Exhibit 10.3
INTEVAC, INC.
2004 EQUITY INCENTIVE PLAN
AS AMENDED, FEBRUARY 2010
     1. Purposes of the Plan. The purposes of this 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.

          The Plan permits the grant of Incentive Stock Options, Nonstatutory
Stock Options, Restricted Stock, Stock Appreciation Rights, Performance Units
and Performance Shares.
     2. Definitions. As used herein, the following definitions will apply:
          (a) “Administrator” means the Board or any of its Committees as will
be administering the Plan, in accordance with Section 4 of the Plan.
          (b) “Affiliated SAR” means a SAR that is granted in connection with a
related Option, and which automatically will be deemed to be exercised at the
same time that the related Option is exercised.
          (c) “Applicable Laws” means the requirements relating to the
administration of equity-based awards 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 Awards are, or will be, granted under
the Plan.
          (d) “Award” means, individually or collectively, a grant under the
Plan of Options, SARs, Restricted Stock, Performance Units or Performance
Shares.
          (e) “Award Agreement” means the written or electronic agreement
setting forth the terms and provisions applicable to each Award granted under
the Plan. The Award Agreement is subject to the terms and conditions of the
Plan.
          (f) “Awarded Stock” means the Common Stock subject to an Award.
          (g) “Board” means the Board of Directors of the Company.
          (h) “Change in Control” means the occurrence of any of the following
events:

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               (i) Any “person” (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in
Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the
Company representing fifty percent (50%) or more of the total voting power
represented by the Company’s then outstanding voting securities; or
               (ii) The consummation of the sale or disposition by the Company
of all or substantially all of the Company’s assets;
               (iii) A change in the composition of the Board occurring within a
two-year period, as a result of which fewer than a majority of the directors are
Incumbent Directors. “Incumbent Directors” means directors who either (A) are
Directors as of the effective date of the Plan, or (B) are elected, or nominated
for election, to the Board with the affirmative votes of at least a majority of
the Incumbent Directors at the time of such election or nomination (but will not
include an individual whose election or nomination is in connection with an
actual or threatened proxy contest relating to the election of directors to the
Company); or
               (iv) The consummation of a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or its parent) at least
fifty percent (50%) of the total voting power represented by the voting
securities of the Company or such surviving entity or its parent outstanding
immediately after such merger or consolidation.
          (i) “Code” means the Internal Revenue Code of 1986, as amended. Any
reference to a section of the Code herein will be a reference to any successor
or amended section of the Code.
          (j) “Committee” means a committee of Directors appointed by the Board
in accordance with Section 4 of the Plan.
          (k) “Common Stock” means the common stock of the Company, or in the
case of Performance Units, the cash equivalent thereof.
          (l) “Company” means Intevac, Inc., a California corporation, or any
successor thereto.
          (m) “Consultant” means any natural person, including an advisor,
engaged by the Company or a Parent or Subsidiary to render services to such
entity.
          (n) “Cost of Sales as a Percentage of Sales” means as to any
Performance Period, the Company’s cost of sales stated as a percentage of sales,
determined in accordance with generally accepted accounting principles.
          (o) “Director” means a member of the Board.
          (p) “Disability” means total and permanent disability as defined in
Section 22(e)(3) of the Code.

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          (q) “Earnings Per Share” means as to any Performance Period, the
Company’s Profit After Tax, divided by a weighted average number of common
shares outstanding and dilutive common equivalent shares deemed outstanding,
determined in accordance with generally accepted accounting principles.
          (r) “Employee” means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. Neither
service as a Director nor payment of a director’s fee by the Company will be
sufficient to constitute “employment” by the Company.
          (s) “Exchange Act” means the Securities Exchange Act of 1934, as
amended.
          (t) “Exchange Program” means a program under which (i) outstanding
Awards are surrendered or cancelled in exchange for Awards of the same type
(which may have lower exercise prices and different terms), Awards of a
different type, and/or cash, and/or (ii) the exercise price of an outstanding
Award is reduced. The terms and conditions of any Exchange Program will be
determined by the Administrator in its sole discretion.
          (u) “Fair Market Value” means, as of any date, the value 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 will be the closing sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such exchange or system on the day
of determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;
               (ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock will be the mean between the high bid and low asked
prices for the Common Stock on the day of determination, as reported in The Wall
Street Journal or such other source as the Administrator deems reliable; or
               (iii) In the absence of an established market for the Common
Stock, the Fair Market Value will be determined in good faith by the
Administrator.
          (v) “Fiscal Year” means the fiscal year of the Company.
          (w) “Free Cash Flow” means as to any Performance Period, the Company’s
earnings before interest, taxes, depreciation and amortization (EBITDA),
determined in accordance with generally accepted accounting principles.
          (x) “Freestanding SAR” means a SAR that is granted independently of
any Option.

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          (y) “Incentive Stock Option” means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
          (z) “Inside Director” means a Director who is an Employee.
          (aa) “Marketing and Sales Expenses as a Percentage of Sales” means as
to any Performance Period, the Company’s marketing and sales expenses stated as
a percentage of sales, determined in accordance with generally accepted
accounting principles.
          (bb) “Net Income as a Percentage of Sales” means as to any Performance
Period, the Company’s net income stated as a percentage of sales, determined in
accordance with generally accepted accounting principles.
          (cc) “Nonstatutory Stock Option” means an Option that by its terms
does not qualify or is not intended to qualify as an Incentive Stock Option.
          (dd) “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.
          (ee) “Operating Margin” means as to any Performance Period, the
Company’s net operating income divided by Revenues, determined in accordance
with generally accepted accounting principles.
          (ff) “Option” means a stock option granted pursuant to the Plan.
          (gg) “Outside Director” means a Director who is not an Employee.
          (hh) “Parent” means a “parent corporation,” whether now or hereafter
existing, as defined in Section 424(e) of the Code.
          (ii) “Participant” means a Service Provider who holds an outstanding
Award granted under the Plan.
          (jj) “Performance Goals” means the goal(s) (or combined goal(s))
determined by the Committee (in its discretion) to be applicable to a
Participant with respect to an Award. As determined by the Committee, the
Performance Goals applicable to an Award may provide for a targeted level or
levels of achievement using one or more of the following measures: (a) Cost of
Sales as a Percentage of Sales, (b) Earnings Per Share, (c) Free Cash Flow,
(d) Marketing and Sales Expenses as a Percentage of Sales, (e) Net Income as a
Percentage of Sales, (f) Operating Margin, (g) Revenue, (h) Total Shareholder
Return and (i) Working Capital. The Performance Goals may differ from
Participant to Participant and from Award to Award. Any criteria used may be
measured, as applicable, (i) in absolute terms, (ii) in relative terms
(including, but not limited to, passage of time and/or against another company
or companies), (iii) on a per-share basis, (iv) against the performance of the
Company as a whole or a segment of the Company and/or (v) on a pre-tax or
after-tax basis. Prior to the latest possible date that will not jeopardize an
Award’s qualification as “performance-based compensation” under Section 162(m)
of the Code, the Committee shall

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determine whether any element(s) or item(s) shall be included in or excluded
from the calculation of any Performance Goal with respect to any Participants.
          (kk) “Performance Period” means the time period of any Fiscal Year or
such longer period as determined by the Committee in its sole discretion during
which the performance objectives must be met.
          (ll) “Performance Share” means an Award granted to a Participant
pursuant to Section 10.
          (mm) “Performance Unit” means an Award granted to a Participant
pursuant to Section 10.
          (nn) “Period of Restriction” means the period during which the
transfer of Shares of Restricted Stock are subject to restrictions and
therefore, the Shares are subject to a substantial risk of forfeiture. Such
restrictions may be based on the passage of time, the achievement of target
levels of performance, or the occurrence of other events as determined by the
Administrator.
          (oo) “Plan” means this 2004 Equity Incentive Plan.
          (pp) “Profit After Tax” means as to any Performance Period, the
Company’s income after taxes, determined in accordance with generally accepted
accounting principles.
          (qq) “Restricted Stock” means shares of Common Stock issued pursuant
to a Restricted Stock award under Section 8 of the Plan or issued pursuant to
the early exercise of an Option.
          (rr) “Revenue” means as to any Performance Period, the Company’s net
revenues generated from third parties, determined in accordance with generally
accepted accounting principles.
          (ss) “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
          (tt) “Section 16(b)” means Section 16(b) of the Exchange Act.
          (uu) “Service Provider” means an Employee, Director or Consultant.
          (vv) “Share” means a share of the Common Stock, as adjusted in
accordance with Section 13 of the Plan.
          (ww) “Stock Appreciation Right” or “SAR” means an Award, granted alone
or in connection with an Option, that pursuant to Section 9 is designated as a
SAR.
          (xx) “Subsidiary” means a “subsidiary corporation”, whether now or
hereafter existing, as defined in Section 424(f) of the Code.

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          (yy) “Tandem SAR” means a SAR that is granted in connection with a
related Option, the exercise of which will require forfeiture of the right to
purchase an equal number of Shares under the related Option (and when a Share is
purchased under the Option, the SAR will be canceled to the same extent).
          (zz) “Total Shareholder Return” means as to any Performance Period,
the total return (change in share price plus reinvestment of any dividends) of a
Share.
          (aaa) “Unvested Awards” shall mean Options or Restricted Stock that
(i) were granted to an individual in connection with such individual’s position
as an Employee and (ii) are still subject to vesting or lapsing of Company
repurchase rights or similar restrictions.
          (bbb) “Working Capital” means the Company’s current assets minus
current liabilities, determined in accordance with generally accepted accounting
principles.
     3. Stock Subject to the Plan.
          (a) Stock Subject to the Plan. Subject to the provisions of Section 13
of the Plan, the maximum aggregate number of Shares that may be optioned and
sold under the Plan is 3,400,000 Shares plus (a) the number of shares which have
been reserved but not issued under the Company’s 1995 Stock Option/Stock
Issuance Plan (the “1995 Plan”) as of the effective date of the Plan, and
(b) any Shares returned to the 1995 Plan as a result of termination of options
or repurchase of Shares issued under such plan, with the maximum number of
Shares to be added to the Plan pursuant to clauses (a) and (b) equal to
1,500,000 Shares. The Shares may be authorized, but unissued, or reacquired
Common Stock. Shares shall not be deemed to have been issued pursuant to the
Plan with respect to any portion of an Award that is settled in cash. Upon
payment in Shares pursuant to the exercise of an SAR, the number of Shares
available for issuance under the Plan shall be reduced only by the number of
Shares actually issued in such payment. If the exercise price of an Option is
paid by tender to the Company, or attestation to the ownership, of Shares owned
by the Participant, the number of Shares available for issuance under the Plan
shall be reduced by the gross number of Shares for which the Option is
exercised. Notwithstanding anything to the contrary herein, the total number of
Shares subject to Awards other than Options or SARs that were granted at per
Share exercise prices equal to 100% of Fair Market Value per Share on the grant
date may not exceed 20% of the Shares reserved for issuance under the Plan.
          (b) Lapsed Awards. If an Award expires or becomes unexercisable
without having been exercised in full, or is surrendered pursuant to an Exchange
Program, or, with respect to Options, Restricted Stock, Performance Shares or
Performance Units, is forfeited back to or repurchased by the Company, the
unpurchased Shares (or for Awards other than Options and SARs, the forfeited or
repurchased Shares) which were subject thereto shall become available for future
grant or sale under the Plan (unless the Plan has terminated). With respect to
SARs, only Shares actually issued pursuant to an SAR shall cease to be available
under the Plan; all remaining Shares under SARs shall remain available for
future grant or sale under the Plan (unless the Plan has terminated). However,
Shares that have actually been issued under the Plan under any Award shall not
be returned to the Plan and shall not become available for future distribution
under the Plan, except that if unvested Shares of Restricted Stock, Performance
Shares or Performance Units are repurchased by the Company or are forfeited to
the Company, such Shares shall become available

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for future grant under the Plan. To the extent an Award under the Plan is paid
out in cash rather than stock, such cash payment shall not result in reducing
the number of Shares available for issuance under the Plan.
     4. Administration of the Plan.
          (a) Procedure.
               (i) Multiple Administrative Bodies. Different Committees with
respect to different groups of Service Providers may administer the Plan.
               (ii) Section 162(m). To the extent that the Administrator
determines it to be desirable to qualify Options granted hereunder as
“performance-based compensation” within the meaning of Section 162(m) of the
Code, the Plan will be administered by a Committee of two or more “outside
directors” within the meaning of Section 162(m) of the Code.
               (iii) Rule 16b-3. To the extent desirable to qualify transactions
hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder
will be structured to satisfy the requirements for exemption under Rule 16b-3.
               (iv) Other Administration. Other than as provided above, the Plan
will be administered by (A) the Board or (B) a Committee, which committee will
be constituted to satisfy Applicable Laws.
          (b) Powers of the Administrator. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator will have the authority, in
its discretion:
               (i) to determine the Fair Market Value;
               (ii) to select the Service Providers to whom Awards may be
granted hereunder;
               (iii) to determine the number of Shares to be covered by each
Award granted hereunder;
               (iv) to approve forms of agreement for use under the Plan;
               (v) to determine the terms and conditions, not inconsistent with
the terms of the Plan, 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 be exercised (which may be based on performance criteria), any
vesting acceleration or waiver of forfeiture restrictions, and any restriction
or limitation regarding any Award or the Shares relating thereto, based in each
case on such factors as the Administrator will determine;
               (vi) to institute an Exchange Program;

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               (vii) to construe and interpret the terms of the Plan and Awards
granted pursuant to the Plan;
               (viii) 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 satisfying applicable foreign laws and/or
qualifying for preferred tax treatment under applicable foreign laws;
               (ix) to modify or amend each Award (subject to Section 17(c) of
the Plan), including the discretionary authority to extend the post-termination
exercisability period of Awards longer than is otherwise provided for in the
Plan;
               (x) to allow Participants to satisfy withholding tax obligations
by electing to have the Company withhold from the Shares or cash to be issued
upon exercise or vesting of an Award that number of Shares or cash having a Fair
Market Value equal to the minimum amount required to be withheld. The Fair
Market Value of any Shares to be withheld will be determined on the date that
the amount of tax to be withheld is to be determined. All elections by a
Participant to have Shares or cash withheld for this purpose will be made in
such form and under such conditions as the Administrator may deem necessary or
advisable;
               (xi) to authorize any person to execute on behalf of the Company
any instrument required to effect the grant of an Award previously granted by
the Administrator;
               (xii) to allow a Participant to defer the receipt of the payment
of cash or the delivery of Shares that would otherwise be due to such
Participant under an Award;
               (xiii) to make all other determinations deemed necessary or
advisable for administering the Plan.
          (c) Exchange Program. Notwithstanding anything in this Plan to the
contrary, the Administrator shall not have the authority to institute an
Exchange Program without the consent of the shareholders.
          (d) Effect of Administrator’s Decision. The Administrator’s decisions,
determinations and interpretations will be final and binding on all Participants
and any other holders of Awards.
     5. Eligibility. Nonstatutory Stock Options, Restricted Stock, Stock
Appreciation Rights, Performance Units and Performance Shares may be granted to
Service Providers. Incentive Stock Options may be granted only to Employees.
     6. Limitations.
          (a) Each Option will be designated in the Award Agreement as either an
Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding
such designation, to the extent that the aggregate Fair Market Value of the
Shares with respect to which Incentive Stock Options are exercisable for the
first time by the Participant during any calendar year (under all plans of the
Company and any Parent or Subsidiary) exceeds $100,000, such Options will be
treated as Nonstatutory Stock Options. For purposes of this Section 6(a),
Incentive Stock Options will be taken

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into account in the order in which they were granted. The Fair Market Value of
the Shares will be determined as of the time the Option with respect to such
Shares is granted.
          (b) The following limitations will apply to grants of Options and
Stock Appreciation Rights with an exercise price equal to or exceeding 100% of
Fair Market Value on the grant date:
               (i) No Service Provider will be granted, in any Fiscal Year,
Options or SARs to purchase more than 200,000 Shares.
               (ii) In connection with his or her initial service, a Service
Provider may be granted Options or SARs to purchase up to an additional 300,000
Shares, which will not count against the limit set forth in Section 6(b)(i)
above.
               (iii) The foregoing limitations will be adjusted proportionately
in connection with any change in the Company’s capitalization as described in
Section 13.
               (iv) If an Option or SAR is cancelled in the same Fiscal Year in
which it was granted (other than in connection with a transaction described in
Section 13), the cancelled Option or SAR will be counted against the limits set
forth in subsections (i) and (ii) above. For this purpose, if the exercise price
of an Option is reduced, the transaction will be treated as a cancellation of
the Option and the grant of a new Option.
     7. Stock Options.
          (a) Term of Option. The term of each Option will be stated in the
Award Agreement. In the case of an Incentive Stock Option, the term will be ten
(10) years from the date of grant or such shorter term as may be provided in the
Award Agreement. Moreover, in the case of an Incentive Stock Option granted to a
Participant who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock Option will be five (5) years from the date of grant or such
shorter term as may be provided in the Award Agreement.
          (b) Option Exercise Price and Consideration.
               (i) Exercise Price. The per share exercise price for the Shares
to be issued pursuant to exercise of an Option will be determined by the
Administrator, subject to the following:
                    (1) In the case of an Incentive Stock Option
                         a) granted to an Employee who, at the time the
Incentive Stock Option is granted, owns 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 will be no less than 110% of the
Fair Market Value per Share on the date of grant.

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                         b) granted to any Employee other than an Employee
described in paragraph (a) immediately above, the per Share exercise price will
be no less than 100% of the Fair Market Value per Share on the date of grant.
                    (2) In the case of a Nonstatutory Stock Option, the per
Share exercise price will be determined by the Administrator. In the case of a
Nonstatutory Stock Option intended to qualify as “performance-based
compensation” within the meaning of Section 162(m) of the Code, the per Share
exercise price will be no less than 100% of the Fair Market Value per Share on
the date of grant.
                    (3) Notwithstanding the foregoing, Incentive Stock Options
may be granted with a per Share exercise price of less than 100% of the Fair
Market Value per Share on the date of grant pursuant to a merger or other
corporate transaction.
               (ii) Waiting Period and Exercise Dates. At the time an Option is
granted, the Administrator will fix the period within which the Option may be
exercised and will determine any conditions that must be satisfied before the
Option may be exercised.
               (iii) Form of Consideration. The Administrator will determine the
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator will
determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of: (1) cash; (2) check; (3) promissory note;
(4) other Shares, provided Shares acquired directly or indirectly from the
Company, (A) have been owned by the Participant and not subject to substantial
risk of forfeiture for more than six months on the date of surrender, and
(B) have a Fair Market Value on the date of surrender equal to the aggregate
exercise price of the Shares as to which said Option will be exercised; (5)
consideration received by the Company under a cashless exercise program
implemented by the Company in connection with the Plan; (6) a reduction in the
amount of any Company liability to the Participant, including any liability
attributable to the Participant’s participation in any Company-sponsored
deferred compensation program or arrangement; (7) any combination of the
foregoing methods of payment; or (8) such other consideration and method of
payment for the issuance of Shares to the extent permitted by Applicable Laws.
          (c) Exercise of Option.
               (i) Procedure for Exercise; Rights as a Stockholder. Any Option
granted hereunder will be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Administrator and set
forth in the Award Agreement. An Option may not be exercised for a fraction of a
Share.
                    An Option will be deemed exercised when the Company
receives: (x) written or electronic notice of exercise (in accordance with the
Award Agreement) from the person entitled to exercise the Option, and (y) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Award Agreement and the Plan. Shares issued
upon exercise of an Option will be issued in the name of the Participant or, if
requested by the Participant, in the name of the Participant and his or her
spouse. Until the Shares are issued (as

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evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), no right to vote or receive dividends
or any other rights as a stockholder will exist with respect to the Awarded
Stock, notwithstanding the exercise of the Option. The Company will issue (or
cause to be issued) such Shares promptly after the Option is exercised. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the Shares are issued, except as provided in Section 13 of
the Plan.
                    Exercising an Option in any manner will decrease the number
of Shares thereafter available, both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is exercised.
          (d) Termination of Relationship as a Service Provider. If a
Participant ceases to be a Service Provider, other than upon the Participant’s
death or Disability, the Participant may exercise his or her Option within such
period of time as is specified in the Award Agreement to the extent that the
Option is vested on the date of termination (but in no event later than the
expiration of the term of such Option as set forth in the Award Agreement). In
the absence of a specified time in the Award Agreement, the Option will remain
exercisable for three (3) months following the Participant’s termination. Unless
otherwise provided by the Administrator, if on the date of termination the
Participant is not vested as to his or her entire Option, the Shares covered by
the unvested portion of the Option will revert to the Plan. If after termination
the Participant does not exercise his or her Option within the time specified by
the Administrator, the Option will terminate, and the Shares covered by such
Option will revert to the Plan.
          (e) Disability of Participant. If a Participant ceases to be a Service
Provider as a result of the Participant’s Disability, the Participant may
exercise his or her Option within such period of time as is specified in the
Award Agreement to the extent the Option is vested on the date of termination
(but in no event later than the expiration of the term of such Option as set
forth in the Award Agreement). In the absence of a specified time in the Award
Agreement, the Option will remain exercisable for twelve (12) months following
the Participant’s termination. Unless otherwise provided by the Administrator,
if on the date of termination the Participant is not vested as to his or her
entire Option, the Shares covered by the unvested portion of the Option will
revert to the Plan. If after termination the Participant does not exercise his
or her Option within the time specified herein, the Option will terminate, and
the Shares covered by such Option will revert to the Plan.
          (f) Death of Participant. If a Participant dies while a Service
Provider, the Option may be exercised following the Participant’s death within
such period of time as is specified in the Award Agreement to the extent that
the Option is vested on the date of death (but in no event may the option be
exercised later than the expiration of the term of such Option as set forth in
the Award Agreement), by the Participant’s designated beneficiary, provided such
beneficiary has been designated prior to Participant’s death in a form
acceptable to the Administrator. If no such beneficiary has been designated by
the Participant, then such Option may be exercised by the personal
representative of the Participant’s estate or by the person(s) to whom the
Option is transferred pursuant to the Participant’s will or in accordance with
the laws of descent and distribution. In the absence of a specified time in the
Award Agreement, the Option will remain exercisable for twelve (12) months
following Participant’s death. Unless otherwise provided by the Administrator,
if at the time of death Participant is not vested as to his or her entire
Option, the Shares covered by the unvested portion of the Option will
immediately revert to the Plan. If the

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Option is not so exercised within the time specified herein, the Option will
terminate, and the Shares covered by such Option will revert to the Plan.
          (g) Buyout Provisions. The Administrator may at any time offer to buy
out 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
Participant at the time that such offer is made.
     8. Restricted Stock.
          (a) Grant of Restricted Stock. Subject to the terms and provisions of
the Plan, the Administrator, at any time and from time to time, may grant Shares
of Restricted Stock to Service Providers in such amounts as the Administrator,
in its sole discretion, will determine provided that during any Fiscal Year, no
Service Provider shall receive more than 125,000 Shares of Restricted Stock
except that such Service Provider may receive up to an additional 175,000 Shares
of Restricted Stock in the fiscal year of the Company in which his or her
service as a Service Provider first commences.
          (b) Restricted Stock Agreement. Each Award of Restricted Stock will be
evidenced by an Award Agreement that will specify the Period of Restriction, the
number of Shares granted, and such other terms and conditions as the
Administrator, in its sole discretion, will determine. Unless the Administrator
determines otherwise, Shares of Restricted Stock will be held by the Company as
escrow agent until the restrictions on such Shares have lapsed.
          (c) Transferability. Except as provided in this Section 8, Shares of
Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated until the end of the applicable Period of Restriction.
          (d) Other Restrictions. The Administrator, in its sole discretion, may
impose such other restrictions on Shares of Restricted Stock as it may deem
advisable or appropriate.
               (i) General Restrictions. The Administrator may set restrictions
based upon the achievement of specific performance objectives (Company-wide,
departmental, or individual), applicable federal or state securities laws, or
any other basis determined by the Committee in its discretion.
               (ii) Section 162(m) Performance Restrictions. For purposes of
qualifying grants of Restricted Stock as “performance-based compensation” under
Section 162(m) of the Code, the Committee, in its discretion, may set
restrictions based upon the achievement of Performance Goals. The Performance
Goals shall be set by the Committee on or before the latest date permissible to
enable the Restricted Stock to qualify as “performance-based compensation” under
Section 162(m) of the Code. In granting Restricted Stock which is intended to
qualify under Section 162(m) of the Code, the Committee shall follow any
procedures determined by it from time to time to be necessary or appropriate to
ensure qualification of the Restricted Stock under Section 162(m) of the Code
(e.g., in determining the Performance Goals).
     (e) Removal of Restrictions. Except as otherwise provided in this
Section 8, Shares of Restricted Stock covered by each Restricted Stock grant
made under the Plan will be released from escrow as soon as practicable after
the last day of the Period of Restriction. The

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Administrator, in its discretion, may accelerate the time at which any
restrictions will lapse or be removed.
          (f) Voting Rights. During the Period of Restriction, Service Providers
holding Shares of Restricted Stock granted hereunder may exercise full voting
rights with respect to those Shares, unless the Administrator determines
otherwise.
          (g) Dividends and Other Distributions. During the Period of
Restriction, Service Providers holding Shares of Restricted Stock will be
entitled to receive all dividends and other distributions paid with respect to
such Shares unless otherwise provided in the Award Agreement. If any such
dividends or distributions are paid in Shares, the Shares will be subject to the
same restrictions on transferability and forfeitability as the Shares of
Restricted Stock with respect to which they were paid.
          (h) Return of Restricted Stock to Company. On the date set forth in
the Award Agreement, the Restricted Stock for which restrictions have not lapsed
will revert to the Company and again will become available for grant under the
Plan.
     9. Stock Appreciation Rights.
          (a) Grant of SARs. Subject to the terms and conditions of the Plan, a
SAR may be granted to Service Providers at any time and from time to time as
will be determined by the Administrator, in its sole discretion. The
Administrator may grant Affiliated SARs, Freestanding SARs, Tandem SARs, or any
combination thereof.
          (b) Number of Shares. The Administrator will have complete discretion
to determine the number of SARs granted to any Service Provider, subject to the
limits set forth in Section 6.
          (c) Exercise Price and Other Terms. The Administrator, subject to the
provisions of the Plan, will have complete discretion to determine the terms and
conditions of SARs granted under the Plan; provided, however, that no SAR may
have a term of more than ten (10) years from the date of grant. However, the
exercise price of Tandem or Affiliated SARs will equal the exercise price of the
related Option.
          (d) Exercise of Tandem SARs. Tandem SARs may be exercised for all or
part of the Shares subject to the related Option upon the surrender of the right
to exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable. With respect to a Tandem SAR granted in connection with an
Incentive Stock Option: (a) the Tandem SAR will expire no later than the
expiration of the underlying Incentive Stock Option; (b) the value of the payout
with respect to the Tandem SAR will be for no more than one hundred percent
(100%) of the difference between the exercise price of the underlying Incentive
Stock Option and the Fair Market Value of the Shares subject to the underlying
Incentive Stock Option at the time the Tandem SAR is exercised; and (c) the
Tandem SAR will be exercisable only when the Fair Market Value of the Shares
subject to the Incentive Stock Option exceeds the Exercise Price of the
Incentive Stock Option.

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          (e) Exercise of Affiliated SARs. An Affiliated SAR will be deemed to
be exercised upon the exercise of the related Option. The deemed exercise of an
Affiliated SAR will not necessitate a reduction in the number of Shares subject
to the related Option.
          (f) Exercise of Freestanding SARs. Freestanding SARs will be
exercisable on such terms and conditions as the Administrator, in its sole
discretion, will determine.
          (g) SAR Agreement. Each SAR grant will be evidenced by an Award
Agreement that will specify the exercise price, the term of the SAR, the
conditions of exercise, and such other terms and conditions as the
Administrator, in its sole discretion, will determine.
          (h) Expiration of SARs. An SAR granted under the Plan will expire upon
the date determined by the Administrator, in its sole discretion, and set forth
in the Award Agreement. Notwithstanding the foregoing, the rules of
Sections 7(d), 7(e) and 7(f) also will apply to SARs.
          (i) Payment of SAR Amount. Upon exercise of an SAR, a Participant will
be entitled to receive payment from the Company in an amount determined by
multiplying:
               (i) The difference between the Fair Market Value of a Share on
the date of exercise over the exercise price; times
               (ii) The number of Shares with respect to which the SAR is
exercised.
     At the discretion of the Administrator, the payment upon SAR exercise may
be in cash, in Shares of equivalent value, or in some combination thereof.
          (j) Buyout Provisions. The Administrator may at any time offer to buy
out for a payment in cash or Shares a Stock Appreciation Right previously
granted based on such terms and conditions as the Administrator shall establish
and communicate to the Participant at the time that such offer is made.
     10. Performance Units and Performance Shares.
          (a) Grant of Performance Units/Shares. Subject to the terms and
conditions of the Plan, Performance Units and Performance Shares may be granted
to Service Providers at any time and from time to time, as will be determined by
the Administrator, in its sole discretion. The Administrator will have complete
discretion in determining the number of Performance Units and Performance Shares
granted to each Service Provider, provided that during any Fiscal Year, (a) no
Service Provider shall receive Performance Units having an initial value greater
than $750,000, except that such Service Provider may receive Performance Units
in the fiscal year of the Company in which his or her service as an Employee
first commences with an initial value no greater than $750,000, and (b) no
Service Provider shall receive more than 125,000 Performance Shares, except that
such Service Provider may receive up to an additional 175,000 Performance Shares
in the fiscal year of the Company in which his or her service as a Service
Provider first commences. The Administrator will have complete discretion in
determining the conditions that must be satisfied.

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          (b) Value of Performance Units/Shares. Each Performance Unit will have
an initial value that is established by the Administrator on or before the date
of grant. Each Performance Share will have an initial value equal to the Fair
Market Value of a Share on the date of grant.
          (c) Performance Objectives and Other Terms. The Administrator will set
performance objectives in its discretion which, depending on the extent to which
they are met, will determine the number or value of Performance Units/Shares
that will be paid out to the Service Providers. Each Award of Performance
Units/Shares will be evidenced by an Award Agreement that will specify the
Performance Period, and such other terms and conditions as the Administrator, in
its sole discretion, will determine. The Administrator may set performance
objectives based upon the achievement of Company-wide, divisional, or individual
goals, applicable federal or state securities laws, or any other basis
determined by the Administrator in its discretion.
          (d) Section 162(m) Performance Objectives. For purposes of qualifying
grants of Performance Units and/or Performance Shares as “performance-based
compensation” under Section 162(m) of the Code, the Committee, in its
discretion, may determine that the performance objectives applicable to
Performance Units and/or Performance Shares shall be based on the achievement of
Performance Goals. The Performance Goals shall be set by the Committee on or
before the latest date permissible to enable the Performance Units and/or
Performance Shares to qualify as “performance-based compensation” under Section
162(m) of the Code. In granting Performance Units and/or Performance Shares
which are intended to qualify under Section 162(m) of the Code, the Committee
shall follow any procedures determined by it from time to time to be necessary
or appropriate to ensure qualification of the Performance Units and/or
Performance Shares under Section 162(m) of the Code (e.g., in determining the
Performance Goals).
          (e) Earning of Performance Units/Shares. After the applicable
Performance Period has ended, the holder of Performance Units/Shares will be
entitled to receive a payout of the number of Performance Units/Shares earned by
the Participant over the Performance Period, to be determined as a function of
the extent to which the corresponding performance objectives have been achieved.
After the grant of a Performance Unit/Share, the Administrator, in its sole
discretion, may reduce or waive any performance objectives for such Performance
Unit/Share.
          (f) Form and Timing of Payment of Performance Units/Shares. Payment of
earned Performance Units/Shares will be made as soon as practicable after the
expiration of the applicable Performance Period. The Administrator, in its sole
discretion, may pay earned Performance Units/Shares in the form of cash, in
Shares (which have an aggregate Fair Market Value equal to the value of the
earned Performance Units/Shares at the close of the applicable Performance
Period) or in a combination thereof.
          (g) Cancellation of Performance Units/Shares. On the date set forth in
the Award Agreement, all unearned or unvested Performance Units/Shares will be
forfeited to the Company, and again will be available for grant under the Plan.
     11. Leaves of Absence. Unless the Administrator provides otherwise, vesting
of Awards granted hereunder will be suspended during any unpaid leave of
absence, such that vesting shall cease on the first day of any unpaid leave of
absence and shall only recommence upon return to active service. A Service
Provider will not cease to be an Employee in the case of (i) any leave of

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absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, or any Subsidiary. 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.
If reemployment upon expiration of a leave of absence approved by the Company is
not so guaranteed, then three months following the 91st day of such leave any
Incentive Stock Option held by the Participant will cease to be treated as an
Incentive Stock Option and will be treated for tax purposes as a Nonstatutory
Stock Option.
     12. Transferability of Awards. Unless determined otherwise by the
Administrator, an Award 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
Participant, only by the Participant. If the Administrator makes an Award
transferable, such Award will contain such additional terms and conditions as
the Administrator deems appropriate.
     13. Adjustments; Dissolution or Liquidation; or Change in Control.
          (a) Adjustments. Subject to any required action by the shareholders of
the Company, the number of Shares covered by each outstanding Award, the number
of Shares which have been authorized for issuance under the Plan but as to which
no Awards have yet been granted or which have been returned to the Plan upon
cancellation or expiration of an Award and the number of Shares as well as the
price per share of Common Stock covered by each such outstanding Award and the
162(m) annual share issuance limits under Section 3, 6, 8(a), 9(b) and 10(a)
shall be proportionately adjusted for any increase or decrease in the number of
issued Shares resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued Shares effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been “effected
without receipt of consideration.” Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of Shares subject to an Award.
          (b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator will notify each
Participant as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for a Participant
to have the right to exercise his or her Option or SAR until ten (10) days prior
to such transaction as to all of the Awarded Stock covered thereby, including
Shares as to which the Award would not otherwise be exercisable. In addition,
the Administrator may provide that any Company repurchase option or forfeiture
rights applicable to any Award shall lapse 100%, and that any Award vesting
shall accelerate 100%, provided the proposed dissolution or liquidation takes
place at the time and in the manner contemplated. To the extent it has not been
previously exercised (with respect to Options and SARs) or vested (with respect
to other Awards), an Award will terminate immediately prior to the consummation
of such proposed action.
          (c) Change in Control.

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               (i) Stock Options and SARS. In the event of a Change in Control,
each outstanding Option and SAR shall be assumed or an equivalent option or SAR
substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. In the event that the successor corporation refuses to
assume or substitute for the Option or SAR, the Participant shall fully vest in
and have the right to exercise the Option or SAR as to all of the Awarded Stock,
including Shares as to which it would not otherwise be vested or exercisable. If
an Option or SAR becomes fully vested and exercisable in lieu of assumption or
substitution in the event of a Change in Control, the Administrator shall notify
the Participant in writing or electronically that the Option or SAR shall be
fully vested and exercisable for a period of fifteen (15) days from the date of
such notice, and the Option or SAR shall terminate upon the expiration of such
period. For the purposes of this paragraph, the Option or SAR shall be
considered assumed if, following the Change in Control, the option or stock
appreciation right confers the right to purchase or receive, for each Share of
Awarded Stock subject to the Option or SAR immediately prior to Change in
Control, the consideration (whether stock, cash, or other securities or
property) received in the Change in Control by holders of Common Stock for each
Share held on the effective date of the transaction (and if holders were offered
a choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares); provided, however, that if such
consideration received in the Change in Control is not solely common stock of
the successor corporation or its Parent, the Administrator may, with the consent
of the successor corporation, provide for the consideration to be received upon
the exercise of the Option or SAR, for each Share of Awarded Stock subject to
the Option or SAR, to be solely common stock of the successor corporation or its
Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the Change in Control. Notwithstanding anything
herein to the contrary, an Award that vests, is earned or paid-out upon the
satisfaction of one or more performance goals will not be considered assumed if
the Company or its successor modifies any of such performance goals without the
Participant’s consent; provided, however, a modification to such performance
goals only to reflect the successor corporation’s post-Change in Control
corporate structure will not be deemed to invalidate an otherwise valid Award
assumption.
               (ii) Restricted Stock, Performance Shares and Performance Units.
In the event of a Change in Control, each outstanding Restricted Stock,
Performance Share and Performance Unit award shall be assumed or an equivalent
Restricted Stock, Performance Share and Performance Unit award substituted by
the successor corporation or a Parent or Subsidiary of the successor
corporation. In the event that the successor corporation refuses to assume or
substitute for the Restricted Stock, Performance Share or Performance Unit
award, the Participant shall fully vest in the Restricted Stock, Performance
Share or Performance Unit including as to Shares (or with respect to Performance
Units, the cash equivalent thereof) which would not otherwise be vested. For the
purposes of this paragraph, a Restricted Stock, Performance Share and
Performance Unit award shall be considered assumed if, following the Change in
Control, the award confers the right to purchase or receive, for each Share (or
with respect to Performance Units, the cash equivalent thereof) subject to the
Award immediately prior to the Change in Control, the consideration (whether
stock, cash, or other securities or property) received in the Change in Control
by holders of Common Stock for each Share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the Change in Control
is not solely common stock of the successor corporation or its Parent, the
Administrator may, with the consent of the successor corporation, provide for
the consideration to be received, for each Share

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and each unit/right to acquire a Share subject to the Award, to be solely common
stock of the successor corporation or its Parent equal in fair market value to
the per share consideration received by holders of Common Stock in the Change in
Control. Notwithstanding anything herein to the contrary, an Award that vests,
is earned or paid-out upon the satisfaction of one or more performance goals
will not be considered assumed if the Company or its successor modifies any of
such performance goals without the Participant’s consent; provided, however, a
modification to such performance goals only to reflect the successor
corporation’s post-Change in Control corporate structure will not be deemed to
invalidate an otherwise valid Award assumption.
     14. No Effect on Employment or Service. Neither the Plan nor any Award will
confer upon a Participant any right with respect to continuing the Participant’s
relationship as a Service Provider with the Company, nor will they interfere in
any way with the Participant’s right or the Company’s right to terminate such
relationship at any time, with or without cause, to the extent permitted by
Applicable Laws.
     15. Date of Grant. The date of grant of an Award will be, for all purposes,
the date on which the Administrator makes the determination granting such Award,
or such other later date as is determined by the Administrator. Notice of the
determination will be provided to each Participant within a reasonable time
after the date of such grant.
     16. Term of Plan. Subject to Section 20 of the Plan, the Plan will become
effective upon its adoption by the Board. It will continue in effect for a term
of ten (10) years unless terminated earlier under Section 17 of the Plan.
     17. Amendment and Termination of the Plan.
          (a) Amendment and Termination. The Board may at any time amend, alter,
suspend or terminate the Plan.
          (b) Stockholder Approval. The Company will obtain stockholder approval
of any Plan amendment to the extent necessary and desirable to comply with
Applicable Laws.
          (c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan will impair the rights of any Participant,
unless mutually agreed otherwise between the Participant and the Administrator,
which agreement must be in writing and signed by the Participant and the
Company. Termination of the Plan will not affect the Administrator’s ability to
exercise the powers granted to it hereunder with respect to Awards granted under
the Plan prior to the date of such termination.
     18. Conditions Upon Issuance of Shares.
          (a) Legal Compliance. Shares will not be issued pursuant to the
exercise of an Award unless the exercise of such Award and the issuance and
delivery of such Shares will comply with Applicable Laws and will be further
subject to the approval of counsel for the Company with respect to such
compliance.
          (b) Investment Representations. As a condition to the exercise of an
Award, the Company may require the person exercising such Award to represent and
warrant at the time of any

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such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required.
     19. 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, will relieve the Company of any liability in respect of
the failure to issue or sell such Shares as to which such requisite authority
will not have been obtained.
     20. Stockholder Approval. The Plan will be subject to approval by the
stockholders of the Company within twelve (12) months after the date the Plan is
adopted. Such stockholder approval will be obtained in the manner and to the
degree required under Applicable Laws.

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