Exhibit 10.1

 

2004 Equity Incentive Plan
of
Macropore Biosurgery, Inc.

1.                                       PURPOSE OF THIS PLAN

The purpose of this 2004 Equity Incentive Plan is to enhance the long-term
stockholder value of Macropore Biosurgery Inc. by offering opportunities to
eligible individuals to participate in the growth in value of the equity of
Macropore Biosurgery, Inc.

2.                                       DEFINITIONS AND RULES OF INTERPRETATION

2.1           DEFINITIONS.

This Plan uses the following defined terms:

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

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

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

(D)           “AWARD” MEANS A STOCK AWARD (E.G. RESTRICTED STOCK UNIT AWARD),
SAR, CASH AWARD, OR OPTION GRANTED IN ACCORDANCE WITH THE TERMS OF THIS PLAN.

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

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

(G)           “AWARDEE” MEANS: (I) A PERSON TO WHOM AN AWARD HAS BEEN GRANTED,
INCLUDING A HOLDER OF A SUBSTITUTE AWARD, (II) A PERSON TO WHOM AN AWARD HAS
BEEN TRANSFERRED IN ACCORDANCE WITH ALL APPLICABLE REQUIREMENTS OF SECTIONS 6.5,
AND 16.

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

(I)            “CASH AWARD” MEANS THE RIGHT TO RECEIVE CASH AS DESCRIBED IN
SECTION 8.3.

 

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

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

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

(M)          “COMPANY” MEANS MACROPORE BIOSURGERY, INC., A DELAWARE CORPORATION.

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

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

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

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

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

(S)           “EFFECTIVE DATE” MEANS THE DATE AS OF WHICH THE BOARD APPROVES
THIS PLAN.

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

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

(V)           “EXECUTIVE” MEANS, IF THE COMPANY HAS ANY CLASS OF ANY EQUITY
SECURITY REGISTERED UNDER SECTION 12 OF THE EXCHANGE ACT, AN INDIVIDUAL WHO IS
SUBJECT TO SECTION 16 OF THE EXCHANGE ACT OR WHO IS A “COVERED EMPLOYEE” UNDER
SECTION 162(M) OF THE CODE, IN EITHER CASE BECAUSE OF THE INDIVIDUAL’S
RELATIONSHIP WITH THE COMPANY OR AN AFFILIATE.  IF THE COMPANY

 

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DOES NOT HAVE ANY CLASS OF ANY EQUITY SECURITY REGISTERED UNDER SECTION 12 OF
THE EXCHANGE ACT, “EXECUTIVE” MEANS ANY (I) DIRECTOR, (II) OFFICER ELECTED OR
APPOINTED BY THE BOARD, OR (III) BENEFICIAL OWNER OF MORE THAN 10% OF ANY CLASS
OF THE COMPANY’S EQUITY SECURITIES.

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

(X)            “FAIR MARKET VALUE” MEANS THE VALUE OF SHARES AS DETERMINED UNDER
SECTION 17.2.

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

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

(AA)         “INCENTIVE STOCK OPTION” MEANS AN OPTION INTENDED TO QUALIFY AS AN
INCENTIVE STOCK OPTION UNDER SECTION 422 OF THE CODE.

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

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

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

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

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

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

(HH)         “PLAN” MEANS THIS 2004 EQUITY INCENTIVE PLAN OF MACROPORE
BIOSURGERY, INC.

 

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

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

(KK)         “SAR” OR “STOCK APPRECIATION RIGHT” MEANS A RIGHT TO RECEIVE CASH
BASED ON A CHANGE IN THE FAIR MARKET VALUE OF A SPECIFIC NUMBER OF SHARES
PURSUANT TO AN AWARD AGREEMENT, AS DESCRIBED IN SECTION 8.1.

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

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

(NN)         “STOCK AWARD” MEANS AN OFFER BY THE COMPANY TO SELL SHARES SUBJECT
TO CERTAIN RESTRICTIONS PURSUANT TO THE AWARD AGREEMENT AS DESCRIBED IN
SECTION 8.2 OR, AS DETERMINED BY THE COMMITTEE, A NOTIONAL ACCOUNT REPRESENTING
THE RIGHT TO BE PAID AN AMOUNT BASED ON SHARES.

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

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

(QQ)         “SUBSTITUTE SAR” MEANS A SAR GRANTED IN SUBSTITUTION FOR, OR UPON
THE CONVERSION OF, A STOCK APPRECIATION RIGHT GRANTED BY ANOTHER ENTITY WITH
RESPECT TO EQUITY SECURITIES IN THE GRANTING ENTITY.

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

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

2.2           Rules of Interpretation.  Any reference to a “Section,” without
more, is to a Section of this Plan. Captions and titles are used for convenience
in this Plan and shall not, by themselves, determine the meaning of this Plan.
Except when otherwise indicated by the context, the singular includes the plural
and vice versa. Any reference to a statute is also a

 

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reference to the applicable rules and regulations adopted under that statute.
Any reference to a statute, rule or regulation, or to a section of a statute,
rule or regulation, is a reference to that statute, rule, regulation, or section
as amended from time to time, both before and after the Effective Date and
including any successor provisions.

 

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

3.1           Number of Award Shares.  The Shares issuable under this Plan shall
be authorized but unissued or reacquired Shares, including Shares repurchased by
the Company on the open market. The number of Shares initially reserved for
issuance over the term of this Plan shall be 3,000,000 increased by those Shares
that are restored pursuant to the decision of the Board or Committee pursuant to
Section 6.4(a) to deliver only such Shares as are necessary to award the net
Share appreciation.  The maximum number of Shares shall be cumulatively
increased on the first January 1 after the Effective Date and each January 1
thereafter for 9 more years, by a number of Shares equal to the lesser of (a) 2%
of the number of Shares issued and outstanding on the immediately preceding
December 31, and (b) a number of Shares set by the Board. Except as required by
applicable law, Shares shall not reduce the number of Shares reserved for
issuance under this Plan until the earlier of the date such Shares are vested
pursuant to the terms of the applicable Award or the actual date of delivery of
the Shares to the Awardee. Also, if an Award later terminates or expires without
having been exercised in full, the maximum number of shares that may be issued
under this Plan shall be increased by the number of Shares that were covered by,
but not purchased under, that Award.  By contrast, the repurchase of Shares by
the Company shall not increase the maximum number of Shares that may be issued
under this Plan.

3.2           Source of Shares.  Award Shares may be:  (a) Shares that have
never been issued, (b) Shares that have been issued but are no longer
outstanding, or (c) Shares that are outstanding and are acquired to discharge
the Company’s obligation to deliver Award Shares.

 

3.3           TERM OF THIS PLAN

(A)           THIS PLAN SHALL BE EFFECTIVE ON, AND AWARDS MAY BE GRANTED UNDER
THIS PLAN ON AND AFTER THE EFFECTIVE DATE.

(B)           SUBJECT TO THE PROVISIONS OF SECTION 13, AWARDS MAY BE GRANTED
UNDER THIS PLAN FOR A PERIOD OF TEN YEARS FROM THE EFFECTIVE DATE.

4.                                       ADMINISTRATION

4.1           GENERAL

(A)           THE BOARD SHALL HAVE ULTIMATE RESPONSIBILITY FOR ADMINISTERING
THIS PLAN.  THE BOARD MAY DELEGATE CERTAIN OF ITS RESPONSIBILITIES TO A
COMMITTEE, WHICH SHALL CONSIST OF AT LEAST TWO MEMBERS OF THE BOARD.  THE BOARD
OR THE COMMITTEE MAY FURTHER DELEGATE ITS RESPONSIBILITIES TO ANY EMPLOYEE OF
THE COMPANY OR ANY AFFILIATE.  WHERE THIS PLAN SPECIFIES THAT AN ACTION IS TO BE
TAKEN OR A DETERMINATION MADE BY THE BOARD, ONLY THE BOARD MAY TAKE THAT ACTION
OR MAKE THAT DETERMINATION.  WHERE THIS PLAN SPECIFIES THAT AN ACTION IS TO BE
TAKEN OR A

 

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DETERMINATION MADE BY THE COMMITTEE, ONLY THE COMMITTEE MAY TAKE THAT ACTION OR
MAKE THAT DETERMINATION.  WHERE THIS PLAN REFERENCES THE “ADMINISTRATOR,” THE
ACTION MAY BE TAKEN OR DETERMINATION MADE BY THE BOARD, THE COMMITTEE, OR OTHER
ADMINISTRATOR.  HOWEVER, ONLY THE BOARD OR THE COMMITTEE MAY APPROVE GRANTS OF
AWARDS TO EXECUTIVES, AND AN ADMINISTRATOR OTHER THAN THE BOARD OR THE COMMITTEE
MAY GRANT AWARDS ONLY WITHIN THE GUIDELINES ESTABLISHED BY THE BOARD OR
COMMITTEE.  MOREOVER, ALL ACTIONS AND DETERMINATIONS BY ANY ADMINISTRATOR ARE
SUBJECT TO THE PROVISIONS OF THIS PLAN.

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

4.2           Authority of the Board or the Committee.Subject to the other
provisions of this Plan, the Board or the Committee shall have the authority to:

(A)           GRANT AWARDS, INCLUDING SUBSTITUTE AWARDS;

(B)           DETERMINE THE FAIR MARKET VALUE OF SHARES;

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

(D)           SELECT THE AWARDEES;

(E)           DETERMINE THE TIMES AWARDS ARE GRANTED;

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

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

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

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

(J)            MODIFY OR AMEND ANY AWARD;

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

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

 

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

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

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

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

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

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

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

4.3           Scope of Discretion.  Subject to the provisions of this Section
4.3, on all matters for which this Plan confers the authority, right or power on
the Board, the Committee, or other Administrator to make decisions, that body
may make those decisions in its sole and absolute discretion. Those decisions
will be final, binding and conclusive. In making its decisions, the Board,
Committee or other Administrator need not treat all persons eligible to receive
Awards, all Awardees, all Awards or all Award Shares the same way.
Notwithstanding anything herein to the contrary, and except as provided in
Section 13.3, the discretion of the Board, Committee or other Administrator is
subject to the specific provisions and specific limitations of this Plan, as
well as all rights conferred on specific Awardees by Award Agreements and other
agreements.

 

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5.             PERSONS ELIGIBLE TO RECEIVE AWARDS. AWARDS (INCLUDING SUBSTITUTE
AWARDS) MAY BE GRANTED TO, AND ONLY TO, EMPLOYEES, DIRECTORS AND CONSULTANTS,
INCLUDING TO PROSPECTIVE EMPLOYEES, DIRECTORS AND CONSULTANTS CONDITIONED ON THE
BEGINNING OF THEIR SERVICE FOR THE COMPANY OR AN AFFILIATE.

6.                                       TERMS AND CONDITIONS OF OPTIONS

The following rules apply to all Options:

6.1           Price. Except as specifically provided herein, no nonstatutory
Option may have an Option Price less than 85% of the Fair Market Value of the
Shares on the Grant Date. In no event will the Option Price of any Option be
less than the par value of the Shares issuable under the Option if that is
required by Applicable Law.

 

6.2           Term.  No Option shall be exercisable after its Expiration Date.
No Option may have an Expiration Date that is more than ten years after its
Grant Date.

 

6.3           Vesting.  Options shall be exercisable: (a) on the Grant Date, or
(b) in accordance with a schedule related to the Grant Date, the date the
Optionee’s directorship, employment or consultancy begins, or a different date
specified in the Option Agreement. No Option granted to an individual who is
subject to the overtime pay provisions of the Fair Labor Standards Act may be
exercised before the expiration of six months after the Grant Date.

 

6.4           FORM AND METHOD OF PAYMENT.

(A)           THE BOARD OR COMMITTEE SHALL DETERMINE THE ACCEPTABLE FORM AND
METHOD OF PAYMENT FOR EXERCISING AN OPTION.  SO LONG AS VARIABLE ACCOUNTING
PURSUANT TO “APB 25” DOES NOT APPLY AND THE BOARD OR COMMITTEE OTHERWISE
DETERMINES THERE IS NO MATERIAL ADVERSE ACCOUNTING CONSEQUENCE AT THE TIME OF
EXERCISE, THE BOARD OR COMMITTEE MAY REQUIRE THE DELIVERY IN SHARES FOR THE
VALUE OF THE NET APPRECIATION OF THE SHARES AT THE TIME OF EXERCISE OVER THE
EXERCISE PRICE.  THE DIFFERENCE BETWEEN FULL NUMBER OF SHARES COVERED BY THE
EXERCISED PORTION OF THE AWARD AND THE NUMBER OF SHARES ACTUALLY DELIVERED SHALL
BE RESTORED TO THE AMOUNT OF SHARES RESERVED FOR ISSUANCE UNDER SECTION 3.1.

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

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

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

 

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(II)           PROVIDED THAT A PUBLIC MARKET EXISTS FOR THE SHARES, AND SUBJECT
TO APPLICABLE LAW CONSIDERATION RECEIVED BY THE COMPANY UNDER A PROCEDURE UNDER
WHICH A LICENSED BROKER-DEALER ADVANCES FUNDS ON BEHALF OF AN OPTIONEE OR SELLS
OPTION SHARES ON BEHALF OF AN OPTIONEE (A “CASHLESS EXERCISE PROCEDURE”);

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

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

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

6.5           Nonassignability of Options.  Except as determined by the
Administrator, no Option shall be assignable or otherwise transferable by the
Optionee except by will or by the laws of descent and distribution. However,
Options may be transferred and exercised in accordance with a Domestic Relations
Order and may be exercised by a guardian or conservator appointed to act for the
Optionee.

 

6.6           Substitute Options.  The Board may cause the Company to grant
Substitute Options in connection with the acquisition by the Company or an
Affiliate of equity securities of any entity (including by merger, tender offer,
or other similar transaction) or of all or a portion of the assets of any
entity. Any such substitution shall be effective on the effective date of the
acquisition. Unless and to the extent specified otherwise by the Board,
Substitute Options shall have the same terms and conditions as the options they
replace, except that (subject to the provisions of Section 10) Substitute
Options shall be Options to purchase Shares rather than equity securities of the
granting entity and shall have an Option Price determined by the Board.

 

6.7           Repricings.  In furtherance of, and not in limitation of, the
provisions of Section 10, Options may be repriced, replaced or regranted through
cancellation or modification without stockholder approval.

 

7.                                       INCENTIVE STOCK OPTIONS.

No Incentive Stock Options shall be granted under the Plan.

8.                                       STOCK APPRECIATION RIGHTS, STOCK AWARDS
AND CASH AWARDS

8.1           Stock Appreciation Rights.  The following rules apply to SARs:

(A)           GENERAL.  SARS MAY BE GRANTED EITHER ALONE, IN ADDITION TO, OR IN
TANDEM WITH OTHER AWARDS GRANTED UNDER THIS PLAN. THE ADMINISTRATOR MAY GRANT
SARS TO ELIGIBLE PARTICIPANTS SUBJECT TO TERMS AND CONDITIONS NOT INCONSISTENT
WITH THIS PLAN AND DETERMINED BY THE ADMINISTRATOR. THE SPECIFIC TERMS AND
CONDITIONS APPLICABLE TO THE AWARDEE SHALL BE PROVIDED FOR IN THE AWARD
AGREEMENT. SARS SHALL BE EXERCISABLE, IN WHOLE OR IN PART, AT SUCH TIMES AS THE

 

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ADMINISTRATOR SHALL SPECIFY IN THE AWARD AGREEMENT.  THE GRANT OR VESTING OF A
SAR MAY BE MADE CONTINGENT ON THE ACHIEVEMENT OF OBJECTIVELY DETERMINABLE
PERFORMANCE CONDITIONS.

(B)           EXERCISE OF SARS.  UPON THE EXERCISE OF AN SAR, IN WHOLE OR IN
PART, AN AWARDEE SHALL BE ENTITLED TO A PAYMENT IN AN AMOUNT EQUAL TO THE EXCESS
OF THE FAIR MARKET VALUE OF A FIXED NUMBER OF SHARES COVERED BY THE EXERCISED
PORTION OF THE SAR ON THE DATE OF EXERCISE, OVER THE FAIR MARKET VALUE OF THE
SHARES COVERED BY THE EXERCISED PORTION OF THE SAR ON THE GRANT DATE.  THE
AMOUNT DUE TO THE AWARDEE UPON THE EXERCISE OF A SAR SHALL BE PAID IN CASH,
SHARES OR A COMBINATION THEREOF, OVER THE PERIOD OR PERIODS SPECIFIED IN THE
AWARD AGREEMENT.  AN AWARD AGREEMENT MAY PLACE LIMITS ON THE AMOUNT THAT MAY BE
PAID OVER ANY SPECIFIED PERIOD OR PERIODS UPON THE EXERCISE OF A SAR, ON AN
AGGREGATE BASIS OR AS TO ANY AWARDEE.  A SAR SHALL BE CONSIDERED EXERCISED WHEN
THE COMPANY RECEIVES WRITTEN NOTICE OF EXERCISE IN ACCORDANCE WITH THE TERMS OF
THE AWARD AGREEMENT FROM THE PERSON ENTITLED TO EXERCISE THE SAR.  IF A SAR HAS
BEEN GRANTED IN TANDEM WITH AN OPTION, UPON THE EXERCISE OF THE SAR, THE NUMBER
OF SHARES THAT MAY BE PURCHASED PURSUANT TO THE OPTION SHALL BE REDUCED BY THE
NUMBER OF SHARES WITH RESPECT TO WHICH THE SAR IS EXERCISED.

(C)           NONASSIGNABILITY OF SARS.  EXCEPT AS DETERMINED BY THE
ADMINISTRATOR, NO SAR SHALL BE ASSIGNABLE OR OTHERWISE TRANSFERABLE BY THE
AWARDEE EXCEPT BY WILL OR BY THE LAWS OF DESCENT AND DISTRIBUTION. 
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, SARS MAY BE TRANSFERRED AND
EXERCISED IN ACCORDANCE WITH A DOMESTIC RELATIONS ORDER.

(D)           SUBSTITUTE SARS.  THE BOARD MAY CAUSE THE COMPANY TO GRANT
SUBSTITUTE SARS IN CONNECTION WITH THE ACQUISITION BY THE COMPANY OR AN
AFFILIATE OF EQUITY SECURITIES OF ANY ENTITY (INCLUDING BY MERGER) OR ALL OR A
PORTION OF THE ASSETS OF ANY ENTITY.  ANY SUCH SUBSTITUTION SHALL BE EFFECTIVE
ON THE EFFECTIVE DATE OF THE ACQUISITION.  UNLESS AND TO THE EXTENT SPECIFIED
OTHERWISE BY THE BOARD, SUBSTITUTE SARS SHALL HAVE THE SAME TERMS AND CONDITIONS
AS THE OPTIONS THEY REPLACE, EXCEPT THAT (SUBJECT TO THE PROVISIONS OF
SECTION 9) SUBSTITUTE SARS SHALL BE EXERCISABLE WITH RESPECT TO THE FAIR MARKET
VALUE OF SHARES RATHER THAN EQUITY SECURITIES OF THE GRANTING ENTITY AND SHALL
BE ON TERMS THAT, AS DETERMINED BY THE BOARD IN ITS SOLE AND ABSOLUTE
DISCRETION, PROPERLY REFLECTS THE SUBSTITUTION.

(E)           REPRICINGS.  AN SAR MAY BE REPRICED, REPLACED OR REGRANTED,
THROUGH CANCELLATION OR MODIFICATION WITHOUT STOCKHOLDER APPROVAL.

8.2           Stock Awards.  The following rules apply to all Stock Awards:

 

(A)           GENERAL.  THE SPECIFIC TERMS AND CONDITIONS OF A STOCK AWARD
APPLICABLE TO THE AWARDEE SHALL BE PROVIDED FOR IN THE AWARD AGREEMENT. THE
AWARD AGREEMENT SHALL STATE THE NUMBER OF SHARES THAT THE AWARDEE SHALL BE
ENTITLED TO RECEIVE OR PURCHASE, THE TERMS AND CONDITIONS ON WHICH THE SHARES
SHALL VEST, THE PRICE TO BE PAID, WHETHER SHARES ARE TO BE DELIVERED AT THE TIME
OF GRANT OR AT SOME DEFERRED DATE SPECIFIED IN THE AWARD AGREEMENT (E.G. A
RESTRICTED STOCK UNIT AWARD AGREEMENT), WHETHER THE AWARD IS PAYABLE SOLELY IN
SHARES, CASH OR EITHER AND, IF APPLICABLE, THE TIME WITHIN WHICH THE AWARDEE
MUST ACCEPT SUCH OFFER. THE OFFER SHALL BE ACCEPTED BY EXECUTION OF THE AWARD
AGREEMENT.  THE ADMINISTRATOR MAY REQUIRE THAT ALL SHARES SUBJECT TO A RIGHT OF
REPURCHASE OR RISK OF FORFEITURE BE HELD IN ESCROW UNTIL SUCH REPURCHASE RIGHT

 

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OR RISK OF FORFEITURE LAPSES.  THE GRANT OR VESTING OF A STOCK AWARD MAY BE MADE
CONTINGENT ON THE ACHIEVEMENT OF OBJECTIVELY DETERMINABLE PERFORMANCE
CONDITIONS.

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

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

(D)           NONASSIGNABILITY OF STOCK AWARDS.  EXCEPT AS DETERMINED BY THE
ADMINISTRATOR, NO STOCK AWARD SHALL BE ASSIGNABLE OR OTHERWISE TRANSFERABLE BY
THE AWARDEE EXCEPT BY WILL OR BY THE LAWS OF DESCENT AND DISTRIBUTION. 
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, STOCK AWARDS MAY BE TRANSFERRED
AND EXERCISED IN ACCORDANCE WITH A DOMESTIC RELATIONS ORDER.

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

8.3           CASH AWARDS. THE FOLLOWING RULES APPLY TO ALL CASH AWARDS:

Cash Awards may be granted either alone, in addition to, or in tandem with other
Awards granted under this Plan. After the Administrator determines that it will
offer a Cash Award, it shall advise the Awardee, by means of an Award Agreement,
of the terms, conditions and restrictions related to the Cash Award.

9.                                       EXERCISE OF AWARDS

9.1           In General.  An Award shall be exercisable in accordance with this
Plan and the Award Agreement under which it is granted.

 

9.2           Time of Exercise.  Options and Stock Awards shall be considered
exercised when the Company receives: (a) written notice of exercise from the
person entitled to exercise the Option or Stock Award, (b) full payment, or
provision for payment, in a form and method approved by the Administrator, for
the Shares for which the Option or Stock Award is being exercised, and (c) with
respect to Stock Awards and Nonstatutory Options, payment, or provision

 

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for payment, in a form approved by the Administrator, of all applicable
withholding taxes due upon exercise. An Award may not be exercised for a
fraction of a Share. SARs shall be considered exercised when the Company
receives written notice of the exercise from the person entitled to exercise the
SAR.

 

9.3           Issuance of Award Shares.  The Company shall issue Award Shares in
the name of the person properly exercising the Award. If the Awardee is that
person and so requests, the Award Shares shall be issued in the name of the
Awardee and the Awardee’s spouse. The Company shall endeavor to issue Award
Shares promptly after an Award is exercised or after the Grant Date of a Stock
Award, as applicable. Until Award Shares are actually issued, as evidenced by
the appropriate entry on the stock register of the Company or its transfer
agent, the Awardee will not have the rights of a stockholder with respect to
those Award Shares, even though the Awardee has completed all the steps
necessary to exercise the Award. No adjustment shall be made for any dividend,
distribution, or other right for which the record date precedes the date the
Award Shares are issued, except as provided in Section 10.

 

9.4           Termination

 

(A)           IN GENERAL.  EXCEPT AS PROVIDED IN AN AWARD AGREEMENT OR IN
WRITING BY THE ADMINISTRATOR, INCLUDING IN AN AWARD AGREEMENT, AND AS OTHERWISE
PROVIDED IN SECTIONS 9.4(B), (C), (D) AND (E) AFTER AN AWARDEE’S TERMINATION,
THE AWARDEE’S AWARDS SHALL BE EXERCISABLE TO THE EXTENT (BUT ONLY TO THE EXTENT)
THEY ARE VESTED ON THE DATE OF THAT TERMINATION AND ONLY DURING THE NINETY (90)
DAYS AFTER THE TERMINATION, BUT IN NO EVENT AFTER THE EXPIRATION DATE.  TO THE
EXTENT THE AWARDEE DOES NOT EXERCISE AN AWARD WITHIN THE TIME SPECIFIED FOR
EXERCISE, THE AWARD SHALL AUTOMATICALLY TERMINATE.

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

(C)           DEATH OR DISABILITY.  UNLESS OTHERWISE PROVIDED BY THE
ADMINISTRATOR, IF AN AWARDEE’S TERMINATION IS DUE TO DEATH OR DISABILITY (AS
DETERMINED BY THE ADMINISTRATOR WITH RESPECT TO ALL AWARDS), ALL AWARDS OF THAT
AWARDEE TO THE EXTENT EXERCISABLE AT THE DATE OF THAT TERMINATION MAY BE
EXERCISED FOR ONE YEAR AFTER THAT TERMINATION, BUT IN NO EVENT AFTER THE
EXPIRATION DATE.  IN THE CASE OF TERMINATION DUE TO DEATH, AN AWARD MAY BE
EXERCISED AS PROVIDED IN SECTION 16.  IN THE CASE OF TERMINATION DUE TO
DISABILITY, IF A GUARDIAN OR CONSERVATOR HAS BEEN APPOINTED TO ACT FOR THE
AWARDEE AND BEEN GRANTED THIS AUTHORITY AS PART OF THAT APPOINTMENT, THAT
GUARDIAN OR CONSERVATOR MAY EXERCISE THE AWARD ON BEHALF OF THE AWARDEE.  DEATH
OR DISABILITY OCCURRING AFTER AN AWARDEE’S TERMINATION SHALL NOT CAUSE THE
TERMINATION TO BE TREATED AS HAVING OCCURRED DUE TO DEATH OR DISABILITY.  TO THE
EXTENT AN AWARD IS NOT SO EXERCISED WITHIN THE TIME SPECIFIED FOR ITS EXERCISE,
THE AWARD SHALL AUTOMATICALLY TERMINATE.

 

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

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

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

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

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

10.                                 CERTAIN TRANSACTIONS AND EVENTS

10.1         In General.  Except as provided in this Section 10, no change in
the capital structure of the Company, merger, sale or other disposition of
assets or a subsidiary, change in control, issuance by the Company of shares of
any class of securities or securities convertible into shares of any class of
securities, exchange or conversion of securities, or other transaction or event
shall require or be the occasion for any adjustments of the type described in
this Section 10. Additional provisions with respect to the foregoing
transactions are set forth in Section 13.3.

 

10.2         Changes in Capital Structure.  In the event of any stock split,
reverse stock split, recapitalization, combination or reclassification of stock,
stock dividend, spin-off, or similar change to the capital structure of the
Company (not including a Fundamental Transaction or Change in Control), the
Board shall make whatever adjustments it concludes are appropriate to: (a) the
number and type of Awards that may be granted under this Plan, (b) the number
and type of Options that may be granted to any individual under this Plan,
(c) the terms of any SAR, (d) the Purchase Price of any Stock Award, (e) the
Option Price and number and class of securities issuable under each outstanding
Option, and (f) the repurchase price of any securities substituted for Award
Shares that are subject to repurchase rights. The specific adjustments shall

 

13

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be determined by the Board. Unless the Board specifies otherwise, any securities
issuable as a result of any such adjustment shall be rounded down to the next
lower whole security. The Board need not adopt the same rules for each Award or
each Awardee.

 

10.3         Fundamental Transactions.  In the event of (a) a merger or
consolidation in which the Company is not the surviving corporation (other than
a merger or consolidation with a wholly-owned subsidiary, a reincorporation of
the Company in a different jurisdiction, or other transaction in which there is
no substantial change in the stockholders of the Company or their relative stock
holdings and the Awards granted under this Plan are assumed, converted or
replaced by the successor corporation, which assumption shall be binding on all
Participants), (b) a merger in which the Company is the surviving corporation
but after which the stockholders of the Company immediately prior to such merger
(other than any stockholder that merges, or which owns or controls another
corporation that merges, with the Company in such merger) cease to own their
shares or other equity interest in the Company, (c) the sale of all or
substantially all of the assets of the Company, or (d) the acquisition, sale, or
transfer of more than 50% of the outstanding shares of the Company by tender
offer or similar transaction (each, a “Fundamental Transaction”), any or all
outstanding Awards may be assumed, converted or replaced by the successor
corporation (if any), which assumption, conversion or replacement shall be
binding on all participants under this Plan. In the alternative, the successor
corporation may substitute equivalent Awards or provide substantially similar
consideration to participants as was provided to stockholders (after taking into
account the existing provisions of the Awards). The successor corporation may
also issue, in place of outstanding Shares held by the participants,
substantially similar shares or other property subject to repurchase
restrictions no less favorable to the participant. In the event such successor
corporation (if any) does not assume or substitute Awards, as provided above,
pursuant to a transaction described in this Subsection 10.3, the vesting with
respect to such Awards shall fully and immediately accelerate or the repurchase
rights of the Company shall fully and immediately terminate, as the case may be,
so that the Awards may be exercised or the repurchase rights shall terminate
before, or otherwise in connection with the closing or completion of the
Fundamental Transaction or event, but then terminate. Notwithstanding anything
in this Plan to the contrary, the Committee may, in its sole discretion, provide
that the vesting of any or all Award Shares subject to vesting or right of
repurchase shall accelerate or lapse, as the case may be, upon a transaction
described in this Section 10.3. If the Committee exercises such discretion with
respect to Options, such Options shall become exercisable in full prior to the
consummation of such event at such time and on such conditions as the Committee
determines, and if such Options are not exercised prior to the consummation of
the Fundamental Transaction, they shall terminate at such time as determined by
the Committee. Subject to any greater rights granted to participants under the
foregoing provisions of this Section 10.3, in the event of the occurrence of any
Fundamental Transaction, any outstanding Awards shall be treated as provided in
the applicable agreement or plan of merger, consolidation, dissolution,
liquidation, or sale of assets.

 

10.4         Changes of Control.  The Board may also, but need not, specify that
other transactions or events constitute a “Change in Control”. The Board may do
that either before or after the transaction or event occurs. Examples of
transactions or events that the Board may treat as Changes of Control are:
(a) any person or entity, including a “group” as contemplated by
Section 13(d)(3) of the Exchange Act, acquires securities holding 30% or more of
the total combined voting power or value of the Company, or (b) as a result of
or in

 

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connection with a contested election of Company Directors, the persons who were
Company Directors immediately before the election cease to constitute a majority
of the Board. In connection with a Change in Control, notwithstanding any other
provision of this Plan, the Board may, but need not, take any one or more of the
actions described in Section 10.3. In addition, the Board may extend the date
for the exercise of Awards (but not beyond their original Expiration Date). The
Board need not adopt the same rules for each Award or each Awardee.
Notwithstanding anything in this Plan to the contrary, in the event of an
involuntary Termination of services for any reason other than death, disability
or Cause, within 18 months following the consummation of a Fundamental
Transaction or Change in Control, any Awards, assumed or substituted in a
Fundamental Transaction or Change in Control, which are subject to vesting
conditions and/or the right of repurchase in favor of the Company or a successor
entity, shall accelerate fully so that such Award Shares are immediately
exercisable upon Termination or, if subject to the right of repurchase in favor
of the Company, such repurchase rights shall lapse as of the date of
Termination. Such Awards shall be exercisable for a period of three (3) months
following termination.

 

10.5         Divestiture.  If the Company or an Affiliate sells or otherwise
transfers equity securities of an Affiliate to a person or entity other than the
Company or an Affiliate, or leases, exchanges or transfers all or any portion of
its assets to such a person or entity, then the Board may specify that such
transaction or event constitutes a “Divestiture”. In connection with a
Divestiture, notwithstanding any other provision of this Plan, the Board may,
but need not, take one or more of the actions described in Section 10.3 or 10.4
with respect to Awards of Award Shares held by, for example, Employees,
Directors or Consultants for whom that transaction or event results in a
Termination. The Board need not adopt the same rules for each Award or Awardee.

 

10.6         Dissolution.  If the Company adopts a plan of dissolution, the
Board may cause Awards to be fully vested and exercisable (but not after their
Expiration Date) before the dissolution is completed but contingent on its
completion and may cause the Company’s repurchase rights on Award Shares to
lapse upon completion of the dissolution. The Board need not adopt the same
rules for each Award or each Awardee. Notwithstanding anything herein to the
contrary, in the event of a dissolution of the Company, to the extent not
exercised before the earlier of the completion of the dissolution or their
Expiration Date, Awards shall terminate immediately prior to the dissolution.

 

10.7         Cut-Back to Preserve Benefits.  If the Administrator determines
that the net after-tax amount to be realized by any Awardee, taking into account
any accelerated vesting, termination of repurchase rights, or cash payments to
that Awardee in connection with any transaction or event set forth in this
Section 10 would be greater if one or more of those steps were not taken or
payments were not made with respect to that Awardee’s Awards or Award Shares,
then, at the election of the Awardee, to such extent, one or more of those steps
shall not be taken and payments shall not be made.

 

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11.                                 WITHHOLDING AND TAX REPORTING

11.1         TAX WITHHOLDING ALTERNATIVES

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

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

12.                                 COMPLIANCE WITH LAW

The grant of Awards and the issuance and subsequent transfer of Award Shares
shall be subject to compliance with all Applicable Law, including all applicable
securities laws.  Awards may not be exercised, and Award Shares may not be
transferred, in violation of Applicable Law.  Thus, for example, Awards may not
be exercised unless:  (a) a registration statement under the Securities Act is
then in effect with respect to the related Award Shares, or (b) in the opinion
of legal counsel to the Company, those Award Shares may be issued in accordance
with an applicable exemption from the registration requirements of the
Securities Act and any other applicable securities laws.  The failure or
inability of the Company to obtain from any regulatory body the authority
considered by the Company’s legal counsel to be necessary or useful for the
lawful issuance of any Award Shares or their subsequent transfer shall relieve
the Company of any liability for failing to issue those Award Shares or
permitting their transfer.  As a condition to the exercise of any Award or the
transfer of any Award Shares, the Company may require the Awardee to satisfy any
requirements or qualifications that may be necessary or appropriate to comply
with or evidence compliance with any Applicable Law.

13.                                 AMENDMENT OR TERMINATION OF THIS PLAN OR
OUTSTANDING AWARDS

13.1         Amendment and Termination.  The Board may at any time amend,
suspend, or terminate this Plan.

 

13.2         Stockholder Approval.  The Board may require that the Company’s
stockholders approve any amendments to the Plan if the Board determines such
approval is required or helpful under Applicable Law.

 

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13.3         Effect.  No amendment, suspension, or termination of this Plan, and
no modification of any Award even in the absence of an amendment, suspension, or
termination of this Plan, shall impair any existing contractual rights of any
Awardee unless the affected Awardee consents to the amendment, suspension,
termination, or modification. Notwithstanding anything herein to the contrary,
no such consent shall be required if the Board determines, in its sole and
absolute discretion, that the amendment, suspension, termination, or
modification: (a) is required or advisable in order for the Company, this Plan
or the Award to satisfy Applicable Law, to meet the requirements of any
accounting standard or to avoid any adverse accounting treatment, or (b) in
connection with any transaction or event described in Section 10, is in the best
interests of the Company or its stockholders. The Board may, but need not, take
the tax or accounting consequences to affected Awardees into consideration in
acting under the preceding sentence. Those decisions shall be final, binding and
conclusive. Termination of this Plan shall not affect the Administrator’s
ability to exercise the powers granted to it under this Plan with respect to
Awards granted before the termination of Award Shares issued under such Awards
even if those Award Shares are issued after the termination.

 

14.                                 RESERVED RIGHTS

14.1         Nonexclusivity of this Plan.  This Plan shall not limit the power
of the Company or any Affiliate to adopt other incentive arrangements including,
for example, the grant or issuance of stock options, stock, or other
equity-based rights under other plans.

 

14.2         Unfunded Plan.  This Plan shall be unfunded. Although bookkeeping
accounts may be established with respect to Awardees, any such accounts will be
used merely as a convenience. The Company shall not be required to segregate any
assets on account of this Plan, the grant of Awards, or the issuance of Award
Shares. The Company and the Administrator shall not be deemed to be a trustee of
stock or cash to be awarded under this Plan. Any obligations of the Company to
any Awardee shall be based solely upon contracts entered into under this Plan,
such as Award Agreements. No such obligations shall be deemed to be secured by
any pledge or other encumbrance on any assets of the Company. Neither the
Company nor the Administrator shall be required to give any security or bond for
the performance of any such obligations.

 

15.           SPECIAL ARRANGEMENTS REGARDING AWARD SHARES

15.1         Escrow of Stock Certificates.

To enforce any restrictions on Award Shares, the Administrator may require their
holder to deposit the certificates representing Award Shares, with stock powers
or other transfer instruments approved by the Administrator endorsed in blank,
with the Company or an agent of the Company to hold in escrow until the
restrictions have lapsed or terminated. The Administrator may also cause a
legend or legends referencing the restrictions to be placed on the certificates.

 

15.2         REPURCHASE RIGHTS

(A)           GENERAL.  IF A STOCK AWARD IS SUBJECT TO VESTING CONDITIONS, THE
COMPANY SHALL HAVE THE RIGHT, DURING THE SEVEN MONTHS AFTER THE AWARDEE’S
TERMINATION, TO REPURCHASE ANY OR ALL OF THE AWARD SHARES THAT WERE UNVESTED AS
OF THE DATE OF THAT TERMINATION.  THE REPURCHASE PRICE SHALL BE DETERMINED BY
THE ADMINISTRATOR IN ACCORDANCE WITH THIS SECTION 15.2 WHICH SHALL

 

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BE EITHER (I) THE PURCHASE PRICE FOR THE AWARD SHARES (MINUS THE AMOUNT OF ANY
CASH DIVIDENDS PAID OR PAYABLE WITH RESPECT TO THE AWARD SHARES FOR WHICH THE
RECORD DATE PRECEDES THE REPURCHASE) OR (II) THE LOWER OF (A) THE PURCHASE PRICE
FOR THE SHARES OR (B) THE FAIR MARKET VALUE OF THOSE AWARD SHARES AS OF THE DATE
OF THE TERMINATION.  THE REPURCHASE PRICE SHALL BE PAID IN CASH.  THE COMPANY
MAY ASSIGN THIS RIGHT OF REPURCHASE.

 

(B)           PROCEDURE.  THE COMPANY OR ITS ASSIGNEE MAY CHOOSE TO GIVE THE
AWARDEE A WRITTEN NOTICE OF EXERCISE OF ITS REPURCHASE RIGHTS UNDER THIS SECTION
15.2.  HOWEVER, THE COMPANY’S FAILURE TO GIVE SUCH A NOTICE SHALL NOT AFFECT ITS
RIGHTS TO REPURCHASE AWARD SHARES.  THE COMPANY MUST, HOWEVER, TENDER THE
REPURCHASE PRICE DURING THE PERIOD SPECIFIED IN THIS SECTION 15.2 FOR EXERCISING
ITS REPURCHASE RIGHTS IN ORDER TO EXERCISE SUCH RIGHTS.

16.                                 BENEFICIARIES

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

17.                                 MISCELLANEOUS

17.1         Governing Law.  This Plan, the Award Agreements and all other
agreements entered into under this Plan, and all actions taken under this Plan
or in connection with Awards or Award Shares, shall be governed by the laws of
the State of Delaware.

 

17.2         Determination of Value.  Fair Market Value shall be determined as
follows:

 

(A)           LISTED STOCK.  IF THE SHARES ARE TRADED ON ANY ESTABLISHED STOCK
EXCHANGE OR QUOTED ON A NATIONAL MARKET SYSTEM, FAIR MARKET VALUE SHALL BE THE
CLOSING SALES PRICE FOR THE SHARES AS QUOTED ON THAT STOCK EXCHANGE OR SYSTEM
FOR THE DATE THE VALUE IS TO BE DETERMINED (THE “VALUE DATE”) AS REPORTED IN THE
WALL STREET JOURNAL OR A SIMILAR PUBLICATION.  IF NO SALES ARE REPORTED AS
HAVING OCCURRED ON THE VALUE DATE, FAIR MARKET VALUE SHALL BE THAT CLOSING SALES
PRICE FOR THE LAST PRECEDING TRADING DAY ON WHICH SALES OF SHARES ARE REPORTED
AS HAVING OCCURRED.  IF NO SALES ARE REPORTED AS HAVING OCCURRED DURING THE FIVE
TRADING DAYS BEFORE THE VALUE DATE, FAIR MARKET VALUE SHALL BE THE CLOSING BID
FOR SHARES ON THE VALUE DATE.  IF SHARES ARE LISTED ON MULTIPLE EXCHANGES OR
SYSTEMS, FAIR MARKET VALUE SHALL BE BASED ON SALES OR BID PRICES ON THE PRIMARY
EXCHANGE OR SYSTEM ON WHICH SHARES ARE TRADED OR QUOTED.

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

 

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VALUE SHALL BE THE MEAN BETWEEN THE HIGH BID AND LOW ASKED PRICES ON THE LAST
PRECEDING TRADING DAY ON WHICH ANY BID AND ASKED PRICES WERE QUOTED.

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

17.3         Reservation of Shares.  During the term of this Plan, the Company
shall at all times reserve and keep available such number of Shares as are still
issuable under this Plan.

 

17.4         Electronic Communications.  Any Award Agreement, notice of exercise
of an Award, or other document required or permitted by this Plan may be
delivered in writing or, to the extent determined by the Administrator,
electronically. Signatures may also be electronic if permitted by the
Administrator.

 

17.5         Notices.  Unless the Administrator specifies otherwise, any notice
to the Company under any Option Agreement or with respect to any Awards or Award
Shares shall be in writing (or, if so authorized by Section 17.4, communicated
electronically), shall be addressed to the Secretary of the Company, and shall
only be effective when received by the Secretary of the Company.

 

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