Exhibit 10.4

 

 

RIGEL PHARMACEUTICALS, INC.

2011 EQUITY INCENTIVE PLAN

 

ADOPTED: MARCH 23, 2011

APPROVED BY STOCKHOLDERS MAY 19, 2011

AMENDED FEBRUARY 3, 2012

APPROVED BY STOCKHOLDERS MAY 22, 2012

AMENDED FEBRUARY 8, 2013

APPROVED BY STOCKHOLDERS MAY 14, 2013

AMENDED JANUARY 26, 2016

APPROVED BY STOCKHOLDERS MAY 10, 2016

TERMINATION DATE: MARCH 22, 2021

 

1.                                      PURPOSES.

 

(a)                                 The persons eligible to receive Stock Awards
are the Employees, Directors and Consultants of the Company and its Affiliates.

 

(b)                                 The purpose of the Plan is to provide a
means by which eligible recipients of Stock Awards may be given an opportunity
to benefit from increases in value of the Common Stock through the granting of
the following Stock Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock
Options, (iii) stock bonuses and (iv) rights to acquire restricted stock.

 

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

 

2.                                      DEFINITIONS.

 

(a)                                 “Affiliate” means, at the time of
determination, any “parent” or “subsidiary” of the Company as such terms are
defined in Rule 405 of the Securities Act. The Board shall have the authority to
determine the time or times at which “parent” or “subsidiary” status is
determined within the foregoing definition.

 

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

 

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

 

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

 

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

 

(f)                                   “Company” means Rigel
Pharmaceuticals, Inc., a Delaware corporation.

 

(g)                                 “Consultant” means any person, including an
advisor, (i) engaged by the Company or an Affiliate to render consulting or
advisory services and who is compensated for such services or (ii) who is a
member of the Board of Directors of an Affiliate. However, the term “Consultant”
shall not include either Directors who are not compensated by the Company for
their services as Directors or Directors who are merely paid a director’s fee by
the Company for their services as Directors.

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(h)                                 “Continuous Service” means that the
Participant’s service with the Company or an Affiliate, whether as an Employee,
Director or Consultant, is not interrupted or terminated. The Participant’s
Continuous Service shall not be deemed to have terminated merely because of a
change in the capacity in which the Participant renders service to the Company
or an Affiliate as an Employee, Consultant or Director or a change in the entity
for which the Participant renders such service, provided that there is no
interruption or termination of the Participant’s service. For example, a change
in status without interruption from an Employee of the Company to a Consultant
of an Affiliate or a Director will not constitute an interruption of Continuous
Service. The Board or the chief executive officer of the Company, in that
party’s sole discretion, may determine whether Continuous Service shall be
considered interrupted in the case of any leave of absence approved by that
party, including sick leave, military leave or any other personal leave.

 

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

 

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

 

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

 

(l)                                    “Employee” means any person employed by
the Company or an Affiliate. Mere service as a Director or payment of a
director’s fee by the Company or an Affiliate shall not be sufficient to
constitute “employment” by the Company or an Affiliate.

 

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

 

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

 

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

 

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

 

(o)                                 “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.

 

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

 

(q)                                 “Nonstatutory Stock Option” means an Option
not intended to qualify as an Incentive Stock Option.

 

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(r)                                  “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.

 

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

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

 

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

 

(v)                                 “Outside Director” means a Director who
either (i) is not a current employee of the Company or an “affiliated
corporation” (within the meaning of Treasury Regulations promulgated under
Section 162(m) of the Code), is not a former employee of the Company or an
“affiliated corporation” receiving compensation for prior services (other than
benefits under a tax qualified pension plan), was not an officer of the Company
or an “affiliated corporation” at any time and is not currently receiving direct
or indirect remuneration from the Company or an “affiliated corporation” for
services in any capacity other than as a Director or (ii) is otherwise
considered an “outside director” for purposes of Section 162(m) of the Code.

 

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

 

(x)                                 “Performance Criteria” means the one or more
criteria that the Board shall select for purposes of establishing the
Performance Goals for a Performance Period. The Performance Criteria that shall
be used to establish such Performance Goals may be based on any one of, or
combination of, the following: (i) earnings per share; (ii) earnings before
interest, taxes and depreciation; (iii) earnings before interest, taxes,
depreciation and amortization (EBITDA); (iv) net earnings; (v) total stockholder
return; (vi) return on equity; (vii) return on assets, investment, or capital
employed; (viii) operating margin; (ix) gross margin; (x) operating income;
(xi) net income (before or after taxes); (xii) net operating income; (xiii) net
operating income after tax; (xiv) pre- and after-tax income; (xv) pre-tax
profit; (xvi) operating cash flow; (xvii) sales or revenue targets;
(xviii) increases in revenue or product revenue; (xix) expenses and cost
reduction goals; (xx) improvement in or attainment of expense levels;
(xxi) improvement in or attainment of working capital levels; (xxii) economic
value added (or an equivalent metric); (xxiii) market share; (xxiv) cash flow;
(xxv) cash flow per share; (xxvi) share price performance; (xxvii) debt
reduction; (xxviii) implementation or completion of projects or processes;
(xxix) customer satisfaction; (xxx) total stockholder return;
(xxxi) stockholders’ equity; and (xxxii) other measures of performance selected
by the Board. Partial achievement of the specified criteria may result in the
payment or vesting corresponding to the degree of achievement as specified in
the Stock Award Agreement. The Board shall, in its sole discretion, define the
manner of calculating the Performance Criteria it selects to use for such
Performance Period.

 

(y)                                 “Performance Goals” means, for a Performance
Period, the one or more goals established by the Board for the Performance
Period based upon the Performance Criteria. The Board is authorized at any time
in its sole discretion, to adjust or modify the calculation of a Performance
Goal for such Performance Period in order to prevent the dilution or enlargement
of the rights of Participants, (a) in the event of, or in anticipation of, any
items that are “unusual” in nature or occur “infrequently” as determined under
generally accepted accounting principles; (b) in response to, or in anticipation
of, changes in applicable laws, regulations, accounting principles, or business
conditions; or (c) in view of the Board’s assessment of the business strategy of
the Company, performance of comparable organizations, economic and business
conditions, and any other circumstances deemed relevant. Specifically, the Board
is authorized to make adjustment in the method of calculating attainment of
Performance Goals and objectives for a Performance Period as follows: (i) to
exclude the dilutive effects of acquisitions or joint ventures; (ii) to assume
that any business divested by the Company achieved performance objectives at
targeted levels during the balance of a Performance Period following such
divestiture; and (iii) to exclude the effect of any change in the outstanding
shares of common stock of the Company by reason of any stock dividend or split,
stock repurchase, reorganization, recapitalization, merger, consolidation,
spin-off, combination or exchange of shares or other similar corporate change,
or any distributions to common stockholders other than regular cash dividends.
In addition, the Board

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is authorized to make adjustment in the method of calculating attainment of
Performance Goals and objectives for a Performance Period as follows: (i) to
exclude restructuring and/or other nonrecurring charges; (ii) to exclude
exchange rate effects, as applicable, for non-U.S. dollar denominated net sales
and operating earnings; (iii) to exclude the effects of changes to generally
accepted accounting standards required by the Financial Accounting Standards
Board; (iv) to exclude the effects to any statutory adjustments to corporate tax
rates; and (v) to exclude the effects of items that are “unusual” in nature or
occur “infrequently” as determined under generally accepted accounting
principles.

 

(z)                                  “Performance Period” means the one or more
periods of time, which may be of varying and overlapping durations, as the Board
may select, over which the attainment of one or more Performance Goals will be
measured for the purpose of determining a Participant’s right to and the payment
of a Stock Award.

 

(aa)                          “Plan” means this Rigel Pharmaceuticals, Inc. 2011
Equity Incentive Plan.

 

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

 

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

 

(dd)                          “Stock Award” means any right granted under the
Plan, including an Option, a stock bonus, a right to acquire restricted stock, a
stock unit award and a stock appreciation right.

 

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

 

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

 

3.                                      ADMINISTRATION.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(c)  Delegation to Committee.

 

(i)  General.  The Board may delegate administration of the Plan to a Committee
or Committees of one (1) or more members of the Board, and the term “Committee”
shall apply to any person or persons to whom such authority has been delegated.
If administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, including the power to delegate to a subcommittee any of the
administrative powers the Committee is authorized to exercise (and references in
this Plan to the Board shall thereafter be to the Committee or subcommittee),
subject, however, to such resolutions, not inconsistent with the provisions of
the Plan, as may be adopted from time to time by the Board. The Board may
abolish the Committee at any time and revest in the Board the administration of
the Plan.

 

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

 

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

 

(e)  Cancellation and Re-Grant of Stock Awards.  Notwithstanding anything to the
contrary in the Plan, neither the Board nor any Committee shall have the
authority to: (i) reprice any outstanding Stock Awards under the Plan,
(ii) cancel any outstanding Options or Stock Appreciation Rights that have an
exercise price or strike price greater than the current Fair Market Value of the
Common Stock in exchange for cash or other Stock Awards under the Plan, or
(iii) effect any other action that is treated as a repricing under generally
accepted accounting principles unless, in each case, the stockholders of the
Company have approved such an action within twelve (12) months prior to such an
event.

 

4.                                      SHARES SUBJECT TO THE PLAN.

 

(a)  Share Reserve.  Subject to the provisions of subsection 11(a) relating to
adjustments upon changes in Common Stock, the shares of Common Stock that may be
issued pursuant to Stock Awards shall not exceed in the aggregate 13,250,000
shares of Common Stock, which number consists of (i) 3,500,000 shares of Common
Stock initially reserved for issuance under the Plan plus (ii) 600,000 shares of
Common Stock approved by the Board in February 2012 and subsequently approved by
the Company’s stockholders plus (iii) 7,000,000 shares of Common Stock approved
by the Board in February 2013 and subsequently approved by the Company’s
stockholders plus (iii) 2,150,000 shares of Common Stock approved by the Board
in January 2016 and subsequently approved by the Company’s stockholders..

 

(b)                                 Subject to subsection 4(c), the number of
shares available for issuance under the Plan shall be reduced by: (i) one
(1) share for each share of stock issued pursuant to (A) an Option granted under
Section 6, or (B) a Stock Appreciation Right granted under subsection 7(d) with
respect to which the strike price is at least one hundred percent (100%) of the
Fair Market Value of the underlying Common Stock on the date of grant; and
(ii) one and sixty-four hundredths (1.64) shares for each share of Common Stock
issued pursuant to a Stock Bonus Award, Restricted Stock Award, Stock Unit Award
or Performance Stock Award.

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(c)  Reversion of Shares to the Share Reserve.

 

(i)  Shares Available For Subsequent Issuance.  If any (i) Stock Award shall for
any reason expire or otherwise terminate, in whole or in part, without having
been exercised in full, (ii) shares of Common Stock issued to a Participant
pursuant to a Stock Award are forfeited to or repurchased by the Company,
including any repurchase or forfeiture caused by the failure to meet a
contingency or condition required for the vesting of such shares, or (iii) Stock
Award is settled in cash, then the shares of Common Stock not issued under such
Stock Award, or forfeited to or repurchased by the Company, shall revert to and
again become available for issuance under the Plan. To the extent there is
issued a share of Common Stock pursuant to a Stock Award that counted as one and
sixty-four hundredths (1.64) shares against the number of shares available for
issuance under the Plan pursuant to subsection 4(b) and such share of Common
Stock again becomes available for issuance under the Plan pursuant to this
subsection 4(c)(i), then the number of shares of Common Stock available for
issuance under the Plan shall increase by one and sixty-four hundredths (1.64)
shares.

 

(ii)  Shares Not Available For Subsequent Issuance.  If any shares subject to a
Stock Award are not delivered to a Participant because the Stock Award is
exercised through a reduction of shares subject to the Stock Award (i.e., “net
exercised”), the number of shares that are not delivered to the Participant
shall not remain available for issuance under the Plan. If any shares subject to
a Stock Award are not delivered to a Participant because such shares are
withheld in satisfaction of the withholding of taxes incurred in connection with
the exercise of an Option or stock appreciation right, or the issuance of shares
under a stock bonus award, restricted stock award or stock unit award, the
number of shares that are not delivered to the Participant shall not remain
available for subsequent issuance under the Plan. If the exercise price of any
Stock Award is satisfied by tendering shares of Common Stock held by the
Participant (either by actual delivery or attestation), then the number of
shares so tendered shall not remain available for subsequent issuance under the
Plan.

 

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

 

5.                                      ELIGIBILITY.

 

(a)  Eligibility for Specific Stock Awards.  Incentive Stock Options may be
granted only to employees of the Company or a “parent corporation” or
“subsidiary corporation” thereof (as such terms are defined in
Sections 424(e) and (f) of the Code). Stock Awards other than Incentive Stock
Options may be granted to Employees, Directors and Consultants; provided,
however, Nonstatutory Stock Options and stock appreciation rights may not be
granted to Employees, Directors, and Consultants who are providing Continuous
Services only to any “parent” of the Company, as such term is defined in
Rule 405 promulgated under the Securities Act, unless such Stock Awards comply
with the distribution requirements of Section 409A of the Code.

 

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

 

(c)  Section 162(m) Limitation.  Subject to the provisions of Section 11
relating to adjustments upon changes in the shares of Common Stock, no Employee
shall be eligible to be granted Options covering more than one million five
hundred thousand (1,500,000) shares of Common Stock during any calendar year.

 

(d)  Consultants.

 

(i)                                    A Consultant shall not be eligible for
the grant of a Stock Award if, at the time of grant, a Form S-8 Registration
Statement under the Securities Act (“Form S-8”) is not available to register
either the offer or the sale of the Company’s securities to such Consultant
because of the nature of the services that the Consultant is providing to the
Company, or because the Consultant is not a natural person, or as otherwise
provided by the rules governing the use of Form S-8, unless the Company
determines both (i) that

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such grant (A) shall be registered in another manner under the Securities Act
(e.g., on a Form S-3 Registration Statement) or (B) does not require
registration under the Securities Act in order to comply with the requirements
of the Securities Act, if applicable, and (ii) that such grant complies with the
securities laws of all other relevant jurisdictions.

 

(ii)                                Form S-8 generally is available to
consultants and advisors only if (i) they are natural persons; (ii) they provide
bona fide services to the issuer, its parents, its majority-owned subsidiaries
or majority-owned subsidiaries of the issuer’s parent; and (iii) the services
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 issuer’s securities.

 

6.                                      OPTION PROVISIONS.

 

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

 

(a)  Term.  Subject to the provisions of subsection 5(b) regarding Ten Percent
Stockholders, no Option shall be exercisable after the expiration of ten
(10) years from the date it was granted.

 

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

 

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

(d)  Consideration.  The purchase price of Common Stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised or (ii) at
the discretion of the Board (1) by delivery to the Company of other Common
Stock; (2) according to a deferred payment or other similar arrangement with the
Optionholder; (3) by a “net exercise” arrangement pursuant to which the Company
will reduce the number of shares of Common Stock issued upon exercise by the
largest whole number of shares with a Fair Market Value that does not exceed the
aggregate exercise price; provided, however, that the Company shall accept a
cash or other payment from the Participant to the extent of any remaining
balance of the aggregate exercise price not satisfied by such holding back of
whole shares; provided, further, however, that shares of Common Stock will no
longer be outstanding under an Option and will not be exercisable thereafter to
the extent that (i) shares are used to pay the exercise price pursuant to the
“net exercise,” (ii) shares are delivered to the Participant as a result of such
exercise, and (iii) shares are withheld to satisfy tax withholding obligations;
or (4) in any other form of legal consideration that may be acceptable to the
Board. At any time that the Company is incorporated in Delaware, payment of the
Common Stock’s “par value,” as defined in the Delaware General Corporation Law,
shall not be made by deferred payment.

 

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

 

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(e)  Transferability of Options.  The Board may, in its sole discretion, impose
such limitations on the transferability of Options, as the Board shall
determine. In the absence of such a determination by the Board to the contrary,
the following restrictions on the transferability of Options shall apply:

 

(i)  Restrictions on Transfer.  An Option shall not be transferable except by
will or by the laws of descent and distribution and shall be exercisable during
the lifetime of the Optionholder only by the Optionholder; provided, however,
that the Board may, in its sole discretion, permit transfer of the Option in a
manner that is not prohibited by applicable tax and securities laws upon the
Optionholder’s request. Except as explicitly provided herein, an Option may not
be transferred for consideration.

 

(ii)  Domestic Relations Orders.  Notwithstanding the foregoing, an Option may
be transferred pursuant to a domestic relations order; provided, however, that
if an Option is an Incentive Stock Option, such Option may be deemed to be a
Nonstatutory Stock Option as a result of such transfer.

 

(iii)  Beneficiary Designation.  Notwithstanding the foregoing, the Optionholder
may, by delivering written notice to the Company, in a form provided by or
otherwise satisfactory to the Company and any broker designated by the Company
to effect Option exercises, designate a third party who, in the event of the
death of the Optionholder, shall thereafter be entitled to exercise the Option
and receive the Common Stock or other consideration resulting from such
exercise. In the absence of such a designation, the executor or administrator of
the Optionholder’s estate shall be entitled to exercise the Option and receive
the Common Stock or other consideration resulting from such exercise.

 

(f)  Vesting Generally.  The total number of shares of Common Stock subject to
an Option may, but need not, vest and therefore become exercisable in periodic
installments that may, but need not, be equal. The Option may be subject to such
other terms and conditions on the time or times when it may be exercised (which
may be based on performance or other criteria) as the Board may deem
appropriate. The vesting provisions of individual Options may vary. The
provisions of this subsection 6(g) are subject to any Option provisions
governing the minimum number of shares of Common Stock as to which an Option may
be exercised.

 

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

 

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

 

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

 

(j)  Death of Optionholder.  In the event (i) an Optionholder’s Continuous
Service terminates as a result of the Optionholder’s death or (ii) the
Optionholder dies within the period (if any) specified in the Option Agreement
after the

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termination of the Optionholder’s Continuous Service for a reason other than
death, then the Option may be exercised (to the extent the Optionholder was
entitled to exercise such Option as of the date of death) by the Optionholder’s
estate, by a person who acquired the right to exercise the Option by bequest or
inheritance or by a person designated to exercise the Option upon the
Optionholder’s death pursuant to subsection 6(e) or 6(f), but only within the
period ending on the earlier of (1) the date eighteen (18) months following the
date of death (or such longer or shorter period specified in the Option
Agreement) or (2) the expiration of the term of such Option as set forth in the
Option Agreement. If, after death, the Option is not exercised within the time
specified herein, the Option shall terminate.

 

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

 

(l)  Non-Exempt Employees.  No Option granted to an Employee who is a non-exempt
employee for purposes of the Fair Labor Standards Act of 1938, as amended, shall
be first exercisable for any shares of Common Stock until at least six months
following the date of grant of the Option. Notwithstanding the foregoing,
consistent with the provisions of the Worker Economic Opportunity Act, (i) in
the event of the Participant’s death or Disability, (ii) upon a Corporate
Transaction (as defined in section 11(c)) in which such Option is not assumed,
continued, or substituted, or (iii) upon the Participant’s retirement (as such
term may be defined in the Participant’s Option Agreement or in another
applicable agreement or in accordance with the Company’s then current employment
policies and guidelines), any such vested Options may be exercised earlier than
six months following the date of grant. The foregoing provision is intended to
operate so that any income derived by a non-exempt employee in connection with
the exercise or vesting of an Option will be exempt from his or her regular rate
of pay.

 

7.                                      PROVISIONS OF STOCK AWARDS OTHER THAN
OPTIONS.

 

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

 

(i)  Consideration.  A stock bonus may be awarded in consideration for past
services actually rendered to the Company or an Affiliate for its benefit.

 

(ii)  Vesting.  Shares of Common Stock awarded under the stock bonus agreement
may, but need not, be subject to a share repurchase option in favor of the
Company in accordance with a vesting schedule to be determined by the Board.

 

(iii)  Termination of Participant’s Continuous Service.  In the event a
Participant’s Continuous Service terminates, the Company may reacquire any or
all of the shares of Common Stock held by the Participant which have not vested
as of the date of termination under the terms of the stock bonus agreement.

 

(iv)  Transferability.  Rights to acquire shares of Common Stock under the stock
bonus agreement shall be transferable by the Participant only upon such terms
and conditions as are set forth in the stock bonus agreement, as the Board shall
determine in its discretion, so long as Common Stock awarded under the stock
bonus agreement remains subject to the terms of the stock bonus agreement.

 

(b)  Restricted Stock Awards.  Each restricted stock purchase agreement shall be
in such form and shall contain such terms and conditions as the Board shall deem
appropriate. The terms and conditions of the restricted stock purchase
agreements may change from time to time, and the terms and conditions of
separate restricted stock purchase

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agreements need not be identical, but each restricted stock purchase agreement
shall include (through incorporation of provisions hereof by reference in the
agreement or otherwise) the substance of each of the following provisions:

 

(i)  Purchase Price.  The purchase price under each restricted stock purchase
agreement shall be such amount as the Board shall determine and designate in
such restricted stock purchase agreement. The purchase price shall not be less
than eighty-five percent (85%) of the Common Stock’s Fair Market Value on the
date such award is made or at the time the purchase is consummated.

 

(ii)  Consideration.  The purchase price of Common Stock acquired pursuant to
the restricted stock purchase agreement shall be paid either: (i) in cash at the
time of purchase; (ii) at the discretion of the Board, according to a deferred
payment or other similar arrangement with the Participant; or (iii) in any other
form of legal consideration that may be acceptable to the Board in its
discretion; provided, however, that at any time that the Company is incorporated
in Delaware, then payment of the Common Stock’s “par value,” as defined in the
Delaware General Corporation Law, shall not be made by deferred payment.

 

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

 

(iv)  Termination of Participant’s Continuous Service.  In the event a
Participant’s Continuous Service terminates, the Company may repurchase or
otherwise reacquire any or all of the shares of Common Stock held by the
Participant that have not vested as of the date of termination under the terms
of the restricted stock purchase agreement.

 

(v)  Transferability.  Rights to acquire shares of Common Stock under the
restricted stock purchase agreement shall be transferable by the Participant
only upon such terms and conditions as are set forth in the restricted stock
purchase agreement, as the Board shall determine in its discretion, so long as
Common Stock awarded under the restricted stock purchase agreement remains
subject to the terms of the restricted stock purchase agreement.

 

(c)  Stock Unit Awards.  Each stock unit award agreement shall be in such form
and shall contain such terms and conditions as the Board shall deem appropriate.
The terms and conditions of stock unit award agreements may change from time to
time, and the terms and conditions of separate stock unit award agreements need
not be identical, provided, however, that each stock unit award agreement shall
include (through incorporation of the provisions hereof by reference in the
agreement or otherwise) the substance of each of the following provisions:

 

(i)  Consideration.  At the time of grant of a stock unit award, the Board will
determine the consideration, if any, to be paid by the Participant upon delivery
of each share of Common Stock subject to the stock unit award. The consideration
to be paid (if any) by the Participant for each share of Common Stock subject to
a stock unit award may be paid in any form of legal consideration that may be
acceptable to the Board in its sole discretion and permissible under applicable
law.

 

(ii)  Vesting.  At the time of the grant of a stock unit award, the Board may
impose such restrictions or conditions to the vesting of the stock unit award as
it, in its sole discretion, deems appropriate.

 

(iii)  Payment.  A stock unit award may be settled by the delivery of shares of
Common Stock, their cash equivalent, any combination thereof or in any other
form of consideration, as determined by the Board and contained in the stock
unit award agreement.

 

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

 

(v)  Dividend Equivalents.  Dividend equivalents may be credited in respect of
shares of Common Stock covered by a stock unit award, as determined by the Board
and contained in the stock unit award

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agreement. At the sole discretion of the Board, such dividend equivalents may be
converted into additional shares of Common Stock covered by the stock unit award
in such manner as determined by the Board. Any additional shares covered by the
stock unit award credited by reason of such dividend equivalents will be subject
to all the terms and conditions of the underlying stock unit award agreement to
which they relate.

 

(vi)  Termination of Participant’s Continuous Service.  Except as otherwise
provided in the applicable stock unit award agreement, such portion of the stock
unit award that has not vested will be forfeited upon the Participant’s
termination of Continuous Service.

 

(d)  Stock Appreciation Rights.  Each stock appreciation right agreement shall
be in such form and shall contain such terms and conditions as the Board shall
deem appropriate. The terms and conditions of stock appreciation right
agreements may change from time to time, and the terms and conditions of
separate stock appreciation right agreements need not be identical; provided,
however, that each stock appreciation right agreement shall include (through
incorporation of the provisions hereof by reference in the agreement or
otherwise) the substance of each of the following provisions:

 

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

 

(ii)  Vesting.  At the time of the grant of a stock appreciation right, the
Board may impose such restrictions or conditions to the vesting of such stock
appreciation right as it, in its sole discretion, deems appropriate.

 

(iii)  Exercise.  To exercise any outstanding stock appreciation right, the
Participant must provide written notice of exercise to the Company in compliance
with the provisions of the stock appreciation right agreement evidencing such
stock appreciation right.

 

(iv)  Payment.  The appreciation distribution in respect to a stock appreciation
right may be paid in Common Stock, in cash, in any combination of the two or in
any other form of consideration, as determined by the Board and contained in the
stock appreciation right agreement evidencing such stock appreciation right.

 

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

 

8.                                      COVENANTS OF THE COMPANY.

 

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

 

(b)  Securities Law Compliance.  The Company shall seek to obtain from each
regulatory commission or agency having jurisdiction over the Plan such authority
as may be required to grant Stock Awards and to issue and sell shares of Common
Stock upon exercise of the Stock Awards; provided, however, that this
undertaking shall not require

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the Company to register under the Securities Act the Plan, any Stock Award or
any Common Stock issued or issuable pursuant to any such Stock Award. If, after
reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority which counsel for the Company deems necessary
for the lawful issuance and sale of Common Stock under the Plan, the Company
shall be relieved from any liability for failure to issue and sell Common Stock
upon exercise of such Stock Awards unless and until such authority is obtained.

 

(c)  No Obligation to Notify or Minimize Taxes.  The Company shall have no duty
or obligation to any Participant to advise such holder as to the time or manner
of exercising such Stock Award. Furthermore, the Company shall have no duty or
obligation to warn or otherwise advise such holder of a pending termination or
expiration of a Stock Award or a possible period in which the Stock Award may
not be exercised. The Company has no duty or obligation to minimize the tax
consequences of a Stock Award to the holder of such Stock Award.

 

9.                                      USE OF PROCEEDS FROM STOCK.

 

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

 

10.                               MISCELLANEOUS.

 

(a)  Corporate Action Constituting Grant of Stock Awards.  Corporate action
constituting a grant by the Company of a Stock Award to any Participant shall be
deemed completed as of the date of such corporate action, unless otherwise
determined by the Board, regardless of when the instrument, certificate, or
letter evidencing the Stock Award is communicated to, or actually received or
accepted by, the Participant.

 

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

 

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

 

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

 

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

 

(f)  Investment Assurances.  The Company may require a Participant, as a
condition of exercising or acquiring Common Stock under any Stock Award, (i) to
give written assurances satisfactory to the Company as to the Participant’s
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (ii) to
give written assurances satisfactory to the Company stating that the Participant
is acquiring Common Stock subject to the Stock Award for the Participant’s own
account and not with any present intention of selling or otherwise distributing
the Common Stock. The foregoing requirements, and any assurances given pursuant
to such

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

 

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

 

(h)  Performance Stock Awards.  A Stock Award may be granted, may vest, or may
be exercised based upon service conditions, upon the attainment during a
Performance Period of certain Performance Goals, or both. The length of any
Performance Period, the Performance Goals to be achieved during the Performance
Period, and the measure of whether and to what degree such Performance Goals
have been attained shall be conclusively determined by the Board in its sole
discretion. The maximum benefit to be received by any individual in any calendar
year attributable to Stock Awards described in this subsection 10(h) shall not
exceed the value of one million five hundred thousand (1,500,000) shares of
Common Stock.

 

(i)  Electronic Delivery.  Any reference herein to a “written” agreement or
document shall include any agreement or document delivered electronically or
posted on the Company’s intranet.

 

(j)  Compliance with Section 409A.  To the extent that the Board determines that
any Stock Award granted hereunder is subject to Section 409A of the Code, the
Stock Award Agreement evidencing such Stock Award shall incorporate the terms
and conditions necessary to avoid the consequences specified in
Section 409A(a)(1) of the Code. To the extent applicable, the Plan and Stock
Award Agreements shall be interpreted in accordance with Section 409A of the
Code. Notwithstanding anything to the contrary in this Plan (and unless the
Stock Award Agreement specifically provides otherwise), if the Shares are
publicly traded and a Participant holding a Stock Award that constitutes
“deferred compensation” under Section 409A of the Code is a “specified employee”
for purposes of Section 409A of the Code, no distribution or payment of any
amount shall be made upon a “separation from service” before a date that is six
(6) months following the date of such Participant’s “separation from service”
(as defined in Section 409A of the Code without regard to alternative
definitions thereunder) or, if earlier, the date of the Participant’s death.

 

11.                               ADJUSTMENTS UPON CHANGES IN STOCK.

 

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

 

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(b)  Dissolution or Liquidation.  In the event of a dissolution or liquidation
of the Company, then all outstanding Stock Awards shall terminate immediately
prior to such event, and shares of Common Stock subject to the Company’s
repurchase option may be repurchased by the Company notwithstanding the fact
that the holder of such stock is still in Continuous Service. Notwithstanding
the foregoing, Options granted under the 1997 Stock Option Plan shall be subject
to subsection 11(c) below in the event of a dissolution or liquidation of the
Company.

 

(c)  Corporate Transaction.  In the event of (i) a sale, lease or other
disposition of all or substantially all of the securities or assets of the
Company, (ii) a merger or consolidation in which the Company is not the
surviving corporation or (iii) a reverse merger in which the Company is the
surviving corporation but the shares of Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise, then any surviving
corporation or acquiring corporation may assume any Stock 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 11(c)) for those outstanding under the Plan. In the
event any surviving corporation or acquiring corporation does not assume such
Stock Awards or substitute similar stock awards for those outstanding under the
Plan, then with respect to Stock Awards held by Participants whose Continuous
Service has not terminated, the vesting of such Stock Awards (and, if
applicable, the time during which such Stock Awards may be exercised) shall be
accelerated in full, and the Stock Awards shall terminate if not exercised (if
applicable) at or prior to such event. With respect to any other Stock Awards
outstanding under the Plan, such Stock Awards shall terminate if not exercised
(if applicable) prior to such event.

 

12.                               AMENDMENT OF THE PLAN AND STOCK AWARDS.

 

(a)  Amendment of Plan.  The Board at any time, and from time to time, may amend
the Plan. However, except as provided in Section 11 relating to adjustments upon
changes in Common Stock, no amendment shall be effective unless approved by the
stockholders of the Company to the extent stockholder approval is necessary to
satisfy the requirements of Section 422 of the Code, Rule 16b-3 or any Nasdaq or
securities exchange listing requirements.

 

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

 

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

 

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

 

(e)  Amendment of Stock Awards.  The Board at any time, and from time to time,
may amend the terms of any one or more Stock Awards; provided, however, that the
rights under any Stock Award shall not be impaired by any such amendment unless
(i) the Company requests the consent of the Participant and (ii) the Participant
consents in writing.

 

13.                               TERMINATION OR SUSPENSION OF THE PLAN.

 

(a)  Plan Term.  Unless sooner terminated by the Board pursuant to Section 3,
the Plan shall automatically terminate on the day before the tenth (10th)
anniversary of the date the Plan is adopted by the Board or approved by the
stockholders of the Company, whichever is earlier. No Stock Awards may be
granted under the Plan while the Plan is suspended or after it is terminated.

 

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

 

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14.                               EFFECTIVE DATE OF PLAN.

 

The Plan shall become effective upon its adoption by the Board, but no Stock
Award shall be exercised (or, in the case of a stock bonus, shall be granted)
unless and until the Plan has been approved by the stockholders of the Company,
which approval shall be within twelve (12) months before or after the date the
Plan is adopted by the Board.

 

15.                               CHOICE OF LAW.

 

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

 

 

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