Exhibit 10.2


 


XDX, INC.


 


2007 EQUITY INCENTIVE PLAN


 


                1.             Purposes of the Plan.  The purposes of this Plan are:


 


                                •               to attract and retain the best
available personnel for positions of substantial responsibility,


 


                                •               to provide additional incentive
to Employees, Directors and Consultants, and


 


                                •               to promote the success of the
Company’s business.


 


                The Plan permits
the grant of Incentive Stock Options, Nonstatutory Stock Options, Restricted
Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Units and
Performance Shares.


 


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


 


                                (a)           “Administrator” means the
Board or any of its Committees as will be administering the Plan, in accordance
with Section 4 of the Plan.


 


                                (b)           “Applicable Laws” means the
requirements relating to the administration of equity-based awards under U.S.
state corporate laws, U.S. federal and state securities laws, the Code, any
stock exchange or quotation system on which the Common Stock is listed or quoted
and the applicable laws of any foreign country or jurisdiction where Awards
are, or will be, granted under the Plan.


 


                                (c)           “Award” means, individually or
collectively, a grant under the Plan of Options, Stock Appreciation Rights,
Restricted Stock, Restricted Stock Units, Performance Units or Performance
Shares.


 


                                (d)           “Award Agreement” means the
written or electronic agreement setting forth the terms and provisions
applicable to each Award granted under the Plan.  The Award Agreement is subject to the terms
and conditions of the Plan.


 


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


 


                                (f)            “Change in Control” means the
occurrence of any of the following events:


 


                                                (i)            Any “person” (as such term is used
in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial
owner” (as defined in Rule 13d-3 of the Exchange Act), directly or
indirectly, of securities of the Company representing fifty percent (50%) or
more of the total voting power represented by the Company’s then outstanding voting
securities;


 

















 


                                                (ii)           The consummation of the sale or
disposition by the Company of all or substantially all of the Company’s assets;


 


                                                (iii)          A change in the composition of the
Board occurring within a two (2)-year period, as a result of which fewer than a
majority of the directors are Incumbent Directors.  “Incumbent Directors” means directors who
either (A) are Directors as of the effective date of the Plan, or (B) are
elected, or nominated for election, to the Board with the affirmative votes of
at least a majority of the Incumbent Directors at the time of such election or
nomination (but will not include an individual whose election or nomination is
in connection with an actual or threatened proxy contest relating to the
election of directors to the Company); or


 


                                                (iv)          The consummation of a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity or its parent) at least fifty percent (50%) of the total
voting power represented by the voting securities of the Company or such surviving
entity or its parent outstanding immediately after such merger or
consolidation.


 


                                (g)           “Code” means the Internal
Revenue Code of 1986, as amended.  Any
reference to a section of the Code herein will be a reference to any
successor or amended section of the Code.


 


                                (h)           “Committee” means a committee
of Directors or of other individuals satisfying Applicable Laws appointed by
the Board in accordance with Section 4 hereof.


 


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


 


                                (j)            “Company” means XDx, Inc.,
a Delaware corporation, or any successor thereto.


 


                                (k)           “Consultant” means any person,
including an advisor, engaged by the Company or a Parent or Subsidiary to
render services to such entity.


 


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


 


                                (m)          “Disability” means total and
permanent disability as defined in Section 22(e)(3) of the Code,
provided that in the case of Awards other than Incentive Stock Options, the
Administrator in its discretion may determine whether a permanent and total
disability exists in accordance with uniform and non-discriminatory standards
adopted by the Administrator from time to time.


 


                                (n)           “Employee” means any person,
including Officers and Directors, employed by the Company or any Parent or
Subsidiary of the Company.  Neither
service as a Director nor payment of a director’s fee by the Company will be
sufficient to constitute “employment” by the Company.


 


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


 


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                                (p)           “Exchange Program” means a
program under which (i) outstanding Awards are surrendered or cancelled in
exchange for Awards of the same type (which may have lower exercise prices and
different terms), Awards of a different type, and/or cash, (ii) Participants
would have the opportunity to transfer any outstanding Awards to a financial
institution or other person or entity selected by the Administrator, and/or (iii) the
exercise price of an outstanding Award is reduced.  The Administrator will determine the terms
and conditions of any Exchange Program in its sole discretion.


 


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


 


                                                (i)            If the Common Stock is listed on any
established stock exchange or a national market system, including without
limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The
Nasdaq Stock Market, its Fair Market Value will be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the
Administrator deems reliable;


 


                                                (ii)           If the Common Stock is regularly
quoted by a recognized securities dealer but selling prices are not reported,
the Fair Market Value of a Share will be the mean between the high bid and low
asked prices for the Common Stock on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator
deems reliable;


 


                                                (iii)          For purposes of any Awards granted on
the Registration Date, the Fair Market Value will be the initial price to the
public as set forth in the final prospectus included within the registration
statement in Form S-1 filed with the Securities and Exchange Commission
for the initial public offering of the Company’s Common Stock; or


 


                                                (iv)          In the absence of an established
market for the Common Stock, the Fair Market Value will be determined in good
faith by the Administrator.


 


                                (r)            “Fiscal Year” means the
fiscal year of the Company.


 


                                (s)           “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.


 


                                (t)            “Inside Director” means a
Director who is an Employee.


 


                                (u)           “Nonstatutory Stock Option”
means an Option that by its terms does not qualify or is not intended to
qualify as an Incentive Stock Option.


 


                                (v)           “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.


 


                                (w)          “Option” means a stock option
granted pursuant to the Plan.


 


                                (x)            “Outside Director” means a
Director who is not an Employee.


 


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                                (y)           “Parent” means a “parent
corporation,” whether now or hereafter existing, as defined in Section 424(e) of
the Code.


 


                                (z)            “Participant” means the
holder of an outstanding Award.


 


                                (aa)         “Performance Share” means an
Award denominated in Shares which may be earned in whole or in part upon
attainment of performance goals or other vesting criteria as the Administrator
may determine pursuant to Section 10.


 


                                (bb)         “Performance Unit” means an
Award which may be earned in whole or in part upon attainment of performance
goals or other vesting criteria as the Administrator may determine and which
may be settled for cash, Shares or other securities or a combination of the
foregoing  pursuant to Section 10.


 


                                (cc)         “Period of Restriction” means
the period during which the transfer of Shares of Restricted Stock are subject
to restrictions and therefore, the Shares are subject to a substantial risk of
forfeiture.  Such restrictions may be
based on the passage of time, the achievement of target levels of performance,
or the occurrence of other events as determined by the Administrator.


 


                                (dd)         “Plan” means this 2007 Equity
Incentive Plan.


 


                                (ee)         “Registration Date” means the
effective date of the first registration statement that is filed by the Company
and declared effective pursuant to Section 12(g) of the Exchange Act,
with respect to any class of the Company’s securities.


 


                                (ff)           “Restricted Stock” means
Shares issued pursuant to a Restricted Stock award under Section 7 of the
Plan, or issued pursuant to the early exercise of an Option.


 


                                (gg)         “Restricted Stock Unit” means a
bookkeeping entry representing an amount equal to the Fair Market Value of one
Share, granted pursuant to Section 8. 
Each Restricted Stock Unit represents an unfunded and unsecured
obligation of the Company.


 


                                (hh)         “Rule 16b-3” means Rule 16b-3
of the Exchange Act or any successor to Rule 16b-3, as in effect when
discretion is being exercised with respect to the Plan.


 


                                (ii)           “Section 16(b)”  means Section 16(b) of the Exchange
Act.


 


                                (jj)           “Service Provider” means an
Employee, Director or Consultant.


 


                                (kk)         “Share” means a share of the
Common Stock, as adjusted in accordance with Section 14 of the Plan.


 


                                (ll)           “Stock Appreciation Right”
means an Award, granted alone or in connection with an Option, that pursuant to
Section 9 is designated as a Stock Appreciation Right.


 


                                (mm)       “Subsidiary” means a “subsidiary
corporation”, whether now or hereafter existing, as defined in Section 424(f) of
the Code.


 


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                3.             Stock Subject to the Plan.


 


                                (a)           Stock Subject to the Plan.  Subject to the provisions of Section 14
of the Plan, the maximum aggregate number of Shares that may be issued under
the Plan is 4,500,000 Shares, plus (i) any Shares that, as of the
Registration Date, have been reserved but not issued pursuant to any awards
granted under the XDx, Inc. 1998 Stock Plan (the “Old Plan”) and
are not subject to any awards granted thereunder, and (ii) any Shares
subject to stock options or similar awards granted under the Old Plan that
expire or otherwise terminate without having been exercised in full and Shares
issued pursuant to awards granted under the Old Plan that are forfeited to or
repurchased by the Company.  The Shares
may be authorized, but unissued, or reacquired Common Stock.


 


                                (b)           Automatic Share Reserve Increase.  The number of Shares available for issuance
under the Plan shall be increased on the first day of each Fiscal Year
beginning with the 2008 Fiscal Year, in an amount equal to the least of (i) two
million two hundred fifty thousand (2,250,000) Shares, (ii) five percent (5%)
of the outstanding Shares on the last day of the immediately preceding Fiscal
Year or (iii) such number of Shares determined by the Board.


 


                                (c)           Lapsed Awards.  If an Award expires or becomes unexercisable
without having been exercised in full, is surrendered pursuant to an Exchange
Program, or, with respect to Restricted Stock, Restricted Stock Units,
Performance Units or Performance Shares, is forfeited to or repurchased by the
Company due to failure to vest, the unpurchased Shares (or for Awards other
than Options or Stock Appreciation Rights the forfeited or repurchased Shares)
which were subject thereto will become available for future grant or sale under
the Plan (unless the Plan has terminated). 
With respect to Stock Appreciation Rights, only Shares actually issued
pursuant to a Stock Appreciation Right will cease to be available under the
Plan; all remaining Shares under Stock Appreciation Rights will remain
available for future grant or sale under the Plan (unless the Plan has
terminated).  Shares that have actually
been issued under the Plan under any Award will not be returned to the Plan and
will not become available for future distribution under the Plan; provided,
however, that if Shares issued pursuant to Awards of Restricted Stock, Restricted
Stock Units, Performance Shares or Performance Units are repurchased by the
Company or are forfeited to the Company, such Shares will become available for
future grant under the Plan.  Shares used
to pay the exercise price of an Award or to satisfy the tax withholding
obligations related to an Award will become available for future grant or sale
under the Plan.  To the extent an Award
under the Plan is paid out in cash rather than Shares, such cash payment will
not result in reducing the number of Shares available for issuance under the
Plan.  Notwithstanding the foregoing and,
subject to adjustment as provided in Section 14, the maximum number of
Shares that may be issued upon the exercise of Incentive Stock Options shall
equal the aggregate Share number stated in Section 3(a), plus, to the
extent allowable under Section 422 of the Code and the Treasury
Regulations promulgated thereunder, any Shares that become available for
issuance under the Plan pursuant to Section 3(c).


 


                                (d)           Share Reserve.  The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as will be
sufficient to satisfy the requirements of the Plan.


 


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                4.             Administration of the Plan.


 


                                (a)           Procedure.


 


                                                (i)            Multiple Administrative Bodies.  Different Committees with respect to
different groups of Service Providers may administer the Plan.


 


                                                (ii)           Section 162(m).  To the extent that the Administrator
determines it to be desirable to qualify Options granted hereunder as “performance-based
compensation” within the meaning of Section 162(m) of the Code, the Plan
will be administered by a Committee of two (2) or more “outside directors”
within the meaning of Section 162(m) of the Code.


 


                                                (iii)          Rule 16b-3.  To the extent desirable to qualify
transactions hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder will be structured to satisfy the requirements for exemption under Rule 16b-3.


 


                                                (iv)          Other Administration.  Other than as provided above, the Plan will
be administered by (A) the Board or (B) a Committee, which committee
will be constituted to satisfy Applicable Laws.


 


                                (b)           Powers of the Administrator.  Subject to the provisions of the Plan, and in
the case of a Committee, subject to the specific duties delegated by the Board
to such Committee, the Administrator will have the authority, in its discretion:


 


                                                (i)            to determine the Fair Market Value;


 


                                                (ii)           to select the Service Providers to
whom Awards may be granted hereunder;


 


                                                (iii)          to determine the number of Shares to
be covered by each Award granted hereunder;


 


                                                (iv)          to approve forms of Award Agreements
for use under the Plan;


 


                                                (v)           to determine the terms and
conditions, not inconsistent with the terms of the Plan, of any Award granted
hereunder.  Such terms and conditions
include, but are not limited to, the exercise price, the time or times when
Awards may be exercised (which may be based on performance criteria), any
vesting acceleration or waiver of forfeiture restrictions, and any restriction
or limitation regarding any Award or the Shares relating thereto, based in each
case on such factors as the Administrator will determine;


 


                                                (vi)          to determine the terms and conditions
of any, and to institute any Exchange Program;


 


                                                (vii)         to construe and interpret the terms of
the Plan and Awards granted pursuant to the Plan;


 


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                                                (viii)        to prescribe, amend and rescind rules and
regulations relating to the Plan, including rules and regulations relating
to sub-plans established for the purpose of satisfying applicable foreign laws;


 


                                                (ix)           to modify or amend each Award
(subject to Section 19(c) of the Plan), including the discretionary
authority to extend the post-termination exercisability period of Awards;


 


                                                (x)            to allow Participants to satisfy
withholding tax obligations in such manner as prescribed in Section 15;


 


                                                (xi)           to authorize any person to execute on
behalf of the Company any instrument required to effect the grant of an Award
previously granted by the Administrator;


 


                                                (xii)          to allow a Participant to defer the
receipt of the payment of cash or the delivery of Shares that would otherwise
be due to such Participant under an Award


 


                                                (xiii)         to make all other determinations deemed
necessary or advisable for administering the Plan.


 


                                (c)           Effect of Administrator’s Decision.  The Administrator’s decisions, determinations
and interpretations will be final and binding on all Participants and any other
holders of Awards.


 


                5.             Eligibility.  Nonstatutory Stock Options, Stock
Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares
and Performance Units may be granted to Service Providers.  Incentive Stock Options may be granted only
to Employees.


 


                6.             Stock Options.


 


                                (a)           Limitations.  Each Option will be designated in the Award
Agreement as either an Incentive Stock Option or a Nonstatutory Stock
Option.  However, notwithstanding such
designation, to the extent that the aggregate Fair Market Value of the Shares
with respect to which Incentive Stock Options are exercisable for the first
time by the Participant during any calendar year (under all plans of the
Company and any Parent or Subsidiary) exceeds one hundred thousand dollars ($100,000),
such Options will be treated as Nonstatutory Stock Options.  For purposes of this Section 6(a),
Incentive Stock Options will be taken into account in the order in which they
were granted.  The Fair Market Value of
the Shares will be determined as of the time the Option with respect to such
Shares is granted.


 


                                (b)           Term of Option.  The term of each Option will be stated in the
Award Agreement.  In the case of an
Incentive Stock Option, the term will be ten (10) years from the date of
grant or such shorter term as may be provided in the Award Agreement.  Moreover, in the case of an Incentive Stock
Option granted to a Participant who, at the time the Incentive Stock Option is
granted, owns stock representing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or any Parent or
Subsidiary, the term of the Incentive Stock Option will be five (5) years
from the date of grant or such shorter term as may be provided in the Award
Agreement.


 


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                                (c)           Option Exercise Price and
Consideration.


 


                                                (i)            Exercise Price.  The per share exercise price for the Shares
to be issued pursuant to exercise of an Option will be determined by the
Administrator, subject to the following:


 


                                                                (1)           In the case of an Incentive Stock
Option


 


                                                                                a)             granted to an Employee who, at the
time the Incentive Stock Option is granted, owns stock representing more than
ten percent (10%) of the voting power of all classes of stock of the Company or
any Parent or Subsidiary, the per Share exercise price will be no less than one
hundred ten percent (110%) of the Fair Market Value per Share on the date of
grant.


 


                                                                                b)            granted to any Employee other than
an Employee described in paragraph (A) immediately above, the per Share
exercise price will be no less than one hundred percent (100%) of the Fair
Market Value per Share on the date of grant.


 


                                                                (2)           In the case of a Nonstatutory Stock
Option, the per Share exercise price will be no less than one hundred percent
(100%) of the Fair Market Value per Share on the date of grant.


 


                                                                (3)           Notwithstanding the foregoing, Options
may be granted with a per Share exercise price of less than one hundred percent
(100%) of the Fair Market Value per Share on the date of grant pursuant to a
transaction described in, and in a manner consistent with, Section 424(a) of
the Code.


 


                                                (ii)           Waiting Period and Exercise Dates.  At the time an Option is granted, the
Administrator will fix the period within which the Option may be exercised and
will determine any conditions that must be satisfied before the Option may be
exercised.


 


                                                (iii)          Form of Consideration.  The Administrator will determine the
acceptable form of consideration for exercising an Option, including the method
of payment.  In the case of an Incentive
Stock Option, the Administrator will determine the acceptable form of consideration
at the time of grant.  Such consideration
may consist entirely of: (1) cash; (2) check; (3) promissory
note, (4) other Shares, provided Shares acquired directly or indirectly
from the Company, (A) have been owned by the Participant and not subject
to substantial risk of forfeiture for more than six months on the date of
surrender, and (B) have a Fair Market Value on the date of surrender equal
to the aggregate exercise price of the Shares as to which said Option will be
exercised; (5) consideration received by the Company under a
broker-assisted (or other) cashless exercise program implemented by the Company
in connection with the Plan; (6) any combination of the foregoing methods
of payment; or (7) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.


 


                                (d)           Exercise of Option.


 


                                                (i)            Procedure for Exercise; Rights as
a Stockholder.  Any Option granted
hereunder will be exercisable according to the terms of the Plan and at such
times and under such


 


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conditions as determined by the Administrator and set forth in the
Award Agreement.  An Option may not be
exercised for a fraction of a Share.


 


                                                An
Option will be deemed exercised when the Company receives: (i) notice of
exercise (in such form as the Administrator specify from time to time) from the
person entitled to exercise the Option, and (ii) full payment for the
Shares with respect to which the Option is exercised (together with applicable
withholding taxes).  Full payment may
consist of any consideration and method of payment authorized by the
Administrator and permitted by the Award Agreement and the Plan.  Shares issued upon exercise of an Option will
be issued in the name of the Participant or, if requested by the Participant,
in the name of the Participant and his or her spouse.  Until the Shares are issued (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a stockholder will exist with respect to the Shares subject to
an Option, notwithstanding the exercise of the Option.  The Company will issue (or cause to be
issued) such Shares promptly after the Option is exercised.  No adjustment will be made for a dividend or
other right for which the record date is prior to the date the Shares are
issued, except as provided in Section 14 of the Plan.


 


                                                Exercising
an Option in any manner will decrease the number of Shares thereafter
available, both for purposes of the Plan and for sale under the Option, by the
number of Shares as to which the Option is exercised.


 


                                                (ii)           Termination of Relationship as a
Service Provider.  If a Participant
ceases to be a Service Provider, other than upon the Participant’s death or
Disability, the Participant may exercise his or her Option within such period
of time as is specified in the Award Agreement to the extent that the Option is
vested on the date of termination (but in no event later than the expiration of
the term of such Option as set forth in the Award Agreement).  In the absence of a specified time in the
Award Agreement, the Option will remain exercisable for three (3) months
following the Participant’s termination. 
Unless otherwise provided by the Administrator, if on the date of
termination the Participant is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option will revert to the
Plan.  If after termination the
Participant does not exercise his or her Option within the time specified by
the Administrator, the Option will terminate, and the Shares covered by such
Option will revert to the Plan.


 


                                                (iii)          Disability of Participant.  If a Participant ceases to be a Service Provider
as a result of the Participant’s Disability, the Participant may exercise his
or her Option within such period of time as is specified in the Award Agreement
to the extent the Option is vested on the date of termination (but in no event
later than the expiration of the term of such Option as set forth in the Award
Agreement).  In the absence of a
specified time in the Award Agreement, the Option will remain exercisable for
twelve (12) months following the Participant’s termination.  Unless otherwise provided by the
Administrator, if on the date of termination the Participant is not vested as
to his or her entire Option, the Shares covered by the unvested portion of the
Option will revert to the Plan.  If after
termination the Participant does not exercise his or her Option within the time
specified herein, the Option will terminate, and the Shares covered by such
Option will revert to the Plan.


 


                                                (iv)          Death of Participant.  If a Participant dies while a Service
Provider, the Option may be exercised following the Participant’s death within
such period of time as is specified


 


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in the Award Agreement to the extent that the Option is vested on the
date of death (but in no event may the option be exercised later than the
expiration of the term of such Option as set forth in the Award Agreement), by
the Participant’s designated beneficiary, provided such beneficiary has been
designated prior to Participant’s death in a form acceptable to the
Administrator.  If no such beneficiary
has been designated by the Participant, then such Option may be exercised by
the personal representative of the Participant’s estate or by the person(s) to
whom the Option is transferred pursuant to the Participant’s will or in accordance
with the laws of descent and distribution. 
In the absence of a specified time in the Award Agreement, the Option
will remain exercisable for twelve (12) months following Participant’s
death.  Unless otherwise provided by the
Administrator, if at the time of death Participant is not vested as to his or
her entire Option, the Shares covered by the unvested portion of the Option
will immediately revert to the Plan.  If
the Option is not so exercised within the time specified herein, the Option
will terminate, and the Shares covered by such Option will revert to the Plan.


 


                                7.             Restricted Stock.


 


                                                (a)           Grant of Restricted Stock.  Subject to the terms and provisions of the
Plan, the Administrator, at any time and from time to time, may grant Shares of
Restricted Stock to Service Providers in such amounts as the Administrator, in
its sole discretion, will determine.


 


                                                (b)           Restricted Stock Agreement.  Each Award of Restricted Stock will be
evidenced by an Award Agreement that will specify the Period of Restriction,
the number of Shares granted, and such other terms and conditions as the
Administrator, in its sole discretion, will determine.  Unless the Administrator determines
otherwise, the Company as escrow agent will hold Shares of Restricted Stock
until the restrictions on such Shares have lapsed.


 


                                                (c)           Transferability.  Except as provided in this Section 7,
Shares of Restricted Stock may not be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated until the end of the applicable Period of
Restriction.


 


                                                (d)           Other Restrictions.  The Administrator, in its sole discretion,
may impose such other restrictions on Shares of Restricted Stock as it may deem
advisable or appropriate.


 


                                                (e)           Removal of Restrictions.  Except as otherwise provided in this Section 7,
Shares of Restricted Stock covered by each Restricted Stock grant made under
the Plan will be released from escrow as soon as practicable after the last day
of the Period of Restriction or at such other time as the Administrator may
determine.  The Administrator, in its
discretion, may accelerate the time at which any restrictions will lapse or be
removed.


 


                                                (f)            Voting Rights.  During the Period of Restriction, Service
Providers holding Shares of Restricted Stock granted hereunder may exercise
full voting rights with respect to those Shares, unless the Administrator
determines otherwise.


 


                                                (g)           Dividends and Other Distributions.  During the Period of Restriction, Service
Providers holding Shares of Restricted Stock will be entitled to receive all
dividends and other distributions paid with respect to such Shares, unless the
Administrator provides otherwise.  If any
such dividends or distributions are paid in Shares, the Shares will be subject
to the same restrictions


 


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on transferability and forfeitability as the Shares of Restricted Stock
with respect to which they were paid.


 


                                (h)           Return of Restricted Stock to
Company.  On the date set forth in
the Award Agreement, the Restricted Stock for which restrictions have not
lapsed will revert to the Company and again will become available for grant
under the Plan.


 


                8.             Restricted Stock Units.


 


                                (a)           Grant.  Restricted Stock Units may be granted at any
time and from time to time as determined by the Administrator.  After the Administrator determines that it
will grant Restricted Stock Units under the Plan, it shall advise the
Participant in an Award Agreement of the terms, conditions, and restrictions
related to the grant, including the number of Restricted Stock Units.


 


                                (b)           Vesting Criteria and Other Terms.  The Administrator shall set vesting criteria
in its discretion, which, depending on the extent to which the criteria are
met, will determine the number of Restricted Stock Units that will be paid out
to the Participant.  The Administrator
may set vesting criteria based upon the achievement of Company-wide, business
unit, or individual goals (including, but not limited to, continued
employment), or any other basis determined by the Administrator in its
discretion.


 


                                (c)           Earning Restricted Stock Units.  Upon meeting the applicable vesting criteria,
the Participant shall be entitled to receive a payout as determined by the
Administrator.  Notwithstanding the
foregoing, at any time after the grant of Restricted Stock Units, the
Administrator, in its sole discretion, may reduce or waive any vesting criteria
that must be met to receive a payout.


 


                                (d)           Form and Timing of Payment.  Payment of earned Restricted Stock Units
shall be made as soon as practicable after the date(s) determined by the
Administrator and set forth in the Award Agreement.  The Administrator, in its sole discretion,
may only settle earned Restricted Stock Units in cash, Shares, or a combination
of both.


 


                                (e)           Cancellation.  On the date set forth in the Award Agreement,
all unearned Restricted Stock Units shall be forfeited to the Company.


 


                9.             Stock Appreciation Rights.


 


                                (a)           Grant of Stock Appreciation Rights.  Subject to the terms and conditions of the
Plan, a Stock Appreciation Right may be granted to Service Providers at any
time and from time to time as will be determined by the Administrator, in its
sole discretion.


 


                                (b)           Number of Shares.  The Administrator will have complete
discretion to determine the number of Stock Appreciation Rights granted to any
Service Provider.


 


                (c)           Exercise Price and Other Terms.  The per share exercise price for the Shares
to be issued pursuant to exercise of an Stock Appreciation Right shall be
determined by the Administrator and shall be no less than one hundred percent
(100%) of the Fair Market Value per


 


11

















 


share on the date of grant. 
Otherwise, subject to Section 6(a) of the Plan, the
Administrator, subject to the provisions of the Plan, shall have complete
discretion to determine the terms and conditions of Stock Appreciation Rights
granted under the Plan.


 


                                (d)           Stock Appreciation Right Agreement.  Each Stock Appreciation Right grant will be
evidenced by an Award Agreement that will specify the exercise price, the term
of the Stock Appreciation Right, the conditions of exercise, and such other
terms and conditions as the Administrator, in its sole discretion, will
determine.


 


                                (e)           Expiration of Stock Appreciation
Rights.  An Stock Appreciation Right
granted under the Plan will expire upon the date determined by the
Administrator, in its sole discretion, and set forth in the Award
Agreement.  Notwithstanding the foregoing,
the rules of Section 6(d) also will apply to Stock Appreciation
Rights.


 


                                (f)            Payment of Stock Appreciation
Right Amount.  Upon exercise of an Stock
Appreciation Right, a Participant will be entitled to receive payment from the
Company in an amount determined by multiplying:


 


                                                (i)            The difference between the Fair
Market Value of a Share on the date of exercise over the exercise price; times


 


                                                (ii)           The number of Shares with respect to
which the Stock Appreciation Right is exercised.


 


At the discretion of the Administrator, the payment upon Stock
Appreciation Right exercise may be in cash, in Shares of equivalent value, or
in some combination thereof.


 


                10.           Performance Units and Performance
Shares.


 


                                (a)           Grant of Performance Units/Shares.  Performance Units and Performance Shares may
be granted to Service Providers at any time and from time to time, as will be
determined by the Administrator, in its sole discretion.  The Administrator will have complete
discretion in determining the number of Performance Units and Performance
Shares granted to each Participant.


 


                                (b)           Value of Performance Units/Shares.  Each Performance Unit will have an initial
value that is established by the Administrator on or before the date of
grant.  Each Performance Share will have
an initial value equal to the Fair Market Value of a Share on the date of
grant.


 


                                (c)           Performance Objectives and Other
Terms.  The Administrator will set
performance objectives or other vesting provisions (including, without
limitation, continued status as a Service Provider) in its discretion which,
depending on the extent to which they are met, will determine the number or
value of Performance Units/Shares that will be paid out to the Service
Providers.  The time period during which
the performance objectives or other vesting provisions must be met will be
called the “Performance Period.”  Each
Award of Performance Units/Shares will be evidenced by an Award Agreement that
will specify the Performance Period, and such other terms and conditions as the
Administrator, in its sole discretion, will determine.  The Administrator may set performance
objectives based upon the achievement of Company-wide, divisional, or


 


12

















 


individual goals, applicable federal or state securities laws, or any
other basis determined by the Administrator in its discretion.


 


                                d)            Earning of Performance
Units/Shares.  After the applicable
Performance Period has ended, the holder of Performance Units/Shares will be
entitled to receive a payout of the number of Performance Units/Shares earned
by the Participant over the Performance Period, to be determined as a function
of the extent to which the corresponding performance objectives or other
vesting provisions have been achieved. 
After the grant of a Performance Unit/Share, the Administrator, in its
sole discretion, may reduce or waive any performance objectives or other
vesting provisions for such Performance Unit/Share.


 


                                (e)           Form and Timing of Payment of
Performance Units/Shares.  Payment of
earned Performance Units/Shares will be made as soon as practicable after the
expiration of the applicable Performance Period.  The Administrator, in its sole discretion,
may pay earned Performance Units/Shares in the form of cash, in Shares (which
have an aggregate Fair Market Value equal to the value of the earned
Performance Units/Shares at the close of the applicable Performance Period) or
in a combination thereof.


 


                                (f)            Cancellation of Performance
Units/Shares.  On the date set forth
in the Award Agreement, all unearned or unvested Performance Units/Shares will
be forfeited to the Company, and again will be available for grant under the
Plan.


 


                11.           Formula Awards to Outside
Directors.


 


                                (a)           General.  Outside Directors will be entitled to receive
all types of Awards (except Incentive Stock Options) under this Plan, including
discretionary Awards not covered under this Section 11.  All grants of Awards to Outside Directors
pursuant to this Section will be automatic and nondiscretionary, except as
otherwise provided herein, and will be made in accordance with the following
provisions:


 


                                (b)           Type of Option.  If Options are granted pursuant to this Section they
will be Nonstatutory Stock Options and, except as otherwise provided herein,
will be subject to the other terms and conditions of the Plan.


 


                                (c)           No Discretion.  No person will have any discretion to select
which Outside Directors will be granted Awards under this Section or to
determine the number of Shares to be covered by such Awards (except as provided
in Sections 11(g) and 14).


 


                                (d)           Initial Award.  Each (i) Outside Director and (ii) person
who first becomes an Outside Director following the Registration Date will be
automatically granted an Option to purchase twenty thousand (20,000) Shares
(the “Initial Award”) on the Registration Date or on or about the date
on which such person first becomes an Outside Director, respectively, whether
through election by the stockholders of the Company or appointment by the Board
to fill a vacancy; provided, however, that an Inside Director who ceases to be
an Inside Director, but who remains a Director, will not receive an Initial
Award.


 


                                (e)           Annual Award.  Each Outside Director will be automatically
granted an Option to purchase ten thousand (10,000) Shares (an “Annual Award”)
on each date of the annual meeting of the


 


13

















 


stockholders of the Company beginning in 2008, if as of such date, he
or she will have served on the Board for at least the preceding six (6) months.


 


                                (f)            Terms.  The terms of each Award granted pursuant to
this Section will be as follows:


 


                                                (i)            The term of the Award will be ten (10) years.


 


                                                (ii)           The exercise price for Shares subject
to Awards will be 100% of the Fair Market Value on the grant date.


 


                                                (iii)          Subject to Section 14, the Initial
Award will vest and become exercisable as to one forty-eighth (1/48th) of the
Shares subject to the Initial Option on each monthly anniversary of its grant
date, provided that the Participant continues to serve as a Director through
each such date.


 


                                                (iv)          Subject to Section 14, the Annual
Award will vest and become exercisable as to one twelfth (1/12th) of the Shares
subject to the Initial Option on each monthly anniversary of its grant date,
provided that the Participant continues to serve as a Director through such
date.


 


                                (g)           Adjustments.  The Administrator in its discretion may
change and otherwise revise the terms of Awards granted under this Section 11,
including, without limitation, the number of Shares and exercise prices
thereof, for Awards granted on or after the date the Administrator determines
to make any such change or revision.


 


                12.           Leaves of Absence/Transfer Between
Locations.  Unless the Administrator
provides otherwise, vesting of Awards granted hereunder will be suspended
during any unpaid leave of absence.  A
Service Provider will not cease to be an Employee in the case of (i) any
leave of absence approved by the Company or (ii) transfers between
locations of the Company or between the Company, its Parent, or any
Subsidiary.  For purposes of Incentive
Stock Options, no such leave may exceed ninety (90) days, unless reemployment
upon expiration of such leave is guaranteed by statute or contract.  If reemployment upon expiration of a leave of
absence approved by the Company is not so guaranteed, then three (3) months
following the ninety-first (91st) day of such leave any Incentive Stock Option
held by the Participant will cease to be treated as an Incentive Stock Option
and will be treated for tax purposes as a Nonstatutory Stock Option.


 


                13.           Transferability of Awards.  Unless determined otherwise by the
Administrator, an Award may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Participant, only by the Participant.  If
the Administrator makes an Award transferable, such Award will contain such
additional terms and conditions as the Administrator deems appropriate.


 


                14.           Adjustments; Dissolution or
Liquidation; Merger or Change in Control.


 


                                (a)           Adjustments.  In the event that any dividend or other
distribution (whether in the form of cash, Shares, other securities, or other
property), recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase, or exchange
of Shares or other securities of the Company, or other change in the corporate
structure of the Company affecting the Shares occurs, the Administrator, in
order to prevent diminution or


 


14

















 


enlargement of the benefits or potential benefits intended to be made
available under the Plan, shall adjust the number and class of Shares that may
be delivered under the Plan and/or the number, class, and price of Shares
covered by each outstanding Award, and the numerical Share limits in Sections 3
and 11 of the Plan.


 


                                (b)           Dissolution or Liquidation.  In the event of the proposed dissolution or
liquidation of the Company, the Administrator will notify each Participant as
soon as practicable prior to the effective date of such proposed
transaction.  To the extent it has not
been previously exercised, an Award will terminate immediately prior to the
consummation of such proposed action.


 


                                (c)           Change in Control.  In the event of a merger or Change in
Control, each outstanding Award will be treated as the Administrator
determines, including, without limitation, that each Award be assumed or an
equivalent option or right substituted by the successor corporation or a Parent
or Subsidiary of the successor corporation. 
The Administrator shall not be required to treat all Awards similarly in
the transaction.


 


                                In
the event that the successor corporation does not assume or substitute for the
Award, the Participant will fully vest in and have the right to exercise all of
his or her outstanding Options and Stock Appreciation Rights, including Shares
as to which such Awards would not otherwise be vested or exercisable, all
restrictions on Restricted Stock and Restricted Stock Units will lapse, and,
with respect to Awards with performance-based vesting, all performance goals or
other vesting criteria will be deemed achieved at one hundred percent (100%) of
target levels and all other terms and conditions met.  In addition, if an Option or Stock
Appreciation Right is not assumed or substituted in the event of a Change in
Control, the Administrator will notify the Participant in writing or
electronically that the Option or Stock Appreciation Right will be exercisable
for a period of time determined by the Administrator in its sole discretion,
and the Option or Stock Appreciation Right will terminate upon the expiration
of such period.


 


                                For
the purposes of this subsection (c), an Award will be considered assumed
if, following the Change in Control, the Award confers the right to purchase or
receive, for each Share subject to the Award immediately prior to the Change in
Control, the consideration (whether stock, cash, or other securities or property)
received in the Change in Control by holders of Common Stock for each Share
held on the effective date of the transaction (and if holders were offered a
choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares); provided, however, that if such
consideration received in the Change in Control is not solely common stock of
the successor corporation or its Parent, the Administrator may, with the
consent of the successor corporation, provide for the consideration to be
received upon the exercise of an Option or Stock Appreciation Right or upon the
payout of a Restricted Stock Unit, Performance Unit or Performance Share, for
each Share subject to such Award, to be solely common stock of the successor
corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the Change in Control.


 


                                Notwithstanding
anything in this Section 14(c) to the contrary, an Award that vests,
is earned or paid-out upon the satisfaction of one or more performance goals
will not be considered assumed if the Company or its successor modifies any of
such performance goals without the Participant’s consent; provided, however, a
modification to such performance goals only to reflect


 


15

















 


the successor corporation’s post-Change in Control corporate structure
will not be deemed to invalidate an otherwise valid Award assumption.


 


                                (d)           Outside Director Awards.  With respect to Awards granted to an Outside
Director that are assumed or substituted for, if on the date of or following
such assumption or substitution the Participant’s status as a Director or a
director of the successor corporation, as applicable, is terminated other than
upon a voluntary resignation by the Participant (unless such resignation is at
the request of the acquirer), then the Participant will fully vest in and have
the right to exercise Options and/or Stock Appreciation Rights as to all of the
Shares underlying such Award, including those Shares which would not otherwise
be vested or exercisable, all restrictions on Restricted Stock and Restricted
Stock Units will lapse, and, with respect to Performance Units and Performance
Shares, all performance goals or other vesting criteria will be deemed achieved
at one hundred percent (100%) of target levels and all other terms and
conditions met.


 


                15.           Tax Withholding.


 


                                (a)           Withholding Requirements.  Prior to the delivery of any Shares or cash
pursuant to an Award (or exercise thereof), the Company will have the power and
the right to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy federal, state, local, foreign or
other taxes (including the Participant’s FICA obligation) required to be
withheld with respect to such Award (or exercise thereof).


 


                                (b)           Withholding Arrangements.  The Administrator, in its sole discretion and
pursuant to such procedures as it may specify from time to time, may permit a
Participant to satisfy such tax withholding obligation, in whole or in part by (without
limitation) (a) paying cash, (b) electing to have the Company
withhold otherwise deliverable cash or Shares having a Fair Market Value equal
to the minimum statutory amount required to be withheld, or (c) delivering
to the Company already-owned Shares having a Fair Market Value equal to the
minimum statutory amount required to be withheld.  The Fair Market Value of the Shares to be
withheld or delivered will be determined as of the date that the taxes are
required to be withheld.


 


                16.           No Effect on Employment or Service.  Neither the Plan nor any Award will confer
upon a Participant any right with respect to continuing the Participant’s
relationship as a Service Provider with the Company, nor will they interfere in
any way with the Participant’s right or the Company’s right to terminate such
relationship at any time, with or without cause, to the extent permitted by
Applicable Laws.


 


                17.           Date of Grant.  The date of grant of an Award will be, for
all purposes, the date on which the Administrator makes the determination
granting such Award, or such other later date as is determined by the
Administrator.  Notice of the
determination will be provided to each Participant within a reasonable time
after the date of such grant.


 


                                18.           Term of Plan.  Subject to Section 22 of the Plan, the
Plan will become effective upon its adoption by the Board.  It will continue in effect for a term of ten (10) years
from the date adopted by the Board, unless terminated earlier under Section 19
of the Plan.


 


19.           Amendment and
Termination of the Plan.


 


16

















 


                                (a)           Amendment and Termination.  The Board may at any time amend, alter,
suspend or terminate the Plan.


 


                                (b)           Stockholder Approval.  The Company will obtain stockholder approval
of any Plan amendment to the extent necessary and desirable to comply with
Applicable Laws.


 


                                (c)           Effect of Amendment or Termination.  No amendment, alteration, suspension or
termination of the Plan will impair the rights of any Participant, unless
mutually agreed otherwise between the Participant and the Administrator, which
agreement must be in writing and signed by the Participant and the
Company.  Termination of the Plan will
not affect the Administrator’s ability to exercise the powers granted to it
hereunder with respect to Awards granted under the Plan prior to the date of
such termination.


 


                20.           Conditions Upon Issuance of Shares.


 


                                (a)           Legal Compliance.  Shares will not be issued pursuant to the
exercise of an Award unless the exercise of such Award and the issuance and
delivery of such Shares will comply with Applicable Laws and will be further
subject to the approval of counsel for the Company with respect to such
compliance.


 


                                (b)           Investment Representations.  As a condition to the exercise of an Award,
the Company may require the person exercising such Award to represent and
warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute
such Shares if, in the opinion of counsel for the Company, such a
representation is required.


 


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


 


                                22.           Stockholder Approval.  The Plan will be subject to approval by the
stockholders of the Company within twelve (12) months after the date the Plan
is adopted by the Board.  Such
stockholder approval will be obtained in the manner and to the degree required
under Applicable Laws.


 


17