EXHIBIT 10.64

 

PATH 1 NETWORK TECHNOLOGIES, INC.

2004 EQUITY INCENTIVE PLAN

 

1. PURPOSES.

 

(a) Eligible Stock Award Recipients. The persons eligible to receive Stock
Awards are Employees, Directors and Consultants.

 

(b) Available Stock Awards. The purpose of the Plan is to provide a means by
which eligible recipients of Stock Awards may be given an opportunity to benefit
from increases in the value of the Common Stock through the granting of the
following Stock Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock
Options, (iii) Restricted Stock Awards, (iv) Stock Appreciation Rights, (v)
Phantom Stock Awards and (vi) Other Stock Awards.

 

(c) General Purpose. The Company, by means of the Plan, seeks to retain the
services of the group of persons eligible to receive Stock Awards, to secure and
retain the services of new members of this group and to provide incentives for
such persons to exert maximum efforts for the success of the Company and its
Affiliates.

 

2. DEFINITIONS.

 

(a) “Affiliate” means any parent corporation or subsidiary corporation of the
Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.

 

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

 

(c) “Capitalization Adjustment” has the meaning ascribed to that term in Section
11(a).

 

(d) “Cause” means, with respect to a Participant, (i) such Participant’s
conviction of, or plea of “guilty” or “no contest” to, a felony or any crime
involving fraud, under the laws of the United States or any state thereof, (ii)
such Participant’s unauthorized excessive absence from work for reasons other
than illness, (iii) such Participant’s use of alcohol, illegal drugs or any
other illegal substance in such a manner as to interfere with the performance of
such Participant’s duties with the Company, (iv) such Participant’s refusal to
follow reasonable directives from such Participant’s superior, (v) such
Participant’s unauthorized use or disclosure of the Company’s confidential
information or trade secrets, (vi) such Participant’s gross misconduct or
material failure to comply with the Company’s written policies or rules, or
(vii) such Participant’s failure to perform any material duty where such failure
has continued for 30 days after such Participant has been notified in writing by
the Company of the specific nature of such Participant’s failure to perform. Any
determination by the Board that the Continuous Service of a Participant was
terminated by reason of dismissal without Cause for the purposes of outstanding
Stock Awards held by such Participant shall have no effect upon any
determination of the rights or obligations of the Company or such Participant
for any other purpose.

 

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(e) “Change in Control” means the occurrence, in a single transaction or in a
series of related transactions, of any one or more of the following events:

 

(i) any Exchange Act Person becomes the Owner, directly or indirectly, of
securities of the Company representing more than fifty percent (50%) of the
combined voting power of the Company’s then outstanding securities other than by
virtue of a merger, consolidation or similar transaction. Notwithstanding the
foregoing, a Change in Control shall not be deemed to occur (A) on account of
the acquisition of securities of the Company by an investor, any affiliate
thereof or any other Exchange Act Person from the Company in a transaction or
series of related transactions the primary purpose of which is to obtain
financing for the Company through the issuance of equity securities or (B)
solely because the level of Ownership held by any Exchange Act Person (the
“Subject Person”) exceeds the designated percentage threshold of the outstanding
voting securities as a result of a repurchase or other acquisition of voting
securities by the Company reducing the number of shares outstanding, provided
that if a Change in Control would occur (but for the operation of this sentence)
as a result of the acquisition of voting securities by the Company, and after
such share acquisition, the Subject Person becomes the Owner of any additional
voting securities that, assuming the repurchase or other acquisition had not
occurred, increases the percentage of the then outstanding voting securities
Owned by the Subject Person over the designated percentage threshold, then a
Change in Control shall be deemed to occur;

 

(ii) there is consummated a merger, consolidation or similar transaction
involving (directly or indirectly) the Company and, immediately after the
consummation of such merger, consolidation or similar transaction, the
stockholders of the Company immediately prior thereto do not Own, directly or
indirectly, either (A) outstanding voting securities representing more than
fifty percent (50%) of the combined outstanding voting power of the surviving
Entity in such merger, consolidation or similar transaction or (B) more than
fifty percent (50%) of the combined outstanding voting power of the parent of
the surviving Entity in such merger, consolidation or similar transaction, in
each case in substantially the same proportions as their Ownership of the
outstanding voting securities of the Company immediately prior to such
transaction;

 

(iii) the stockholders of the Company approve or the Board approves a plan of
complete dissolution or liquidation of the Company, or a complete dissolution or
liquidation of the Company shall otherwise occur;

 

(iv) there is consummated a sale, lease, license or other disposition of all or
substantially all of the consolidated assets of the Company and its
Subsidiaries, other than a sale, lease, license or other disposition of all or
substantially all of the consolidated assets of the Company and its Subsidiaries
to an Entity, more than fifty percent (50%) of the combined voting power of the
voting securities of which are Owned by stockholders of the Company in
substantially the same proportions as their Ownership of the outstanding voting
securities of the Company immediately prior to such sale, lease, license or
other disposition; or

 

(v) individuals who, on the date this Plan is adopted by the Board, are members
of the Board (the “Incumbent Board”) cease for any reason to constitute at least
a majority of the members of the Board; provided, however, that if the
appointment or election (or

 

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nomination for election) of any new Board member was approved or recommended by
a majority vote of the members of the Incumbent Board then still in office, such
new member shall, for purposes of this Plan, be considered as a member of the
Incumbent Board.

 

Notwithstanding the foregoing or any other provision of this Plan, the
definition of Change in Control (or any analogous term) in an individual written
agreement between the Company or any Affiliate and the Participant shall
supersede the foregoing definition with respect to Stock Awards subject to such
agreement (it being understood, however, that if no definition of Change in
Control or any analogous term is set forth in such an individual written
agreement, the foregoing definition shall apply).

 

(f) “Code” means the Internal Revenue Code of 1986, as amended.

 

(g) “Committee” means a committee of one (1) or more members of the Board
appointed by the Board in accordance with Section 3(c).

 

(h) “Common Stock” means the common stock of the Company.

 

(i) “Company” means Path 1 Network Technologies, Inc., a Delaware corporation.

 

(j) “Consultant” means any person, including an advisor, engaged by the Company
or an Affiliate to render consulting or advisory services and who is compensated
for such services. However, the term “Consultant” shall not include Directors
who are not compensated by the Company for their services as Directors, and the
payment of a fee by the Company for services which the Board determines in its
sole discretion are services as a Director, shall not cause a Director to be
considered a “Consultant” for purposes of the Plan.

 

(k) “Continuous Service” means that the Participant’s service with the Company
or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. A change in the capacity in which the Participant
renders service to the Company or an Affiliate as an Employee, Consultant or
Director or a change in the entity for which the Participant renders such
service, provided that there is no interruption or termination of the
Participant’s service with the Company or an Affiliate, shall not terminate a
Participant’s Continuous Service. For example, a change in status from an
Employee of the Company to a Consultant of an Affiliate or to a Director shall
not constitute an interruption of Continuous Service. The Board or the chief
executive officer of the Company, in that party’s sole discretion, may determine
whether Continuous Service shall be considered interrupted in the case of any
leave of absence approved by that party, including sick leave, military leave or
any other personal leave. Notwithstanding the foregoing, a leave of absence
shall be treated as Continuous Service for purposes of vesting in a Stock Award
only to such extent as may be provided in the Company’s leave of absence policy
or in the written terms of the Participant’s leave of absence.

 

(l) “Corporate Transaction” means the occurrence, in a single transaction or in
a series of related transactions, of any one or more of the following events:

 

(i) a sale or other disposition of all or substantially all, as determined by
the Board in its discretion, of the consolidated assets of the Company and its
Subsidiaries;

 

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(ii) a sale or other disposition of at least ninety percent (90%) of the
outstanding securities of the Company;

 

(iii) a merger, consolidation or similar transaction following which the Company
is not the surviving corporation; or

 

(iv) a merger, consolidation or similar transaction following which the Company
is the surviving corporation but the shares of Common Stock outstanding
immediately preceding the merger, consolidation or similar transaction are
converted or exchanged by virtue of the merger, consolidation or similar
transaction into other property, whether in the form of securities, cash or
otherwise.

 

(m) “Covered Employee” means the chief executive officer and the four (4) other
highest compensated officers of the Company for whom total compensation is
required to be reported to stockholders under the Exchange Act, as determined
for purposes of Section 162(m) of the Code.

 

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

 

(o) “Disability” means the permanent and total disability of a person within the
meaning of Section 22(e)(3) of the Code.

 

(p) “Employee” means any person employed by the Company or an Affiliate. Service
as a Director or payment of a fee by the Company or an Affiliate shall not be
sufficient to constitute “employment” by the Company or such Affiliate.

 

(q) “Entity” means a corporation, partnership or other entity.

 

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

 

(s) “Exchange Act Person” means any natural person, Entity or “group” (within
the meaning of Section 13(d) or 14(d) of the Exchange Act), except that
“Exchange Act Person” shall not include (A) the Company or any Subsidiary of the
Company, (B) any employee benefit plan of the Company or any Subsidiary of the
Company or any trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any Subsidiary of the Company, (C) an underwriter
temporarily holding securities pursuant to an offering of such securities, or
(D) an Entity Owned, directly or indirectly, by the stockholders of the Company
in substantially the same proportions as their Ownership of stock of the
Company.

 

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

 

(i) If the Common Stock is listed on any established stock exchange or traded on
the Nasdaq National Market or the Nasdaq SmallCap Market, the Fair Market Value
of a share of Common Stock shall be the closing sales price for such stock (or
the closing bid, if no sales were reported) as quoted on such exchange or market
(or the exchange or market with the greatest volume of trading in the Common
Stock) on the last market trading day prior to the day

 

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of determination, as reported in The Wall Street Journal or such other source as
the Board deems reliable.

 

(ii) In the absence of such markets for the Common Stock, the Fair Market Value
shall be determined in good faith by the Board.

 

(u) “Incentive Stock Option” means an Option to purchase shares of Common Stock
that is intended to qualify as an incentive stock option within the meaning of
Section 422 of the Code and the regulations promulgated thereunder.

 

(v) “Non-Employee Director” means a Director who either (i) is not a current
Employee or Officer of the Company or its parent or a subsidiary, does not
receive compensation, either directly or indirectly, from the Company or its
parent or a subsidiary, for services rendered as a consultant or in any capacity
other than as a Director (except for an amount as to which disclosure would not
be required under Item 404(a) of Regulation S-K promulgated pursuant to the
Securities Act (“Regulation S-K”)), does not possess an interest in any other
transaction for which disclosure would be required under Item 404(a) of
Regulation S-K, and is not engaged in a business relationship for which
disclosure would be required pursuant to Item 404(b) of Regulation S-K; or (ii)
is otherwise considered a “non-employee director” for purposes of Rule 16b-3.

 

(w) “Nonstatutory Stock Option” means an Option to purchase shares of Common
Stock that is not intended to qualify as an Incentive Stock Option.

 

(x) “Officer” means a person who is an officer of the Company within the meaning
of Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder.

 

(y) “Option” means an Incentive Stock Option or a Nonstatutory Stock Option
granted pursuant to the Plan.

 

(z) “Option Agreement” means a written agreement between the Company and an
Optionholder evidencing the terms and conditions of an individual Option grant.
Each Option Agreement shall be subject to the terms and conditions of the Plan.

 

(aa) “Optionholder” means a person to whom an Option is granted pursuant to the
Plan or, if applicable, such other person who holds an outstanding Option.

 

(bb) “Other Stock Award” means an award based in whole or in part by reference
to the Common Stock which is granted pursuant to the terms and conditions of
Section 7(d).

 

(cc) “Other Stock Award Agreement” means a written agreement between the Company
and a holder of an Other Stock Award evidencing the terms and conditions of an
individual Other Stock Award grant. Each Other Stock Award Agreement shall be
subject to the terms and conditions of the Plan.

 

(dd) “Outside Director” means a Director who either (i) is not a current
employee of the Company or an “affiliated corporation” (within the meaning of
Treasury Regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an

 

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“affiliated corporation” who receives compensation for prior services (other
than benefits under a tax-qualified retirement plan) during the taxable year,
has not been an officer of the Company or an “affiliated corporation”, and does
not receive remuneration from the Company or an “affiliated corporation,” either
directly or indirectly, in any capacity other than as a Director or (ii) is
otherwise considered an “outside director” for purposes of Section 162(m) of the
Code.

 

(ee) “Own,” “Owned,” “Owner,” “Ownership” A person or Entity shall be deemed to
“Own,” to have “Owned,” to be the “Owner” of, or to have acquired “Ownership” of
securities if such person or Entity, directly or indirectly, through any
contract, arrangement, understanding, relationship or otherwise, has or shares
voting power, which includes the power to vote or to direct the voting, with
respect to such securities.

 

(ff) “Participant” means a person to whom a Stock Award is granted pursuant to
the Plan or, if applicable, such other person who holds an outstanding Stock
Award.

 

(gg) “Phantom Stock Award” means a right to receive shares of Common Stock which
is granted pursuant to the terms and conditions of Section 7(b).

 

(hh) “Phantom Stock Award Agreement” means a written agreement between the
Company and a holder of a Phantom Stock Award evidencing the terms and
conditions of an individual Phantom Stock Award grant. Each Phantom Stock Award
Agreement shall be subject to the terms and conditions of the Plan.

 

(ii) “Plan” means this Path 1 Network Technologies, Inc. 2004 Equity Incentive
Plan.

 

(jj) “Restricted Stock Award” means an award of shares of Common Stock which is
granted pursuant to the terms and conditions of Section 7(a).

 

(kk) “Restricted Stock Award Agreement” means an agreement between the Company
and a holder of a Restricted Stock Award evidencing the terms and conditions of
an individual Restricted Stock Award grant. Each Restricted Stock Award
Agreement shall be subject to the terms and conditions of the Plan.

 

(ll) “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any
successor to Rule 16b-3, as in effect from time to time.

 

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

 

(nn) “Stock Appreciation Right” means a right to receive the appreciation of
Common Stock that is granted pursuant to the terms and conditions of Section
7(c).

 

(oo) “Stock Appreciation Right Agreement” means a written agreement between the
Company and a holder of a Stock Appreciation Right evidencing the terms and
conditions of an individual Stock Appreciation Right grant. Each Stock
Appreciation Right Agreement shall be subject to the terms and conditions of the
Plan.

 

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(pp) “Stock Award” means any right granted under the Plan, including an Option,
a Restricted Stock Award, a Stock Appreciation Right, a Phantom Stock Award or
any Other Stock Award.

 

(qq) “Stock Award Agreement” means a written agreement between the Company and a
Participant evidencing the terms and conditions of an individual Stock Award
grant. Each Stock Award Agreement shall be subject to the terms and conditions
of the Plan.

 

(rr) “Subsidiary” means, with respect to the Company, (i) any corporation of
which more than fifty percent (50%) of the outstanding capital stock having
ordinary voting power to elect a majority of the board of directors of such
corporation (irrespective of whether, at the time, stock of any other class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time, directly or indirectly, Owned
by the Company, and (ii) any partnership in which the Company has a direct or
indirect interest (whether in the form of voting or participation in profits or
capital contribution) of more than fifty percent (50%).

 

(ss) “Ten Percent Stockholder” means a person who Owns (or is deemed to Own
pursuant to Section 424(d) of the Code) stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or of any of its Affiliates.

 

3. ADMINISTRATION.

 

(a) Administration by Board. The Board shall administer the Plan unless and
until the Board delegates administration to a Committee, as provided in Section
3(c).

 

(b) Powers of Board. The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:

 

(i) To determine from time to time which of the persons eligible under the Plan
shall be granted Stock Awards; when and how each Stock Award shall be granted;
what type or combination of types of Stock Award shall be granted; the
provisions of each Stock Award granted (which need not be identical), including
the time or times when a person shall be permitted to receive Common Stock
pursuant to a Stock Award; and the number of shares of Common Stock with respect
to which a Stock Award shall be granted to each such person.

 

(ii) To construe and interpret the Plan and Stock Awards granted under it, and
to establish, amend and revoke rules and regulations for its administration. The
Board, in the exercise of this power, may correct any defect, omission or
inconsistency in the Plan or in any Stock Award Agreement, in a manner and to
the extent it shall deem necessary or expedient to make the Plan fully
effective.

 

(iii) To effect, at any time and from time to time, with the consent of any
adversely affected Optionholder, (1) the reduction of the exercise price of any
outstanding Option under the Plan, (2) the cancellation of any outstanding
Option under the Plan and the grant in substitution therefor of (A) a new Option
under the Plan or another equity plan of the Company covering the same or a
different number of shares of Common Stock, (B) a Restricted Stock Award
(including a stock bonus), (C) a Stock Appreciation Right, (D) a Phantom Stock

 

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Award (E) an Other Stock Award, (F) cash and/or (G) other valuable consideration
(as determined by the Board, in its sole discretion), or (3) any other action
that is treated as a repricing under generally accepted accounting principles.

 

(iv) To amend the Plan or a Stock Award as provided in Section 12.

 

(v) To terminate or suspend the Plan as provided in Section 13.

 

(vi) Generally, to exercise such powers and to perform such acts as the Board
deems necessary or expedient to promote the best interests of the Company and
that are not in conflict with the provisions of the Plan.

 

(c) Delegation to Committee.

 

(i) General. The Board may delegate administration of the Plan to a Committee or
Committees of one or more members of the Board, and the term “Committee” shall
apply to any person or persons to whom such authority has been delegated. If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, including the power to delegate to a subcommittee any of the
administrative powers the Committee is authorized to exercise (and references in
this Plan to the Board shall thereafter be to the Committee or subcommittee),
subject, however, to such resolutions, not inconsistent with the provisions of
the Plan, as may be adopted from time to time by the Board. The Board may
abolish the Committee at any time and revest in the Board the administration of
the Plan.

 

(ii) Section 162(m) and Rule 16b-3 Compliance. In the discretion of the Board,
the Committee may consist solely of two or more Outside Directors, in accordance
with Section 162(m) of the Code, and/or solely of two or more Non-Employee
Directors, in accordance with Rule 16b-3. In addition, the Board or the
Committee, in their discretion, may (1) delegate to a committee of one or more
members of the Board who need not be Outside Directors the authority to grant
Stock Awards to eligible persons who are either (a) not then Covered Employees
and are not expected to be Covered Employees at the time of recognition of
income resulting from such Stock Award, or (b) not persons with respect to whom
the Company wishes to comply with Section 162(m) of the Code, and/or (2)
delegate to a committee of one or more members of the Board who need not be
Non-Employee Directors the authority to grant Stock Awards to eligible persons
who are not then subject to Section 16 of the Exchange Act.

 

(d) Delegation to an Officer. The Board may delegate to one or more Officers of
the Company the authority to do one or both of the following (i) designate
Officers and Employees of the Company or any of its Subsidiaries to be
recipients of Stock Awards and (ii) determine the number of shares of Common
Stock to be subject to such Stock Awards granted to such Officers and Employees
of the Company; provided, however, that the Board resolutions regarding such
delegation shall specify the total number of shares of Common Stock that may be
subject to the Stock Awards granted by such Officer and that such Officer may
not grant a Stock Award to himself or herself. Notwithstanding anything to the
contrary in this Section 3(d), the Board may not delegate to an Officer
authority to determine the Fair Market Value of the Common Stock pursuant to
Section 2(t)(ii) above.

 

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(e) Effect of Board’s Decision. All determinations, interpretations and
constructions made by the Board in good faith shall not be subject to review by
any person and shall be final, binding and conclusive on all persons.

 

4. SHARES SUBJECT TO THE PLAN.

 

(a) Share Reserve. Subject to the provisions of Section 11(a) relating to
Capitalization Adjustments, the shares of Common Stock that may be issued
pursuant to Stock Awards shall not exceed in the aggregate nine-hundred thousand
(900,000) shares of Common Stock.

 

(b) Reversion of Shares to the Share Reserve. If any Stock Award shall for any
reason expire or otherwise terminate, in whole or in part, without having been
exercised in full, or if any shares of Common Stock issued to a Participant
pursuant to a Stock Award are forfeited back to or repurchased by the Company,
including, but not limited to, any repurchase or forfeiture caused by the
failure to meet a contingency or condition required for the vesting of such
shares, then the shares of Common Stock not acquired under such Stock Award, or
forfeited back to or repurchased by the Company, shall revert to and again
become available for issuance under the Plan. If any shares subject to a Stock
Award are not delivered to a Participant because such shares are withheld for
the payment of taxes or the Stock Award is exercised through a reduction of
shares subject to the Stock Award (i.e., “net exercised”), the number of shares
that are not delivered to the Participant as a result thereof shall revert to
and again become available for issuance under the Plan. If the exercise price of
any Stock Award is satisfied by tendering shares of Common Stock held by the
Participant (either by actual delivery or attestation), then the number of
shares so tendered shall revert to and again become available for issuance under
the Plan. Notwithstanding anything to the contrary in this Section 4(b), subject
to the provisions of Section 11(a) relating to Capitalization Adjustments the
aggregate maximum number of shares of Common Stock that may be issued as
Incentive Stock Options shall be nine-hundred thousand (900,000) shares of
Common Stock.

 

(c) Source of Shares. The shares of Common Stock subject to the Plan may be
unissued shares or reacquired shares, bought on the market or otherwise.

 

5. ELIGIBILITY.

 

(a) Eligibility for Specific Stock Awards. Incentive Stock Options may be
granted only to Employees. Stock Awards other than Incentive Stock Options may
be granted to Employees, Directors and Consultants.

 

(b) Ten Percent Stockholders. A Ten Percent Stockholder shall not be granted an
Incentive Stock Option unless the exercise price of such Option is at least one
hundred ten percent (110%) of the Fair Market Value of the Common Stock on the
date of grant and the Option is not exercisable after the expiration of five (5)
years from the date of grant.

 

(c) Section 162(m) Limitation on Annual Grants. Subject to the provisions of
Section 11(a) relating to Capitalization Adjustments, at such time as the
Company may be subject to the applicable provisions of Section 162(m) of the
Code, no Employee shall be eligible

 

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to be granted Options or Stock Appreciation Rights covering more than
seven-thousand (700,000) shares of Common Stock during any calendar year.

 

(d) Consultants. A Consultant shall not be eligible for the grant of a Stock
Award if, at the time of grant, a Form S-8 Registration Statement under the
Securities Act (“Form S-8”) is not available to register either the offer or the
sale of the Company’s securities to such Consultant because of the nature of the
services that the Consultant is providing to the Company, because the Consultant
is not a natural person, or because of any other rule governing the use of Form
S-8, unless the Company determines both (i) that such grant (A) shall be
registered in another manner under the Securities Act (e.g., on a Form S-3
Registration Statement) or (B) does not require registration under the
Securities Act in order to comply with the requirements of the Securities Act,
if applicable, and (ii) that such grant complies with the securities laws of all
other relevant jurisdictions.

 

6. OPTION PROVISIONS.

 

Each Option shall be in such form and shall contain such terms and conditions as
the Board shall deem appropriate. All Options shall be separately designated
Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and,
if certificates are issued, a separate certificate or certificates shall be
issued for shares of Common Stock purchased on exercise of each type of Option.
The provisions of separate Options need not be identical, but each Option shall
include (through incorporation of provisions hereof by reference in the Option
or otherwise) the substance of each of the following provisions:

 

(a) Term. The Board shall determine the term of an Option; provided that,
subject to the provisions of Section 5(b) regarding Ten Percent Stockholders, no
Incentive Stock Option shall be exercisable after the expiration of ten (10)
years from the date on which it was granted.

 

(b) Exercise Price of an Incentive Stock Option. Subject to the provisions of
Section 5(b) regarding Ten Percent Stockholders, the exercise price of each
Incentive Stock Option shall be not less than one hundred percent (100%) of the
Fair Market Value of the Common Stock subject to the Option on the date the
Option is granted. Notwithstanding the foregoing, an Incentive Stock Option may
be granted with an exercise price lower than that set forth in the preceding
sentence if such Option is granted pursuant to an assumption or substitution for
another option in a manner satisfying the provisions of Section 424(a) of the
Code.

 

(c) Exercise Price of a Nonstatutory Stock Option. The Board, in its discretion,
shall determine the exercise price of each Nonstatutory Stock Option.

 

(d) Consideration. The purchase price of Common Stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable law, either (i) in
cash at the time the Option is exercised or (ii) at the discretion of the Board
at the time of the grant of the Option (or subsequently in the case of a
Nonstatutory Stock Option) (1) by delivery to the Company of other Common Stock
at the time the Option is exercised, (2) according to a deferred payment or
other similar arrangement with the Optionholder, (3) by a “net exercise” of the
Option (as further described below), (4) pursuant to a program developed under
Regulation T as promulgated by

 

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the Federal Reserve Board that, prior to the issuance of Common Stock, results
in either the receipt of cash (or check) by the Company or the receipt of
irrevocable instructions to pay the aggregate exercise price to the Company from
the sales proceeds or (5) in any other form of legal consideration that may be
acceptable to the Board. Unless otherwise specifically provided in the Option,
the purchase price of Common Stock acquired pursuant to an Option that is paid
by delivery to the Company of other Common Stock acquired, directly or
indirectly from the Company, shall be paid only by shares of the Common Stock of
the Company that have been held for more than six (6) months (or such longer or
shorter period of time required to avoid a charge to earnings for financial
accounting purposes). At any time that the Company is incorporated in Delaware,
payment of the Common Stock’s “par value,” as defined in the Delaware General
Corporation Law, shall not be made by deferred payment.

 

In the case of any deferred payment arrangement, interest shall be compounded at
least annually and shall be charged at the minimum rate of interest necessary to
avoid (1) the treatment as interest, under any applicable provisions of the
Code, of any amounts other than amounts stated to be interest under the deferred
payment arrangement and (2) the treatment of the Option as a variable award for
financial accounting purposes.

 

In the case of a “net exercise” of an Option, the Company will not require a
payment of the exercise price of the Option from the Participant but will reduce
the number of shares of Common Stock issued upon the exercise by the largest
number of whole shares that has a Fair Market Value that does not exceed the
aggregate exercise price. With respect to any remaining balance of the aggregate
exercise price, the Company shall accept a cash payment from the Participant.
The shares of Common Stock so used to pay the exercise price of an Option under
a “net exercise” will be considered to have resulted from the exercise of the
Option, and accordingly, the Option will not again be exercisable with respect
to such shares, the shares actually delivered to the Participant, and any shares
withheld for purposes of tax withholding.

 

(e) Transferability of an Incentive Stock Option. An Incentive Stock Option
shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionholder
only by the Optionholder. Notwithstanding the foregoing, the Optionholder may,
by delivering written notice to the Company, in a form provided by or otherwise
satisfactory to the Company, designate a third party who, in the event of the
death of the Optionholder, shall thereafter be entitled to exercise the Option.

 

(f) Transferability of a Nonstatutory Stock Option. A Nonstatutory Stock Option
shall be transferable to the extent provided in the Option Agreement. If the
Nonstatutory Stock Option does not provide for transferability, then the
Nonstatutory Stock Option shall not be transferable except by will or by the
laws of descent and distribution and shall be exercisable during the lifetime of
the Optionholder only by the Optionholder. Notwithstanding the foregoing, the
Optionholder may, by delivering written notice to the Company, in a form
provided by or otherwise satisfactory to the Company, designate a third party
who, in the event of the death of the Optionholder, shall thereafter be entitled
to exercise the Option.

 

(g) Vesting Generally. The total number of shares of Common Stock subject to an
Option may, but need not, vest and therefore become exercisable in periodic
installments that may, but need not, be equal. The Option may be subject to such
other terms and conditions on

 

11

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the time or times when it may be exercised (which may be based on performance or
other criteria) as the Board may deem appropriate. The vesting provisions of
individual Options may vary. The provisions of this Section 6(g) are subject to
any Option provisions governing the minimum number of shares of Common Stock as
to which an Option may be exercised.

 

(h) Termination of Continuous Service. In the event that an Optionholder’s
Continuous Service terminates (for reasons other than Cause or upon the
Optionholder’s death or Disability), the Optionholder may exercise his or her
Option (to the extent that the Optionholder was entitled to exercise such Option
as of the date of termination) but only within such period of time ending on the
earlier of (i) the expiration of the term of the Option as set forth in the
Option Agreement or (ii) the date three (3) months following the termination of
the Optionholder’s Continuous Service (or such longer or shorter period
specified in the Option Agreement). If, after termination of Continuous Service,
the Optionholder does not exercise his or her Option within the time specified
herein or in the Option Agreement (as applicable), the Option shall terminate.

 

(i) Extension of Termination Date. An Optionholder’s Option Agreement may (but
need not) provide that if the exercise of the Option following the termination
of the Optionholder’s Continuous Service (for reasons other than Cause or upon
the Optionholder’s death or Disability) would be prohibited at any time solely
because the issuance of shares of Common Stock would violate the registration
requirements under the Securities Act, then the Option shall terminate on the
earlier of (i) the expiration of the term of the Option as set forth in the
Option Agreement or (ii) the expiration of a period of three (3) months after
the termination of the Optionholder’s Continuous Service during which the
exercise of the Option would not be in violation of such registration
requirements.

 

(j) Disability of Optionholder. In the event that an Optionholder’s Continuous
Service terminates as a result of the Optionholder’s Disability, the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise such Option as of the date of termination), but only
within such period of time ending on the earlier of (i) the expiration of the
term of the Option as set forth in the Option Agreement or (ii) the date twelve
(12) months following such termination (or such longer or shorter period
specified in the Option Agreement). If, after termination of Continuous Service,
the Optionholder does not exercise his or her Option within the time specified
herein or in the Option Agreement (as applicable), the Option shall terminate.

 

(k) Death of Optionholder. In the event that (i) an Optionholder’s Continuous
Service terminates as a result of the Optionholder’s death or (ii) the
Optionholder dies within the period (if any) specified in the Option Agreement
after the termination of the Optionholder’s Continuous Service for a reason
other than death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise such Option as of the date of death) by
the Optionholder’s estate, by a person who acquired the right to exercise the
Option by bequest or inheritance or by a person designated to exercise the
option upon the Optionholder’s death pursuant to Section 6(e) or 6(f), but only
within the period ending on the earlier of (1) the expiration of the term of the
Option as set forth in the Option Agreement or (2) the date eighteen (18) months
following the date of death (or such longer or shorter period specified in the
Option

 

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Agreement). If, after death, the Option is not exercised within the time
specified herein or in the Option Agreement (as applicable), the Option shall
terminate.

 

(l) Termination for Cause. In the event an Optionholder’s Continuous Service is
terminated for Cause, the Option shall terminate upon the termination date of
such Optionholder’s Continuous Service and the Optionholder shall be prohibited
from exercising his or her Option from and after the time of such termination.

 

(m) Early Exercise. The Option may, but need not, include a provision whereby
the Optionholder may elect at any time before the Optionholder’s Continuous
Service terminates to exercise the Option as to any part or all of the shares of
Common Stock subject to the Option prior to the full vesting of the Option. Any
unvested shares of Common Stock so purchased may be subject to a repurchase
option in favor of the Company or to any other restriction the Board determines
to be appropriate. The Company will not exercise its repurchase option until at
least six (6) months (or such longer or shorter period of time required to avoid
a charge to earnings for financial accounting purposes) have elapsed following
exercise of the Option unless the Board otherwise specifically provides in the
Option.

 

7. PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.

 

(a) Restricted Stock Awards. Each Restricted Stock Award Agreement shall be in
such form and shall contain such terms and conditions as the Board shall deem
appropriate. At the Board’s election, shares of Common Stock may be (i) held in
book entry form subject to the Company’s instructions until any restrictions
relating to the Restricted Stock Award lapse; or (ii) evidenced by a
certificate, which certificate shall be held in such form and manner as
determined by the Board. The terms and conditions of Restricted Stock Award
Agreements may change from time to time, and the terms and conditions of
separate Restricted Stock Award Agreements need not be identical, but each shall
include (through incorporation of the provisions hereof by reference in the
agreement or otherwise) the substance of each of the following provisions:

 

(i) Purchase Price. At the time of the grant of a Restricted Stock Award, the
Board will determine the price to be paid by the Participant for each share
subject to the Restricted Stock Award. To the extent required by law, the price
to be paid by the Participant for each share of the Restricted Stock Award will
not be less than the par value of a share of Common Stock. A Restricted Stock
Award may be awarded as a stock bonus (i.e., with no cash purchase price to be
paid) to the extent permissible under applicable law.

 

(ii) Consideration. At the time of the grant of a Restricted Stock Award, the
Board will determine the consideration permissible for the payment of the
purchase price of the Restricted Stock Award. The purchase price of Common Stock
acquired pursuant to the Restricted Stock Award shall be paid in one of the
following ways: (i) in cash at the time of purchase; (ii) at the discretion of
the Board, according to a deferred payment or other similar arrangement with the
Participant; (iii) by services rendered or to be rendered to the Company; or
(iv) in any other form of legal consideration that may be acceptable to the
Board in its discretion; provided, however, that at any time that the Company is
incorporated in Delaware, the Common Stock’s “par value,” as defined in the
Delaware General Corporation Law, shall not be paid by

 

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deferred payment and must be paid in a form of consideration that is permissible
under the Delaware General Corporation Law.

 

(iii) Vesting. Shares of Common Stock acquired under a Restricted Stock Award
may, but need not, be subject to a share repurchase option in favor of the
Company in accordance with a vesting schedule to be determined by the Board.

 

(iv) Termination of Participant’s Continuous Service. In the event that a
Participant’s Continuous Service terminates, the Company shall have the right,
but not the obligation, to repurchase or otherwise reacquire any or all of the
shares of Common Stock held by the Participant that have not vested as of the
date of termination under the terms of the Restricted Stock Award Agreement. At
the Board’s election, the repurchase right may be at the least of: (i) the Fair
Market Value on the relevant date; (ii) the Participant’s original cost; or
(iii) if the Participant paid the purchase price for the shares of Common Stock
with services rendered, then for no consideration. The Company shall not be
required to exercise its repurchase option until at least six (6) months (or
such longer or shorter period of time required to avoid a charge to earnings for
financial accounting purposes) have elapsed following the purchase of the
restricted stock unless otherwise determined by the Board or provided in the
Restricted Stock Award Agreement.

 

(v) Transferability. Rights to purchase or receive shares of Common Stock
granted under a Restricted Stock Award shall be transferable by the Participant
only upon such terms and conditions as are set forth in the Restricted Stock
Award Agreement, as the Board shall determine in its discretion, and so long as
Common Stock awarded under the Restricted Stock Award remains subject to the
terms of the Restricted Stock Award Agreement.

 

(b) Phantom Stock. Each Phantom Stock Award Agreement shall be in such form and
shall contain such terms and conditions as the Board shall deem appropriate. The
terms and conditions of Phantom Stock Award Agreements may change from time to
time, and the terms and conditions of separate Phantom Stock Award Agreements
need not be identical, but each shall include (through incorporation of the
provisions hereof by reference in the agreement or otherwise) the substance of
each of the following provisions:

 

(i) Consideration. At the time of grant of a Phantom Stock Award, the Board will
determine the consideration, if any, to be paid by the Participant upon delivery
of each share of Common Stock subject to the Phantom Stock Award. To the extent
required by applicable law, the consideration to be paid by the Participant for
each share of Common Stock subject to a Phantom Stock Award will not be less
than the par value of a share of Common Stock. Such consideration may be paid in
any form permitted under applicable law.

 

(ii) Vesting. At the time of the grant of a Phantom Stock Award, the Board may
impose such restrictions or conditions to the vesting of the Phantom Stock Award
as it, in its absolute discretion, deems appropriate.

 

(iii) Payment. A Phantom Stock Award may be settled by the delivery of shares of
Common Stock, their cash equivalent, or any combination of the two, as the Board
deems appropriate.

 

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(iv) Additional Restrictions. At the time of the grant of a Phantom Stock Award,
the Board, as it deems appropriate, may impose such restrictions or conditions
that delay the delivery of the shares of Common Stock (or their cash equivalent)
subject to a Phantom Stock Award after the vesting of such Award.

 

(v) Dividend Equivalents. Dividend equivalents may be credited in respect of
shares of Common Stock covered by a Phantom Stock Award, as determined by the
Board and contained in the Phantom Stock Award Agreement. At the discretion of
the Board, such dividend equivalents may be converted into additional shares of
Common Stock covered by the Phantom Stock Award by dividing (1) the aggregate
amount or value of the dividends paid with respect to that number of shares of
Common Stock covered by the Phantom Stock Award then credited by (2) the Fair
Market Value per share of Common Stock on the payment date for such dividend, or
in such other manner as determined by the Board. Any additional shares covered
by the Phantom Stock Award credited by reason of such dividend equivalents will
be subject to all the terms and conditions of the underlying Phantom Stock Award
Agreement to which they relate.

 

(vi) Termination of Participant’s Continuous Service. Except as otherwise
provided in the applicable Phantom Stock Award Agreement, such portion of the
Phantom Stock Award that has not vested will be forfeited upon the Participant’s
termination of Continuous Service for any reason.

 

(c) Stock Appreciation Rights. Each Stock Appreciation Right Agreement shall be
in such form and shall contain such terms and conditions as the Board shall deem
appropriate. The terms and conditions of Stock Appreciation Right Agreements may
change from time to time, and the terms and conditions of separate Stock
Appreciation Right Agreements need not be identical. In addition, the terms of a
Stock Appreciation Right may provide for the automatic conversion of such Stock
Appreciation Right, with or without further action by the Board or the
Participant, into another type of Stock Award, which conversion may or may not
be conditioned on the occurrence of one or more events. Each Stock Appreciation
Right Agreement shall include (through incorporation of the provisions hereof by
reference in the agreement or otherwise) the substance of each of the following
provisions:

 

(i) Strike Price and Calculation of Appreciation. Each Stock Appreciation Right
will be denominated in share of Common Stock equivalents. The appreciation
distribution payable on the exercise of a Stock Appreciation Right will be not
greater than an amount equal to the excess of (A) the aggregate Fair Market
Value (on the date of the exercise of the Stock Appreciation Right) of a number
of shares of Common Stock equal to the number of share of Common Stock
equivalents in which the Participant is vested under such Stock Appreciation
Right, and with respect to which the Participant is exercising the Stock
Appreciation Right on such date, over (B) an amount that will be determined by
the Committee at the time of grant of the Stock Appreciation Right.

 

(ii) Vesting. At the time of the grant of a Stock Appreciation Right, the Board
may impose such restrictions or conditions to the vesting of such Stock
Appreciate Right as it, in its absolute discretion, deems appropriate.

 

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(iii) Exercise. To exercise any outstanding Stock Appreciation Right, the
Participant must provide written notice of exercise to the Company in compliance
with the provisions of the Stock Appreciation Right Agreement evidencing such
Stock Appreciation Right.

 

(iv) Payment. In general, the appreciation distribution with respect to a Stock
Appreciation Right may be paid in one or more of the following forms: Common
Stock, cash or any other form of consideration as determined by the Board and
set forth in the Stock Appreciation Right Agreement evidencing such Stock
Appreciation Right; provided, however, that, unless and until the Plan has been
approved by the stockholders of the Company, the appreciation distribution with
respect to a Stock Appreciation Right may be paid only in cash, or, at the
election of the Participant in his or her sole discretion at the time of
exercise, shares of Common Stock having an aggregate Fair Market Value equal to
such appreciation distribution (with cash paid in lieu of any fractional
shares).

 

(v) Termination of Continuous Service. In the event that a Participant’s
Continuous Service terminates, the Participant may exercise his or her Stock
Appreciation Right (to the extent that the Participant was entitled to exercise
such Stock Appreciation Right as of the date of termination) but only within
such period of time ending on the earlier of (i) the expiration of the term of
the Stock Appreciation Right as set forth in the Stock Appreciation Right
Agreement or (ii) the date three (3) months (or such longer or shorter period
specified in the Stock Appreciation Right Agreement) following the termination
of the Participant’s Continuous Service. If, after termination of Continuous
Service, the Participant does not exercise his or her Stock Appreciation Right
within the time specified herein or in the Stock Appreciation Right Agreement
(as applicable), the Stock Appreciation Right shall terminate.

 

(d) Other Stock Awards. Other forms of Stock Awards valued in whole or in part
by reference to, or otherwise based on, Common Stock may be granted either alone
or in addition to Stock Awards provided for under Section 6 and the preceding
provisions of this Section 7. Subject to the provisions of the Plan, the Board
shall have sole and complete authority to determine the persons to whom and the
time or times at which such Other Stock Awards will be granted, the number of
shares of Common Stock (or the cash equivalent thereof) to be granted pursuant
to such Awards and all other terms and conditions of such Awards.

 

8. COVENANTS OF THE COMPANY.

 

(a) Availability of Shares. During the terms of the Stock Awards, the Company
shall keep available at all times the number of shares of Common Stock required
to satisfy such Stock Awards.

 

(b) Securities Law Compliance. The Company shall seek to obtain from each
regulatory commission or agency having jurisdiction over the Plan such authority
as may be required to grant Stock Awards and to issue and sell shares of Common
Stock upon exercise of the Stock Awards; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any
such Stock Award. If, after reasonable efforts, the Company is unable to obtain
from any such regulatory commission or agency the authority which counsel for
the

 

16

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Company deems necessary for the lawful issuance and sale of Common Stock under
the Plan, the Company shall be relieved from any liability for failure to issue
and sell Common Stock upon exercise of such Stock Awards unless and until such
authority is obtained.

 

9. USE OF PROCEEDS FROM STOCK.

 

Proceeds from the sale of Common Stock pursuant to Stock Awards shall constitute
general funds of the Company.

 

10. MISCELLANEOUS.

 

(a) Acceleration of Exercisability and Vesting. The Board shall have the power
to accelerate the time at which a Stock Award may first be exercised or the time
during which a Stock Award or any part thereof will vest in accordance with the
Plan, notwithstanding the provisions in the Stock Award stating the time at
which it may first be exercised or the time during which it will vest.

 

(b) Stockholder Rights. No Participant shall be deemed to be the holder of, or
to have any of the rights of a holder with respect to, any shares of Common
Stock subject to such Stock Award unless and until such Participant has
satisfied all requirements for exercise of the Stock Award pursuant to its
terms.

 

(c) No Employment or other Service Rights. Nothing in the Plan, any Stock Award
Agreement or other instrument executed pursuant thereto or any Stock Award
granted pursuant thereto shall confer upon any Participant any right to continue
to serve the Company or an Affiliate in the capacity in effect at the time the
Stock Award was granted or shall affect the right of the Company or an Affiliate
to terminate (i) the employment of an Employee with or without notice and with
or without cause, (ii) the service of a Consultant pursuant to the terms of such
Consultant’s agreement with the Company or an Affiliate or (iii) the service of
a Director pursuant to the Bylaws of the Company or an Affiliate, and any
applicable provisions of the corporate law of the state in which the Company or
the Affiliate is incorporated, as the case may be.

 

(d) Incentive Stock Option $100,000 Limitation. To the extent that the aggregate
Fair Market Value (determined at the time of grant) of Common Stock with respect
to which Incentive Stock Options are exercisable for the first time by any
Optionholder during any calendar year (under all plans of the Company and its
Affiliates) exceeds one hundred thousand dollars ($100,000), the Options or
portions thereof that exceed such limit (according to the order in which they
were granted) shall be treated as Nonstatutory Stock Options, notwithstanding
any contrary provision of the applicable Option Agreement(s).

 

(e) Investment Assurances. The Company may require a Participant, as a condition
of exercising or acquiring Common Stock under any Stock Award, (i) to give
written assurances satisfactory to the Company as to the Participant’s knowledge
and experience in financial and business matters and/or to employ a purchaser
representative reasonably satisfactory to the Company who is knowledgeable and
experienced in financial and business matters and that he or she is capable of
evaluating, alone or together with the purchaser representative, the merits and
risks of exercising the Stock Award; and (ii) to give written assurances
satisfactory to the

 

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Company stating that the Participant is acquiring Common Stock subject to the
Stock Award for the Participant’s own account and not with any present intention
of selling or otherwise distributing the Common Stock. The foregoing
requirements, and any assurances given pursuant to such requirements, shall be
inoperative if (1) the issuance of the shares of Common Stock upon the exercise
or acquisition of Common Stock under the Stock Award has been registered under a
then currently effective registration statement under the Securities Act or (2)
as to any particular requirement, a determination is made by counsel for the
Company that such requirement need not be met in the circumstances under the
then applicable securities laws. The Company may, upon advice of counsel to the
Company, place legends on stock certificates representing Common Stock issued
under the Plan as such counsel deems necessary or appropriate in order to comply
with applicable securities laws, including, but not limited to, legends
restricting the transfer of the Common Stock.

 

(f) Withholding Obligations. To the extent provided by the terms of a Stock
Award Agreement, the Participant may satisfy any federal, state or local tax
withholding obligation relating to the exercise or acquisition of Common Stock
under a Stock Award by any of the following means (in addition to the Company’s
right to withhold from any compensation paid to the Participant by the Company)
or by a combination of such means: (i) tendering a cash payment; (ii)
authorizing the Company to withhold shares of Common Stock from the shares of
Common Stock otherwise issuable to the Participant as a result of the exercise
or acquisition of Common Stock under the Stock Award; provided, however, that no
shares of Common Stock are withheld with a value exceeding the minimum amount of
tax required to be withheld by law (or such lesser amount as may be necessary to
avoid variable award accounting); or (iii) delivering to the Company owned and
unencumbered shares of Common Stock.

 

11. ADJUSTMENTS UPON CHANGES IN STOCK.

 

(a) Capitalization Adjustments. If any change is made in, or other event occurs
with respect to, the Common Stock subject to the Plan or subject to any Stock
Award without the receipt of consideration by the Company (through merger,
consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by the
Company (each a “Capitalization Adjustment”), the Plan will be appropriately
adjusted in the class(es) and maximum number of securities subject to the Plan
pursuant to Sections 4(a) and 4(b) and the maximum number of securities subject
to award to any person pursuant to Section 5(c), and the outstanding Stock
Awards will be appropriately adjusted in the class(es) and number of securities
and price per share of Common Stock subject to such outstanding Stock Awards.
The Board shall make such adjustments, and its determination shall be final,
binding and conclusive. (The conversion of any convertible securities of the
Company shall not be treated as a transaction “without receipt of consideration”
by the Company.)

 

(b) Dissolution or Liquidation. In the event of a dissolution or liquidation of
the Company, then all outstanding Stock Awards shall terminate immediately prior
to the completion of such dissolution or liquidation.

 

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(c) Corporate Transaction. In the event of a Corporate Transaction, any
surviving corporation or acquiring corporation may (but need not) assume or
continue any or all Stock Awards outstanding under the Plan or may (but need
not) substitute similar stock awards for any and all Stock Awards outstanding
under the Plan, including an award to acquire the same consideration paid to the
stockholders or the Company, as the case may be, pursuant to the Corporate
Transaction), and any reacquisition or repurchase rights held by the Company in
respect of Common Stock issued pursuant to any and all Stock Awards may be
assigned by the Company to the successor of the Company (or the successor’s
parent company), if any, in connection with such Corporate Transaction. In the
event that any surviving corporation or acquiring corporation does not assume or
continue all such outstanding Stock Awards or substitute similar stock awards
for all such outstanding Stock Awards, then with respect to Stock Awards that
have been not assumed, continued or substituted and that are held by
Participants whose Continuous Service has not terminated prior to the effective
time of the Corporate Transaction, the vesting of such Stock Awards (and, if
applicable, the time at which such Stock Awards may be exercised) shall
(contingent upon the effectiveness of the Corporate Transaction) be accelerated
in full to a date prior to the effective time of such Corporate Transaction as
the Board shall determine (or, if the Board shall not determine such a date, to
the date that is five (5) days prior to the effective time of the Corporate
Transaction), such Stock Awards shall terminate if not exercised (if applicable)
at or prior to such effective time, and any reacquisition or repurchase rights
held by the Company with respect to such Stock Awards shall (contingent upon the
effectiveness of the Corporate Transaction) lapse. With respect to any other
Stock Awards outstanding under the Plan that have not been assumed, continued or
substituted, the vesting of such Stock Awards (and, if applicable, the time at
which such Stock Award may be exercised) shall not be accelerated, unless
otherwise provided in a written agreement between the Company or any Affiliate
and the holder of such Stock Award, and such Stock Awards shall terminate if not
exercised (if applicable) prior to the effective time of the Corporate
Transaction.

 

(d) Change in Control. A Stock Award may be subject to additional acceleration
of vesting and exercisability upon or after a Change in Control as may be
provided in the Stock Award Agreement for such Stock Award or as may be provided
in any other written agreement between the Company or any Affiliate and the
Participant, but in the absence of such provision, no such acceleration shall
occur.

 

12. AMENDMENT OF THE PLAN AND STOCK AWARDS.

 

(a) Amendment of Plan. The Board at any time, and from time to time, may amend
the Plan. However, except as provided in Section 11(a) relating to
Capitalization Adjustments, no amendment shall be effective unless approved by
the stockholders of the Company to the extent stockholder approval is necessary
to satisfy applicable law.

 

(b) Stockholder Approval. The Board, in its sole discretion, may submit any
other amendment to the Plan for stockholder approval, including, but not limited
to, amendments to the Plan intended to satisfy the requirements of Section
162(m) of the Code and the regulations thereunder regarding the exclusion of
performance-based compensation from the limit on corporate deductibility of
compensation paid to Covered Employees.

 

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(c) Contemplated Amendments. It is expressly contemplated that the Board may
amend the Plan in any respect the Board deems necessary or advisable to provide
eligible Employees with the maximum benefits provided or to be provided under
the provisions of the Code and the regulations promulgated thereunder relating
to Incentive Stock Options and/or to bring the Plan and/or Incentive Stock
Options granted under it into compliance therewith.

 

(d) No Impairment of Rights. Rights under any Stock Award granted before
amendment of the Plan shall not be impaired by any amendment of the Plan unless
(i) the Company requests the consent of the Participant and (ii) the Participant
consents in writing.

 

(e) Amendment of Stock Awards. The Board at any time, and from time to time, may
amend the terms of any one or more Stock Awards, including, but not limited to,
amendments to provide terms more favorable than previously provided in the
agreement evidencing a Stock Award, subject to any specified limits in the Plan
that are not subject to Board discretion; provided, however, that the rights
under any Stock Award shall not be impaired by any such amendment unless (i) the
Company requests the consent of the Participant and (ii) the Participant
consents in writing.

 

13. TERMINATION OR SUSPENSION OF THE PLAN.

 

(a) Plan Term. The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate on the day before the tenth (10th)
anniversary of the date the Plan is adopted by the Board or approved by the
stockholders of the Company, whichever is earlier. No Stock Awards may be
granted under the Plan while the Plan is suspended or after it is terminated.

 

(b) No Impairment of Rights. Suspension or termination of the Plan shall not
impair rights and obligations under any Stock Award granted while the Plan is in
effect except with the written consent of the Participant.

 

14. EFFECTIVE DATE OF PLAN.

 

The Plan shall become effective on the date the Plan is adopted by the Board;
provided, however, that, no Stock Award other than Stock Appreciation Rights
shall be granted under the Plan unless and until the Plan has been approved by
the stockholders of the Company within twelve (12) months after the date the
Plan is adopted by the Board.

 

15. CHOICE OF LAW.

 

The laws of the State of California shall govern all questions concerning the
construction, validity and interpretation of this Plan, without regard to such
state’s conflict of laws rules.

 

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