTION FOR,
OR UPON THE CONVERSION OF, A STOCK AWARD GRANTED BY ANOTHER ENTITY TO PURCHASE
EQUITY SECURITIES IN THE GRANTING ENTITY.

 

(QQ) “TEN PERCENT SHAREHOLDER” MEANS ANY PERSON WHO, DIRECTLY OR BY ATTRIBUTION
UNDER SECTION 424(D) OF THE CODE, OWNS STOCK POSSESSING MORE THAN TEN PERCENT OF
THE TOTAL COMBINED VOTING POWER OF ALL CLASSES OF STOCK OF THE COMPANY OR OF ANY
AFFILIATE ON THE GRANT DATE.

 

(RR)   “TERMINATION” MEANS THAT THE AWARDEE HAS CEASED TO BE, WITH OR WITHOUT
ANY CAUSE OR REASON, AN EMPLOYEE, DIRECTOR OR CONSULTANT.  HOWEVER, UNLESS SO
DETERMINED BY THE ADMINISTRATOR, OR OTHERWISE PROVIDED IN THIS PLAN,
“TERMINATION” SHALL NOT INCLUDE A CHANGE IN STATUS FROM AN EMPLOYEE, CONSULTANT
OR DIRECTOR TO ANOTHER SUCH STATUS.  AN EVENT THAT CAUSES AN AFFILIATE TO CEASE
BEING AN AFFILIATE SHALL BE TREATED AS THE “TERMINATION” OF THAT AFFILIATE’S
EMPLOYEES, DIRECTORS, AND CONSULTANTS.

 

2.2          RULES OF INTERPRETATION.  ANY REFERENCE TO A “SECTION,” WITHOUT
MORE, IS TO A SECTION OF THIS PLAN.  CAPTIONS AND TITLES ARE USED FOR
CONVENIENCE IN THIS PLAN AND SHALL NOT, BY THEMSELVES, DETERMINE THE MEANING OF
THIS PLAN.  EXCEPT WHEN OTHERWISE INDICATED BY THE CONTEXT, THE SINGULAR
INCLUDES THE PLURAL AND VICE VERSA.  ANY REFERENCE TO A STATUTE IS ALSO A
REFERENCE TO THE APPLICABLE RULES AND REGULATIONS ADOPTED UNDER THAT STATUTE. 
ANY REFERENCE TO A STATUTE, RULE OR REGULATION, OR TO A SECTION OF A STATUTE,
RULE OR REGULATION, IS A REFERENCE TO THAT STATUTE, RULE, REGULATION, OR SECTION
AS AMENDED FROM TIME TO TIME, BOTH BEFORE AND AFTER THE EFFECTIVE DATE OF THIS
PLAN AND INCLUDING ANY SUCCESSOR PROVISIONS.

 

3.             SHARES SUBJECT TO THIS PLAN; TERM OF THIS PLAN

 

3.1          Number of Award Shares.  The Shares issuable under this Plan shall
be authorized but unissued or reacquired Shares, including but not limited to
Shares repurchased by the Company on the open market.  Subject to adjustment
under Section 10, the maximum number of Shares that may be issued under this
Plan is 6,750,000.  When an Award is granted, the maximum number of Shares that
may be issued under this Plan shall be reduced by the number of Shares covered
by that Award.  However, if an Award later terminates or expires without having
been exercised in full, the maximum number of shares that may be issued under
this Plan shall be increased by the number of Shares that were covered by, but
not purchased under, that Award.  By contrast, the repurchase of Shares by the
Company shall not increase the maximum number of Shares that may be issued under
this Plan.

 

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3.2          TERM OF THIS PLAN.

 

(A)           THIS PLAN SHALL BE EFFECTIVE ON, AND AWARDS MAY BE GRANTED UNDER
THIS PLAN AFTER, THE DATE IT HAS BEEN BOTH ADOPTED BY THE BOARD AND APPROVED BY
THE COMPANY’S SHAREHOLDERS (THE “EFFECTIVE DATE”).

 

(B)           SUBJECT TO THE PROVISIONS OF SECTION 14, AWARDS MAY BE GRANTED
UNDER THIS PLAN FOR A PERIOD OF TEN YEARS FROM THE EARLIER OF THE DATE ON WHICH
THE BOARD APPROVES THIS PLAN AND THE DATE THE COMPANY’S SHAREHOLDERS APPROVE
THIS PLAN.  ACCORDINGLY, AWARDS MAY NOT BE GRANTED UNDER THIS PLAN AFTER TEN
YEARS FROM THE EARLIER OF THOSE DATES.

 

4.             ADMINISTRATION

 

4.1          GENERAL.

 

(A)           THE BOARD SHALL HAVE ULTIMATE RESPONSIBILITY FOR ADMINISTERING
THIS PLAN.  THE BOARD MAY DELEGATE CERTAIN OF ITS RESPONSIBILITIES TO A
COMMITTEE, WHICH SHALL CONSIST OF AT LEAST TWO MEMBERS OF THE BOARD.  THE BOARD
OR THE COMMITTEE MAY FURTHER DELEGATE ITS RESPONSIBILITIES TO ANY EMPLOYEE OF
THE COMPANY OR ANY AFFILIATE.  WHERE THIS PLAN SPECIFIES THAT AN ACTION IS TO BE
TAKEN OR A DETERMINATION MADE BY THE BOARD, ONLY THE BOARD MAY TAKE THAT ACTION
OR MAKE THAT DETERMINATION.  WHERE THIS PLAN SPECIFIES THAT AN ACTION IS TO BE
TAKEN OR A DETERMINATION MADE BY THE COMMITTEE, ONLY THE COMMITTEE MAY TAKE THAT
ACTION OR MAKE THAT DETERMINATION.  WHERE THIS PLAN REFERENCES THE
“ADMINISTRATOR,” THE ACTION MAY BE TAKEN OR DETERMINATION MADE BY THE BOARD, THE
COMMITTEE, OR OTHER ADMINISTRATOR.  HOWEVER, ONLY THE BOARD OR THE COMMITTEE MAY
APPROVE GRANTS OF AWARDS TO EXECUTIVES AND SUCH OTHER PARTICIPANTS AS MAY BE
SPECIFICALLY DESIGNATED BY THE BOARD, AND AN ADMINISTRATOR OTHER THAN THE BOARD
OR THE COMMITTEE MAY GRANT AWARDS ONLY WITHIN GUIDELINES ESTABLISHED BY THE
BOARD OR COMMITTEE.  MOREOVER, ALL ACTIONS AND DETERMINATIONS BY ANY
ADMINISTRATOR ARE SUBJECT TO THE PROVISIONS OF THIS PLAN.

 

(B)           SO LONG AS THE COMPANY HAS REGISTERED AND OUTSTANDING A CLASS OF
EQUITY SECURITIES UNDER SECTION 12 OF THE EXCHANGE ACT, THE COMMITTEE SHALL
CONSIST OF COMPANY DIRECTORS WHO ARE “NON-EMPLOYEE DIRECTORS” AS DEFINED IN
RULE 16B-3 AND, AFTER THE EXPIRATION OF ANY TRANSITION PERIOD PERMITTED BY
TREASURY REGULATIONS SECTION 1.162-27(H)(3), WHO ARE “OUTSIDE DIRECTORS” AS
DEFINED IN SECTION 162(M) OF THE CODE.

 

4.2          AUTHORITY OF THE ADMINISTRATOR.  SUBJECT TO THE OTHER PROVISIONS OF
THIS PLAN, THE ADMINISTRATOR SHALL HAVE THE AUTHORITY TO:

 

(A)           GRANT AWARDS, INCLUDING SUBSTITUTE AWARDS;

 

(B)           DETERMINE THE FAIR MARKET VALUE OF SHARES;

 

(C)           DETERMINE THE OPTION PRICE AND THE PURCHASE PRICE OF AWARDS;

 

(D)           SELECT THE AWARDEES;

 

(E)           DETERMINE THE TIMES AWARDS ARE GRANTED;

 

(F)            DETERMINE THE NUMBER OF SHARES SUBJECT TO EACH AWARD;

 

(G)           DETERMINE THE METHODS OF PAYMENT THAT MAY BE USED TO PURCHASE
AWARD SHARES;

 

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(H)           DETERMINE THE METHODS OF PAYMENT THAT MAY BE USED TO SATISFY
WITHHOLDING TAX OBLIGATIONS;

 

(I)            DETERMINE THE OTHER TERMS OF EACH AWARD, INCLUDING BUT NOT
LIMITED TO THE TIME OR TIMES AT WHICH AWARDS MAY BE EXERCISED, WHETHER AND UNDER
WHAT CONDITIONS AN AWARD IS ASSIGNABLE, AND WHETHER AN OPTION IS A NONSTATUTORY
OPTION OR AN INCENTIVE STOCK OPTION;

 

(J)            MODIFY OR AMEND ANY AWARD;

 

(K)           AUTHORIZE ANY PERSON TO SIGN ANY AWARD AGREEMENT OR OTHER DOCUMENT
RELATED TO THIS PLAN ON BEHALF OF THE COMPANY;

 

(L)            DETERMINE THE FORM OF ANY AWARD AGREEMENT OR OTHER DOCUMENT
RELATED TO THIS PLAN, AND WHETHER THAT DOCUMENT, INCLUDING SIGNATURES, MAY BE IN
ELECTRONIC FORM;

 

(M)          INTERPRET THIS PLAN AND ANY AWARD AGREEMENT OR DOCUMENT RELATED TO
THIS PLAN;

 

(N)           CORRECT ANY DEFECT, REMEDY ANY OMISSION, OR RECONCILE ANY
INCONSISTENCY IN THIS PLAN, ANY AWARD AGREEMENT OR ANY OTHER DOCUMENT RELATED TO
THIS PLAN;

 

(O)           ADOPT, AMEND, AND REVOKE RULES AND REGULATIONS UNDER THIS PLAN,
INCLUDING RULES AND REGULATIONS RELATING TO SUB-PLANS AND PLAN ADDENDA;

 

(P)           ADOPT, AMEND, AND REVOKE SPECIAL RULES AND PROCEDURES WHICH MAY BE
INCONSISTENT WITH THE TERMS OF THIS PLAN, SET FORTH (IF THE ADMINISTRATOR SO
CHOOSES) IN SUB-PLANS REGARDING (FOR EXAMPLE) THE OPERATION AND ADMINISTRATION
OF THIS PLAN AND THE TERMS OF AWARDS, IF AND TO THE EXTENT NECESSARY OR USEFUL
TO ACCOMMODATE NON-U.S. APPLICABLE LAWS AND PRACTICES AS THEY APPLY TO AWARDS
AND AWARD SHARES HELD BY, OR GRANTED OR ISSUED TO, PERSONS WORKING OR RESIDENT
OUTSIDE OF THE UNITED STATES OR EMPLOYED BY AFFILIATES INCORPORATED OUTSIDE THE
UNITED STATES;

 

(Q)           IN THE CASE OF THE BOARD, DETERMINE WHETHER A TRANSACTION OR EVENT
SHOULD BE TREATED AS A CHANGE IN CONTROL, A DIVESTITURE OR NEITHER;

 

(R)            DETERMINE THE EFFECT OF A FUNDAMENTAL TRANSACTION AND, IF THE
BOARD DETERMINES THAT A TRANSACTION OR EVENT SHOULD BE TREATED AS A CHANGE IN
CONTROL OR A DIVESTITURE, THEN THE EFFECT OF THAT CHANGE IN CONTROL OR
DIVESTITURE; AND

 

(S)           MAKE ALL OTHER DETERMINATIONS THE ADMINISTRATOR DEEMS NECESSARY OR
ADVISABLE FOR THE ADMINISTRATION OF THIS PLAN.

 

4.3          SCOPE OF DISCRETION.  SUBJECT TO THE LAST SENTENCE OF THIS
SECTION 4.3, ON ALL MATTERS FOR WHICH THIS PLAN CONFERS THE AUTHORITY, RIGHT OR
POWER ON THE BOARD, THE COMMITTEE, OR OTHER ADMINISTRATOR TO MAKE DECISIONS,
THAT BODY MAY MAKE THOSE DECISIONS.  THOSE DECISIONS WILL BE FINAL, BINDING AND
CONCLUSIVE.  MOREOVER, BUT AGAIN SUBJECT TO THE LAST SENTENCE OF THIS
SECTION 4.3, IN MAKING THOSE DECISIONS, THE BOARD, COMMITTEE OR OTHER
ADMINISTRATOR NEED NOT TREAT ALL PERSONS ELIGIBLE TO RECEIVE AWARDS, ALL
AWARDEES, ALL AWARDS OR ALL AWARD SHARES THE SAME WAY.  HOWEVER, EXCEPT AS
PROVIDED IN SECTION 14.3, THE DISCRETION OF THE BOARD, COMMITTEE OR OTHER
ADMINISTRATOR IS SUBJECT TO THE SPECIFIC PROVISIONS AND SPECIFIC LIMITATIONS OF
THIS PLAN, AS WELL AS ALL RIGHTS CONFERRED ON SPECIFIC AWARDEES BY AWARD
AGREEMENTS AND OTHER AGREEMENTS.

 

5.             PARTICIPANTS ELIGIBLE TO RECEIVE AWARDS

 

5.1          ELIGIBLE PARTICIPANTS.  AWARDS (INCLUDING SUBSTITUTE AWARDS) MAY BE
GRANTED TO, AND ONLY TO, EMPLOYEES, DIRECTORS AND CONSULTANTS, INCLUDING TO
PROSPECTIVE EMPLOYEES, DIRECTORS AND CONSULTANTS CONDITIONED ON THE BEGINNING OF
THEIR SERVICE FOR THE COMPANY OR AN AFFILIATE.  HOWEVER, INCENTIVE STOCK OPTIONS
MAY ONLY BE GRANTED TO EMPLOYEES, AS PROVIDED IN SECTION 7(G).

 

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5.2          SECTION 162(M) LIMITATION.

 

(A)           OPTIONS.  SO LONG AS THE COMPANY IS A “PUBLICLY HELD CORPORATION”
WITHIN THE MEANING OF SECTION 162(M) OF THE CODE: (I) NO EMPLOYEE MAY BE GRANTED
ONE OR MORE OPTIONS WITHIN ANY FISCAL YEAR OF THE COMPANY UNDER THIS PLAN TO
PURCHASE MORE THAN 500,000 SHARES UNDER OPTIONS, SUBJECT TO ADJUSTMENT PURSUANT
TO SECTION 10, (II) OPTIONS MAY BE GRANTED TO AN EXECUTIVE ONLY BY THE COMMITTEE
(AND, NOTWITHSTANDING SECTION 4.1(A), NOT BY THE BOARD).  IF AN OPTION IS
CANCELLED WITHOUT BEING EXERCISED OR IF THE OPTION PRICE OF AN OPTION IS
REDUCED, THAT CANCELLED OR REPRICED OPTION SHALL CONTINUE TO BE COUNTED AGAINST
THE LIMIT ON AWARDS THAT MAY BE GRANTED TO ANY PARTICIPANT UNDER THIS
SECTION 5.2.  NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IN CONNECTION
WITH HIS OR HER INITIAL EMPLOYMENT WITH THE COMPANY OR AN AFFILIATE, A NEW
EMPLOYEE OR PROSPECTIVE EMPLOYEE SHALL BE ELIGIBLE TO RECEIVE UP TO A MAXIMUM OF
750,000 SHARES UNDER OPTIONS (SUBJECT TO ADJUSTMENT PURSUANT TO SECTION 10),
WHICH SHARES SHALL NOT BE COUNTED TOWARD THE 500,000 LIMITATION SET FORTH IN
THIS SECTION 5.2(A).

 

(B)           STOCK AWARDS.  ANY STOCK AWARD INTENDED AS “QUALIFIED
PERFORMANCE-BASED COMPENSATION” WITHIN THE MEANING OF SECTION 162(M) OF THE CODE
MUST VEST OR BECOME EXERCISABLE CONTINGENT ON THE ACHIEVEMENT OF ONE OR MORE
OBJECTIVELY DETERMINABLE PERFORMANCE CONDITIONS.  THE COMMITTEE SHALL HAVE THE
DISCRETION TO DETERMINE THE TIME AND MANNER OF COMPLIANCE WITH SECTION 162(M) OF
THE CODE.

 

6.             TERMS AND CONDITIONS OF OPTIONS

 

The following rules apply to all Options:

 

6.1          PRICE.  NO OPTION INTENDED AS “QUALIFIED INCENTIVE-BASED
COMPENSATION” WITHIN THE MEANING OF SECTION 162(M) OF THE CODE MAY HAVE AN
OPTION PRICE LESS THAN 100% OF THE FAIR MARKET VALUE OF THE SHARES ON THE GRANT
DATE.  IN NO EVENT WILL THE OPTION PRICE OF ANY OPTION BE LESS THAN THE PAR
VALUE OF THE SHARES ISSUABLE UNDER THE OPTION IF THAT IS REQUIRED BY APPLICABLE
LAW.  THE OPTION PRICE OF AN INCENTIVE STOCK OPTION SHALL BE SUBJECT TO
SECTION 7(F).

 

6.2          TERM.  NO OPTION SHALL BE EXERCISABLE AFTER ITS EXPIRATION DATE. 
NO OPTION MAY HAVE AN EXPIRATION DATE THAT IS MORE THAN TEN YEARS AFTER ITS
GRANT DATE.  ADDITIONAL PROVISIONS REGARDING THE TERM OF INCENTIVE STOCK OPTIONS
ARE PROVIDED IN SECTIONS 7(A) AND 7(E).

 

6.3          VESTING.  OPTIONS SHALL BE EXERCISABLE: (A) ON THE GRANT DATE, OR
(B) IN ACCORDANCE WITH A SCHEDULE RELATED TO THE GRANT DATE, THE DATE THE
AWARDEE’S DIRECTORSHIP, EMPLOYMENT OR CONSULTANCY BEGINS, OR A DIFFERENT DATE
SPECIFIED IN THE AWARD AGREEMENT.  IF SO PROVIDED IN THE AWARD AGREEMENT, AN
OPTION MAY BE EXERCISABLE SUBJECT TO THE APPLICATION OF REVERSE VESTING TO THE
OPTION SHARES.  ADDITIONAL PROVISIONS REGARDING THE VESTING OF INCENTIVE STOCK
OPTIONS ARE PROVIDED IN SECTION 7(C).  NO OPTION GRANTED TO AN INDIVIDUAL WHO IS
SUBJECT TO THE OVERTIME PAY PROVISIONS OF THE FAIR LABOR STANDARDS ACT MAY BE
EXERCISED BEFORE THE EXPIRATION OF SIX MONTHS AFTER THE GRANT DATE.

 

6.4          FORM AND METHOD OF PAYMENT.

 

(A)           THE ADMINISTRATOR SHALL DETERMINE THE ACCEPTABLE FORM AND METHOD
OF PAYMENT FOR EXERCISING AN OPTION.

 

(B)           ACCEPTABLE FORMS OF PAYMENT FOR ALL OPTION SHARES ARE CASH, CHECK
OR WIRE TRANSFER, DENOMINATED IN U.S. DOLLARS EXCEPT AS SPECIFIED BY THE
ADMINISTRATOR FOR NON-U.S. EMPLOYEES OR NON-U.S. SUB-PLANS.

 

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(C)           IN ADDITION, THE ADMINISTRATOR MAY PERMIT PAYMENT TO BE MADE BY
ANY OF THE FOLLOWING METHODS:

 

(I)            OTHER SHARES, OR THE DESIGNATION OF OTHER SHARES, WHICH (A) ARE
“MATURE” SHARES FOR PURPOSES OF AVOIDING VARIABLE ACCOUNTING TREATMENT UNDER
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GENERALLY MATURE SHARES ARE THOSE THAT
HAVE BEEN OWNED BY THE AWARDEE FOR MORE THAN SIX MONTHS ON THE DATE OF
SURRENDER), AND (B) HAVE A FAIR MARKET VALUE ON THE DATE OF SURRENDER EQUAL TO
THE OPTION PRICE OF THE SHARES AS TO WHICH THE OPTION IS BEING EXERCISED;

 

(II)           PROVIDED THAT A PUBLIC MARKET EXISTS FOR THE SHARES,
CONSIDERATION RECEIVED BY THE COMPANY UNDER A PROCEDURE UNDER WHICH A LICENSED
BROKER-DEALER ADVANCES FUNDS ON BEHALF OF AN AWARDEE OR SELLS OPTION SHARES ON
BEHALF OF AN AWARDEE (A “CASHLESS EXERCISE PROCEDURE”), PROVIDED THAT IF THE
COMPANY EXTENDS OR ARRANGES FOR THE EXTENSION OF CREDIT TO AN AWARDEE UNDER ANY
CASHLESS EXERCISE PROCEDURE, NO OFFICER OR DIRECTOR MAY PARTICIPATE IN THAT
CASHLESS EXERCISE PROCEDURE;

 

(III)          SUBJECT TO SECTION 6.4(E), ONE OR MORE PROMISSORY NOTES MEETING
THE REQUIREMENTS OF SECTION 6.4(E) PROVIDED, HOWEVER, THAT PROMISSORY NOTES MAY
NOT BE USED FOR ANY PORTION OF AN AWARD WHICH IS NOT VESTED AT THE TIME OF
EXERCISE;

 

(IV)          CANCELLATION OF ANY DEBT OWED BY THE COMPANY OR ANY AFFILIATE TO
THE AWARDEE INCLUDING WITHOUT LIMITATION WAIVER OF COMPENSATION DUE OR ACCRUED
FOR SERVICES PREVIOUSLY RENDERED TO THE COMPANY OR AN AFFILIATE; AND

 

(V)           ANY COMBINATION OF THE METHODS OF PAYMENT PERMITTED BY ANY
PARAGRAPH OF THIS SECTION 6.4.

 

(D)           THE ADMINISTRATOR MAY ALSO PERMIT ANY OTHER FORM OR METHOD OF
PAYMENT FOR OPTION SHARES PERMITTED BY APPLICABLE LAW.

 

(E)           THE PROMISSORY NOTES REFERRED TO IN SECTION 6.4(C)(III) SHALL BE
FULL RECOURSE.  UNLESS THE ADMINISTRATOR SPECIFIES OTHERWISE AFTER TAKING INTO
ACCOUNT ANY RELEVANT ACCOUNTING ISSUES, THE PROMISSORY NOTES SHALL BEAR INTEREST
AT A FAIR MARKET VALUE RATE WHEN THE OPTION IS EXERCISED.  INTEREST ON THE
PROMISSORY NOTES SHALL ALSO BE AT LEAST SUFFICIENT TO AVOID IMPUTATION OF
INTEREST UNDER SECTIONS 483, 1274, AND 7872 OF THE CODE.  THE PROMISSORY NOTES
AND THEIR ADMINISTRATION SHALL AT ALL TIMES COMPLY WITH ANY APPLICABLE MARGIN
RULES OF THE FEDERAL RESERVE.  THE PROMISSORY NOTES MAY ALSO INCLUDE SUCH OTHER
TERMS AS THE ADMINISTRATOR SPECIFIES.  PAYMENT MAY NOT BE MADE BY PROMISSORY
NOTE BY OFFICERS OR DIRECTORS IF SHARES ARE REGISTERED UNDER SECTION 12 OF THE
EXCHANGE ACT.

 

6.5          ASSIGNABILITY OF OPTIONS.  EXCEPT AS DETERMINED BY THE
ADMINISTRATOR, NO OPTION SHALL BE ASSIGNABLE OR OTHERWISE TRANSFERABLE BY THE
AWARDEE EXCEPT BY WILL OR BY THE LAWS OF DESCENT AND DISTRIBUTION.  HOWEVER,
OPTIONS MAY BE TRANSFERRED AND EXERCISED IN ACCORDANCE WITH A DOMESTIC RELATIONS
ORDER AND MAY BE EXERCISED BY A GUARDIAN OR CONSERVATOR APPOINTED TO ACT FOR THE
AWARDEE.  INCENTIVE STOCK OPTIONS MAY ONLY BE ASSIGNED IN COMPLIANCE WITH
SECTION 7(H).

 

6.6          SUBSTITUTE OPTIONS.  THE BOARD MAY CAUSE THE COMPANY TO GRANT
SUBSTITUTE OPTIONS IN CONNECTION WITH THE ACQUISITION BY THE COMPANY OR AN
AFFILIATE OF EQUITY SECURITIES OF ANY ENTITY (INCLUDING BY MERGER, TENDER OFFER,
OR OTHER SIMILAR TRANSACTION) OR OF ALL OR A PORTION OF THE ASSETS OF ANY
ENTITY.  ANY SUCH SUBSTITUTION SHALL BE EFFECTIVE ON THE EFFECTIVE DATE OF THE
ACQUISITION.  SUBSTITUTE OPTIONS MAY BE NONSTATUTORY OPTIONS OR INCENTIVE STOCK
OPTIONS.  UNLESS AND TO THE EXTENT SPECIFIED OTHERWISE BY THE BOARD, SUBSTITUTE
OPTIONS SHALL HAVE THE SAME TERMS AND CONDITIONS AS THE OPTIONS THEY REPLACE,
EXCEPT THAT (SUBJECT TO THE PROVISIONS OF SECTION 10) SUBSTITUTE OPTIONS SHALL
BE OPTIONS TO PURCHASE SHARES RATHER THAN EQUITY SECURITIES OF THE GRANTING
ENTITY AND SHALL HAVE AN OPTION PRICE DETERMINED BY THE BOARD.

 

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7.             INCENTIVE STOCK OPTIONS

 

The following rules apply only to Incentive Stock Options and only to the extent
these rules are more restrictive than the rules that would otherwise apply under
this Plan.  With the consent of the Awardee, or where this Plan provides that an
action may be taken notwithstanding any other provision of this Plan, the
Administrator may deviate from the requirements of this Section, notwithstanding
that any Incentive Stock Option modified by the Administrator will thereafter be
treated as a Nonstatutory Option.

 

(A)           THE EXPIRATION DATE OF AN INCENTIVE STOCK OPTION SHALL NOT BE
LATER THAN TEN YEARS FROM ITS GRANT DATE, WITH THE RESULT THAT NO INCENTIVE
STOCK OPTION MAY BE EXERCISED AFTER THE EXPIRATION OF TEN YEARS FROM ITS GRANT
DATE.

 

(B)           NO INCENTIVE STOCK OPTION MAY BE GRANTED MORE THAN TEN YEARS FROM
THE DATE THIS PLAN WAS APPROVED BY THE BOARD.

 

(C)           OPTIONS INTENDED TO BE INCENTIVE STOCK OPTIONS UNDER SECTION 422
OF THE CODE THAT ARE GRANTED TO ANY SINGLE AWARDEE UNDER ALL INCENTIVE STOCK
OPTION PLANS OF THE COMPANY AND ITS AFFILIATES, INCLUDING INCENTIVE STOCK
OPTIONS GRANTED UNDER THIS PLAN, MAY NOT VEST AT A RATE OF MORE THAN $100,000
(OR SUCH OTHER AMOUNT THAT MAY BE HEREAFTER SPECIFIED IN THE APPLICABLE SECTION
OF THE CODE) IN FAIR MARKET VALUE OF STOCK (MEASURED ON THE GRANT DATES OF THE
OPTIONS) DURING ANY CALENDAR YEAR.  FOR THIS PURPOSE, AN OPTION VESTS WITH
RESPECT TO A GIVEN SHARE OF STOCK THE FIRST TIME ITS HOLDER MAY PURCHASE THAT
SHARE, NOTWITHSTANDING ANY RIGHT OF THE COMPANY TO REPURCHASE THAT SHARE. 
UNLESS THE ADMINISTRATOR OF THAT OPTION PLAN SPECIFIES OTHERWISE IN THE RELATED
AGREEMENT GOVERNING THE OPTION, THIS VESTING LIMITATION SHALL BE APPLIED BY, TO
THE EXTENT NECESSARY TO SATISFY THIS $100,000 (OR OTHER AMOUNT) RULE, BY
TREATING CERTAIN STOCK OPTIONS THAT WERE INTENDED TO BE INCENTIVE STOCK OPTIONS
UNDER SECTION 422 OF THE CODE AS NONSTATUTORY OPTIONS.  THE STOCK OPTIONS OR
PORTIONS OF STOCK OPTIONS TO BE RECLASSIFIED AS NONSTATUTORY OPTIONS ARE THOSE
WITH THE HIGHEST OPTION PRICES, WHETHER GRANTED UNDER THIS PLAN OR ANY OTHER
EQUITY COMPENSATION PLAN OF THE COMPANY OR ANY AFFILIATE THAT PERMITS THAT
TREATMENT.  THIS SECTION 7(C) SHALL NOT CAUSE AN INCENTIVE STOCK OPTION TO VEST
BEFORE ITS ORIGINAL VESTING DATE OR CAUSE AN INCENTIVE STOCK OPTION THAT HAS
ALREADY VESTED TO CEASE TO BE VESTED.

 

(D)           IN ORDER FOR AN INCENTIVE STOCK OPTION TO BE EXERCISED FOR ANY
FORM OF PAYMENT OTHER THAN THOSE DESCRIBED IN SECTION 6.4(B), THAT FORM OF
PAYMENT MUST BE STATED AT THE TIME OF GRANT IN THE AWARD AGREEMENT RELATING TO
THAT INCENTIVE STOCK OPTION.

 

(E)           ANY INCENTIVE STOCK OPTION GRANTED TO A TEN PERCENT SHAREHOLDER
MUST HAVE AN EXPIRATION DATE THAT IS NOT LATER THAN FIVE YEARS FROM ITS GRANT
DATE, WITH THE RESULT THAT NO SUCH OPTION MAY BE EXERCISED AFTER THE EXPIRATION
OF FIVE YEARS FROM THE GRANT DATE.

 

(F)            THE OPTION PRICE OF AN INCENTIVE STOCK OPTION SHALL NEVER BE LESS
THAN THE FAIR MARKET VALUE OF THE SHARES AT THE GRANT DATE.  THE OPTION PRICE
FOR THE SHARES COVERED BY AN INCENTIVE STOCK OPTION GRANTED TO A TEN PERCENT
SHAREHOLDER SHALL NEVER BE LESS THAN 110% OF THE FAIR MARKET VALUE OF THE SHARES
AT THE GRANT DATE.

 

(G)           INCENTIVE STOCK OPTIONS MAY BE GRANTED ONLY TO EMPLOYEES.  IF AN
AWARDEE CHANGES STATUS FROM AN EMPLOYEE TO A CONSULTANT, THAT AWARDEE’S
INCENTIVE STOCK OPTIONS BECOME NONSTATUTORY OPTIONS IF NOT EXERCISED WITHIN THE
TIME PERIOD DESCRIBED IN SECTION 7(I) (DETERMINED BY TREATING THAT CHANGE IN
STATUS AS A TERMINATION SOLELY FOR PURPOSES OF THIS SECTION 7(G)).

 

(H)           NO RIGHTS UNDER AN INCENTIVE STOCK OPTION MAY BE TRANSFERRED BY
THE AWARDEE, OTHER THAN BY WILL OR THE LAWS OF DESCENT AND DISTRIBUTION.  DURING
THE LIFE OF THE AWARDEE, AN INCENTIVE STOCK OPTION MAY BE EXERCISED ONLY BY THE
AWARDEE.  THE COMPANY’S COMPLIANCE WITH A DOMESTIC RELATIONS ORDER, OR THE
EXERCISE OF AN INCENTIVE STOCK OPTION BY A GUARDIAN OR CONSERVATOR APPOINTED TO
ACT FOR THE AWARDEE, SHALL NOT VIOLATE THIS SECTION 7(H).

 

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(I)            AN INCENTIVE STOCK OPTION SHALL BE TREATED AS A NONSTATUTORY
OPTION IF IT REMAINS EXERCISABLE AFTER, AND IS NOT EXERCISED WITHIN, THE
THREE-MONTH PERIOD BEGINNING WITH THE AWARDEE’S TERMINATION FOR ANY REASON OTHER
THAN THE AWARDEE’S DEATH OR DISABILITY (AS DEFINED IN SECTION 22(E) OF THE
CODE).  IN THE CASE OF TERMINATION DUE TO DEATH, AN INCENTIVE STOCK OPTION SHALL
CONTINUE TO BE TREATED AS AN INCENTIVE STOCK OPTION IF IT REMAINS EXERCISABLE
AFTER, AND IS NOT EXERCISED WITHIN, THE THREE-MONTH PERIOD AFTER THE AWARDEE’S
TERMINATION PROVIDED IT IS EXERCISED BEFORE THE EXPIRATION DATE.  IN THE CASE OF
TERMINATION DUE TO DISABILITY, AN INCENTIVE STOCK OPTION SHALL BE TREATED AS A
NONSTATUTORY OPTION IF IT REMAINS EXERCISABLE AFTER, AND IS NOT EXERCISED
WITHIN, ONE YEAR AFTER THE AWARDEE’S TERMINATION.

 

(J)            AN INCENTIVE STOCK OPTION MAY ONLY BE MODIFIED BY THE BOARD OR
THE COMMITTEE.

 

8.             STOCK AWARDS

 

8.1          GENERAL.  THE SPECIFIC TERMS AND CONDITIONS OF A STOCK AWARD
APPLICABLE TO THE AWARDEE SHALL BE PROVIDED FOR IN THE AWARD AGREEMENT. THE
AWARD AGREEMENT SHALL STATE THE NUMBER OF SHARES THAT THE AWARDEE SHALL BE
ENTITLED TO RECEIVE OR PURCHASE, THE TERMS AND CONDITIONS ON WHICH THE SHARES
SHALL VEST, THE PRICE TO BE PAID AND, IF APPLICABLE, THE TIME WITHIN WHICH THE
AWARDEE MUST ACCEPT SUCH OFFER. THE OFFER SHALL BE ACCEPTED BY EXECUTION OF THE
AWARD AGREEMENT.  THE ADMINISTRATOR MAY REQUIRE THAT ALL SHARES SUBJECT TO A
RIGHT OF REPURCHASE OR RISK OF FORFEITURE BE HELD IN ESCROW UNTIL SUCH
REPURCHASE RIGHT OR RISK OF FORFEITURE LAPSES.  THE GRANT OR VESTING OF A STOCK
AWARD MAY BE MADE CONTINGENT ON THE ACHIEVEMENT OF OBJECTIVELY DETERMINABLE
PERFORMANCE CONDITIONS.

 

8.2          RIGHT OF REPURCHASE.  IF SO PROVIDED IN THE AWARD AGREEMENT, AWARD
SHARES ACQUIRED PURSUANT TO A STOCK AWARD MAY BE SUBJECT TO REPURCHASE BY THE
COMPANY OR AN AFFILIATE IF NOT VESTED IN ACCORDANCE WITH THE AWARD AGREEMENT.

 

8.3          FORM OF PAYMENT FOR STOCK AWARDS.  THE ADMINISTRATOR SHALL
DETERMINE THE ACCEPTABLE FORM AND METHOD OF PAYMENT FOR EXERCISING A STOCK
AWARD.  ACCEPTABLE FORMS OF PAYMENT FOR ALL AWARD SHARES ARE CASH, CHECK OR WIRE
TRANSFER, DENOMINATED IN U.S. DOLLARS EXCEPT AS SPECIFIED BY THE ADMINISTRATOR
FOR NON-U.S. EMPLOYEES OR NON-U.S. SUB-PLANS.  IN ADDITION, THE ADMINISTRATOR
MAY PERMIT PAYMENT TO BE MADE BY ANY OF THE METHODS PERMITTED WITH RESPECT TO
THE EXERCISE OF OPTIONS PURSUANT TO SECTION 6.4.

 

8.4          NONASSIGNABILITY OF STOCK AWARDS.  EXCEPT AS DETERMINED BY THE
ADMINISTRATOR, NO STOCK AWARD SHALL BE ASSIGNABLE OR OTHERWISE TRANSFERABLE BY
THE AWARDEE EXCEPT BY WILL OR BY THE LAWS OF DESCENT AND DISTRIBUTION (INCLUDING
WITHOUT LIMITATION SECTION 17).  NOTWITHSTANDING ANYTHING TO THE CONTRARY
HEREIN, STOCK AWARDS MAY BE TRANSFERRED AND EXERCISED IN ACCORDANCE WITH A
DOMESTIC RELATIONS ORDER.

 

8.5          SUBSTITUTE STOCK AWARD.  THE BOARD MAY CAUSE THE COMPANY TO GRANT
SUBSTITUTE STOCK AWARDS IN CONNECTION WITH THE ACQUISITION BY THE COMPANY OR AN
AFFILIATE OF EQUITY SECURITIES OF ANY ENTITY (INCLUDING BY MERGER, TENDER OFFER,
OR OTHER SIMILAR TRANSACTION) OR OF ALL OR A PORTION OF THE ASSETS OF ANY
ENTITY.  ANY SUCH SUBSTITUTION SHALL BE EFFECTIVE ON THE EFFECTIVE DATE OF THE
ACQUISITION.  UNLESS AND TO THE EXTENT SPECIFIED OTHERWISE BY THE BOARD,
SUBSTITUTE STOCK AWARDS SHALL HAVE THE SAME TERMS AND CONDITIONS AS THE STOCK
AWARDS THEY REPLACE, EXCEPT THAT (SUBJECT TO THE PROVISIONS OF SECTION 10)
SUBSTITUTE STOCK AWARDS SHALL BE STOCK AWARDS TO PURCHASE SHARES RATHER THAN
EQUITY SECURITIES OF THE GRANTING ENTITY AND SHALL HAVE A PURCHASE PRICE THAT,
AS DETERMINED BY THE BOARD IN ITS SOLE AND ABSOLUTE DISCRETION, PROPERLY
REFLECTS THE SUBSTITUTION.

 

8.6          MAXIMUM NUMBER OF STOCK AWARDS.  THE MAXIMUM AGGREGATE NUMBER OF
SHARES THAT MAY BE ISSUED PURSUANT TO STOCK AWARDS UNDER THIS PLAN SHALL NOT
EXCEED TEN PERCENT (10%) OF THE NUMBER OF SHARES THAT MAY BE ISSUED PURSUANT TO
THIS PLAN UNDER SECTION 3.1.

 

9.                                      EXERCISE OF AWARDS

 

9.1          IN GENERAL.  AN AWARD SHALL BE EXERCISABLE IN ACCORDANCE WITH THIS
PLAN AND THE AWARD AGREEMENT UNDER WHICH IT IS GRANTED.

 

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9.2          TIME OF EXERCISE.  OPTIONS AND STOCK AWARDS SHALL BE CONSIDERED
EXERCISED WHEN THE COMPANY RECEIVES: (A) WRITTEN NOTICE OF EXERCISE FROM THE
PERSON ENTITLED TO EXERCISE THE OPTION OR STOCK AWARD, (B) FULL PAYMENT, OR
PROVISION FOR PAYMENT, IN A FORM AND METHOD APPROVED BY THE ADMINISTRATOR, FOR
THE SHARES FOR WHICH THE OPTION OR STOCK AWARD IS BEING EXERCISED, AND (C) WITH
RESPECT TO NONSTATUTORY OPTIONS, PAYMENT, OR PROVISION FOR PAYMENT, IN A FORM
APPROVED BY THE ADMINISTRATOR, OF ALL APPLICABLE WITHHOLDING TAXES DUE UPON
EXERCISE.  AN AWARD MAY NOT BE EXERCISED FOR A FRACTION OF A SHARE.

 

9.3          ISSUANCE OF AWARD SHARES.  THE COMPANY SHALL ISSUE AWARD SHARES IN
THE NAME OF THE PERSON PROPERLY EXERCISING THE AWARD.  IF THE AWARDEE IS THAT
PERSON AND SO REQUESTS, THE AWARD SHARES SHALL BE ISSUED IN THE NAME OF THE
AWARDEE AND THE AWARDEE’S SPOUSE.  THE COMPANY SHALL ENDEAVOR TO ISSUE AWARD
SHARES PROMPTLY AFTER AN AWARD IS EXERCISED.  UNTIL AWARD SHARES ARE ACTUALLY
ISSUED, AS EVIDENCED BY THE APPROPRIATE ENTRY ON THE STOCK REGISTER OF THE
COMPANY OR ITS TRANSFER AGENT, THE AWARDEE WILL NOT HAVE THE RIGHTS OF A
SHAREHOLDER WITH RESPECT TO THOSE AWARD SHARES, EVEN THOUGH THE AWARDEE HAS
COMPLETED ALL THE STEPS NECESSARY TO EXERCISE THE AWARD.  NO ADJUSTMENT SHALL BE
MADE FOR ANY DIVIDEND, DISTRIBUTION, OR OTHER RIGHT FOR WHICH THE RECORD DATE
PRECEDES THE DATE THE AWARD SHARES ARE ISSUED, EXCEPT AS PROVIDED IN SECTION 10.

 

9.4          TERMINATION.

 

(A)           IN GENERAL.  EXCEPT AS PROVIDED IN AN AWARD AGREEMENT OR IN
WRITING BY THE ADMINISTRATOR, AND AS OTHERWISE PROVIDED IN SECTIONS 9.4(B), (C),
(D) AND (E) AFTER AN AWARDEE’S TERMINATION, THE AWARDEE’S AWARDS SHALL BE
EXERCISABLE TO THE EXTENT (BUT ONLY TO THE EXTENT) THEY ARE VESTED ON THE DATE
OF THAT TERMINATION AND ONLY DURING THE THREE MONTHS AFTER THE TERMINATION, BUT
IN NO EVENT AFTER THE EXPIRATION DATE.  TO THE EXTENT THE AWARDEE DOES NOT
EXERCISE AN AWARD WITHIN THE TIME SPECIFIED FOR EXERCISE, THE AWARD SHALL
AUTOMATICALLY TERMINATE.

 

(B)           LEAVES OF ABSENCE.  UNLESS OTHERWISE PROVIDED IN THE AWARD
AGREEMENT OR IN WRITING BY THE ADMINISTRATOR, NO AWARD MAY BE EXERCISED MORE
THAN THREE MONTHS AFTER THE BEGINNING OF A LEAVE OF ABSENCE, OTHER THAN A
PERSONAL OR MEDICAL LEAVE APPROVED BY AN AUTHORIZED REPRESENTATIVE OF THE
COMPANY WITH EMPLOYMENT GUARANTEED UPON RETURN.  AWARDS SHALL NOT CONTINUE TO
VEST DURING A LEAVE OF ABSENCE, UNLESS OTHERWISE DETERMINED IN WRITING BY THE
ADMINISTRATOR WITH RESPECT TO AN APPROVED PERSONAL OR MEDICAL LEAVE WITH
EMPLOYMENT GUARANTEED UPON RETURN.

 

(C)           DEATH OR DISABILITY.  UNLESS OTHERWISE PROVIDED IN THE AWARD
AGREEMENT OR IN WRITING BY THE ADMINISTRATOR, IF AN AWARDEE’S TERMINATION IS DUE
TO DEATH OR DISABILITY (AS DETERMINED BY THE ADMINISTRATOR WITH RESPECT TO ALL
AWARDS OTHER THAN INCENTIVE STOCK OPTIONS AND AS DEFINED BY SECTION 22(E) OF THE
CODE WITH RESPECT TO INCENTIVE STOCK OPTIONS), ALL AWARDS OF THAT AWARDEE TO THE
EXTENT EXERCISABLE AT THE DATE OF THAT TERMINATION MAY BE EXERCISED FOR ONE YEAR
AFTER THAT TERMINATION, BUT IN NO EVENT AFTER THE EXPIRATION DATE.  IN THE CASE
OF TERMINATION DUE TO DEATH, AN AWARD MAY BE EXERCISED AS PROVIDED IN
SECTION 17.  IN THE CASE OF TERMINATION DUE TO DISABILITY, IF A GUARDIAN OR
CONSERVATOR HAS BEEN APPOINTED TO ACT FOR THE AWARDEE AND BEEN GRANTED THIS
AUTHORITY AS PART OF THAT APPOINTMENT, THAT GUARDIAN OR CONSERVATOR MAY EXERCISE
THE AWARD ON BEHALF OF THE AWARDEE.  DEATH OR DISABILITY OCCURRING AFTER AN
AWARDEE’S TERMINATION SHALL NOT CAUSE THE TERMINATION TO BE TREATED AS HAVING
OCCURRED DUE TO DEATH OR DISABILITY.  TO THE EXTENT AN AWARD IS NOT SO EXERCISED
WITHIN THE TIME SPECIFIED FOR ITS EXERCISE, THE AWARD SHALL AUTOMATICALLY
TERMINATE.

 

(D)           DIVESTITURE.  IF AN AWARDEE’S TERMINATION IS DUE TO A DIVESTITURE,
THE BOARD MAY TAKE ANY ONE OR MORE OF THE ACTIONS DESCRIBED IN SECTION 10.3 OR
10.4 WITH RESPECT TO THE AWARDEE’S AWARDS.

 

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(E)           TERMINATION FOR CAUSE.  IN THE DISCRETION OF THE ADMINISTRATOR,
WHICH MAY BE EXERCISED ON THE DATE OF GRANT, OR AT A DATE LATER IN TIME, IF AN
AWARDEE’S TERMINATION IS DUE TO CAUSE, ALL OF THE AWARDEE’S AWARDS SHALL
AUTOMATICALLY TERMINATE AND CEASE TO BE EXERCISABLE AT THE TIME OF TERMINATION. 
“CAUSE” MEANS EMPLOYMENT-RELATED DISHONESTY, FRAUD, MISCONDUCT OR DISCLOSURE OR
MISUSE OF CONFIDENTIAL INFORMATION, OR OTHER EMPLOYMENT-RELATED CONDUCT THAT IS
LIKELY TO CAUSE SIGNIFICANT INJURY TO THE COMPANY, AN AFFILIATE, OR ANY OF THEIR
RESPECTIVE EMPLOYEES, OFFICERS OR DIRECTORS (INCLUDING, WITHOUT LIMITATION,
COMMISSION OF A FELONY OR SIMILAR OFFENSE WHETHER OR NOT EMPLOYMENT-RELATED), IN
EACH CASE AS DETERMINED BY THE ADMINISTRATOR.  “CAUSE” SHALL NOT REQUIRE THAT A
CIVIL JUDGMENT OR CRIMINAL CONVICTION HAVE BEEN ENTERED AGAINST OR GUILTY PLEA
SHALL HAVE BEEN MADE BY THE AWARDEE REGARDING ANY OF THE MATTERS REFERRED TO IN
THE PREVIOUS SENTENCE.  ACCORDINGLY, THE ADMINISTRATOR SHALL BE ENTITLED TO
DETERMINE “CAUSE” BASED ON THE ADMINISTRATOR’S GOOD FAITH BELIEF.  IF THE
AWARDEE IS CRIMINALLY CHARGED WITH A FELONY OR SIMILAR OFFENSE, THAT SHALL BE A
SUFFICIENT, BUT NOT A NECESSARY, BASIS FOR SUCH A BELIEF.

 

(F)            ADMINISTRATOR DISCRETION.  NOTWITHSTANDING THE PROVISIONS OF
SECTION 9.4 (A)-(E), THE ADMINISTRATOR SHALL HAVE COMPLETE DISCRETION,
EXERCISABLE EITHER AT THE TIME AN AWARD IS GRANTED OR AT ANY TIME WHILE THE
AWARD REMAINS OUTSTANDING, TO:

 

(I)            EXTEND THE PERIOD OF TIME FOR WHICH THE AWARD IS TO REMAIN
EXERCISABLE, FOLLOWING THE AWARDEE’S TERMINATION, FROM THE LIMITED EXERCISE
PERIOD OTHERWISE IN EFFECT FOR THAT AWARD TO SUCH GREATER PERIOD OF TIME AS THE
ADMINISTRATOR SHALL DEEM APPROPRIATE, BUT IN NO EVENT BEYOND THE EXPIRATION
DATE; AND/OR

 

(II)           PERMIT THE AWARD TO BE EXERCISED, DURING THE APPLICABLE
POST-TERMINATION EXERCISE PERIOD, NOT ONLY WITH RESPECT TO THE NUMBER OF VESTED
SHARES FOR WHICH SUCH AWARD MAY BE EXERCISABLE AT THE TIME OF THE AWARDEE’S
TERMINATION BUT ALSO WITH RESPECT TO ONE OR MORE ADDITIONAL INSTALLMENTS IN
WHICH THE AWARDEE WOULD HAVE VESTED HAD THE AWARDEE NOT BEEN SUBJECT TO
TERMINATION.

 

(G)           CONSULTING OR EMPLOYMENT RELATIONSHIP. NOTHING IN THIS PLAN OR IN
ANY AWARD AGREEMENT, AND NO AWARD OR THE FACT THAT AWARD SHARES REMAIN SUBJECT
TO REPURCHASE RIGHTS, SHALL:  (A) INTERFERE WITH OR LIMIT THE RIGHT OF THE
COMPANY OR ANY AFFILIATE TO TERMINATE THE EMPLOYMENT OR CONSULTANCY OF ANY
AWARDEE AT ANY TIME, WHETHER WITH OR WITHOUT CAUSE OR REASON, AND WITH OR
WITHOUT THE PAYMENT OF SEVERANCE OR ANY OTHER COMPENSATION OR PAYMENT,
(B) INTERFERE WITH THE APPLICATION OF ANY PROVISION IN ANY OF THE COMPANY’S OR
ANY AFFILIATE’S CHARTER DOCUMENTS OR APPLICABLE LAW RELATING TO THE ELECTION,
APPOINTMENT, TERM OF OFFICE, OR REMOVAL OF A DIRECTOR OR (C) INTERFERE WITH THE
COMPANY’S RIGHT TO TERMINATE ANY CONSULTANCY.

 

10.          CERTAIN TRANSACTIONS AND EVENTS

 

10.1        IN GENERAL.  EXCEPT AS PROVIDED IN THIS SECTION 10, NO CHANGE IN THE
CAPITAL STRUCTURE OF THE COMPANY, MERGER, SALE OR OTHER DISPOSITION OF ASSETS OR
A SUBSIDIARY, CHANGE IN CONTROL, ISSUANCE BY THE COMPANY OF SHARES OF ANY CLASS
OF SECURITIES OR SECURITIES CONVERTIBLE INTO SHARES OF ANY CLASS OF SECURITIES,
EXCHANGE OR CONVERSION OF SECURITIES, OR OTHER TRANSACTION OR EVENT SHALL
REQUIRE OR BE THE OCCASION FOR ANY ADJUSTMENTS OF THE TYPE DESCRIBED IN THIS
SECTION 10.  ADDITIONAL PROVISIONS WITH RESPECT TO THE FOREGOING TRANSACTIONS
ARE SET FORTH IN SECTION 14.3.

 

10.2        CHANGES IN CAPITAL STRUCTURE.  IN THE EVENT OF ANY STOCK SPLIT,
REVERSE STOCK SPLIT, RECAPITALIZATION, COMBINATION OR RECLASSIFICATION OF STOCK,
STOCK DIVIDEND, SPIN-OFF, OR SIMILAR CHANGE TO THE CAPITAL STRUCTURE OF THE
COMPANY (NOT INCLUDING A FUNDAMENTAL TRANSACTION OR CHANGE IN CONTROL), THE
BOARD SHALL MAKE WHATEVER ADJUSTMENTS IT CONCLUDES ARE APPROPRIATE TO: (A) THE
NUMBER AND TYPE OF AWARDS THAT MAY BE GRANTED UNDER THIS PLAN, (B) THE NUMBER
AND TYPE OF OPTIONS THAT MAY BE GRANTED TO ANY PARTICIPANT UNDER THIS PLAN,
(C) THE PURCHASE PRICE AND NUMBER AND CLASS OF SECURITIES ISSUABLE UNDER EACH
OUTSTANDING STOCK AWARD, (D) THE OPTION PRICE AND NUMBER AND CLASS OF SECURITIES
ISSUABLE UNDER EACH OUTSTANDING OPTION, AND (E) THE REPURCHASE PRICE OF ANY
SECURITIES SUBSTITUTED FOR AWARD SHARES THAT ARE SUBJECT TO REPURCHASE RIGHTS. 
THE SPECIFIC ADJUSTMENTS SHALL BE DETERMINED BY THE BOARD.  UNLESS THE BOARD
SPECIFIES OTHERWISE, ANY SECURITIES ISSUABLE AS A RESULT OF ANY SUCH ADJUSTMENT
SHALL BE ROUNDED DOWN TO THE NEXT LOWER WHOLE SECURITY.  THE BOARD NEED NOT
ADOPT THE SAME RULES FOR EACH AWARD OR EACH AWARDEE.

 

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10.3        FUNDAMENTAL TRANSACTIONS.  EXCEPT FOR GRANTS TO NON-EMPLOYEE
DIRECTORS PURSUANT TO SECTION 11, IN THE EVENT OF (A) A MERGER OR CONSOLIDATION
IN WHICH THE COMPANY IS NOT THE SURVIVING CORPORATION (OTHER THAN A MERGER OR
CONSOLIDATION WITH A WHOLLY-OWNED SUBSIDIARY, A REINCORPORATION OF THE COMPANY
IN A DIFFERENT JURISDICTION, OR OTHER TRANSACTION IN WHICH THERE IS NO
SUBSTANTIAL CHANGE IN THE SHAREHOLDERS OF THE COMPANY OR THEIR RELATIVE STOCK
HOLDINGS AND THE AWARDS GRANTED UNDER THIS PLAN ARE ASSUMED, CONVERTED OR
REPLACED BY THE SUCCESSOR CORPORATION, WHICH ASSUMPTION SHALL BE BINDING ON ALL
PARTICIPANTS UNDER THIS PLAN), (B) A MERGER IN WHICH THE COMPANY IS THE
SURVIVING CORPORATION BUT AFTER WHICH THE SHAREHOLDERS OF THE COMPANY
IMMEDIATELY PRIOR TO SUCH MERGER (OTHER THAN ANY SHAREHOLDER THAT MERGES, OR
WHICH OWNS OR CONTROLS ANOTHER CORPORATION THAT MERGES, WITH THE COMPANY IN SUCH
MERGER) CEASE TO OWN THEIR SHARES OR OTHER EQUITY INTEREST IN THE COMPANY,
(C) THE SALE OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE COMPANY, OR
(D) THE ACQUISITION, SALE, OR TRANSFER OF MORE THAN 50% OF THE OUTSTANDING
SHARES OF THE COMPANY BY TENDER OFFER OR SIMILAR TRANSACTION (EACH, A
“FUNDAMENTAL TRANSACTION”), ANY OR ALL OUTSTANDING AWARDS MAY BE ASSUMED,
CONVERTED OR REPLACED BY THE SUCCESSOR CORPORATION (IF ANY), WHICH ASSUMPTION,
CONVERSION OR REPLACEMENT SHALL BE BINDING ON ALL PARTICIPANTS UNDER THIS PLAN. 
IN THE ALTERNATIVE, THE SUCCESSOR CORPORATION MAY SUBSTITUTE EQUIVALENT AWARDS
OR PROVIDE SUBSTANTIALLY SIMILAR CONSIDERATION TO PARTICIPANTS AS WAS PROVIDED
TO THE COMPANY’S SHAREHOLDERS (AFTER TAKING INTO ACCOUNT THE EXISTING PROVISIONS
OF THE AWARDS).  THE SUCCESSOR CORPORATION MAY ALSO ISSUE, IN PLACE OF
OUTSTANDING SHARES HELD BY PARTICIPANTS, SUBSTANTIALLY SIMILAR SHARES OR OTHER
PROPERTY SUBJECT TO REPURCHASE RESTRICTIONS NO LESS FAVORABLE TO THE
PARTICIPANTS. IN THE EVENT SUCH SUCCESSOR CORPORATION (IF ANY) DOES NOT ASSUME
OR SUBSTITUTE AWARDS, AS PROVIDED ABOVE, PURSUANT TO A TRANSACTION DESCRIBED IN
THIS SECTION 10.3, THE VESTING WITH RESPECT TO SUCH AWARDS SHALL FULLY AND
IMMEDIATELY ACCELERATE OR THE REPURCHASE RIGHTS OF THE COMPANY SHALL FULLY AND
IMMEDIATELY TERMINATE, AS THE CASE MAY BE, SO THAT THE AWARDS MAY BE EXERCISED
OR THE REPURCHASE RIGHTS SHALL TERMINATE BEFORE, OR OTHERWISE IN CONNECTION WITH
THE CLOSING OR COMPLETION OF THE FUNDAMENTAL TRANSACTION OR EVENT, BUT THEN
TERMINATE.  NOTWITHSTANDING ANYTHING IN THIS PLAN TO THE CONTRARY, THE BOARD
MAY, IN ITS SOLE DISCRETION, PROVIDE THAT THE VESTING OF ANY OR ALL AWARD SHARES
SUBJECT TO VESTING OR A RIGHT OF REPURCHASE SHALL ACCELERATE OR LAPSE, AS THE
CASE MAY BE, UPON A TRANSACTION DESCRIBED IN THIS SECTION 10.3. IF THE BOARD
EXERCISES SUCH DISCRETION WITH RESPECT TO OPTIONS, SUCH OPTIONS SHALL BECOME
EXERCISABLE IN FULL PRIOR TO THE CONSUMMATION OF SUCH EVENT AT SUCH TIME AND ON
SUCH CONDITIONS AS THE BOARD DETERMINES, AND IF SUCH OPTIONS ARE NOT EXERCISED
PRIOR TO THE CONSUMMATION OF THE FUNDAMENTAL TRANSACTION, THEY SHALL TERMINATE
AT SUCH TIME AS DETERMINED BY THE BOARD.  THE BOARD NEED NOT ADOPT THE SAME
RULES FOR EACH AWARD OR EACH AWARDEE.  SUBJECT TO ANY GREATER RIGHTS GRANTED TO
PARTICIPANTS UNDER THE FOREGOING PROVISIONS OF THIS SECTION 10.3, IN THE EVENT
OF THE OCCURRENCE OF ANY FUNDAMENTAL TRANSACTION, ANY OUTSTANDING AWARDS SHALL
BE TREATED AS PROVIDED IN THE APPLICABLE AGREEMENT OR PLAN OF MERGER,
CONSOLIDATION, DISSOLUTION, LIQUIDATION, OR SALE OF ASSETS.

 

10.4        CHANGES IN CONTROL.  THE BOARD MAY ALSO, BUT NEED NOT, SPECIFY THAT
OTHER TRANSACTIONS OR EVENTS CONSTITUTE A “CHANGE IN CONTROL”.  THE BOARD MAY DO
THAT EITHER BEFORE OR AFTER THE TRANSACTION OR EVENT OCCURS.  EXAMPLES OF
TRANSACTIONS OR EVENTS THAT THE BOARD MAY TREAT AS CHANGES IN CONTROL ARE:
(A) ANY PERSON OR ENTITY, INCLUDING A “GROUP” AS CONTEMPLATED BY
SECTION 13(D)(3) OF THE EXCHANGE ACT, ACQUIRES SECURITIES HOLDING 50% OR MORE OF
THE TOTAL COMBINED VOTING POWER OR VALUE OF THE COMPANY, OR (B) AS A RESULT OF
OR IN CONNECTION WITH A CONTESTED ELECTION OF COMPANY DIRECTORS, THE PERSONS WHO
WERE COMPANY DIRECTORS IMMEDIATELY BEFORE THE ELECTION CEASE TO CONSTITUTE A
MAJORITY OF THE BOARD.  IN CONNECTION WITH A CHANGE IN CONTROL, NOTWITHSTANDING
ANY OTHER PROVISION OF THIS PLAN, THE BOARD MAY, BUT NEED NOT, TAKE ANY ONE OR
MORE OF THE ACTIONS DESCRIBED IN SECTION 10.3.  IN ADDITION, THE BOARD MAY
EXTEND THE DATE FOR THE EXERCISE OF AWARDS (BUT NOT BEYOND THEIR ORIGINAL
EXPIRATION DATE).  THE BOARD NEED NOT ADOPT THE SAME RULES FOR EACH AWARD OR
EACH AWARDEE.

 

10.5        DIVESTITURE.  IF THE COMPANY OR AN AFFILIATE SELLS OR OTHERWISE
TRANSFERS EQUITY SECURITIES OF AN AFFILIATE TO A PERSON OR ENTITY OTHER THAN THE
COMPANY OR AN AFFILIATE, OR LEASES, EXCHANGES OR TRANSFERS ALL OR ANY PORTION OF
ITS ASSETS TO SUCH A PERSON OR ENTITY, THEN THE BOARD MAY SPECIFY THAT SUCH
TRANSACTION OR EVENT CONSTITUTES A “DIVESTITURE”.  IN CONNECTION WITH A
DIVESTITURE, NOTWITHSTANDING ANY OTHER PROVISION OF THIS PLAN, THE BOARD MAY,
BUT NEED NOT, TAKE ONE OR MORE OF THE ACTIONS DESCRIBED IN SECTION 10.3 OR 10.4
WITH RESPECT TO AWARDS OR AWARD SHARES HELD BY, FOR EXAMPLE, EMPLOYEES,
DIRECTORS OR CONSULTANTS FOR WHOM THAT TRANSACTION OR EVENT RESULTS IN A
TERMINATION.  THE BOARD NEED NOT ADOPT THE SAME RULES FOR EACH AWARD OR EACH
AWARDEE.

 

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10.6        DISSOLUTION.  IF THE COMPANY ADOPTS A PLAN OF DISSOLUTION, THE BOARD
MAY CAUSE AWARDS TO BE FULLY VESTED AND EXERCISABLE (BUT NOT AFTER THEIR
EXPIRATION DATE) BEFORE THE DISSOLUTION IS COMPLETED BUT CONTINGENT ON ITS
COMPLETION AND MAY CAUSE THE COMPANY’S REPURCHASE RIGHTS ON AWARD SHARES TO
LAPSE UPON COMPLETION OF THE DISSOLUTION.  THE BOARD NEED NOT ADOPT THE SAME
RULES FOR EACH AWARD OR EACH AWARDEE.  HOWEVER, TO THE EXTENT NOT EXERCISED
BEFORE THE EARLIER OF THE COMPLETION OF THE DISSOLUTION, AWARDS SHALL TERMINATE
IMMEDIATELY PRIOR TO THE DISSOLUTION.

 

11.          AUTOMATIC OPTION GRANTS TO NON-EMPLOYEE DIRECTORS.

 

11.1        AUTOMATIC OPTION GRANTS TO NON-EMPLOYEE DIRECTORS.

 

(A)           ANNUAL GRANT.  ON THE DATE OF THE LAST REGULAR MEETING OF
DIRECTORS DURING EACH CALENDAR YEAR EACH INDIVIDUAL WHO IS SERVING AS A
NON-EMPLOYEE DIRECTOR SHALL AUTOMATICALLY BE GRANTED A NONSTATUTORY OPTION TO
PURCHASE 15,000 SHARES (THE “ANNUAL GRANT”), PROVIDED, HOWEVER, THAT SUCH
INDIVIDUAL HAS SERVED AS A NON-EMPLOYEE DIRECTOR FOR AT LEAST SIX MONTHS.

 

(B)           INITIAL GRANT.  UPON THE FIRST APPOINTMENT OR ELECTION OF AN
INDIVIDUAL AS A NON-EMPLOYEE DIRECTOR, SUCH INDIVIDUAL SHALL AUTOMATICALLY BE
GRANTED A NONSTATUTORY OPTION TO PURCHASE 25,000 SHARES (THE “INITIAL GRANT”).

 

(C)           EXERCISE PRICE.

 

(I)            THE OPTION PRICE SHALL BE EQUAL TO ONE HUNDRED PERCENT (100%) OF
THE FAIR MARKET VALUE OF THE SHARES ON THE OPTION GRANT DATE.

 

(II)           THE OPTION PRICE SHALL BE PAYABLE IN ONE OR MORE OF THE
ALTERNATIVE FORMS AUTHORIZED PURSUANT TO SECTION 6.4.  EXCEPT TO THE EXTENT THE
SALE AND REMITTANCE PROCEDURE SPECIFIED THEREUNDER IS UTILIZED, PAYMENT OF THE
OPTION PRICE MUST BE MADE ON THE DATE OF EXERCISE.

 

(D)           OPTION TERM.  EACH OPTION SHALL HAVE A TERM OF TEN (10) YEARS
MEASURED FROM THE OPTION GRANT DATE.

 

(E)           EXERCISE AND VESTING OF OPTIONS.  THE SHARES UNDERLYING EACH
OPTION ISSUED PURSUANT TO EACH INITIAL GRANT SHALL VEST AND BE EXERCISABLE IN A
SERIES OF FORTY-EIGHT (48) SUCCESSIVE EQUAL MONTHLY INSTALLMENTS AT THE END OF
EACH FULL MONTH FROM THE DATE OF GRANT, FOR SO LONG AS THE NON-EMPLOYEE DIRECTOR
CONTINUOUSLY REMAINS A DIRECTOR. THE SHARES UNDERLYING EACH OPTION ISSUED
PURSUANT TO EACH ANNUAL GRANT SHALL VEST AND BE EXERCISABLE IN A SERIES OF
TWELVE (12) SUCCESSIVE EQUAL MONTHLY INSTALLMENTS AT THE END OF EACH FULL MONTH
FROM THE DATE OF GRANT, FOR SO LONG AS THE NON-EMPLOYEE DIRECTOR CONTINUOUSLY
REMAINS A DIRECTOR.

 

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(F)            TERMINATION OF BOARD SERVICE.  THE FOLLOWING PROVISIONS SHALL
GOVERN THE EXERCISE OF ANY OPTIONS HELD BY THE AWARDEE AT THE TIME THE AWARDEE
CEASES TO SERVE AS A NON-EMPLOYEE DIRECTOR:

 

(I)            IN GENERAL.  EXCEPT AS OTHERWISE PROVIDED IN SECTION 11.3, AFTER
CESSATION OF SERVICE AS A DIRECTOR (THE “CESSATION DATE”), THE AWARDEE’S OPTIONS
SHALL BE EXERCISABLE TO THE EXTENT (BUT ONLY TO THE EXTENT) THEY ARE VESTED ON
THE CESSATION DATE AND ONLY DURING THE THREE MONTHS AFTER SUCH CESSATION DATE,
BUT IN NO EVENT AFTER THE EXPIRATION DATE.  TO THE EXTENT THE AWARDEE DOES NOT
EXERCISE AN OPTION WITHIN THE TIME SPECIFIED FOR EXERCISE, THE OPTION SHALL
AUTOMATICALLY TERMINATE.

 

(II)           DEATH OR DISABILITY.  IF AN AWARDEE’S CESSATION OF SERVICE ON THE
BOARD IS DUE TO DEATH OR DISABILITY (AS DETERMINED BY THE BOARD), ALL
NON-EMPLOYEE DIRECTOR OPTIONS OF THAT AWARDEE, WHETHER OR NOT EXERCISABLE UPON
SUCH CESSATION DATE, MAY BE EXERCISED AT ANY TIME ON OR PRIOR TO THE EXPIRATION
DATE.  IN THE CASE OF A CESSATION OF SERVICE DUE TO DEATH, AN OPTION MAY BE
EXERCISED AS PROVIDED IN SECTION 17.  IN THE CASE OF A CESSATION OF SERVICE DUE
TO DISABILITY, IF A GUARDIAN OR CONSERVATOR HAS BEEN APPOINTED TO ACT FOR THE
AWARDEE AND BEEN GRANTED THIS AUTHORITY AS PART OF THAT APPOINTMENT, THAT
GUARDIAN OR CONSERVATOR MAY EXERCISE THE OPTION ON BEHALF OF THE AWARDEE.  DEATH
OR DISABILITY OCCURRING AFTER AN AWARDEE’S CESSATION OF SERVICE SHALL NOT CAUSE
THE CESSATION OF SERVICE TO BE TREATED AS HAVING OCCURRED DUE TO DEATH OR
DISABILITY.  TO THE EXTENT AN OPTION IS NOT SO EXERCISED WITHIN THE TIME
SPECIFIED FOR ITS EXERCISE, THE OPTION SHALL AUTOMATICALLY TERMINATE.

 

11.2        CERTAIN TRANSACTIONS AND EVENTS.

 

(A)           IN THE EVENT OF A FUNDAMENTAL TRANSACTION WHILE THE AWARDEE
REMAINS A NON-EMPLOYEE DIRECTOR, THE SHARES AT THE TIME SUBJECT TO EACH
OUTSTANDING OPTION HELD BY SUCH AWARDEE PURSUANT TO SECTION 11, BUT NOT
OTHERWISE VESTED, SHALL AUTOMATICALLY VEST IN FULL SO THAT EACH SUCH OPTION
SHALL, IMMEDIATELY PRIOR TO THE EFFECTIVE DATE OF THE FUNDAMENTAL TRANSACTION,
BECOME EXERCISABLE FOR ALL THE SHARES AS FULLY VESTED SHARES AND MAY BE
EXERCISED FOR ANY OR ALL OF THOSE VESTED SHARES. IMMEDIATELY FOLLOWING THE
CONSUMMATION OF THE FUNDAMENTAL TRANSACTION, EACH OPTION SHALL TERMINATE AND
CEASE TO BE OUTSTANDING, EXCEPT TO THE EXTENT ASSUMED BY THE SUCCESSOR
CORPORATION (OR AFFILIATE THEREOF).

 

(B)           IN THE EVENT OF A CHANGE IN CONTROL WHILE THE AWARDEE REMAINS A
NON-EMPLOYEE DIRECTOR, THE SHARES AT THE TIME SUBJECT TO EACH OUTSTANDING OPTION
HELD BY SUCH AWARDEE PURSUANT TO SECTION 11, BUT NOT OTHERWISE VESTED, SHALL
AUTOMATICALLY VEST IN FULL SO THAT EACH SUCH OPTION SHALL, IMMEDIATELY PRIOR TO
THE EFFECTIVE DATE OF THE CHANGE IN CONTROL, BECOME EXERCISABLE FOR ALL THE
SHARES AS FULLY VESTED SHARES AND MAY BE EXERCISED FOR ANY OR ALL OF THOSE
VESTED SHARES. EACH SUCH OPTION SHALL REMAIN EXERCISABLE FOR SUCH FULLY VESTED
SHARES UNTIL THE EXPIRATION OR SOONER TERMINATION OF THE OPTION TERM IN
CONNECTION WITH A CHANGE IN CONTROL.

 

(C)           EACH OPTION WHICH IS ASSUMED IN CONNECTION WITH A FUNDAMENTAL
TRANSACTION SHALL BE APPROPRIATELY ADJUSTED, IMMEDIATELY AFTER SUCH FUNDAMENTAL
TRANSACTION, TO APPLY TO THE NUMBER AND CLASS OF SECURITIES WHICH WOULD HAVE
BEEN ISSUABLE TO THE AWARDEE IN CONSUMMATION OF SUCH FUNDAMENTAL TRANSACTION HAD
THE OPTION BEEN EXERCISED IMMEDIATELY PRIOR TO SUCH FUNDAMENTAL TRANSACTION.
APPROPRIATE ADJUSTMENTS SHALL ALSO BE MADE TO THE OPTION PRICE PAYABLE PER SHARE
UNDER EACH OUTSTANDING OPTION, PROVIDED THE AGGREGATE OPTION PRICE PAYABLE FOR
SUCH SECURITIES SHALL REMAIN THE SAME.

 

(D)           THE GRANT OF OPTIONS PURSUANT TO SECTION 11 SHALL IN NO WAY AFFECT
THE RIGHT OF THE COMPANY TO ADJUST, RECLASSIFY, REORGANIZE OR OTHERWISE CHANGE
ITS CAPITAL OR BUSINESS STRUCTURE OR TO MERGE, CONSOLIDATE, DISSOLVE, LIQUIDATE
OR SELL OR TRANSFER ALL OR ANY PART OF ITS BUSINESS OR ASSETS.

 

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(E)           THE REMAINING TERMS OF EACH OPTION GRANTED PURSUANT TO SECTION 11
SHALL, AS APPLICABLE, BE THE SAME AS TERMS IN EFFECT FOR AWARDS GRANTED UNDER
THIS PLAN.  NOTWITHSTANDING THE FOREGOING, THE PROVISIONS OF SECTION 9.4 AND
SECTION 10 SHALL NOT APPLY TO OPTIONS GRANTED PURSUANT TO SECTION 11.

 

11.3        LIMITED TRANSFERABILITY OF OPTIONS.  EACH OPTION GRANTED PURSUANT TO
SECTION 11 MAY BE ASSIGNED IN WHOLE OR IN PART DURING THE AWARDEE’S LIFETIME TO
ONE OR MORE MEMBERS OF THE AWARDEE’S FAMILY OR TO A TRUST ESTABLISHED
EXCLUSIVELY FOR ONE OR MORE SUCH FAMILY MEMBERS OR TO AN ENTITY IN WHICH THE
AWARDEE IS MAJORITY OWNER OR TO THE AWARDEE’S FORMER SPOUSE, TO THE EXTENT SUCH
ASSIGNMENT IS IN CONNECTION WITH THE AWARDEE’S ESTATE OR FINANCIAL PLAN OR
PURSUANT TO A DOMESTIC RELATIONS ORDER. THE ASSIGNED PORTION MAY ONLY BE
EXERCISED BY THE PERSON OR PERSONS WHO ACQUIRE A PROPRIETARY INTEREST IN THE
OPTION PURSUANT TO THE ASSIGNMENT. THE TERMS APPLICABLE TO THE ASSIGNED PORTION
SHALL BE THE SAME AS THOSE IN EFFECT FOR THE OPTION IMMEDIATELY PRIOR TO SUCH
ASSIGNMENT AND SHALL BE SET FORTH IN SUCH DOCUMENTS ISSUED TO THE ASSIGNEE AS
THE ADMINISTRATOR MAY DEEM APPROPRIATE. THE AWARDEE MAY ALSO DESIGNATE ONE OR
MORE PERSONS AS THE BENEFICIARY OR BENEFICIARIES OF HIS OR HER OUTSTANDING
OPTIONS UNDER SECTION 11, AND THOSE OPTIONS SHALL, IN ACCORDANCE WITH SUCH
DESIGNATION, AUTOMATICALLY BE TRANSFERRED TO SUCH BENEFICIARY OR BENEFICIARIES
UPON THE AWARDEE’S DEATH WHILE HOLDING THOSE OPTIONS. SUCH BENEFICIARY OR
BENEFICIARIES SHALL TAKE THE TRANSFERRED OPTIONS SUBJECT TO ALL THE TERMS AND
CONDITIONS OF THE APPLICABLE AWARD AGREEMENT EVIDENCING EACH SUCH TRANSFERRED
OPTION, INCLUDING WITHOUT LIMITATION, THE LIMITED TIME PERIOD DURING WHICH THE
OPTION MAY BE EXERCISED FOLLOWING THE AWARDEE’S DEATH.

 

12.          WITHHOLDING AND TAX REPORTING

 

12.1        TAX WITHHOLDING ALTERNATIVES.

 

(A)           GENERAL.  WHENEVER AWARD SHARES ARE ISSUED OR BECOME FREE OF
RESTRICTIONS, THE COMPANY MAY REQUIRE THE AWARDEE TO REMIT TO THE COMPANY AN
AMOUNT SUFFICIENT TO SATISFY ANY APPLICABLE TAX WITHHOLDING REQUIREMENT, WHETHER
THE RELATED TAX IS IMPOSED ON THE AWARDEE OR THE COMPANY.  THE COMPANY SHALL
HAVE NO OBLIGATION TO DELIVER AWARD SHARES OR RELEASE AWARD SHARES FROM AN
ESCROW OR PERMIT A TRANSFER OF AWARD SHARES UNTIL THE AWARDEE HAS SATISFIED
THOSE TAX WITHHOLDING OBLIGATIONS.

 

(B)           METHOD OF PAYMENT.  THE AWARDEE SHALL PAY ANY REQUIRED WITHHOLDING
USING THE FORMS OF CONSIDERATION DESCRIBED IN SECTION 6.4(B), EXCEPT THAT, IN
THE DISCRETION OF THE ADMINISTRATOR, THE COMPANY MAY ALSO PERMIT THE AWARDEE TO
USE ANY OF THE FORMS OF PAYMENT DESCRIBED IN SECTION 6.4(C).  THE ADMINISTRATOR,
IN ITS SOLE DISCRETION, MAY ALSO PERMIT AWARD SHARES TO BE WITHHELD TO PAY
REQUIRED WITHHOLDING.  IF THE ADMINISTRATOR PERMITS AWARD SHARES TO BE WITHHELD,
THE FAIR MARKET VALUE OF THE AWARD SHARES WITHHELD, AS DETERMINED AS OF THE DATE
OF WITHHOLDING, SHALL NOT EXCEED THE AMOUNT DETERMINED BY THE APPLICABLE MINIMUM
STATUTORY WITHHOLDING RATES.

 

12.2        REPORTING OF DISPOSITIONS.  ANY HOLDER OF OPTION SHARES ACQUIRED
UNDER AN INCENTIVE STOCK OPTION SHALL PROMPTLY NOTIFY THE ADMINISTRATOR,
FOLLOWING SUCH PROCEDURES AS THE ADMINISTRATOR MAY REQUIRE, OF THE SALE OR OTHER
DISPOSITION OF ANY OF THOSE OPTION SHARES IF THE DISPOSITION OCCURS DURING: 
(A) THE LONGER OF TWO YEARS AFTER THE GRANT DATE OF THE INCENTIVE STOCK OPTION
AND ONE YEAR AFTER THE DATE THE INCENTIVE STOCK OPTION WAS EXERCISED, OR
(B) SUCH OTHER PERIOD AS THE ADMINISTRATOR HAS ESTABLISHED.

 

13.                               COMPLIANCE WITH LAW

 

The grant of Awards and the issuance and subsequent transfer of Award Shares
shall be subject to compliance with all Applicable Law, including all applicable
securities laws.  Awards may not be exercised, and Award Shares may not be
transferred, in violation of Applicable Law.  Thus, for example, Awards may not
be exercised unless:  (a) a registration statement under the Securities Act is
then in effect with respect to the related Award Shares, or (b) in the opinion
of legal counsel to the Company, those Award Shares may be issued in accordance
with an applicable exemption from the registration

 

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requirements of the Securities Act and any other applicable securities laws. 
The failure or inability of the Company to obtain from any regulatory body the
authority considered by the Company’s legal counsel to be necessary or useful
for the lawful issuance of any Award Shares or their subsequent transfer shall
relieve the Company of any liability for failing to issue those Award Shares or
permitting their transfer.  As a condition to the exercise of any Award or the
transfer of any Award Shares, the Company may require the Awardee to satisfy any
requirements or qualifications that may be necessary or appropriate to comply
with or evidence compliance with any Applicable Law.

 

14.          AMENDMENT OR TERMINATION OF THIS PLAN OR OUTSTANDING AWARDS

 

14.1        AMENDMENT AND TERMINATION.  SUBJECT TO SECTION 14.2 AND 14.3, THE
BOARD MAY AT ANY TIME AMEND, SUSPEND, OR TERMINATE THIS PLAN.

 

14.2        SHAREHOLDER APPROVAL.  THE COMPANY SHALL OBTAIN THE APPROVAL OF THE
COMPANY’S SHAREHOLDERS FOR ANY AMENDMENT TO THIS PLAN IF SHAREHOLDER APPROVAL IS
NECESSARY OR DESIRABLE TO COMPLY WITH ANY APPLICABLE LAW OR WITH THE
REQUIREMENTS APPLICABLE TO THE GRANT OF AWARDS INTENDED TO BE INCENTIVE STOCK
OPTIONS.  THE BOARD MAY ALSO, BUT NEED NOT, REQUIRE THAT THE COMPANY’S
SHAREHOLDERS APPROVE ANY OTHER AMENDMENTS TO THIS PLAN.

 

14.3        EFFECT.  NO AMENDMENT, SUSPENSION, OR TERMINATION OF THIS PLAN, AND
NO MODIFICATION OF ANY AWARD EVEN IN THE ABSENCE OF AN AMENDMENT, SUSPENSION, OR
TERMINATION OF THIS PLAN, SHALL IMPAIR ANY EXISTING CONTRACTUAL RIGHTS OF ANY
AWARDEE UNLESS THE AFFECTED AWARDEE CONSENTS TO THE AMENDMENT, SUSPENSION,
TERMINATION, OR MODIFICATION.  HOWEVER, NO SUCH CONSENT SHALL BE REQUIRED IF THE
BOARD DETERMINES, IN ITS SOLE AND ABSOLUTE DISCRETION, THAT THE AMENDMENT,
SUSPENSION, TERMINATION, OR MODIFICATION:  (A) IS REQUIRED OR ADVISABLE IN ORDER
FOR THE COMPANY, THIS PLAN OR THE AWARD TO SATISFY APPLICABLE LAW, TO MEET THE
REQUIREMENTS OF ANY ACCOUNTING STANDARD OR TO AVOID ANY ADVERSE ACCOUNTING
TREATMENT, OR (B) IN CONNECTION WITH ANY TRANSACTION OR EVENT DESCRIBED IN
SECTION 10, IS IN THE BEST INTERESTS OF THE COMPANY OR ITS SHAREHOLDERS.  THE
BOARD MAY, BUT NEED NOT, TAKE THE TAX OR ACCOUNTING CONSEQUENCES TO AFFECTED
AWARDEES INTO CONSIDERATION IN ACTING UNDER THE PRECEDING SENTENCE.  THOSE
DECISIONS SHALL BE FINAL, BINDING AND CONCLUSIVE.  TERMINATION OF THIS PLAN
SHALL NOT AFFECT THE ADMINISTRATOR’S ABILITY TO EXERCISE THE POWERS GRANTED TO
IT UNDER THIS PLAN WITH RESPECT TO (I) AWARDS GRANTED BEFORE THE TERMINATION OF
THIS PLAN OR (II) AWARD SHARES ISSUED UNDER SUCH AWARDS EVEN IF THOSE AWARD
SHARES ARE ISSUED AFTER THE TERMINATION OF THIS PLAN.

 

15.          RESERVED RIGHTS

 

15.1        NONEXCLUSIVITY OF THIS PLAN.  THIS PLAN SHALL NOT LIMIT THE POWER OF
THE COMPANY OR ANY AFFILIATE TO ADOPT OTHER INCENTIVE ARRANGEMENTS INCLUDING,
FOR EXAMPLE, THE GRANT OR ISSUANCE OF STOCK OPTIONS, STOCK, OR OTHER
EQUITY-BASED RIGHTS UNDER OTHER PLANS.

 

15.2        UNFUNDED PLAN.  THIS PLAN SHALL BE UNFUNDED.  ALTHOUGH BOOKKEEPING
ACCOUNTS MAY BE ESTABLISHED WITH RESPECT TO AWARDEES, ANY SUCH ACCOUNTS WILL BE
USED MERELY AS A CONVENIENCE.  THE COMPANY SHALL NOT BE REQUIRED TO SEGREGATE
ANY ASSETS ON ACCOUNT OF THIS PLAN, THE GRANT OF AWARDS, OR THE ISSUANCE OF
AWARD SHARES.  THE COMPANY AND THE ADMINISTRATOR SHALL NOT BE DEEMED TO BE A
TRUSTEE OF STOCK OR CASH TO BE AWARDED UNDER THIS PLAN.  ANY OBLIGATIONS OF THE
COMPANY TO ANY AWARDEE SHALL BE BASED SOLELY UPON CONTRACTS ENTERED INTO UNDER
THIS PLAN, SUCH AS AWARD AGREEMENTS.  NO SUCH OBLIGATIONS SHALL BE DEEMED TO BE
SECURED BY ANY PLEDGE OR OTHER ENCUMBRANCE ON ANY ASSETS OF THE COMPANY. 
NEITHER THE COMPANY NOR THE ADMINISTRATOR SHALL BE REQUIRED TO GIVE ANY SECURITY
OR BOND FOR THE PERFORMANCE OF ANY SUCH OBLIGATIONS.

 

16.          SPECIAL ARRANGEMENTS REGARDING AWARD SHARES

 

16.1        ESCROW OF STOCK CERTIFICATES.  TO ENFORCE ANY RESTRICTIONS ON AWARD
SHARES, THE ADMINISTRATOR MAY REQUIRE THEIR HOLDER TO DEPOSIT THE CERTIFICATES
REPRESENTING AWARD SHARES, WITH STOCK POWERS OR OTHER TRANSFER INSTRUMENTS
APPROVED BY THE ADMINISTRATOR ENDORSED IN BLANK, WITH THE COMPANY OR AN AGENT OF
THE COMPANY TO HOLD IN ESCROW UNTIL THE RESTRICTIONS HAVE LAPSED OR TERMINATED. 
THE

 

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ADMINISTRATOR MAY ALSO CAUSE A LEGEND OR LEGENDS REFERENCING THE RESTRICTIONS TO
BE PLACED ON THE CERTIFICATES.  ANY AWARDEE WHO DELIVERS A PROMISSORY NOTE AS
PARTIAL OR FULL CONSIDERATION FOR THE PURCHASE OF AWARD SHARES WILL BE REQUIRED
TO PLEDGE AND DEPOSIT WITH THE COMPANY SOME OR ALL OF THE AWARD SHARES AS
COLLATERAL TO SECURE THE PAYMENT OF THE NOTE.  HOWEVER, THE ADMINISTRATOR MAY
REQUIRE OR ACCEPT OTHER OR ADDITIONAL FORMS OF COLLATERAL TO SECURE THE NOTE
AND, IN ANY EVENT, THE COMPANY WILL HAVE FULL RECOURSE AGAINST THE MAKER OF THE
NOTE, NOTWITHSTANDING ANY PLEDGE OR OTHER COLLATERAL.

 

16.2        REPURCHASE RIGHTS.

 

(A)           GENERAL.  IF AN OPTION IS SUBJECT TO REVERSE VESTING OR A STOCK
AWARD IS SUBJECT TO VESTING CONDITIONS, THE COMPANY SHALL HAVE THE RIGHT, DURING
THE SEVEN MONTHS AFTER THE AWARDEE’S TERMINATION, TO REPURCHASE ANY OR ALL OF
THE AWARD SHARES THAT WERE UNVESTED AS OF THE DATE OF THAT TERMINATION.  IF THE
AWARD SHARES WERE PURCHASED WITH A PROMISSORY NOTE, THE REPURCHASE PRICE SHALL
BE THE LOWER OF:  (A) THE PURCHASE PRICE FOR THE AWARD SHARES (MINUS THE AMOUNT
OF ANY CASH DIVIDENDS PAID OR PAYABLE WITH RESPECT TO THE AWARD SHARES FOR WHICH
THE RECORD DATE PRECEDES THE REPURCHASE) AND (B) THE FAIR MARKET VALUE AT THE
DATE OF TERMINATION.  IN ALL OTHER CASES, THE REPURCHASE PRICE SHALL BE
DETERMINED BY THE ADMINISTRATOR IN ACCORDANCE WITH THIS SECTION 16.2 WHICH SHALL
BE EITHER (I) THE PURCHASE PRICE FOR THE AWARD SHARES (MINUS THE AMOUNT OF ANY
CASH DIVIDENDS PAID OR PAYABLE WITH RESPECT TO THE AWARD SHARES FOR WHICH THE
RECORD DATE PRECEDES THE REPURCHASE) OR (II) THE LOWER OF (A) THE OPTION PRICE
OR PURCHASE PRICE FOR THE AWARD SHARES OR (B) THE FAIR MARKET VALUE OF THOSE
AWARD SHARES AS OF THE DATE OF THE TERMINATION.  THE REPURCHASE PRICE SHALL BE
PAID IN CASH OR IF THE AWARD SHARES WERE PURCHASED IN WHOLE OR IN PART WITH A
PROMISSORY NOTE, CANCELLATION IN WHOLE OR IN PART OF INDEBTEDNESS UNDER THAT
NOTE, OR A COMBINATION OF THOSE MEANS.  THE COMPANY MAY ASSIGN THIS RIGHT OF
REPURCHASE.

 

(B)           PROCEDURE.  THE COMPANY OR ITS ASSIGNEE MAY CHOOSE TO GIVE THE
AWARDEE A WRITTEN NOTICE OF EXERCISE OF ITS REPURCHASE RIGHTS UNDER THIS
SECTION 16.2.  HOWEVER, THE COMPANY’S FAILURE TO GIVE SUCH A NOTICE SHALL NOT
AFFECT ITS RIGHTS TO REPURCHASE AWARD SHARES.  THE COMPANY MUST, HOWEVER, TENDER
THE REPURCHASE PRICE DURING THE PERIOD SPECIFIED IN THIS SECTION 16.2 FOR
EXERCISING ITS REPURCHASE RIGHTS IN ORDER TO EXERCISE SUCH RIGHTS.

 

16.3        MARKET STANDOFF.  IF REQUESTED BY THE COMPANY OR A REPRESENTATIVE OF
ITS UNDERWRITERS IN CONNECTION WITH A REGISTRATION OF ANY SECURITIES OF THE
COMPANY UNDER THE SECURITIES ACT, AWARDEES OR CERTAIN AWARDEES SHALL BE
PROHIBITED FROM SELLING SOME OR ALL OF THEIR AWARD SHARES DURING A PERIOD NOT TO
EXCEED 180 DAYS AFTER THE EFFECTIVE DATE OF THE COMPANY’S REGISTRATION
STATEMENT.  THIS RESTRICTION SHALL NOT APPLY TO ANY REGISTRATION STATEMENT ON
FORM S-8, FORM S-4 OR AN EQUIVALENT REGISTRATION STATEMENT.

 

17.          BENEFICIARIES

 

An Awardee may file a written designation of one or more beneficiaries who are
to receive the Awardee’s rights under the Awardee’s Awards after the Awardee’s
death.  Such designation shall be accompanied by a signed acknowledgment from
the Awardee’s spouse, if any, consenting to such designation.  An Awardee may
change such a designation at any time by written notice.  If an Awardee
designates a beneficiary, the beneficiary may exercise the Awardee’s Awards
after the Awardee’s death.  If an Awardee dies when the Awardee has no living
beneficiary designated under this Plan, the Company shall allow the executor or
administrator of the Awardee’s estate to exercise the Award or, if there is
none, the person entitled to exercise the Option under the Awardee’s will or the
laws of descent and distribution.  In any case, no Award may be exercised after
its Expiration Date.

 

18.                               Miscellaneous

 

18.1        GOVERNING LAW.  THIS PLAN, THE AWARD AGREEMENTS AND ALL OTHER
AGREEMENTS ENTERED INTO UNDER THIS PLAN, AND ALL ACTIONS TAKEN UNDER THIS PLAN
OR IN CONNECTION WITH AWARDS OR AWARD SHARES, SHALL BE GOVERNED BY THE LAWS OF
THE STATE OF CALIFORNIA.

 

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18.2        DETERMINATION OF VALUE.  FAIR MARKET VALUE SHALL BE DETERMINED AS
FOLLOWS:

 

(A)           LISTED STOCK.  IF THE SHARES ARE TRADED ON ANY ESTABLISHED STOCK
EXCHANGE OR QUOTED ON A NATIONAL MARKET SYSTEM, FAIR MARKET VALUE SHALL BE THE
CLOSING SALES PRICE FOR THE SHARES AS QUOTED ON THAT STOCK EXCHANGE OR SYSTEM
FOR THE DATE THE VALUE IS TO BE DETERMINED (THE “VALUE DATE”) AS REPORTED BY
SUCH STOCK EXCHANGE OR NATIONAL MARKET SYSTEM, OR, IF NOT REPORTED BY SUCH STOCK
EXCHANGE OR NATIONAL MARKET SYSTEM, AS REPORTED IN THE WALL STREET JOURNAL OR A
SIMILAR PUBLICATION.  IF NO SALES ARE REPORTED AS HAVING OCCURRED ON THE VALUE
DATE, FAIR MARKET VALUE SHALL BE THAT CLOSING SALES PRICE FOR THE LAST PRECEDING
TRADING DAY ON WHICH SALES OF SHARES ARE REPORTED AS HAVING OCCURRED.  IF NO
SALES ARE REPORTED AS HAVING OCCURRED DURING THE FIVE TRADING DAYS BEFORE THE
VALUE DATE, FAIR MARKET VALUE SHALL BE THE CLOSING BID FOR SHARES ON THE VALUE
DATE.  IF SHARES ARE LISTED ON MULTIPLE EXCHANGES OR SYSTEMS, FAIR MARKET VALUE
SHALL BE BASED ON SALES OR BID PRICES ON THE PRIMARY EXCHANGE OR SYSTEM ON WHICH
SHARES ARE TRADED OR QUOTED.

 

(B)           STOCK QUOTED BY SECURITIES DEALER.  IF SHARES ARE REGULARLY QUOTED
BY A RECOGNIZED SECURITIES DEALER BUT SELLING PRICES ARE NOT REPORTED ON ANY
ESTABLISHED STOCK EXCHANGE OR QUOTED ON A NATIONAL MARKET SYSTEM, FAIR MARKET
VALUE SHALL BE THE MEAN BETWEEN THE HIGH BID AND LOW ASKED PRICES ON THE VALUE
DATE.  IF NO PRICES ARE QUOTED FOR THE VALUE DATE, FAIR MARKET VALUE SHALL BE
THE MEAN BETWEEN THE HIGH BID AND LOW ASKED PRICES ON THE LAST PRECEDING TRADING
DAY ON WHICH ANY BID AND ASKED PRICES WERE QUOTED.

 

(C)           NO ESTABLISHED MARKET.  IF SHARES ARE NOT TRADED ON ANY
ESTABLISHED STOCK EXCHANGE OR QUOTED ON A NATIONAL MARKET SYSTEM AND ARE NOT
QUOTED BY A RECOGNIZED SECURITIES DEALER, THE BOARD OR COMMITTEE WILL DETERMINE
FAIR MARKET VALUE IN GOOD FAITH.  THE BOARD OR COMMITTEE WILL CONSIDER THE
FOLLOWING FACTORS, AND ANY OTHERS IT CONSIDERS SIGNIFICANT, IN DETERMINING FAIR
MARKET VALUE: (I) THE PRICE AT WHICH OTHER SECURITIES OF THE COMPANY HAVE BEEN
ISSUED TO PURCHASERS OTHER THAN EMPLOYEES, DIRECTORS, OR CONSULTANTS, (II) THE
COMPANY’S SHAREHOLDER’S EQUITY, PROSPECTIVE EARNING POWER, DIVIDEND-PAYING
CAPACITY, AND NON-OPERATING ASSETS, IF ANY, AND (III) ANY OTHER RELEVANT
FACTORS, INCLUDING THE ECONOMIC OUTLOOK FOR THE COMPANY AND THE COMPANY’S
INDUSTRY, THE COMPANY’S POSITION IN THAT INDUSTRY, THE COMPANY’S GOODWILL AND
OTHER INTELLECTUAL PROPERTY, AND THE VALUES OF SECURITIES OF OTHER BUSINESSES IN
THE SAME INDUSTRY.

 

18.3        RESERVATION OF SHARES.  DURING THE TERM OF THIS PLAN, THE COMPANY
SHALL AT ALL TIMES RESERVE AND KEEP AVAILABLE SUCH NUMBER OF SHARES AS ARE STILL
ISSUABLE UNDER THIS PLAN.

 

18.4        ELECTRONIC COMMUNICATIONS.  ANY AWARD AGREEMENT, NOTICE OF EXERCISE
OF AN AWARD, OR OTHER DOCUMENT REQUIRED OR PERMITTED BY THIS PLAN MAY BE
DELIVERED IN WRITING OR, TO THE EXTENT DETERMINED BY THE ADMINISTRATOR,
ELECTRONICALLY.  SIGNATURES MAY ALSO BE ELECTRONIC IF PERMITTED BY THE
ADMINISTRATOR.

 

18.5        NOTICES.  UNLESS THE ADMINISTRATOR SPECIFIES OTHERWISE, ANY NOTICE
TO THE COMPANY UNDER ANY AWARD AGREEMENT OR WITH RESPECT TO ANY AWARDS OR AWARD
SHARES SHALL BE IN WRITING (OR, IF SO AUTHORIZED BY SECTION 18.4, COMMUNICATED
ELECTRONICALLY), SHALL BE ADDRESSED TO THE COMPANY, AND SHALL ONLY BE EFFECTIVE
WHEN RECEIVED BY THE COMPANY.

 

Adopted by the Board on:  March 19, 2004

Approved by the shareholders on:  May 27, 2004, May 31, 2007 and May 23, 2008

Effective date of this Plan:  May 27, 2004

Amended by the Board on:  March 23, 2006, March 22, 2007 and March 7, 2008

 

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