Exhibit 10.1

 

CONCEPTUS, INC.

 

FIFTH AMENDED AND RESTATED
2001 EQUITY INCENTIVE PLAN

 

2001 Equity Incentive Plan

Adopted by the Board: March 21, 2001

Approved by Stockholders: May 16, 2001

 

Amended and Restated Equity Incentive Plan
Adopted by the Board: March 2002

Approved by Stockholders: May 30, 2002

 

Second Amended and Restated Equity Incentive Plan

Adopted by the Board: April 2003

Approved by Stockholders: June 10, 2003

 

Third Amended and Restated Equity Incentive Plan

Adopted by the Board: March 2004

Approved by Stockholders: April 19, 2004

 

Amendment to Third Amended and Restated Equity Incentive Plan

Adopted by the Board: March 2004

Approved by Stockholders: April 19, 2004

 

Fourth Amended and Restated Equity Incentive Plan

Adopted by the Executive Committee: November 30, 2004

 

Fifth Amended and Restated Equity Incentive Plan

Adopted by the Executive Committee: January 5, 2005

 

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TABLE OF CONTENTS

 

1.

 

PURPOSES OF THE PLAN

 

 

 

 

 

2.

 

DEFINITIONS

 

 

 

 

 

3.

 

STOCK SUBJECT TO THE PLAN

 

 

 

 

 

4.

 

ADMINISTRATION OF THE PLAN

 

 

 

 

 

5.

 

ELIGIBILITY

 

 

 

 

 

6.

 

LIMITATIONS.

 

 

 

 

 

7.

 

TERM OF PLAN

 

 

 

 

 

8.

 

TERM OF AWARDS

 

 

 

 

 

9.

 

OPTION EXERCISE PRICE AND CONSIDERATION

 

 

 

 

 

10.

 

EXERCISE OF OPTION;

 

 

 

 

 

11.

 

NON-TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS

 

 

 

 

 

12.

 

GRANTING OF AWARDS TO INDEPENDENT DIRECTORS

 

 

 

 

 

13.

 

TERMS OF AWARDS GRANTED TO INDEPENDENT DIRECTORS

 

 

 

 

 

14.

 

STOCK PURCHASE RIGHTS

 

 

 

 

 

15.

 

RESTRICTED STOCK UNITS

 

 

 

 

 

16.

 

STOCK APPRECIATION RIGHTS

 

 

 

 

 

17.

 

OTHER AWARDS.

 

 

 

 

 

18.

 

ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER OR ASSET SALE

 

 

 

 

 

19.

 

TIME OF GRANTING AWARDS

 

 

 

 

 

20.

 

AMENDMENT AND TERMINATION OF THE PLAN

 

 

 

 

 

21.

 

STOCKHOLDER APPROVAL

 

 

 

 

 

22.

 

INABILITY TO OBTAIN AUTHORITY

 

 

 

 

 

23.

 

RESERVATION OF SHARES

 

 

 

 

 

24.

 

INVESTMENT INTENT

 

 

 

 

 

25.

 

GOVERNING LAW

 

 

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CONCEPTUS, INC.

 

FIFTH AMENDED AND RESTATED 2001 EQUITY INCENTIVE PLAN

 

1.                                       Purposes of the Plan.  The purposes of
the Conceptus, Inc. Fifth Amended and Restated 2001 Equity Incentive Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees, Directors and
Consultants and to promote the success of the Company’s business.  Options
granted under the Plan may be Incentive Stock Options or Non-Qualified Stock
Options, as determined by the Administrator at the time of grant.  Other Awards
may also be granted under the Plan.

 

2.                                       Definitions.  As used herein, the
following definitions shall apply:

 

(A)                                  “ACQUISITION” MEANS (I) ANY CONSOLIDATION
OR MERGER OF THE COMPANY WITH OR INTO ANY OTHER CORPORATION OR OTHER ENTITY OR
PERSON IN WHICH THE STOCKHOLDERS OF THE COMPANY PRIOR TO SUCH CONSOLIDATION OR
MERGER OWN LESS THAN FIFTY PERCENT (50%) OF THE COMPANY’S VOTING POWER
IMMEDIATELY AFTER SUCH CONSOLIDATION OR MERGER, EXCLUDING ANY CONSOLIDATION OR
MERGER EFFECTED EXCLUSIVELY TO CHANGE THE DOMICILE OF THE COMPANY; OR (II) A
SALE OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE COMPANY.

 

(B)                                 “ADMINISTRATOR” MEANS THE BOARD OR THE
COMMITTEE RESPONSIBLE FOR CONDUCTING THE GENERAL ADMINISTRATION OF THE PLAN, AS
APPLICABLE, IN ACCORDANCE WITH SECTION 4 HEREOF.

 

(C)                                  “APPLICABLE LAWS” MEANS THE REQUIREMENTS
RELATING TO THE ADMINISTRATION OF STOCK OPTION PLANS UNDER U.S. STATE CORPORATE
LAWS, U.S. FEDERAL AND STATE SECURITIES LAWS, THE CODE, ANY STOCK EXCHANGE OR
QUOTATION SYSTEM ON WHICH THE COMMON STOCK IS LISTED OR QUOTED AND THE
APPLICABLE LAWS OF ANY FOREIGN COUNTRY OR JURISDICTION WHERE OPTIONS OR STOCK
PURCHASE RIGHTS ARE GRANTED UNDER THE PLAN.

 

(D)                                 “AUDIT COMMITTEE” SHALL MEAN THE AUDIT
COMMITTEE OF THE BOARD.

 

(E)                                  “AWARD” SHALL MEAN AN OPTION, A RESTRICTED
STOCK AWARD, A STOCK APPRECIATION RIGHT AWARD, A PERFORMANCE SHARE AWARD, A
DIVIDEND EQUIVALENTS AWARD, A STOCK PAYMENT AWARD, A STOCK PURCHASE RIGHT OR A
RESTRICTED STOCK UNIT AWARD GRANTED TO AN ELIGIBLE INDIVIDUAL UNDER THE PLAN.

 

(F)                                    “AWARD AGREEMENT” MEANS ANY WRITTEN
AGREEMENT, CONTRACT, OR OTHER INSTRUMENT OR DOCUMENT EVIDENCING AN AWARD.

 

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

 

(H)                                 “CODE” MEANS THE INTERNAL REVENUE CODE OF
1986, AS AMENDED, OR ANY SUCCESSOR STATUTE OR STATUTES THERETO.  REFERENCE TO
ANY PARTICULAR CODE SECTION SHALL INCLUDE ANY SUCCESSOR SECTION.

 

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(I)                                     “COMMITTEE” MEANS A COMMITTEE APPOINTED
BY THE BOARD IN ACCORDANCE WITH SECTION 4 HEREOF.

 

(J)                                     “COMMON STOCK” MEANS THE COMMON STOCK OF
THE COMPANY, PAR VALUE $0.003 PER SHARE.

 

(K)                                  “COMPANY” MEANS CONCEPTUS, INC., A DELAWARE
CORPORATION.

 

(L)                                     “COMPENSATION COMMITTEE” SHALL MEAN THE
COMPENSATION COMMITTEE OF THE BOARD.

 

(M)                               “CONSULTANT” MEANS ANY CONSULTANT OR ADVISER
IF: (I) THE CONSULTANT OR ADVISER RENDERS BONA FIDE SERVICES TO THE COMPANY OR
ANY PARENT OR SUBSIDIARY OF THE COMPANY; (II) THE SERVICES RENDERED BY THE
CONSULTANT OR ADVISER ARE NOT IN CONNECTION WITH THE OFFER OR SALE OF SECURITIES
IN A CAPITAL-RAISING TRANSACTION AND DO NOT DIRECTLY OR INDIRECTLY PROMOTE OR
MAINTAIN A MARKET FOR THE COMPANY’S SECURITIES; AND (III) THE CONSULTANT OR
ADVISER IS A NATURAL PERSON WHO HAS CONTRACTED DIRECTLY WITH THE COMPANY OR ANY
PARENT OR SUBSIDIARY OF THE COMPANY TO RENDER SUCH SERVICES.

 

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

 

(O)                                 “EMPLOYEE” MEANS ANY PERSON, INCLUDING AN
OFFICER OR DIRECTOR, WHO IS AN EMPLOYEE (AS DEFINED IN ACCORDANCE WITH SECTION
3401(C) OF THE CODE) OF THE COMPANY OR ANY PARENT OR SUBSIDIARY OF THE COMPANY. 
A SERVICE PROVIDER SHALL NOT CEASE TO BE AN EMPLOYEE IN THE CASE OF (I) ANY
LEAVE OF ABSENCE APPROVED BY THE COMPANY OR (II) TRANSFERS BETWEEN LOCATIONS OF
THE COMPANY OR BETWEEN THE COMPANY, ITS PARENT, ANY SUBSIDIARY, OR ANY
SUCCESSOR.  FOR PURPOSES OF INCENTIVE STOCK OPTIONS, NO SUCH LEAVE MAY EXCEED
NINETY (90) DAYS, UNLESS REEMPLOYMENT UPON EXPIRATION OF SUCH LEAVE IS
GUARANTEED BY STATUTE OR CONTRACT.  NEITHER SERVICE AS A DIRECTOR NOR PAYMENT OF
A DIRECTOR’S FEE BY THE COMPANY SHALL BE SUFFICIENT, BY ITSELF, TO CONSTITUTE
“EMPLOYMENT” BY THE COMPANY.

 

(P)                                 “EXCHANGE ACT” MEANS THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED, OR ANY SUCCESSOR STATUTE OR STATUTES THERETO. 
REFERENCE TO ANY PARTICULAR EXCHANGE ACT SECTION SHALL INCLUDE ANY SUCCESSOR
SECTION.

 

(Q)                                 “EXECUTIVE COMMITTEE” SHALL MEAN THE
EXECUTIVE COMMITTEE OF THE BOARD.

 

(R)                                    “FAIR MARKET VALUE” MEANS, AS OF ANY
DATE, THE VALUE OF A SHARE OF COMMON STOCK DETERMINED AS FOLLOWS:

 

(I)                                     IF THE COMMON STOCK IS LISTED ON ANY
ESTABLISHED STOCK EXCHANGE OR A NATIONAL MARKET SYSTEM, INCLUDING, WITHOUT
LIMITATION, THE NASDAQ NATIONAL MARKET OR THE NASDAQ SMALLCAP MARKET OF THE
NASDAQ STOCK MARKET, ITS FAIR MARKET VALUE SHALL BE THE CLOSING SALES PRICE FOR
A SHARE OF SUCH STOCK (OR THE CLOSING BID, IF NO SALES WERE REPORTED) AS QUOTED
ON SUCH EXCHANGE OR SYSTEM FOR THE LAST MARKET TRADING DAY PRIOR TO THE TIME OF
DETERMINATION, AS REPORTED IN THE WALL STREET JOURNAL OR SUCH OTHER SOURCE AS
THE ADMINISTRATOR DEEMS RELIABLE;

 

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(II)                                  IF THE COMMON STOCK IS REGULARLY QUOTED BY
A RECOGNIZED SECURITIES DEALER BUT SELLING PRICES ARE NOT REPORTED, ITS FAIR
MARKET VALUE SHALL BE THE MEAN BETWEEN THE HIGH BID AND LOW ASKED PRICES FOR A
SHARE OF THE COMMON STOCK ON THE LAST MARKET TRADING DAY PRIOR TO THE DAY OF
DETERMINATION; OR

 

(III)                               IN THE ABSENCE OF AN ESTABLISHED MARKET FOR
THE COMMON STOCK, THE FAIR MARKET VALUE THEREOF SHALL BE DETERMINED IN GOOD
FAITH BY THE ADMINISTRATOR.

 

(S)                                  “HOLDER” MEANS A PERSON WHO HAS BEEN
GRANTED OR AWARDED AN AWARD OR WHO HOLDS SHARES ACQUIRED PURSUANT TO THE
EXERCISE OF AN AWARD.

 

(T)                                    “INCENTIVE STOCK OPTION” MEANS AN OPTION
INTENDED TO QUALIFY AS AN INCENTIVE STOCK OPTION WITHIN THE MEANING OF
SECTION 422 OF THE CODE AND WHICH IS DESIGNATED AS AN INCENTIVE STOCK OPTION BY
THE ADMINISTRATOR.

 

(U)                                 “INDEPENDENT DIRECTOR” MEANS A DIRECTOR WHO
IS NOT AN EMPLOYEE OF THE COMPANY.

 

(V)                                 “LEAD DIRECTOR” SHALL MEAN THE LEAD
INDEPENDENT DIRECTOR APPOINTED BY THE BOARD.

 

(W)                               “NON-QUALIFIED STOCK OPTION” MEANS AN OPTION
(OR PORTION THEREOF) THAT IS NOT DESIGNATED AS AN INCENTIVE STOCK OPTION BY THE
ADMINISTRATOR, OR WHICH IS DESIGNATED AS AN INCENTIVE STOCK OPTION BY THE
ADMINISTRATOR BUT FAILS TO QUALIFY AS AN INCENTIVE STOCK OPTION WITHIN THE
MEANING OF SECTION 422 OF THE CODE.

 

(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 A STOCK OPTION GRANTED
PURSUANT TO THE PLAN.

 

(Z)                                   “OPTION AGREEMENT” MEANS A WRITTEN
AGREEMENT BETWEEN THE COMPANY AND A HOLDER EVIDENCING THE TERMS AND CONDITIONS
OF AN INDIVIDUAL OPTION GRANT.  THE OPTION AGREEMENT IS SUBJECT TO THE TERMS AND
CONDITIONS OF THE PLAN.

 

(AA)                            “PARENT” MEANS ANY CORPORATION, WHETHER NOW OR
HEREAFTER EXISTING (OTHER THAN THE COMPANY), IN AN UNBROKEN CHAIN OF
CORPORATIONS ENDING WITH THE COMPANY IF EACH OF THE CORPORATIONS OTHER THAN THE
LAST CORPORATION IN THE UNBROKEN CHAIN OWNS STOCK POSSESSING MORE THAN FIFTY
PERCENT OF THE TOTAL COMBINED VOTING POWER OF ALL CLASSES OF STOCK IN ONE OF THE
OTHER CORPORATIONS IN SUCH CHAIN.

 

(BB)                          “PERFORMANCE SHARE” MEANS A RIGHT GRANTED TO A
HOLDER PURSUANT TO SECTION 17, TO RECEIVE CASH, STOCK, OR OTHER AWARDS, THE
PAYMENT OF WHICH IS CONTINGENT UPON ACHIEVING CERTAIN PERFORMANCE GOALS
ESTABLISHED BY THE COMMITTEE.

 

(CC)                            “PLAN” MEANS THE CONCEPTUS, INC. FIFTH AMENDED
AND RESTATED 2001 EQUITY INCENTIVE PLAN.

 

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(DD)                          “RESTRICTED STOCK” MEANS SHARES (I) ACQUIRED
PURSUANT TO THE EXERCISE OF AN UNVESTED OPTION IN ACCORDANCE WITH SECTION 10(H)
BELOW OR PURSUANT TO A STOCK PURCHASE RIGHT GRANTED UNDER SECTION 14 BELOW OR
(II) ISSUED TO INDEPENDENT DIRECTORS PURSUANT TO SECTION 12 BELOW.

 

(EE)                            “RESTRICTED STOCK UNIT” MEANS A RIGHT TO RECEIVE
A SPECIFIED NUMBER OF SHARES OF COMMON STOCK DURING SPECIFIED TIME PERIODS
PURSUANT TO SECTION 15.

 

(FF)                                “RULE 16B-3” MEANS THAT CERTAIN RULE 16B-3
UNDER THE EXCHANGE ACT, AS SUCH RULE MAY BE AMENDED FROM TIME TO TIME.

 

(GG)                          “SECURITIES ACT” MEANS THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY SUCCESSOR STATUTE OR STATUTES THERETO.  REFERENCE TO ANY
PARTICULAR SECURITIES ACT SECTION SHALL INCLUDE ANY SUCCESSOR SECTION.

 

(HH)                          “SERVICE PROVIDER” MEANS AN EMPLOYEE, DIRECTOR OR
CONSULTANT.

 

(II)                                  “SHARE” MEANS A SHARE OF COMMON STOCK, AS
ADJUSTED IN ACCORDANCE WITH SECTION 18 BELOW.

 

(JJ)                                  “STOCK APPRECIATION RIGHT” OR “SAR” MEANS
A RIGHT GRANTED PURSUANT TO SECTION 16 TO RECEIVE A PAYMENT EQUAL TO THE EXCESS
OF THE FAIR MARKET VALUE OF A SPECIFIED NUMBER OF SHARES OF COMMON STOCK ON THE
DATE THE SAR IS EXERCISED OVER THE FAIR MARKET VALUE ON THE DATE THE SAR WAS
GRANTED AS SET FORTH IN THE APPLICABLE AWARD AGREEMENT.

 

(KK)                            “STOCK PAYMENT” MEANS (A) A PAYMENT IN THE FORM
OF SHARES, OR (B) AN OPTION OR OTHER RIGHT TO PURCHASE SHARES, AS PART OF ANY
BONUS, DEFERRED COMPENSATION OR OTHER ARRANGEMENT, MADE IN LIEU OF ALL OR ANY
PORTION OF THE COMPENSATION, GRANTED PURSUANT TO SECTION 17.

 

(LL)                                  “STOCK PURCHASE RIGHT” MEANS A RIGHT TO
PURCHASE COMMON STOCK PURSUANT TO SECTION 14 BELOW.

 

(MM)                      “SUBSIDIARY” MEANS ANY CORPORATION, WHETHER NOW OR
HEREAFTER EXISTING (OTHER THAN THE COMPANY), IN AN UNBROKEN CHAIN OF
CORPORATIONS BEGINNING WITH THE COMPANY IF EACH OF THE CORPORATIONS OTHER THAN
THE LAST CORPORATION IN THE UNBROKEN CHAIN OWNS STOCK POSSESSING MORE THAN FIFTY
PERCENT OF THE TOTAL COMBINED VOTING POWER OF ALL CLASSES OF STOCK IN ONE OF THE
OTHER CORPORATIONS IN SUCH CHAIN.

 

3.                                       Stock Subject to the Plan.  Subject to
the provisions of Section 15 of the Plan, the shares of stock subject to Awards
shall be Common Stock, initially shares of the Company’s Common Stock, par value
$0.003 per share.  Subject to the provisions of Section 15 of the Plan, the
maximum aggregate number of Shares which may be issued upon exercise of Options
or Stock Purchase Rights or issued in the form of Restricted Stock is 2,500,000
Shares.  Shares issued pursuant to an Award may be authorized but unissued, or
reacquired Common Stock.  If an Option or Stock Purchase Right expires or
becomes unexercisable without having been exercised in full, the unpurchased
Shares which were subject thereto shall become available for future grant or
sale under the Plan (unless the Plan has terminated).  Shares which are
delivered

 

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by the Holder or withheld by the Company upon the exercise of an Option or Stock
Purchase Rights under the Plan, in payment of the exercise price thereof or tax
withholding thereon, may again be optioned, granted or awarded hereunder,
subject to the limitations of this Section 3.  If Shares of Restricted Stock are
repurchased by the Company at their original purchase price, if any, such Shares
shall become available for future grant under the Plan.  Notwithstanding the
provisions of this Section 3, no Shares may again be optioned, granted or
awarded if such action would cause an Incentive Stock Option to fail to qualify
as an Incentive Stock Option under Section 422 of the Code.

 

4.                                       Administration of the Plan.

 

(A)                                  ADMINISTRATOR.  EITHER THE BOARD OR A
COMMITTEE OF THE BOARD DELEGATED ADMINISTRATIVE AUTHORITY HEREUNDER SHALL
ADMINISTER THE PLAN AND, IN THE CASE OF A COMMITTEE, THE COMMITTEE SHALL CONSIST
SOLELY OF TWO OR MORE INDEPENDENT DIRECTORS EACH OF WHOM IS BOTH AN “OUTSIDE
DIRECTOR,” WITHIN THE MEANING OF SECTION 162(M) OF THE CODE, AND A “NON-EMPLOYEE
DIRECTOR” WITHIN THE MEANING OF RULE 16B-3.  WITHIN THE SCOPE OF SUCH AUTHORITY,
THE BOARD OR THE COMMITTEE MAY (I) DELEGATE TO A COMMITTEE OF ONE OR MORE
MEMBERS OF THE BOARD WHO ARE NOT INDEPENDENT DIRECTORS THE AUTHORITY TO GRANT
AWARDS UNDER THE PLAN TO ELIGIBLE PERSONS WHO ARE EITHER (1) NOT THEN “COVERED
EMPLOYEES,” WITHIN THE MEANING OF SECTION 162(M) OF THE CODE AND ARE NOT
EXPECTED TO BE “COVERED EMPLOYEES” AT THE TIME OF RECOGNITION OF INCOME
RESULTING FROM SUCH AWARD OR (2) NOT PERSONS WITH RESPECT TO WHOM THE COMPANY
WISHES TO COMPLY WITH SECTION 162(M) OF THE CODE AND/OR (II) DELEGATE TO A
COMMITTEE OF ONE OR MORE MEMBERS OF THE BOARD WHO ARE NOT “NON-EMPLOYEE
DIRECTORS,” WITHIN THE MEANING OF RULE 16B-3, THE AUTHORITY TO GRANT AWARDS
UNDER THE PLAN TO ELIGIBLE PERSONS WHO ARE NOT THEN SUBJECT TO SECTION 16 OF THE
EXCHANGE ACT.  THE BOARD MAY ABOLISH THE COMMITTEE AT ANY TIME AND REVEST IN THE
BOARD THE ADMINISTRATION OF THE PLAN.  APPOINTMENT OF COMMITTEE MEMBERS SHALL BE
EFFECTIVE UPON ACCEPTANCE OF APPOINTMENT. COMMITTEE MEMBERS MAY RESIGN AT ANY
TIME BY DELIVERING WRITTEN NOTICE TO THE BOARD.  VACANCIES IN THE COMMITTEE MAY
BE FILLED ONLY BY THE BOARD.

 

(B)                                 POWERS OF THE ADMINISTRATOR.  SUBJECT TO THE
PROVISIONS OF THE PLAN AND THE SPECIFIC DUTIES DELEGATED BY THE BOARD TO SUCH
COMMITTEE, AND SUBJECT TO THE APPROVAL OF ANY RELEVANT AUTHORITIES, THE
ADMINISTRATOR SHALL HAVE THE AUTHORITY IN ITS SOLE DISCRETION:

 

(I)                                     TO DETERMINE THE FAIR MARKET VALUE;

 

(II)                                  TO SELECT THE SERVICE PROVIDERS TO WHOM
AWARDS MAY FROM TIME TO TIME BE GRANTED HEREUNDER;

 

(III)                               TO DETERMINE THE NUMBER OF SHARES TO BE
COVERED BY EACH SUCH AWARD GRANTED HEREUNDER;

 

(IV)                              TO APPROVE FORMS OF AGREEMENT FOR USE UNDER
THE PLAN;

 

(V)                                 TO DETERMINE THE TERMS AND CONDITIONS OF ANY
AWARD GRANTED HEREUNDER (SUCH TERMS AND CONDITIONS INCLUDE, BUT ARE NOT LIMITED
TO, THE EXERCISE PRICE, THE TIME OR TIMES WHEN AWARDS MAY VEST OR BE EXERCISED
(WHICH MAY BE BASED ON PERFORMANCE CRITERIA), ANY VESTING ACCELERATION OR WAIVER
OF FORFEITURE RESTRICTIONS, AND ANY RESTRICTION OR LIMITATION

 

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REGARDING ANY AWARD OR THE COMMON STOCK RELATING THERETO, BASED IN EACH CASE ON
SUCH FACTORS AS THE ADMINISTRATOR, IN ITS SOLE DISCRETION, SHALL DETERMINE);

 

(VI)                              TO DETERMINE WHETHER TO OFFER TO BUYOUT A
PREVIOUSLY GRANTED OPTION AS PROVIDED IN SUBSECTION 10(I) AND TO DETERMINE THE
TERMS AND CONDITIONS OF SUCH OFFER AND BUYOUT (INCLUDING WHETHER PAYMENT IS TO
BE MADE IN CASH OR SHARES);

 

(VII)                           TO PRESCRIBE, AMEND AND RESCIND RULES AND
REGULATIONS RELATING TO THE PLAN, INCLUDING RULES AND REGULATIONS RELATING TO
SUB-PLANS ESTABLISHED FOR THE PURPOSE OF QUALIFYING FOR PREFERRED TAX TREATMENT
UNDER FOREIGN TAX LAWS;

 

(VIII)                        TO ALLOW HOLDERS TO SATISFY WITHHOLDING TAX
OBLIGATIONS BY ELECTING TO HAVE THE COMPANY WITHHOLD FROM THE SHARES TO BE
ISSUED PURSUANT TO AN AWARD THAT NUMBER OF SHARES HAVING A FAIR MARKET VALUE
EQUAL TO THE MINIMUM AMOUNT REQUIRED TO BE WITHHELD BASED ON THE STATUTORY
WITHHOLDING RATES FOR FEDERAL AND STATE TAX PURPOSES THAT APPLY TO SUPPLEMENTAL
TAXABLE INCOME.  THE FAIR MARKET VALUE OF THE SHARES TO BE WITHHELD SHALL BE
DETERMINED ON THE DATE THAT THE AMOUNT OF TAX TO BE WITHHELD IS TO BE
DETERMINED.  ALL ELECTIONS BY HOLDERS TO HAVE SHARES WITHHELD FOR THIS PURPOSE
SHALL BE MADE IN SUCH FORM AND UNDER SUCH CONDITIONS AS THE ADMINISTRATOR MAY
DEEM NECESSARY OR ADVISABLE;

 

(IX)                                TO AMEND THE PLAN OR ANY AWARD GRANTED UNDER
THE PLAN AS PROVIDED IN SECTION 21; AND

 

(X)                                   TO CONSTRUE AND INTERPRET THE TERMS OF THE
PLAN AND AWARDS GRANTED PURSUANT TO THE PLAN AND TO EXERCISE SUCH POWERS AND
PERFORM SUCH ACTS AS THE ADMINISTRATOR DEEMS NECESSARY OR DESIRABLE TO PROMOTE
THE BEST INTERESTS OF THE COMPANY WHICH ARE NOT IN CONFLICT WITH THE PROVISIONS
OF THE PLAN.

 

(C)                                  EFFECT OF ADMINISTRATOR’S DECISION.  ALL
DECISIONS, DETERMINATIONS AND INTERPRETATIONS OF THE ADMINISTRATOR SHALL BE
FINAL AND BINDING ON ALL HOLDERS.

 

5.                                       Eligibility.  Awards other than
Incentive Stock Options may be granted to Service Providers.  Incentive Stock
Options may be granted only to Employees.  If otherwise eligible, an Employee or
Consultant who has been granted an Award may be granted additional Awards.  Each
Independent Director shall be eligible to be granted Restricted Stock and
Options at the times and in the manner set forth in Section 12.

 

6.                                       LIMITATIONS.

 

(A)                                  EACH OPTION SHALL BE DESIGNATED BY THE
ADMINISTRATOR IN THE OPTION AGREEMENT AS EITHER AN INCENTIVE STOCK OPTION OR A
NON-QUALIFIED STOCK OPTION.  HOWEVER, NOTWITHSTANDING SUCH DESIGNATIONS, TO THE
EXTENT THAT THE AGGREGATE FAIR MARKET VALUE OF SHARES SUBJECT TO A HOLDER’S
INCENTIVE STOCK OPTIONS AND OTHER INCENTIVE STOCK OPTIONS GRANTED BY THE
COMPANY, ANY PARENT OR SUBSIDIARY, WHICH BECOME EXERCISABLE FOR THE FIRST TIME
DURING ANY CALENDAR YEAR (UNDER ALL PLANS OF THE COMPANY OR ANY PARENT OR
SUBSIDIARY) EXCEEDS $100,000, SUCH EXCESS OPTIONS OR OTHER OPTIONS SHALL BE
TREATED AS NON-QUALIFIED STOCK OPTIONS.

 

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For purposes of this Section 6(a), Incentive Stock Options shall be taken into
account in the order in which they were granted, and the Fair Market Value of
the Shares shall be determined as of the time of grant.

 

(B)                                 NEITHER THE PLAN NOR ANY AWARD SHALL CONFER
UPON A HOLDER ANY RIGHT WITH RESPECT TO CONTINUING THE HOLDER’S EMPLOYMENT OR
CONSULTING RELATIONSHIP WITH THE COMPANY, NOR SHALL THEY INTERFERE IN ANY WAY
WITH THE HOLDER’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE SUCH EMPLOYMENT OR
CONSULTING RELATIONSHIP AT ANY TIME, WITH OR WITHOUT CAUSE.

 

(C)                                  THE MAXIMUM NUMBER OF SHARES OF COMMON
STOCK WITH RESPECT TO ONE OR MORE AWARDS THAT MAY BE GRANTED TO ANY ONE SERVICE
PROVIDER DURING A CALENDAR YEAR SHALL BE 800,000. THE FOREGOING LIMITATION SHALL
BE ADJUSTED PROPORTIONATELY IN CONNECTION WITH ANY CHANGE IN THE COMPANY’S
CAPITALIZATION AS DESCRIBED IN SECTION 18.  FOR PURPOSES OF THIS SECTION 6(C),
IF AN OPTION IS CANCELED IN THE SAME CALENDAR YEAR IT WAS GRANTED (OTHER THAN IN
CONNECTION WITH A TRANSACTION DESCRIBED IN SECTION 18), THE CANCELED OPTION WILL
BE COUNTED AGAINST THE LIMIT SET FORTH IN THIS SECTION 6(C).  FOR THIS PURPOSE,
IF THE EXERCISE PRICE OF AN OPTION IS REDUCED, THE TRANSACTION SHALL BE TREATED
AS A CANCELLATION OF THE OPTION AND THE GRANT OF A NEW OPTION.

 

7.                                       Term of Plan.  The Plan became
effective upon its initial adoption by the Board on March 21, 2001 and shall
continue in effect until it is terminated under Section 21 of the Plan.  No
Awards may be issued under the Plan after March 21, 2011, the tenth (10th)
anniversary of the date upon which the Plan was initially adopted by the Board.

 

8.                                       Term of Awards.  The term of each Award
shall be stated in the Award Agreement; provided, however, that the term shall
be no more than ten (10) years from the date of grant thereof.  In the case of
an Incentive Stock Option granted to a Holder who, at the time the Option is
granted, owns (or is treated as owning under Code Section 424) stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Option shall
be five (5) years from the date of grant or such shorter term as may be provided
in the Option Agreement.

 

9.                                       Option Exercise Price and
Consideration.

 

(a)                                  Except as provided in Section 13, the per
share exercise price for the Shares to be issued upon exercise of an Option
shall be such price as is determined by the Administrator, but shall be subject
to the following:

 

(I)                                     IN THE CASE OF AN INCENTIVE STOCK OPTION

 

(A)                              GRANTED TO AN EMPLOYEE WHO, AT THE TIME OF
GRANT OF SUCH OPTION, OWNS (OR IS TREATED AS OWNING UNDER CODE SECTION 424)
STOCK REPRESENTING MORE THAN TEN PERCENT (10%) OF THE VOTING POWER OF ALL
CLASSES OF STOCK OF THE COMPANY OR ANY PARENT OR SUBSIDIARY, THE PER SHARE
EXERCISE PRICE SHALL BE NO LESS THAN ONE HUNDRED TEN PERCENT (110%) OF THE FAIR
MARKET VALUE PER SHARE ON THE DATE OF GRANT.

 

(B)                                GRANTED TO ANY OTHER EMPLOYEE, THE PER SHARE
EXERCISE PRICE SHALL BE NO LESS THAN ONE HUNDRED PERCENT (100%) OF THE FAIR
MARKET VALUE PER SHARE ON THE DATE OF GRANT.

 

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(B)                                 THE CONSIDERATION TO BE PAID FOR THE SHARES
TO BE ISSUED UPON EXERCISE OF AN OPTION, INCLUDING THE METHOD OF PAYMENT, SHALL
BE DETERMINED BY THE ADMINISTRATOR.  SUCH CONSIDERATION MAY CONSIST OF (1) CASH,
(2) CHECK, (3) WITH THE CONSENT OF THE ADMINISTRATOR, A FULL RECOURSE PROMISSORY
NOTE BEARING INTEREST (AT A MARKET RATE OF INTEREST DETERMINED AS OF THE DATE OF
EXERCISE) AND PAYABLE UPON SUCH TERMS AS MAY BE PRESCRIBED BY THE ADMINISTRATOR,
(4) WITH THE CONSENT OF THE ADMINISTRATOR, OTHER SHARES WHICH (X) IN THE CASE OF
SHARES ACQUIRED FROM THE COMPANY, HAVE BEEN OWNED BY THE HOLDER FOR MORE THAN
SIX (6) MONTHS ON THE DATE OF SURRENDER, AND (Y) HAVE A FAIR MARKET VALUE ON THE
DATE OF SURRENDER EQUAL TO THE AGGREGATE EXERCISE PRICE OF THE SHARES AS TO
WHICH SUCH OPTION SHALL BE EXERCISED, (5) WITH THE CONSENT OF THE ADMINISTRATOR,
SURRENDERED SHARES THEN ISSUABLE UPON EXERCISE OF THE OPTION HAVING A FAIR
MARKET VALUE ON THE DATE OF EXERCISE EQUAL TO THE AGGREGATE EXERCISE PRICE OF
THE OPTION OR EXERCISED PORTION THEREOF, (6) PROPERTY OF ANY KIND WHICH
CONSTITUTES GOOD AND VALUABLE CONSIDERATION, (7) WITH THE CONSENT OF THE
ADMINISTRATOR, DELIVERY OF A NOTICE THAT THE HOLDER HAS PLACED A MARKET SELL
ORDER WITH A BROKER WITH RESPECT TO SHARES THEN ISSUABLE UPON EXERCISE OF THE
OPTIONS AND THAT THE BROKER HAS BEEN DIRECTED TO PAY A SUFFICIENT PORTION OF THE
NET PROCEEDS OF THE SALE TO THE COMPANY IN SATISFACTION OF THE OPTION EXERCISE
PRICE, PROVIDED, THAT PAYMENT OF SUCH PROCEEDS IS THEN MADE TO THE COMPANY UPON
SETTLEMENT OF SUCH SALE, OR (8) WITH THE CONSENT OF THE ADMINISTRATOR, ANY
COMBINATION OF THE FOREGOING METHODS OF PAYMENT.

 

10.                                 EXERCISE OF OPTION; VESTING; FRACTIONAL
EXERCISES.  EXCEPT AS PROVIDED IN SECTION 13, OPTIONS GRANTED HEREUNDER SHALL BE
VESTED AND EXERCISABLE ACCORDING TO THE TERMS HEREOF AT SUCH TIMES AND UNDER
SUCH CONDITIONS AS DETERMINED BY THE ADMINISTRATOR AND SET FORTH IN THE OPTION
AGREEMENT.  AN OPTION MAY NOT BE EXERCISED FOR A FRACTION OF A SHARE.

 

(a)                                  All Options shall be subject to such
additional terms and conditions as determined by the Administrator and shall be
evidenced by a written Option Agreement.  In the event that the exercise price
of an Option is intended to be below the Fair Market Value per Share on the date
of grant, such Option Agreement may also include limitations regarding the
exercise of such Option and may provide that such exercise is subject to certain
terms and restrictions, including but not limited to, an election, by specified
date, of the Holder, regarding such Option, to the extent such terms and
restrictions are required so as not cause the Option or the shares of Common
Stock issuable pursuant to the exercise of such Option to be includable in the
gross income of the Holder under Section 409A of the Code prior to such times or
occurrence of such events, as permitted by the Code and the regulations and
other guidance thereunder (including, without limitation, Section 409A of the
Code, and the regulations and other guidance issued by the Secretary of the
Treasury thereunder).

 

(B)                                 DELIVERIES UPON EXERCISE.  ALL OR A PORTION
OF AN EXERCISABLE OPTION SHALL BE DEEMED EXERCISED UPON DELIVERY OF ALL OF THE
FOLLOWING TO THE SECRETARY OF THE COMPANY OR HIS OR HER OFFICE:

 

(I)                                     A WRITTEN OR ELECTRONIC NOTICE COMPLYING
WITH THE APPLICABLE RULES ESTABLISHED BY THE ADMINISTRATOR STATING THAT THE
OPTION, OR A PORTION THEREOF, IS EXERCISED.  THE NOTICE SHALL BE SIGNED BY THE
HOLDER OR OTHER PERSON THEN ENTITLED TO EXERCISE THE OPTION OR SUCH PORTION OF
THE OPTION;

 

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(II)                                  SUCH REPRESENTATIONS AND DOCUMENTS AS THE
ADMINISTRATOR, IN ITS SOLE DISCRETION, DEEMS NECESSARY OR ADVISABLE TO EFFECT
COMPLIANCE WITH APPLICABLE LAWS.  THE ADMINISTRATOR MAY, IN ITS SOLE DISCRETION,
ALSO TAKE WHATEVER ADDITIONAL ACTIONS IT DEEMS APPROPRIATE TO EFFECT SUCH
COMPLIANCE, INCLUDING, WITHOUT LIMITATION, PLACING LEGENDS ON SHARE CERTIFICATES
AND ISSUING STOP TRANSFER NOTICES TO AGENTS AND REGISTRARS;

 

(III)                               UPON THE EXERCISE OF ALL OR A PORTION OF AN
UNVESTED OPTION PURSUANT TO SECTION 10(H), A RESTRICTED STOCK PURCHASE AGREEMENT
IN A FORM DETERMINED BY THE ADMINISTRATOR AND SIGNED BY THE HOLDER OR OTHER
PERSON THEN ENTITLED TO EXERCISE THE OPTION OR SUCH PORTION OF THE OPTION; AND

 

(IV)                              IN THE EVENT THAT THE OPTION SHALL BE
EXERCISED PURSUANT TO SECTION 10(F) BY ANY PERSON OR PERSONS OTHER THAN THE
HOLDER, APPROPRIATE PROOF OF THE RIGHT OF SUCH PERSON OR PERSONS TO EXERCISE THE
OPTION.

 

(C)                                  CONDITIONS TO DELIVERY OF SHARE
CERTIFICATES.  THE COMPANY SHALL NOT BE REQUIRED TO ISSUE OR DELIVER ANY
CERTIFICATE OR CERTIFICATES FOR SHARES PURCHASED UPON THE EXERCISE OF ANY OPTION
OR PORTION THEREOF PRIOR TO FULFILLMENT OF ALL OF THE FOLLOWING CONDITIONS:

 

(I)                                     THE ADMISSION OF SUCH SHARES TO LISTING
ON ALL STOCK EXCHANGES ON WHICH SUCH CLASS OF STOCK IS THEN LISTED;

 

(II)                                  THE COMPLETION OF ANY REGISTRATION OR
OTHER QUALIFICATION OF SUCH SHARES UNDER ANY STATE OR FEDERAL LAW, OR UNDER THE
RULINGS OR REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION OR ANY OTHER
GOVERNMENTAL REGULATORY BODY WHICH THE ADMINISTRATOR SHALL, IN ITS SOLE
DISCRETION, DEEM NECESSARY OR ADVISABLE;

 

(III)                               THE OBTAINING OF ANY APPROVAL OR OTHER
CLEARANCE FROM ANY STATE OR FEDERAL GOVERNMENTAL AGENCY WHICH THE ADMINISTRATOR
SHALL, IN ITS SOLE DISCRETION, DETERMINE TO BE NECESSARY OR ADVISABLE;

 

(IV)                              THE LAPSE OF SUCH REASONABLE PERIOD OF TIME
FOLLOWING THE EXERCISE OF THE OPTION AS THE ADMINISTRATOR MAY ESTABLISH FROM
TIME TO TIME FOR REASONS OF ADMINISTRATIVE CONVENIENCE; AND

 

(V)                                 THE RECEIPT BY THE COMPANY OF FULL PAYMENT
FOR SUCH SHARES, INCLUDING PAYMENT OF ANY APPLICABLE WITHHOLDING TAX, WHICH IN
THE SOLE DISCRETION OF THE ADMINISTRATOR MAY BE IN THE FORM OF CONSIDERATION
USED BY THE HOLDER TO PAY FOR SUCH SHARES UNDER SECTION 9(B).

 

(D)                                 TERMINATION OF RELATIONSHIP AS A SERVICE
PROVIDER.  IF A HOLDER CEASES TO BE A SERVICE PROVIDER OTHER THAN BY REASON OF
THE HOLDER’S DISABILITY OR DEATH, SUCH HOLDER MAY EXERCISE HIS OR HER OPTION
WITHIN SUCH PERIOD OF TIME AS IS SPECIFIED IN THE OPTION AGREEMENT TO THE EXTENT
THAT THE OPTION IS VESTED ON THE DATE OF TERMINATION.  IN THE ABSENCE OF A
SPECIFIED TIME IN THE OPTION AGREEMENT, THE OPTION SHALL REMAIN EXERCISABLE FOR
THREE (3) MONTHS FOLLOWING THE HOLDER’S TERMINATION.  IF, ON THE DATE OF
TERMINATION, THE HOLDER IS NOT VESTED AS TO HIS OR HER ENTIRE OPTION, THE SHARES
COVERED BY THE UNVESTED PORTION OF THE OPTION IMMEDIATELY CEASE TO BE ISSUABLE
UNDER THE OPTION AND SHALL AGAIN BECOME AVAILABLE FOR ISSUANCE UNDER THE PLAN. 
IF, AFTER

 

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TERMINATION, THE HOLDER DOES NOT EXERCISE HIS OR HER OPTION WITHIN THE TIME
PERIOD SPECIFIED HEREIN, THE OPTION SHALL TERMINATE, AND THE SHARES COVERED BY
SUCH OPTION SHALL AGAIN BECOME AVAILABLE FOR ISSUANCE UNDER THE PLAN.

 

(E)                                  DISABILITY OF HOLDER.  IF A HOLDER CEASES
TO BE A SERVICE PROVIDER AS A RESULT OF THE HOLDER’S DISABILITY, THE HOLDER MAY
EXERCISE HIS OR HER OPTION WITHIN SUCH PERIOD OF TIME AS IS SPECIFIED IN THE
OPTION AGREEMENT TO THE EXTENT THE OPTION IS VESTED ON THE DATE OF TERMINATION. 
IN THE ABSENCE OF A SPECIFIED TIME IN THE OPTION AGREEMENT, THE OPTION SHALL
REMAIN EXERCISABLE FOR TWELVE (12) MONTHS FOLLOWING THE HOLDER’S TERMINATION. 
IF SUCH DISABILITY IS NOT A “DISABILITY” AS SUCH TERM IS DEFINED IN
SECTION 22(E)(3) OF THE CODE, IN THE CASE OF AN INCENTIVE STOCK OPTION SUCH
INCENTIVE STOCK OPTION SHALL AUTOMATICALLY CEASE TO BE TREATED AS AN INCENTIVE
STOCK OPTION AND SHALL BE TREATED FOR TAX PURPOSES AS A NON-QUALIFIED STOCK
OPTION FROM AND AFTER THE DAY WHICH IS THREE (3) MONTHS AND ONE (1) DAY
FOLLOWING SUCH TERMINATION.  IF, ON THE DATE OF TERMINATION, THE HOLDER IS NOT
VESTED AS TO HIS OR HER ENTIRE OPTION, THE SHARES COVERED BY THE UNVESTED
PORTION OF THE OPTION SHALL IMMEDIATELY CEASE TO BE ISSUABLE UNDER THE OPTION
AND SHALL AGAIN BECOME AVAILABLE FOR ISSUANCE UNDER THE PLAN.  IF, AFTER
TERMINATION, THE HOLDER DOES NOT EXERCISE HIS OR HER OPTION WITHIN THE TIME
SPECIFIED HEREIN, THE OPTION SHALL TERMINATE, AND THE SHARES COVERED BY SUCH
OPTION SHALL AGAIN BECOME AVAILABLE FOR ISSUANCE UNDER THE PLAN.

 

(F)                                    DEATH OF HOLDER.  IF A HOLDER DIES WHILE
A SERVICE PROVIDER, THE OPTION MAY BE EXERCISED WITHIN SUCH PERIOD OF TIME AS IS
SPECIFIED IN THE OPTION AGREEMENT, BY THE HOLDER’S ESTATE OR BY A PERSON WHO
ACQUIRES THE RIGHT TO EXERCISE THE OPTION BY BEQUEST OR INHERITANCE, BUT ONLY TO
THE EXTENT THAT THE OPTION IS VESTED ON THE DATE OF DEATH.  IN THE ABSENCE OF A
SPECIFIED TIME IN THE OPTION AGREEMENT, THE OPTION SHALL REMAIN EXERCISABLE FOR
TWELVE (12) MONTHS FOLLOWING THE HOLDER’S TERMINATION.  IF, AT THE TIME OF
DEATH, THE HOLDER IS NOT VESTED AS TO HIS OR HER ENTIRE OPTION, THE SHARES
COVERED BY THE UNVESTED PORTION OF THE OPTION SHALL IMMEDIATELY CEASE TO BE
ISSUABLE UNDER THE OPTION AND SHALL AGAIN BECOME AVAILABLE FOR ISSUANCE UNDER
THE PLAN.  THE OPTION MAY BE EXERCISED BY THE EXECUTOR OR ADMINISTRATOR OF THE
HOLDER’S ESTATE OR, IF NONE, BY THE PERSON(S) ENTITLED TO EXERCISE THE OPTION
UNDER THE HOLDER’S WILL OR THE LAWS OF DESCENT OR DISTRIBUTION.  IF THE OPTION
IS NOT SO EXERCISED WITHIN THE TIME SPECIFIED HEREIN, THE OPTION SHALL
TERMINATE, AND THE SHARES COVERED BY SUCH OPTION SHALL AGAIN BECOME AVAILABLE
FOR ISSUANCE UNDER THE PLAN.

 

(G)                                 REGULATORY EXTENSION.  A HOLDER’S OPTION
AGREEMENT MAY PROVIDE THAT IF THE EXERCISE OF THE OPTION FOLLOWING THE
TERMINATION OF THE HOLDER’S STATUS AS A SERVICE PROVIDER (OTHER THAN UPON THE
HOLDER’S DEATH OR DISABILITY) WOULD BE PROHIBITED AT ANY TIME SOLELY BECAUSE THE
ISSUANCE OF SHARES 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 SET FORTH IN SECTION 8 OR (II) THE
EXPIRATION OF A PERIOD OF THREE (3) MONTHS AFTER THE TERMINATION OF THE HOLDER’S
STATUS AS A SERVICE PROVIDER DURING WHICH THE EXERCISE OF THE OPTION WOULD NOT
BE IN VIOLATION OF SUCH REGISTRATION REQUIREMENTS.

 

(H)                                 EARLY EXERCISABILITY.  THE ADMINISTRATOR MAY
PROVIDE IN THE TERMS OF A HOLDER’S OPTION AGREEMENT THAT THE HOLDER MAY, AT ANY
TIME BEFORE THE HOLDER’S STATUS AS A SERVICE PROVIDER TERMINATES, EXERCISE THE
OPTION IN WHOLE OR IN PART PRIOR TO THE FULL VESTING OF THE OPTION; PROVIDED,
HOWEVER, THAT SHARES ACQUIRED UPON EXERCISE OF AN OPTION WHICH HAS NOT

 

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FULLY VESTED MAY BE SUBJECT TO ANY FORFEITURE, TRANSFER OR OTHER RESTRICTIONS AS
THE ADMINISTRATOR MAY DETERMINE IN ITS SOLE DISCRETION.

 

(I)                                     BUYOUT PROVISIONS.  SUBJECT TO THE
PROVISIONS OF SECTION 18(D), THE ADMINISTRATOR MAY AT ANY TIME OFFER TO BUYOUT
FOR A PAYMENT IN CASH OR SHARES, AN OPTION PREVIOUSLY GRANTED, BASED ON SUCH
TERMS AND CONDITIONS AS THE ADMINISTRATOR SHALL ESTABLISH AND COMMUNICATE TO THE
HOLDER AT THE TIME THAT SUCH OFFER IS MADE.

 

11.                                 Non-Transferability of Options and Stock
Purchase Rights.  Options and Stock Purchase Rights may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Holder, only by the Holder.

 

12.                                 Granting of Awards to Independent Directors.

 

(A)                                  INITIAL AND SUBSEQUENT GRANTS.  DURING THE
TERM OF THE PLAN, (I) A PERSON WHO IS INITIALLY ELECTED TO THE BOARD AS AN
INDEPENDENT DIRECTOR AUTOMATICALLY SHALL BE GRANTED ON THE DATE OF SUCH INITIAL
ELECTION (A) AN OPTION TO PURCHASE TWENTY THOUSAND (20,000) SHARES OF COMMON
STOCK (SUBJECT TO ADJUSTMENT AS PROVIDED IN SECTION 18) (“INITIAL OPTION”) AND
(B) SIX THOUSAND SIX HUNDRED SEVENTY (6,670) SHARES OF RESTRICTED STOCK (SUBJECT
TO ADJUSTMENT AS PROVIDED IN SECTION 18) (“INITIAL RESTRICTED STOCK GRANT”) AND
(II) EACH PERSON WHO IS AN INDEPENDENT DIRECTOR IMMEDIATELY FOLLOWING AN ANNUAL
MEETING OF STOCKHOLDERS (PROVIDED THAT, ON SUCH DATE, HE OR SHE SHALL HAVE
SERVED ON THE BOARD FOR AT LEAST SIX (6) MONTHS PRIOR TO THE DATE OF SUCH ANNUAL
MEETING) AUTOMATICALLY SHALL BE GRANTED ON THE DATE OF SUCH ANNUAL MEETING (A)
AN OPTION TO PURCHASE SEVEN THOUSAND FIVE HUNDRED (7,500) SHARES OF COMMON STOCK
(SUBJECT TO ADJUSTMENT AS PROVIDED IN SECTION 18) (“SUBSEQUENT OPTION”) AND (B)
TWO THOUSAND (2,000) SHARES OF RESTRICTED STOCK (SUBJECT TO ADJUSTMENT AS
PROVIDED IN SECTION 18) (“SUBSEQUENT RESTRICTED STOCK GRANT”).    MEMBERS OF THE
BOARD WHO ARE EMPLOYEES OF THE COMPANY WHO SUBSEQUENTLY RETIRE FROM THE COMPANY
AND REMAIN ON THE BOARD WILL NOT RECEIVE AN INITIAL OPTION GRANT OR INITIAL
RESTRICTED STOCK GRANT PURSUANT TO CLAUSE (I) OF THE PRECEDING SENTENCE, BUT TO
THE EXTENT THAT THEY ARE OTHERWISE ELIGIBLE, WILL RECEIVE, AFTER RETIREMENT FROM
EMPLOYMENT WITH THE COMPANY, SUBSEQUENT OPTIONS AND SUBSEQUENT RESTRICTED STOCK
GRANTS AS DESCRIBED IN CLAUSE (II) OF THE PRECEDING SENTENCE (WITH THE DATE OF
RETIREMENT BEING DEEMED TO BE HIS OR HER DATE OF INITIAL ELECTION TO THE BOARD).

 

(B)                                 COMMITTEE GRANTS.  IN ADDITION TO THE GRANTS
IN SECTION 12(A), DURING THE TERM OF THE PLAN:

 

(I)                                     THE INDEPENDENT DIRECTOR WHO IS SERVING
AS THE LEAD DIRECTOR IMMEDIATELY FOLLOWING AN ANNUAL MEETING OF STOCKHOLDERS
AUTOMATICALLY SHALL BE GRANTED ON THE DATE OF SUCH ANNUAL MEETING FIVE HUNDRED
(500) SHARES OF RESTRICTED STOCK (SUBJECT TO ADJUSTMENT AS PROVIDED IN SECTION
18);

 

(II)                                  THE INDEPENDENT DIRECTOR WHO IS SERVING AS
THE CHAIR OF THE AUDIT COMMITTEE IMMEDIATELY FOLLOWING AN ANNUAL MEETING OF
STOCKHOLDERS AUTOMATICALLY SHALL BE GRANTED ON THE DATE OF SUCH ANNUAL MEETING
(A) AN OPTION TO PURCHASE FIVE THOUSAND (5,000)

 

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SHARES OF COMMON STOCK (SUBJECT TO ADJUSTMENT AS PROVIDED IN SECTION 18) AND (B)
FIVE HUNDRED (500) SHARES OF RESTRICTED STOCK (SUBJECT TO ADJUSTMENT AS PROVIDED
IN SECTION 18);

 

(III)                               EACH INDEPENDENT DIRECTOR WHO IS SERVING AS
A MEMBER OF THE AUDIT COMMITTEE (OTHER THAN THE CHAIR OF THE AUDIT COMMITTEE)
IMMEDIATELY FOLLOWING AN ANNUAL MEETING OF STOCKHOLDERS AUTOMATICALLY SHALL BE
GRANTED ON THE DATE OF SUCH ANNUAL MEETING AN OPTION TO PURCHASE TWO THOUSAND
(2,000) SHARES OF COMMON STOCK (SUBJECT TO ADJUSTMENT AS PROVIDED IN SECTION
18);

 

(IV)                              THE INDEPENDENT DIRECTOR WHO IS SERVING AS THE
CHAIR OF THE COMPENSATION COMMITTEE IMMEDIATELY FOLLOWING AN ANNUAL MEETING OF
STOCKHOLDERS AUTOMATICALLY SHALL BE GRANTED ON THE DATE OF SUCH ANNUAL MEETING
(A) AN OPTION TO PURCHASE TWO THOUSAND (2,000) SHARES OF COMMON STOCK (SUBJECT
TO ADJUSTMENT AS PROVIDED IN SECTION 18) AND (B) FIVE HUNDRED (500) SHARES OF
RESTRICTED STOCK (SUBJECT TO ADJUSTMENT AS PROVIDED IN SECTION 18); AND

 

(V)                                 EACH INDEPENDENT DIRECTOR WHO IS SERVING AS
A MEMBER OF THE COMPENSATION COMMITTEE (OTHER THAN THE CHAIR OF THE COMPENSATION
COMMITTEE) IMMEDIATELY FOLLOWING AN ANNUAL MEETING OF STOCKHOLDERS AUTOMATICALLY
SHALL BE GRANTED ON THE DATE OF SUCH ANNUAL MEETING AN OPTION TO PURCHASE ONE
THOUSAND (1,000) SHARES OF COMMON STOCK (SUBJECT TO ADJUSTMENT AS PROVIDED IN
SECTION 18).

 

The Options granted pursuant to this Section 12(b) shall each be referred to as
an “Additional Option” and the shares of Restricted Stock granted pursuant to
this Section 12(b) shall each be referred to as an “Additional Restricted Stock
Grant.”

 

13.                                 Terms of Awards Granted to Independent
Directors.

 

(a)                                  Options.  The per Share price of each
Option granted to an Independent Director shall equal one-hundred percent (100%)
of the Fair Market Value of a share of Common Stock on the date the Option is
granted.  Initial Options (as defined in Section 12) granted to Independent
Directors shall vest and become exercisable as follows:  twenty-five percent
(25%) of the shares subject to each Initial Option shall vest on the one year
anniversary of the date of the Initial Option grant and one forty-eighth
(1/48th) of the shares subject to each Initial Option (rounded down to the next
whole number of shares) shall vest on the first day of each full month
thereafter, such that each Initial Option shall be one-hundred percent (100%)
vested on the on the first day of the forty-eighth (48th) month following its
date of grant.  Subsequent Options and Additional Options (both as defined in
Section 12) granted to Independent Directors shall vest and become exercisable
as follows:  one twelfth (1/12th) of the shares subject to each Subsequent
Option and each Additional Option (rounded down to the next whole number of
shares) shall vest on each monthly anniversary of the date of the Subsequent
Option and Additional Option grants, such that each Subsequent Option and each
Additional Option shall be one-hundred percent (100%) vested on the one year
anniversary of its date of grant.  Subject to Section 10, the term of each
Option granted to an Independent Director shall be ten (10) years from the date
the Option is granted.  No portion of an Option which is unexercisable at the
time of an Independent Director’s termination of membership on the Board shall
thereafter become exercisable.

 

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(B)                                 RESTRICTED STOCK.  THE INITIAL RESTRICTED
STOCK GRANT, SUBSEQUENT RESTRICTED STOCK GRANT, AND ADDITIONAL RESTRICTED STOCK
GRANT SHALL BE PURSUANT TO THE TERMS OF A RESTRICTED STOCK AGREEMENT, WHICH
SHALL GRANT THE COMPANY THE RIGHT TO REPURCHASE SHARES ISSUED PURSUANT TO THE
INITIAL RESTRICTED STOCK GRANT, SUBSEQUENT RESTRICTED STOCK GRANT AND ADDITIONAL
RESTRICTED STOCK GRANT UPON THE TERMINATION OF THE DIRECTOR’S STATUS AS A
DIRECTOR FOR ANY REASON (INCLUDING DEATH OR DISABILITY).  THE PURCHASE PRICE FOR
SHARES REPURCHASED BY THE COMPANY PURSUANT TO SUCH REPURCHASE RIGHT SHALL BE AT
PAR VALUE OF THE SHARES, AND THE REPURCHASE RIGHT SHALL LAPSE AS TO 1/3 OF THE
SHARES SUBJECT TO THE INITIAL RESTRICTED STOCK GRANT, SUBSEQUENT RESTRICTED
STOCK GRANT, OR ADDITIONAL RESTRICTED STOCK GRANT, AS APPLICABLE, ON EACH ANNUAL
ANNIVERSARY OF THE DATE OF GRANT, UNTIL SUCH TIME AS THE REPURCHASE RIGHT SHALL
LAPSE ON THE THIRD ANNIVERSARY OF THE DATE OF GRANT.  THE RESTRICTED STOCK
AGREEMENT SHALL CONTAIN SUCH OTHER TERMS, PROVISIONS AND CONDITIONS NOT
INCONSISTENT WITH THE PLAN AS MAY BE DETERMINED BY THE ADMINISTRATOR IN ITS SOLE
DISCRETION.  THE DIRECTOR SHALL HAVE RIGHTS EQUIVALENT TO THOSE OF A SHAREHOLDER
AND SHALL BE A SHAREHOLDER WHEN HIS OR HER INITIAL RESTRICTED STOCK GRANT,
SUBSEQUENT RESTRICTED STOCK GRANT, OR ADDITIONAL RESTRICTED STOCK GRANT, AS
APPLICABLE, IS ENTERED UPON THE RECORDS OF THE DULY AUTHORIZED TRANSFER AGENT OF
THE COMPANY.

 

14.                                 Stock Purchase Rights. 

 

(A)                                  RIGHTS TO PURCHASE.  STOCK PURCHASE RIGHTS
MAY BE ISSUED EITHER ALONE, IN ADDITION TO, OR IN TANDEM WITH OPTIONS GRANTED
UNDER THE PLAN AND/OR CASH AWARDS MADE OUTSIDE OF THE PLAN.  AFTER THE
ADMINISTRATOR DETERMINES THAT IT WILL OFFER STOCK PURCHASE RIGHTS UNDER THE
PLAN, IT SHALL ADVISE THE OFFEREE IN WRITING OF THE TERMS, CONDITIONS AND
RESTRICTIONS RELATED TO THE OFFER, INCLUDING THE NUMBER OF SHARES THAT SUCH
PERSON SHALL BE ENTITLED TO PURCHASE, THE PRICE TO BE PAID, IF ANY, AND THE TIME
WITHIN WHICH SUCH PERSON MUST ACCEPT SUCH OFFER.  THE OFFER SHALL BE ACCEPTED BY
EXECUTION OF A RESTRICTED STOCK PURCHASE AGREEMENT IN THE FORM DETERMINED BY THE
ADMINISTRATOR.

 

(B)                                 REPURCHASE RIGHT.  UNLESS THE ADMINISTRATOR
DETERMINES OTHERWISE, THE RESTRICTED STOCK PURCHASE AGREEMENT SHALL GRANT THE
COMPANY THE RIGHT TO REPURCHASE SHARES ACQUIRED UPON EXERCISE OF A STOCK
PURCHASE RIGHT UPON THE TERMINATION OF THE PURCHASER’S STATUS AS A SERVICE
PROVIDER FOR ANY REASON.  THE PURCHASE PRICE FOR SHARES REPURCHASED BY THE
COMPANY PURSUANT TO SUCH REPURCHASE RIGHT, IF ANY, AND THE RATE AT WHICH SUCH
REPURCHASE RIGHT SHALL LAPSE SHALL BE DETERMINED BY THE ADMINISTRATOR IN ITS
SOLE DISCRETION, AND SHALL BE SET FORTH IN THE RESTRICTED STOCK PURCHASE
AGREEMENT.

 

(C)                                  OTHER PROVISIONS.  THE RESTRICTED STOCK
PURCHASE AGREEMENT SHALL CONTAIN SUCH OTHER TERMS, PROVISIONS AND CONDITIONS NOT
INCONSISTENT WITH THE PLAN AS MAY BE DETERMINED BY THE ADMINISTRATOR IN ITS SOLE
DISCRETION.

 

(D)                                 RIGHTS AS A SHAREHOLDER.  ONCE THE STOCK
PURCHASE RIGHT IS EXERCISED, THE PURCHASER SHALL HAVE RIGHTS EQUIVALENT TO THOSE
OF A SHAREHOLDER AND SHALL BE A SHAREHOLDER WHEN HIS OR HER PURCHASE IS ENTERED
UPON THE RECORDS OF THE DULY AUTHORIZED TRANSFER AGENT OF THE COMPANY.  NO
ADJUSTMENT SHALL BE MADE FOR A DIVIDEND OR OTHER RIGHT FOR WHICH THE RECORD DATE
IS PRIOR TO THE DATE THE STOCK PURCHASE RIGHT IS EXERCISED, EXCEPT AS PROVIDED
IN SECTION 18 OF THE PLAN.

 

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15.                                 Restricted Stock Units. 

 

Any Holder selected by the Administrator may be granted an award of Restricted
Stock Units in the manner determined from time to time by the Administrator.

 

(A)                                  THE VESTING OF RESTRICTED STOCK UNITS SHALL
BE DETERMINED BY THE ADMINISTRATOR AND MAY BE LINKED TO SPECIFIC PERFORMANCE
CRITERIA DETERMINED TO BE APPROPRIATE BY THE ADMINISTRATOR, IN EACH CASE ON A
SPECIFIED DATE OR DATES OR OVER ANY PERIOD OR PERIODS DETERMINED BY THE
ADMINISTRATOR.  COMMON STOCK UNDERLYING A RESTRICTED STOCK UNIT AWARD WILL NOT
BE ISSUED UNTIL THE RESTRICTED STOCK UNIT AWARD HAS VESTED, PURSUANT TO A
VESTING SCHEDULE OR PERFORMANCE CRITERIA SET BY THE ADMINISTRATOR.

 

(B)                                 UNLESS OTHERWISE PROVIDED BY THE
ADMINISTRATOR, A HOLDER AWARDED RESTRICTED STOCK UNITS SHALL HAVE NO RIGHTS AS A
COMPANY STOCKHOLDER WITH RESPECT TO SUCH RESTRICTED STOCK UNITS UNTIL SUCH TIME
AS THE RESTRICTED STOCK UNITS HAVE VESTED AND THE COMMON STOCK UNDERLYING THE
RESTRICTED STOCK UNITS HAS BEEN ISSUED.

 

(c)                                  All Restricted Stock Units shall be subject
to such additional terms and conditions as determined by the Administrator and
shall be evidenced by a written Award Agreement.  Such Award Agreement may also
include limitations regarding the distribution of payments due pursuant to such
Restricted Stock Units and may provide that such payments are subject to an
election, by a certain date, of the Holder to whom such payment is to be
awarded, to the extent such limitations and elections are required so as not
cause any Restricted Stock Unit Award or the shares of Common Stock or cash
issuable pursuant to any Restricted Stock Unit Award (or other amounts issuable
or distributable) to be includable in the gross income of the Holder under
Section 409A of the Code prior to such times or occurrence of such events, as
permitted by the Code and the regulations and other guidance thereunder
(including, without limitation, Section 409A of the Code, and the regulations
and other guidance issued by the Secretary of the Treasury thereunder).

 

16.                                 Stock Appreciation Rights. 

 

A Stock Appreciation Right may be granted to any Holder selected by the
Administrator.  A Stock Appreciation Right may be granted (a) in connection and
simultaneously with the grant of an Option, (b) with respect to a previously
granted Option, or (c) independent of an Option.  A Stock Appreciation Right
shall be subject to such terms and conditions not inconsistent with the Plan as
the Administrator shall impose and shall be evidenced by an Award Agreement.

 

(A)                                  COUPLED STOCK APPRECIATION RIGHTS.  A
COUPLED STOCK APPRECIATION RIGHT (“CSAR”) SHALL BE RELATED TO A PARTICULAR
OPTION AND SHALL BE EXERCISABLE ONLY WHEN AND TO THE EXTENT THE RELATED OPTION
IS EXERCISABLE.

 

(I)                                     A CSAR MAY BE GRANTED TO A HOLDER FOR NO
MORE THAN THE NUMBER OF SHARES SUBJECT TO THE SIMULTANEOUSLY OR PREVIOUSLY
GRANTED OPTION TO WHICH IT IS COUPLED.

 

(II)                                  A CSAR SHALL ENTITLE THE HOLDER (OR OTHER
PERSON ENTITLED TO EXERCISE THE OPTION PURSUANT TO THE PLAN) TO SURRENDER TO THE
COMPANY UNEXERCISED A PORTION OF

 

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THE OPTION TO WHICH THE CSAR RELATES (TO THE EXTENT THEN EXERCISABLE PURSUANT TO
ITS TERMS) AND TO RECEIVE FROM THE COMPANY IN EXCHANGE THEREFOR AN AMOUNT
DETERMINED BY MULTIPLYING THE DIFFERENCE OBTAINED BY SUBTRACTING THE OPTION
EXERCISE PRICE FROM THE FAIR MARKET VALUE OF A SHARE OF COMMON STOCK ON THE DATE
OF EXERCISE OF THE CSAR BY THE NUMBER OF SHARES OF COMMON STOCK WITH RESPECT TO
WHICH THE CSAR SHALL HAVE BEEN EXERCISED, SUBJECT TO ANY LIMITATIONS THE
ADMINISTRATOR MAY IMPOSE.

 

(B)                                 INDEPENDENT STOCK APPRECIATION RIGHTS.  AN
INDEPENDENT STOCK APPRECIATION RIGHT (“ISAR”) SHALL BE UNRELATED TO ANY OPTION
AND SHALL HAVE A TERM SET BY THE ADMINISTRATOR.  AN ISAR SHALL BE EXERCISABLE IN
SUCH INSTALLMENTS AS THE ADMINISTRATOR MAY DETERMINE.  AN ISAR SHALL COVER SUCH
NUMBER OF SHARES OF COMMON STOCK AS THE ADMINISTRATOR MAY DETERMINE.  THE
EXERCISE PRICE PER SHARE OF COMMON STOCK SUBJECT TO EACH ISAR SHALL BE SET BY
THE ADMINISTRATOR; PROVIDED, HOWEVER, THAT, THE ADMINISTRATOR IN ITS SOLE AND
ABSOLUTE DISCRETION MAY PROVIDE THAT THE ISAR MAY BE EXERCISED SUBSEQUENT TO A
TERMINATION OF EMPLOYMENT OR SERVICE, AS APPLICABLE, OR FOLLOWING AN ACQUISITION
OF THE COMPANY, OR BECAUSE OF THE HOLDER’S RETIREMENT, DEATH OR DISABILITY, OR
OTHERWISE.  AN ISAR SHALL ENTITLE THE HOLDER (OR OTHER PERSON ENTITLED TO
EXERCISE THE ISAR PURSUANT TO THE PLAN) TO EXERCISE ALL OR A SPECIFIED PORTION
OF THE ISAR (TO THE EXTENT THEN EXERCISABLE PURSUANT TO ITS TERMS) AND TO
RECEIVE FROM THE COMPANY AN AMOUNT DETERMINED BY MULTIPLYING THE DIFFERENCE
OBTAINED BY SUBTRACTING THE EXERCISE PRICE PER SHARE OF THE ISAR FROM THE FAIR
MARKET VALUE OF A SHARE OF COMMON STOCK ON THE DATE OF EXERCISE OF THE ISAR BY
THE NUMBER OF SHARES OF COMMON STOCK WITH RESPECT TO WHICH THE ISAR SHALL HAVE
BEEN EXERCISED, SUBJECT TO ANY LIMITATIONS THE ADMINISTRATOR MAY IMPOSE.

 

(C)                                  PAYMENT AND LIMITATIONS ON EXERCISE,
DISTRIBUTION.  PAYMENT OF THE AMOUNTS DETERMINED UNDER SECTION 16(A) AND 16(B)
ABOVE SHALL BE IN CASH, IN COMMON STOCK (BASED ON ITS FAIR MARKET VALUE AS OF
THE DATE THE STOCK APPRECIATION RIGHT IS EXERCISED) OR A COMBINATION OF BOTH, AS
DETERMINED BY THE ADMINISTRATOR.

 

(i)                                     The Administrator shall determine the
terms and procedures regarding the payment of amounts determined under Section
16(a) and 16(b) above, and may provide that such payments are subject to an
election by the Holder to whom such payment is to be awarded, in accordance with
this Section 16(c).  Specifically, the Committee may provide for the deferral of
the payment issuable pursuant to a Stock Appreciation Right at the election of
the Holder to whom such award is to be awarded in accordance with the terms of
this Section 16(c).

 

(A)                              Subject to the paragraph (B) below, any
election of a Holder to defer the issuance of payment pursuant to Stock
Appreciation Right shall be made not later than the close of the taxable year
preceding the first taxable year in which such Holder performs services for such
Stock Appreciation Right or related Option, in the case of a CSAR.

 

(B)                                In the case of the first year in which a
Holder becomes eligible to participate in the Plan, any election of such Holder
to defer the payment pursuant to a Stock Appreciation Right may be made with
respect to services to be performed subsequent to the election within thirty
(30) days after the date such Holder becomes eligible to participate in the
Plan.

 

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(C)                                A Holder, under such terms as the
Administrator shall determine in its sole discretion, may elect to receive the
shares of Common Stock or cash issuable pursuant to a Stock Appreciation Right
upon one or more of the following events:

(i)                                     a date specified in such election,

 

(ii)                                  the termination of Holder,

 

(iii)                               an Unforeseeable Emergency of such Holder;

 

(iv)                              a Change in Control;

 

(v)                                 death; or

 

(vi)                              Qualified Disability;

 

provided, however, in the case of a Holder who is a “key employee” as defined in
Code Section 416(i) (determined without regard to paragraph (5) thereof) of the
Company, the payment issuable pursuant to Holder’s termination shall not be made
before the date which is six (6) months after the date of such termination.

 

(D)                               A deferral election made by a Holder shall be
irrevocable and shall not be amended, modified or terminated by such Holder.

 

(E)                                 Prohibition on Acceleration of
Distributions.  The terms regarding the issuance of payments pursuant to a Stock
Appreciation Right shall not be amended, modified or terminated in any manner
which permits the acceleration of the time or schedule of such issuance of
shares of Common Stock or cash.

 

(F)                                 Limitation of Distributions. 
Notwithstanding the provisions of this section, shares of Common Stock or cash
shall be issuable pursuant to a Stock Appreciation Right at such times or upon
such events as are specified in Section 16(c)(i)(C) above and the terms of the
Award Agreement only to the extent the issuance or distribution at such times or
upon such events under such terms will not cause the Award or the shares of
Common Stock or cash issuable pursuant to the Award (or other amounts issuable
or distributable) to be includable in the gross income of the Holder under
Section 409A of the Code prior to such times or occurrence of such events, as
permitted by the Code and the regulations and other guidance thereunder
(including, without limitation, Section 409A of the Code, and the regulations
and other guidance issued by the Secretary of the Treasury thereunder).

 

(G)                                For purposes of this Section 16, the
“Unforeseeable Emergency” of a Holder shall mean a severe financial hardship to
such Holder resulting from:  (i) an illness or accident of such Holder, or the
spouse or a dependent (as defined in Code Section 152(a)) of such Holder, (ii)
the loss of such Holder property due to casualty, or (iii) other similar
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of such Holder.  For purposes of this Section 16, “Qualified
Disability” shall mean the Holder is “disabled,” as such term is defined in
Section 409A of the Code, and the regulations and other guidance issued by the
Secretary of the Treasury thereunder.  For purposes of this

 

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Section 16, “Change in Control” shall mean a change in control as defined as in
Section 409A of the Code, and the regulations and other guidance issued by the
Secretary of the Treasury thereunder.

 

17.                                 OTHER AWARDS.

 

(A)                                  PERFORMANCE SHARE AWARDS.  ANY HOLDER
SELECTED BY THE COMMITTEE MAY BE GRANTED ONE OR MORE PERFORMANCE SHARE AWARDS
WHICH MAY BE DENOMINATED IN A NUMBER OF SHARES OR IN A DOLLAR VALUE OF SHARES
AND WHICH MAY BE LINKED TO ANY ONE OR MORE SPECIFIC PERFORMANCE CRITERIA
DETERMINED APPROPRIATE BY THE COMMITTEE, IN EACH CASE ON A SPECIFIED DATE OR
DATES OR OVER ANY PERIOD OR PERIODS DETERMINED BY THE COMMITTEE.  IN MAKING SUCH
DETERMINATIONS, THE COMMITTEE SHALL CONSIDER (AMONG SUCH OTHER FACTORS AS IT
DEEMS RELEVANT IN LIGHT OF THE SPECIFIC TYPE OF AWARD) THE CONTRIBUTIONS,
RESPONSIBILITIES AND OTHER COMPENSATION OF THE PARTICULAR HOLDER.

 

(B)                                 DIVIDEND EQUIVALENTS.  ANY HOLDER SELECTED
BY THE COMMITTEE MAY BE GRANTED DIVIDEND EQUIVALENTS BASED ON THE DIVIDENDS
DECLARED ON THE SHARES OF STOCK THAT ARE SUBJECT TO ANY AWARD, TO BE CREDITED AS
OF DIVIDEND PAYMENT DATES, DURING THE PERIOD BETWEEN THE DATE THE AWARD IS
GRANTED AND THE DATE THE AWARD IS EXERCISED, VESTS OR EXPIRES, AS DETERMINED BY
THE COMMITTEE.  SUCH DIVIDEND EQUIVALENTS SHALL BE CONVERTED TO CASH OR
ADDITIONAL SHARES BY SUCH FORMULA AND AT SUCH TIME AND SUBJECT TO SUCH
LIMITATIONS AS MAY BE DETERMINED BY THE COMMITTEE.

 

(C)                                  STOCK PAYMENTS.

 

Any Holder selected by the Committee may receive Stock Payments in the manner
determined from time to time by the Committee.  The number of shares shall be
determined by the Committee and may be based upon specific performance criteria
determined appropriate by the Committee, determined on the date such Stock
Payment is made or on any date thereafter.

 

18.                                 ADJUSTMENTS UPON CHANGES IN CAPITALIZATION,
MERGER OR ASSET SALE.

 

(a)                                  In the event that the Administrator
determines that any dividend or other distribution (whether in the form of cash,
Common Stock, other securities, or other property), recapitalization,
reclassification, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, liquidation,
dissolution, or sale, transfer, exchange or other disposition of all or
substantially all of the assets of the Company, or exchange of Common Stock or
other securities of the Company, issuance of warrants or other rights to
purchase Common Stock or other securities of the Company, or other similar
corporate transaction or event, in the Administrator’s sole discretion, affects
the Common Stock such that an adjustment is determined by the Administrator to
be appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended by the Company to be made available under the Plan
or with respect to any Award, then the Administrator shall, in such manner as it
may deem equitable, adjust any or all of:

 

(I)                                     THE NUMBER AND KIND OF SHARES OF COMMON
STOCK (OR OTHER SECURITIES OR PROPERTY) WITH RESPECT TO WHICH AWARDS MAY BE
GRANTED OR AWARDED (INCLUDING, BUT

 

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not limited to, adjustments of the limitations in Section 3 on the maximum
number and kind of shares which may be issued and adjustments of the maximum
number of Shares that may be purchased by any Holder in any calendar year
pursuant to Section 6(c));

 

(II)                                  THE NUMBER AND KIND OF SHARES OF COMMON
STOCK (OR OTHER SECURITIES OR PROPERTY) SUBJECT TO OUTSTANDING AWARDS; AND

 

(III)                               THE GRANT OR EXERCISE PRICE WITH RESPECT TO
ANY AWARD.

 

(B)                                 IN THE EVENT OF ANY TRANSACTION OR EVENT
DESCRIBED IN SECTION 18(A), THE ADMINISTRATOR, IN ITS SOLE DISCRETION, AND ON
SUCH TERMS AND CONDITIONS AS IT DEEMS APPROPRIATE, AND TO THE EXTENT ALLOWED BY
SECTION 409A OF THE CODE AND ANY APPLICABLE REGULATIONS THEREUNDER, TO THE
EXTENT APPLICABLE, EITHER BY THE TERMS OF THE AWARD OR BY ACTION TAKEN PRIOR TO
THE OCCURRENCE OF SUCH TRANSACTION OR EVENT AND EITHER AUTOMATICALLY OR UPON THE
HOLDER’S REQUEST, IS HEREBY AUTHORIZED TO TAKE ANY ONE OR MORE OF THE FOLLOWING
ACTIONS WHENEVER THE ADMINISTRATOR DETERMINES THAT SUCH ACTION IS APPROPRIATE IN
ORDER TO PREVENT DILUTION OR ENLARGEMENT OF THE BENEFITS OR POTENTIAL BENEFITS
INTENDED BY THE COMPANY TO BE MADE AVAILABLE UNDER THE PLAN OR WITH RESPECT TO
ANY AWARD GRANTED OR ISSUED UNDER THE PLAN OR TO FACILITATE SUCH TRANSACTION OR
EVENT:

 

(I)                                     TO PROVIDE FOR EITHER THE PURCHASE OF
ANY SUCH AWARD FOR AN AMOUNT OF CASH EQUAL TO THE AMOUNT THAT COULD HAVE BEEN
OBTAINED UPON THE EXERCISE OF SUCH AWARD OR REALIZATION OF THE HOLDER’S RIGHTS
HAD SUCH AWARD BEEN CURRENTLY EXERCISABLE OR PAYABLE OR FULLY VESTED OR THE
REPLACEMENT OF SUCH AWARD WITH OTHER RIGHTS OR PROPERTY SELECTED BY THE
ADMINISTRATOR IN ITS SOLE DISCRETION;

 

(II)                                  TO PROVIDE THAT SUCH AWARD SHALL BE
EXERCISABLE AS TO ALL SHARES COVERED THEREBY, NOTWITHSTANDING ANYTHING TO THE
CONTRARY IN THE PLAN OR THE PROVISIONS OF SUCH AWARD;

 

(III)                               TO PROVIDE THAT SUCH AWARD BE ASSUMED BY THE
SUCCESSOR OR SURVIVOR CORPORATION, OR A PARENT OR SUBSIDIARY THEREOF, OR SHALL
BE SUBSTITUTED FOR BY SIMILAR OPTIONS, RIGHTS OR AWARDS COVERING THE STOCK OF
THE SUCCESSOR OR SURVIVOR CORPORATION, OR A PARENT OR SUBSIDIARY THEREOF, WITH
APPROPRIATE ADJUSTMENTS AS TO THE NUMBER AND KIND OF SHARES AND PRICES;

 

(IV)                              TO MAKE ADJUSTMENTS IN THE NUMBER AND TYPE OF
SHARES OF COMMON STOCK (OR OTHER SECURITIES OR PROPERTY) SUBJECT TO OUTSTANDING
AWARDS, AND/OR IN THE TERMS AND CONDITIONS OF (INCLUDING THE GRANT OR EXERCISE
PRICE), AND THE CRITERIA INCLUDED IN, OUTSTANDING AWARDS OR AWARDS WHICH MAY BE
GRANTED IN THE FUTURE; AND

 

(V)                                 TO PROVIDE THAT IMMEDIATELY UPON THE
CONSUMMATION OF SUCH EVENT, SUCH AWARD SHALL NOT BE EXERCISABLE AND SHALL
TERMINATE; PROVIDED, THAT FOR A SPECIFIED PERIOD OF TIME PRIOR TO SUCH EVENT,
SUCH AWARD SHALL BE EXERCISABLE AS TO ALL SHARES COVERED THEREBY, AND THE
RESTRICTIONS IMPOSED UNDER AN AWARD AGREEMENT UPON SOME OR ALL SHARES MAY BE
TERMINATED AND, IN THE CASE OF RESTRICTED STOCK, SOME OR ALL SHARES OF SUCH
RESTRICTED STOCK MAY CEASE TO BE SUBJECT TO REPURCHASE, NOTWITHSTANDING ANYTHING
TO THE CONTRARY IN THE PLAN OR THE PROVISIONS OF SUCH AWARD AGREEMENT.

 

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(C)                                  SUBJECT TO SECTION 3, THE ADMINISTRATOR
MAY, IN ITS SOLE DISCRETION, INCLUDE SUCH FURTHER PROVISIONS AND LIMITATIONS IN
ANY AWARD AGREEMENT OR COMMON STOCK CERTIFICATE, AS IT MAY DEEM EQUITABLE AND IN
THE BEST INTERESTS OF THE COMPANY.

 

(D)                                 IF THE COMPANY UNDERGOES AN ACQUISITION,
THEN ANY SURVIVING CORPORATION OR ENTITY OR ACQUIRING CORPORATION OR ENTITY, OR
AFFILIATE OF SUCH CORPORATION OR ENTITY, MAY ASSUME ANY AWARDS OUTSTANDING UNDER
THE PLAN OR MAY SUBSTITUTE SIMILAR STOCK AWARDS (INCLUDING AN AWARD TO ACQUIRE
THE SAME CONSIDERATION PAID TO THE STOCKHOLDERS IN THE TRANSACTION DESCRIBED IN
THIS SUBSECTION 18(D)) FOR THOSE OUTSTANDING UNDER THE PLAN.  IN THE EVENT ANY
SURVIVING CORPORATION OR ENTITY OR ACQUIRING CORPORATION OR ENTITY IN AN
ACQUISITION, OR AFFILIATE OF SUCH CORPORATION OR ENTITY, DOES NOT ASSUME SUCH
AWARDS OR DOES NOT SUBSTITUTE SIMILAR STOCK AWARDS FOR THOSE OUTSTANDING UNDER
THE PLAN, THEN WITH RESPECT TO (I) AWARDS HELD BY HOLDERS IN THE PLAN WHOSE
STATUS AS A SERVICE PROVIDER HAS NOT TERMINATED PRIOR TO SUCH EVENT, THE VESTING
OF SUCH AWARDS (AND, IF APPLICABLE, THE TIME DURING WHICH SUCH AWARDS MAY BE
EXERCISED) SHALL BE ACCELERATED AND MADE FULLY EXERCISABLE AND ALL RESTRICTIONS
THEREON SHALL LAPSE AT LEAST TEN (10) DAYS PRIOR TO THE CLOSING OF THE
ACQUISITION (AND THE AWARDS TERMINATED IF NOT EXERCISED PRIOR TO THE CLOSING OF
SUCH ACQUISITION), AND (II) ANY OTHER AWARDS OUTSTANDING UNDER THE PLAN, SUCH
RIGHTS SHALL BE TERMINATED IF NOT EXERCISED PRIOR TO THE CLOSING OF THE
ACQUISITION.  NOTWITHSTANDING THE ASSUMPTION OR SUBSTITUTION OF OPTIONS GRANTED
TO SERVICE PROVIDERS OTHER THAN INDEPENDENT DIRECTORS PURSUANT TO THE FOREGOING
PROVISIONS, ANY OPTIONS OR SHARES OF RESTRICTED STOCK GRANTED TO INDEPENDENT
DIRECTORS PURSUANT TO SECTION 12 WHICH ARE OUTSTANDING IMMEDIATELY PRIOR TO THE
CLOSING OF THE ACQUISITION SHALL NOT BE ASSUMED OR SUBSTITUTED FOR, SHALL BE
ACCELERATED AND MADE FULLY VESTED AND/OR EXERCISABLE, AS APPLICABLE, AT LEAST
TEN (10) DAYS PRIOR TO THE CLOSING OF THE ACQUISITION AND SHALL TERMINATE IF NOT
EXERCISED PRIOR TO THE CLOSING OF SUCH ACQUISITION.

 

(E)                                  THE EXISTENCE OF THE PLAN OR ANY AWARD
AGREEMENT AND THE AWARDS GRANTED HEREUNDER SHALL NOT AFFECT OR RESTRICT IN ANY
WAY THE RIGHT OR POWER OF THE COMPANY OR THE STOCKHOLDERS OF THE COMPANY TO MAKE
OR AUTHORIZE ANY ADJUSTMENT, RECAPITALIZATION, REORGANIZATION OR OTHER CHANGE IN
THE COMPANY’S CAPITAL STRUCTURE OR ITS BUSINESS, ANY MERGER OR CONSOLIDATION OF
THE COMPANY, ANY ISSUE OF STOCK OR OF OPTIONS, WARRANTS OR RIGHTS TO PURCHASE
STOCK OR OF BONDS, DEBENTURES, PREFERRED OR PRIOR PREFERENCE STOCKS WHOSE RIGHTS
ARE SUPERIOR TO OR AFFECT THE COMMON STOCK OR THE RIGHTS THEREOF OR WHICH ARE
CONVERTIBLE INTO OR EXCHANGEABLE FOR COMMON STOCK, OR THE DISSOLUTION OR
LIQUIDATION OF THE COMPANY, OR ANY SALE OR TRANSFER OF ALL OR ANY PART OF ITS
ASSETS OR BUSINESS, OR ANY OTHER CORPORATE ACT OR PROCEEDING, WHETHER OF A
SIMILAR CHARACTER OR OTHERWISE.

 

19.                                 Time of Granting Awards.  The date of grant
of an Award shall, for all purposes, be the date on which the Administrator
makes the determination granting such Award, or such other date as is determined
by the Administrator.  Notice of the determination shall be given to each
Employee or Consultant to whom an Award is so granted within a reasonable time
after the date of such grant.

 

20.                                 Amendment and Termination of the Plan.

 

(A)                                  AMENDMENT AND TERMINATION.  THE BOARD MAY
AT ANY TIME WHOLLY OR PARTIALLY AMEND, ALTER, SUSPEND OR TERMINATE THE PLAN. 
HOWEVER, WITHOUT APPROVAL OF THE

 

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COMPANY’S STOCKHOLDERS GIVEN WITHIN TWELVE (12) MONTHS BEFORE OR AFTER THE
ACTION BY THE BOARD, NO ACTION OF THE BOARD MAY, EXCEPT AS PROVIDED IN SECTION
18, INCREASE THE LIMITS IMPOSED IN SECTION 3 ON THE MAXIMUM NUMBER OF SHARES
WHICH MAY BE ISSUED UNDER THE PLAN OR EXTEND THE TERM OF THE PLAN UNDER SECTION
7.

 

(B)                                 SAVINGS CLAUSE.  NOTWITHSTANDING ANYTHING TO
THE CONTRARY IN THE PLAN OR ANY AWARD AGREEMENT RELATING TO AN OUTSTANDING
AWARD, IF AND TO THE EXTENT THE ADMINISTRATOR SHALL DETERMINE THAT THE TERMS OF
ANY AWARD MAY RESULT IN THE FAILURE OF THE SUCH AWARD TO COMPLY WITH THE
REQUIREMENTS OF SECTION 409A OF THE CODE, OR ANY APPLICABLE REGULATIONS OR
GUIDANCE PROMULGATED BY THE SECRETARY OF THE TREASURY IN CONNECTION THEREWITH,
THE ADMINISTRATOR SHALL HAVE AUTHORITY TO TAKE SUCH ACTION TO AMEND, MODIFY,
CANCEL OR TERMINATE THE PLAN OR ANY AWARD AS IT DEEMS NECESSARY OR ADVISABLE,
INCLUDING WITHOUT LIMITATION:

 

(I)                                     ANY AMENDMENT OR MODIFICATION OF THE
PLAN OR ANY AWARD TO CONFORM THE PLAN OR SUCH AWARD TO THE REQUIREMENTS OF
SECTION 409A OF THE CODE OR ANY REGULATIONS OR OTHER GUIDANCE THEREUNDER
(INCLUDING, WITHOUT LIMITATION, ANY AMENDMENT OR MODIFICATION OF THE TERMS OF
ANY AWARD REGARDING VESTING, EXERCISE, OR THE TIMING OR FORM OF PAYMENT).

 

(II)                                  ANY CANCELLATION OR TERMINATION OF ANY
UNVESTED AWARD, OR PORTION THEREOF, WITHOUT ANY PAYMENT TO THE HOLDER HOLDING
SUCH AWARD.

 

(III)                               ANY CANCELLATION OR TERMINATION OF ANY
VESTED AWARD, OR PORTION THEREOF, WITH IMMEDIATE PAYMENT TO THE HOLDER HOLDING
SUCH AWARD OF THE AMOUNT OTHERWISE PAYABLE UPON THE IMMEDIATE EXERCISE OF ANY
SUCH AWARD, OR VESTED PORTION THEREOF, BY SUCH HOLDER.

 

(IV)                              ANY SUCH AMENDMENT, MODIFICATION,
CANCELLATION, OR TERMINATION OF THE PLAN OR ANY AWARD MAY ADVERSELY AFFECT THE
RIGHTS OF A HOLDER WITH RESPECT TO SUCH AWARD WITHOUT THE HOLDER’S CONSENT.

 

(C)                                  STOCKHOLDER APPROVAL.  THE BOARD SHALL
OBTAIN STOCKHOLDER APPROVAL OF ANY PLAN AMENDMENT TO THE EXTENT NECESSARY AND
DESIRABLE TO COMPLY WITH APPLICABLE LAWS.

 

(D)                                 EFFECT OF AMENDMENT OR TERMINATION.  EXCEPT
AS PROVIDED IN SECTION 18(B), ABOVE, NO AMENDMENT, ALTERATION, SUSPENSION OR
TERMINATION OF THE PLAN SHALL IMPAIR THE RIGHTS OF ANY HOLDER, UNLESS MUTUALLY
AGREED OTHERWISE BETWEEN THE HOLDER AND THE ADMINISTRATOR, WHICH AGREEMENT MUST
BE IN WRITING AND SIGNED BY THE HOLDER AND THE COMPANY.  TERMINATION OF THE PLAN
SHALL NOT AFFECT THE ADMINISTRATOR’S ABILITY TO EXERCISE THE POWERS GRANTED TO
IT HEREUNDER WITH RESPECT TO OPTIONS, STOCK PURCHASE RIGHTS OR RESTRICTED STOCK
GRANTED OR AWARDED UNDER THE PLAN PRIOR TO THE DATE OF SUCH TERMINATION.

 

(E)                                  REPRICING PROHIBITED.  NOTWITHSTANDING ANY
PROVISION IN THIS PLAN TO THE CONTRARY, ABSENT APPROVAL OF THE STOCKHOLDERS OF
THE COMPANY NO AWARD MAY BE AMENDED TO REDUCE THE PER SHARE EXERCISE PRICE OF
THE SHARES SUBJECT TO SUCH AWARD BELOW THE PER SHARE EXERCISE PRICE AS OF THE
DATE THE AWARD IS GRANTED.  IN ADDITION, ABSENT APPROVAL OF THE STOCKHOLDERS OF
THE COMPANY NO AWARD MAY BE GRANTED IN EXCHANGE FOR, OR IN CONNECTION WITH, THE
CANCELLATION OR SURRENDER OF AN AWARD HAVING A HIGHER PER SHARE EXERCISE PRICE.

 

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21.                                 Stockholder Approval.  The Plan will be
submitted for the approval of the Company’s stockholders within twelve (12)
months after the date of the Board’s adoption of the Plan.  Options, Stock
Purchase Rights or Restricted Stock may be granted or awarded prior to such
stockholder approval, provided that Options, Stock Purchase Rights and
Restricted Stock not previously authorized under the Plan shall not be
exercisable, shall not vest and the restrictions thereon shall not lapse prior
to the time when the Plan is approved by the stockholders, and provided further
that if such approval has not been obtained at the end of said twelve-month
period, any Options, Stock Purchase Rights and Restricted Stock previously
granted or awarded but not previously authorized under the Plan shall thereupon
be canceled and become null and void.

 

22.                                 Inability to Obtain Authority.  The
inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company’s counsel to be necessary
to the lawful issuance and sale of any Shares hereunder, shall relieve the
Company of any liability in respect of the failure to issue or sell such Shares
as to which such requisite authority shall not have been obtained.

 

23.                                 Reservation of Shares.  The Company, during
the term of this Plan, shall at all times reserve and keep available such number
of Shares as shall be sufficient to satisfy the requirements of the Plan.

 

24.                                 Investment Intent.  The Company may require
a Plan Holder, as a condition of exercising or acquiring stock under any Award,
(i) to give written assurances satisfactory to the Company as to the Holder’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 rights under any Award; and
(ii) to give written assurances satisfactory to the Company stating that the
Holder is acquiring the stock subject to the Award for the Holder’s own account
and not with any present intention of selling or otherwise distributing the
stock.  The foregoing requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (A) the issuance of the shares upon the
exercise or acquisition of stock under the applicable Award has been registered
under a then currently effective registration statement under the Securities Act
or (B) 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 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 stock.

 

25.                                 Governing Law.  The validity and
enforceability of this Plan shall be governed by and construed in accordance
with the laws of the State of Delaware without regard to otherwise governing
principles of conflicts of law.

 

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