**EXHIBIT 10.21.4**

 

**MCDATA CORPORATION**

 

**2004 INDUCEMENTEQUITY GRANT PLAN**

 

**ADOPTED BY THE BOARDOF DIRECTORS:  MAY 25, 2004**

 

**1.             PURPOSES.**

 

**(a)            GeneralPurpose.**  The Company, by means of the Plan, seeks toretain the services of persons not previously an employee or director of theCompany, or following a *bona fide*period of non-employment, as an inducement material to the individual’sentering into employment with the Company within the meaning of Rule4350(i)(1)(A)(iv) of the NASD Marketplace Rules, and to provide incentives forsuch persons to exert maximum efforts for the success of the Company and itsAffiliates.

 

**(b)**           **EligibleStock Award Recipients.**  Thepersons eligible to receive Stock Awards are the Employees of the Company andits Affiliates subject to the limitations set forth in Section 5.

 

**(c)**           **AvailableStock Awards.**  The purpose ofthe Plan is to provide a means by which eligible recipients of Stock Awards maybe given an opportunity to benefit from increases in value of the Common Stockthrough the granting of the following Stock Awards:  (i) Options, (ii) Stock Bonus Awards, (iii) Stock PurchaseAwards, (iv) Stock Appreciation Rights, (v) Stock Unit Awards and(vi) Other Stock Awards.

 

**2.             DEFINITIONS.**

 

**(a)            *“Affiliate”*** means any parent corporation orsubsidiary corporation of the Company, whether now or hereafter existing, asthose terms are defined in Sections 424(e) and (f), respectively, of the Code.

 

**(b)            *“Board”*** means the Board of Directors of theCompany.

 

**(c)           *****“CapitalizationAdjustment”***has the meaning ascribed to that term in Section 11(a).

 

**(d)            *“Change inControl”***means the occurrence, in a single transaction or in a series of relatedtransactions, of any one or more of the following events:

 

**(i)          **any Exchange Act Person becomes theOwner, directly or indirectly, of securities of the Company representing morethan fifty percent (50%) of thecombined voting power of the Company’s then outstanding securities other thanby virtue of a merger, consolidation or similar transaction.  Notwithstandingthe foregoing, a Change in Control shall not be deemed to occur (A) on accountof the acquisition of securities of the Company by an investor, any affiliatethereof or any other Exchange Act Person from the Company in a transaction orseries of related transactions the primary purpose of which is to obtainfinancing for the Company through the issuance of equity securities or (B)****solely because the level of Ownership held byany Exchange Act Person (the “***Subject Person***”) exceeds the designated percentage thresholdof the outstanding voting securities as a result of a repurchase or otheracquisition of voting securities by the Company reducing the number of sharesoutstanding, provided that if a Change in Control would occur (but for theoperation of this sentence) as a result of the acquisition of voting securitiesby the Company, and after such share acquisition, the Subject Person becomesthe Owner of any additional voting securities that, assuming the repurchase orother acquisition had not occurred, increases the percentage of the thenoutstanding voting securities Owned by the Subject Person over the designatedpercentage threshold, then a Change in Control shall be deemed to occur;

 

**(ii)        **there is consummated a merger,consolidation or similar transaction involving (directly or indirectly) theCompany and, immediately after the consummation of such merger, consolidationor similar 

 

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transaction, the stockholders of the Companyimmediately prior thereto do not Own, directly or indirectly, either (A) outstandingvoting securities representing more than fifty percent (50%) of the combined outstanding voting power ofthe surviving Entity in such merger, consolidation or similar transaction or(B) more than fifty percent (50%) ofthe combined outstanding voting power of the parent of the surviving Entity insuch merger, consolidation or similar transaction, in each case insubstantially the same proportions as their Ownership of the outstanding votingsecurities of the Company immediately prior to such transaction;

 

**(iii)       **the stockholders of the Company approveor the Board approves a plan of complete dissolution or liquidation of theCompany, or a complete dissolution or liquidation of the Company shallotherwise occur;

 

**(iv)        **there is consummated a sale, lease,license or other disposition of all or substantially all of the consolidatedassets of the Company and its Subsidiaries, other than a sale, lease, licenseor other disposition of all or substantially all of the consolidated assets ofthe Company and its Subsidiaries to an Entity, more than fifty percent (50%) of the combinedvoting power of the voting securities of which are Owned by stockholders of theCompany in substantially the same proportions as their Ownership of theoutstanding voting securities of the Company immediately prior to such sale,lease, license or other disposition; or

 

**(v)         **individuals who, on the date this Plan isadopted by the Board, are members of the Board (the ***“Incumbent Board”***)cease for any reason to constitute at least a majority of the members of theBoard; *provided,however,* that if the appointment or election (or nomination forelection) of any new Board member was approved or recommended by a majorityvote of the members of the Incumbent Board then still in office, such newmember shall, for purposes of this Plan, be considered as a member of theIncumbent Board.

 

**Notwithstanding the foregoing orany other provision of this Plan, the definition of Change in Control (or anyanalogous term) in an individual written agreement between the Company or anyAffiliate and the Participant shall supersede the foregoing definition withrespect to Stock Awards subject to such agreement (it being understood,however, that if no definition of Change in Control or any analogous term is setforth in such an individual written agreement, the foregoing definition shallapply).**

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

 

**(f)            *“Committee”*** means a committee of one (1) or moremembers of the Board appointed by the Board in accordance withSection 3(c).

 

**(g)           *“CommonStock”***means the Class B common stock of the Company.

 

**(h)           *“Company”*** means McDATA Corporation, a Delawarecorporation.

 

**(i)            *“Consultant”*** means any person, including an advisor,(i) engaged by the Company or an Affiliate to render consulting or advisoryservices and who is compensated for such services or (ii) serving as a memberof the Board of Directors of an Affiliate and who is compensated for suchservices.  However, the term“Consultant” shall not include Directors who are not compensated by the Companyfor their services as Directors, and the payment of a director’s fee by theCompany solely for services as a Director shall not cause a Director to beconsidered a “Consultant” for purposes of the Plan.

 

**(j)            *“ContinuousService”***means that the Participant’s service with the Company or an Affiliate, whetheras an Employee, Director or Consultant, is not interrupted or terminated.  A change in the capacity in which theParticipant renders service to the Company or an Affiliate as an Employee,Consultant or Director or a change in the entity for which the Participantrenders such service, provided that there is no interruption or termination ofthe Participant’s service with the Company or an Affiliate, shall not terminatea Participant’s Continuous Service.  Forexample, a change in status from an Employee of the Company to a Consultant ofan 

 

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Affiliate or a Director shall not constitute aninterruption of Continuous Service.  TheBoard or the chief executive officer of the Company, in that party’s solediscretion, may determine whether Continuous Service shall be consideredinterrupted in the case of any leave of absence approved by that party,including sick leave, military leave or any other personal leave.  Notwithstanding the foregoing, an approvedleave of absence shall be treated as Continuous Service for purposes of vestingin a Stock Award only to such extent as may be provided in the Company’s leaveof absence policy or in the written terms of the Participant’s leave ofabsence.

 

**(k)           *“CorporateTransaction”*** means the occurrence, in a single transaction or in a series ofrelated transactions, of any one or more of the following events:

 

**(i)          **a sale****or other disposition of allor substantially all, as determined by the Board in its discretion, of theconsolidated assets of the Company and its Subsidiaries;

 

**(ii)        **a sale or other disposition of at least ninety percent (90%) of theoutstanding securities of the Company;

 

**(iii)       **a merger, consolidation or similar transactionfollowing which the Company is not the surviving corporation; or

 

**(iv)        **a merger, consolidation or similartransaction following which the Company is the surviving corporation but theshares of Common Stock outstanding immediately preceding the merger,consolidation or similar transaction are converted or exchanged by virtue ofthe merger, consolidation or similar transaction into other property, whetherin the form of securities, cash or otherwise.

 

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

 

**(m)          *“Disability”*** means, with respect to a Participant,such Participant’s permanent and total disability within the meaning of theCompany’s long-term disability plan, as it may be amended from time to time,or, if there is no such plan, as determined by the Board.

 

**(n)           *“Employee”*** means any person employed by the Companyor an Affiliate.  Service as a Directoror as a Consultant shall not be sufficient to constitute “employment” by theCompany or an Affiliate.

 

**(o)            *“Entity”*** means a corporation, partnership or otherentity.

 

**(p)            *“ExchangeAct”***means the Securities Exchange Act of 1934, as amended.

 

**(q)            *“ExchangeAct Person”***means any natural person, Entity or “group” (within the meaning ofSection 13(d) or 14(d) of the Exchange Act), except that “Exchange Act Person”shall not include (A) the Company or any Subsidiary of the Company, (B) anyemployee benefit plan of the Company or any Subsidiary of the Company or anytrustee or other fiduciary holding securities under an employee benefit plan ofthe Company or any Subsidiary of the Company, (C) an underwriter temporarilyholding securities pursuant to an offering of such securities, or (D) an EntityOwned, directly or indirectly, by the stockholders of the Company insubstantially the same proportions as their Ownership of stock of the Company.

 

**(r)            *Fair MarketValue”***means, as of any date, the value of the Common Stock determined as follows:

 

**(i)          **If the Common Stock is listed on anyestablished stock exchange or traded on the Nasdaq National Market or theNasdaq SmallCap Market, the Fair Market Value of a share of Common Stock shallbe the closing sales price for such stock (or the closing bid, if no sales werereported) as quoted on such exchange or market (or the exchange or market withthe greatest volume of trading in the Common Stock) on the last 

 

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market trading day prior to the day of determination,as reported in *The Wall Street Journal*****or such other source as theBoard deems reliable.

 

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

 

**(s)            *“Non-EmployeeDirector”***means a Director who either (i) is not a current Employee or Officer ofthe Company or an Affiliate, does not receive compensation (directly orindirectly) from the Company or an Affiliate for services rendered as aConsultant or in any capacity other than as a Director (except for an amount asto which disclosure would not be required under Item 404(a) of Regulation S-Kpromulgated pursuant to the Securities Act (“Regulation S-K”)), does notpossess an interest in any other transaction as to which disclosure would berequired under Item 404(a) of Regulation S-K and is not engaged in a businessrelationship as to which disclosure would be required under Item 404(b) ofRegulation S-K; or (ii) is otherwise considered a “non-employee director” forpurposes of Rule 16b-3.

 

**(t)            *“Officer”*** means a person who is an officer of theCompany within the meaning of Section 16 of the Exchange Act and the rulesand regulations promulgated thereunder.

 

**(u)           *“Option”*** means a nonstatutory stock optiongranted pursuant to the Plan that is not intended to qualify as an incentivestock option under Section 422 of the Code and the regulations promulgatedthereunder.

 

**(v)            *“OptionAgreement”*** means a written agreement between the Company and an Optionholderevidencing the terms and conditions of an individual Option grant.  Each Option Agreement shall be subject tothe terms and conditions of the Plan.

 

**(w)           *“Optionholder”*** means a person to whom an Option isgranted pursuant to the Plan or, if applicable, such other person who holds anoutstanding Option.

 

**(x)            *“Other Stock Award”*** means an award based in whole or in partby reference to the Common Stock which is granted pursuant to the terms andconditions of Section 7(e).

 

**(y)            *“Other StockAward Agreement”***means a written agreement between the Company and aholder of an Other Stock Award evidencing the terms and conditions of anindividual Other Stock Award grant. Each Other Stock Award Agreement shall be subject to the terms andconditions of the Plan.

 

**(z)            *“Own,”“Owned,” “Owner,” “Ownership”* **A personor Entity shall be deemed to “Own,” to have “Owned,” to be the “Owner” of, orto have acquired “Ownership” of securities if such person or Entity, directlyor indirectly, through any contract, arrangement, understanding, relationshipor otherwise, has or shares voting power, which includes the power to vote orto direct the voting, with respect to such securities.

 

**(aa)          *“Participant”*** means a person to whom a Stock Award isgranted pursuant to the Plan or, if applicable, such other person who holds anoutstanding Stock Award.

 

**(bb)          *“Plan”*** means this 2004 Inducement Equity GrantPlan.

 

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

 

**(dd)          *“SecuritiesAct”***means the Securities Act of 1933, as amended.

 

**(ee)          *“StockAppreciation Right”***means a right to receive the appreciation of CommonStock which is granted pursuant to the terms and conditions of Section 7(d).

 

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**(ff)           *“StockAppreciation Right Agreement”***means a written agreement between the Company and aholder of a Stock Appreciation Right evidencing the terms and conditions of anindividual Stock Appreciation Right grant.  Each Stock Appreciation Right Agreement shall be subject to theterms and conditions of the Plan.

 

**(gg)         *“StockAward”***means any right granted under the Plan, including an Option,  Stock Purchase Award, Stock Bonus Award,Stock Unit Award, a Stock Appreciation Right and an Other Stock Award.

 

**(hh)         *“Stock AwardAgreement”*** means a written agreement between the Company and a Participantevidencing the terms and conditions of an individual Stock Award grant.  Each Stock Award Agreement shall be subjectto the terms and conditions of the Plan.

 

**(ii)           *“Stock Bonus Award”*** means an award of shares of Common Stockwhich is granted pursuant to the terms and conditions of Section 7(a).

 

**(jj)           *“Stock BonusAward Agreement”***means a written agreement between the Company and aholder of a Stock Bonus Award evidencing the terms and conditions of anindividual Stock Bonus Award grant. Each Stock Bonus Award Agreement shall be subject to the terms andconditions of the Plan.

 

**(kk)        *“StockPurchase Award”***means an award of shares of Common Stock which isgranted pursuant to the terms and conditions of Section 7(b).

 

**(ll)           *“StockPurchase Award Agreement”***means a written agreement between the Company and aholder of a Stock Purchase Award evidencing the terms and conditions of an individualStock Purchase Award grant.  Each StockPurchase Award Agreement shall be subject to the terms and conditions of thePlan.

 

**(mm)       *“Stock UnitAward”***meansa right to receive shares of Common Stock which is granted pursuant to theterms and conditions of Section 7(c).

 

**(nn)         *“Stock UnitAward Agreement”***means a written agreement between the Company and aholder of a Stock Unit Award evidencing the terms and conditions of anindividual Stock Unit Award grant.  EachStock Unit Award Agreement shall be subject to the terms and conditions of thePlan.

 

**(oo)          *“Subsidiary”*** means, with respect to the Company, (i)any corporation of which more than fifty percent (50%) of the outstandingcapital stock having ordinary voting power to elect a majority of the board ofdirectors of such corporation (irrespective of whether, at the time, stock ofany other class or classes of such corporation shall have or might have votingpower by reason of the happening of any contingency) is at the time, directlyor indirectly, Owned by the Company, and (ii) any partnership in which theCompany has a direct or indirect interest (whether in the form of voting orparticipation in profits or capital contribution) of more than fifty percent(50%).

 

**3.             ADMINISTRATION.**

 

**(a)            Administrationby Board.**  The Board shall administer the Plan unlessand until the Board delegates administration of the Plan to a committee, asprovided in Section 3(c).

 

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

 

**(i)          **Subject to Section 5 herein, to determinefrom time to time which of the persons eligible under the Plan shall be grantedStock Awards; when and how each Stock Award shall be granted; what type orcombination of types of Stock Award shall be granted; the provisions of eachStock Award granted (which need not be identical), including the time or timeswhen a person shall be permitted to receive Common Stock 

 

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pursuant to a Stock Award; and the number of shares ofCommon Stock with respect to which a Stock Award shall be granted to each suchperson.

 

**(ii)        **To construe and interpret the Plan andStock Awards granted under it, and to establish, amend and revoke rules andregulations for its administration.  TheBoard, in the exercise of this power, may correct any defect, omission orinconsistency in the Plan or in any Stock Award Agreement, in a manner and tothe extent it shall deem necessary or expedient to make the Plan fullyeffective.

 

**(iii)       **To effect, at any time and from time totime, with the consent of any adversely affected Optionholder, (1) thereduction of the exercise price of any outstanding Option under the Plan or (2)any other action that is treated as a repricing under generally acceptedaccounting principles to the extent such action complies with Rule4350(i)(1)(A)(iv) of the NASD Marketplace Rules.

 

**(iv)        **To amend the Plan or a Stock Award asprovided in Section 12.

 

**(v)         **To terminate or suspend the Plan asprovided in Section 13.

 

**(vi)        **Generally, to exercise such powers and toperform such acts as the Board deems necessary or expedient to promote the bestinterests of the Company and that are not in conflict with the provisions ofthe Plan.

 

**(vii)       **To adopt such procedures and sub-plans asare necessary or appropriate to permit participation in the Plan by employeeswho are foreign nationals or employed outside the United States.

 

**(c)            DELEGATION TO COMMITTEE**.

 

**(i)           General.** The Board may delegate some or all of the administration of the Plan toa Committee or Committees of one (1) or more members of the Board, and the term***“Committee”***shall apply to any person or persons to whom such authority has beendelegated.  If administration isdelegated to a Committee, the Committee shall have, in connection with theadministration of the Plan, the powers theretofore possessed by the Board thathave been delegated to the Committee, including the power to delegate to asubcommittee any of the administrative powers the Committee is authorized toexercise (and references in this Plan to the Board shall thereafter be to theCommittee or subcommittee), subject, however, to such resolutions, notinconsistent with the provisions of the Plan, as may be adopted from time totime by the Board.  The Board may retainthe authority to concurrently administer the Plan with the Committee and may,at any time, revest in the Board the administration of the Plan.

 

**(ii)         Rule 16b-3Compliance.**  In the discretion of the Board, theCommittee may consist solely of two (2) or more Non-Employee Directors, inaccordance with Rule 16b-3.

 

**(d)            Effectof Board’s Decision.** All determinations, interpretations and constructionsmade by the Board in good faith shall not be subject to review by any personand shall be final, binding and conclusive on all persons.

 

**4.             SHARES SUBJECT TO THE PLAN**. 

 

**(a)            ShareReserve.**  Subject to the provisions of Section 11(a)relating to Capitalization Adjustments, the shares of Common Stock that may beissued pursuant to Stock Awards shall not exceed in the aggregate three million(3,000,000) shares of Common Stock.

 

**(b)            Reversionof Shares to the Share Reserve**.  If any StockAward shall for any reason expire or otherwise terminate, in whole or in part,without having been exercised in full, or if any shares of Common 

 

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Stock issued to a Participant pursuant to a StockAward are forfeited back to or repurchased by the Company, including, but notlimited to, any repurchase or forfeiture caused by the failure to meet acontingency or condition required for the vesting of such shares, then theshares of Common Stock not acquired under such Stock Award shall revert to andagain become available for issuance under the Plan.  If any shares subject to a Stock Award are not delivered to aParticipant because such shares are withheld for taxes or the Stock Award isexercised through a reduction of shares subject to the Stock Award (i.e., “netexercised”), then the shares that are not delivered shall revert to and againbecome available for issuance under the Plan. If the exercise price of any Stock Award is satisfied by tenderingshares of Common Stock held by the Participant (either by actual delivery orattestation), then the number of such tendered shares shall revert to and againbecome available for issuance under the Plan.

 

**(c)            Source ofShares.**  The shares of Common Stock subject to thePlan may be unissued shares or reacquired shares, bought on the market orotherwise.

 

**5.             ELIGIBILITY. **Personseligible for Stock Awards shall consist of Employees whose potential contribution,in the judgment of the Board, will benefit the future success of the Companyand/or an Affiliate.   Stock Awards maybe granted only to persons not previously an Employee or Director of theCompany, or following a *bona fide*period of non-employment, as an inducement material to the individual’sentering into employment with the Company within the meaning of Rule4350(i)(1)(A)(iv) of the NASD Marketplace Rules.  In addition, notwithstanding any other provision of the Plan tothe contrary, all Stock Awards must be granted either by a majority of theCompany’s independent directors or a committee comprised of a majority ofindependent directors.

 

**6.             OPTION PROVISIONS.**

 

Each Option shallbe in such form and shall contain such terms and conditions as the Board shalldeem appropriate.  All Options shall bedesignated as nonstatutory stock options at the time of grant.  The provisions of separate Options need notbe identical, but each Option shall include (through incorporation ofprovisions hereof by reference in the Option or otherwise) the substance ofeach of the following provisions:

 

**(a)            Term.** The Board shall determine the term of an Option.

 

**(b)            ExercisePrice of an Option.**  The Board, in its discretion, shalldetermine the exercise price of each Option.

 

**(c)**            **Consideration.**  The purchase price of Common Stock acquiredpursuant to an Option shall be paid, to the extent permitted by applicable law,either (i) in cash at the time the Option is exercised or (ii) at thediscretion of the Board (1) by delivery to the Company of other Common Stock,(2) by a “net exercise” of the Option (as further described below), (3)pursuant to a program developed under Regulation T as promulgated by theFederal Reserve Board that, prior to the issuance of Common Stock, results ineither the receipt of cash (or check) by the Company or the receipt ofirrevocable instructions to pay the aggregate exercise price to the Companyfrom the sales proceeds, (4) according to a deferred payment or other similararrangement with the Optionholder or (5) in any other form of legalconsideration that may be acceptable to the Board.  Unless otherwise specifically provided in the Option, thepurchase price of Common Stock acquired pursuant to an Option that is paid bydelivery to the Company of other Common Stock acquired, directly or indirectlyfrom the Company, shall be paid only by shares of the Common Stock of theCompany that have been held for more than six (6) months (or such longer orshorter period of time required to avoid a charge to earnings for financialaccounting purposes).

 

In the case of a“net exercise” of an Option, the Company will not require a payment of theexercise price of the Option from the Participant but will reduce the number ofshares of Common Stock issued upon the exercise by the largest number of wholeshares that has a Fair Market Value that does not exceed the aggregate 

 

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exercise price. With respect to any remaining balance of the aggregate exercise price,the Company shall accept a cash payment from the Participant.  The shares of Common Stock so used to paythe exercise price of an Option under a “net exercise” and any shares withheldfor taxes will be considered to have been withheld from the exercise of the Option.  Accordingly, the Option will not again beexercisable with respect to the shares deemed withheld to satisfy the exerciseprice, the shares actually delivered to the Participant or any shares withheldfor purposes of tax withholding.

 

In the case of anydeferred payment arrangement, interest shall be compounded at least annuallyand shall be charged at the minimum rate of interest necessary to avoid thetreatment as interest, under any applicable provisions of the Code, of anyamounts other than amounts stated to be interest under the deferred paymentarrangement.

 

**(c)            Transferabilityof an Option.**  An Option shall be transferable to theextent provided in the Option Agreement. If the Option does not provide for transferability, then the Optionshall not be transferable except by (i) will, (ii) the laws of descent anddistribution, or (iii) upon dissolution of the Optionholder’s marriage pursuantto a domestic relations order.  Also,during the Optionholder’s lifetime, only the Optionholder is entitled toexercise his or her Option.  Notwithstandingthe foregoing, by delivering written notice to the Company, in a formsatisfactory to the Company, an Optionholder may designate a third party who,in the event of such Optionholder’s death, shall thereafter be entitled toexercise the Option.

 

**(d)            VestingGenerally.**  The total number of shares of Common Stocksubject to an Option may, but need not, vest and therefore become exercisablein periodic installments that may, but need not, be equal.  The Option may be subject to such otherterms and conditions on the time or times when it may be exercised (which maybe based on performance or other criteria) as the Board may deemappropriate.  The vesting provisions ofindividual Options may vary.  Theprovisions of this Section 6(e) are subject to any Option provisions governingthe minimum number of shares of Common Stock as to which an Option may beexercised.

 

**(e)            Terminationof Continuous Service.**  In the event that anOptionholder’s Continuous Service terminates (other than upon theOptionholder’s death or Disability), the Optionholder may exercise his or herOption (to the extent that the Optionholder was entitled to exercise suchOption as of the date of termination of Continuous Service) but only withinsuch period of time ending on the earlier of (i) the date three (3) monthsfollowing the termination of the Optionholder’s Continuous Service (or suchlonger or shorter period specified in the Option Agreement) or (ii) theexpiration of the term of the Option as set forth in the Option Agreement.  If, after termination of Continuous Service,the Optionholder does not exercise his or her Option within the time specifiedin the Option Agreement, the Option shall terminate.

 

**(f)            Extensionof Termination Date.**  An Optionholder’s Option Agreement may (butneed not) provide that if the exercise of the Option following the terminationof the Optionholder’s Continuous Service (other than upon the Optionholder’sdeath or Disability) would be prohibited at any time solely because theissuance of shares of Common Stock would violate the registration requirementsunder the Securities Act, then the Option shall terminate on the earlier of (i)the expiration of the term of the Option set forth in the Option Agreement or(ii) the expiration of a period of three (3) months after the termination ofthe Optionholder’s Continuous Service during which the exercise of the Optionwould not be in violation of such registration requirements.

 

**(g)           Disabilityof Optionholder.**  In the event that an Optionholder’sContinuous Service terminates as a result of the Optionholder’s Disability, theOptionholder may exercise his or her Option (to the extent that theOptionholder was entitled to exercise such Option as of the date of terminationof Continuous Service), but only within such period of time ending on theearlier of (i) the date twelve (12) months following such termination ofContinuous Service (or such longer or shorter period specified in the OptionAgreement) or (ii) the expiration of the term of the Option as set forth in theOption Agreement.  If, after terminationof

 

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Continuous Service, the Optionholder does not exercisehis or her Option within the time specified herein, the Option shall terminate.

 

**(h)           Death ofOptionholder.**  In the event that (i) an Optionholder’sContinuous Service terminates as a result of the Optionholder’s death or (ii)the Optionholder dies within the period (if any) specified in the OptionAgreement after the termination of the Optionholder’s Continuous Service for areason other than death, then the Option may be exercised (to the extent theOptionholder was entitled to exercise such Option as of the date of death) bythe Optionholder’s estate, by a person who acquired the right to exercise theOption by bequest or inheritance or by a person designated to exercise theoption upon the Optionholder’s death pursuant to Section 6(d), but only withinthe period ending on the earlier of (1) the date eighteen (18) months followingthe date of death (or such longer or shorter period specified in the OptionAgreement) or (2) the expiration of the term of such Option as set forth in theOption Agreement.  If, after death, theOption is not exercised within the time specified herein, the Option shallterminate.

 

**(i)            EarlyExercise.**  The Option may, but need not, include aprovision whereby the Optionholder may elect at any time before theOptionholder’s Continuous Service terminates to exercise the Option as to anypart or all of the shares of Common Stock subject to the Option prior to thefull vesting of the Option.  Anyunvested shares of Common Stock so purchased may be subject to a repurchaseoption in favor of the Company or to any other restriction the Board determinesto be appropriate.  The Company shallnot be required to exercise its repurchase option until at least six (6) months(or such longer or shorter period of time required to avoid a charge toearnings for financial accounting purposes) have elapsed following exercise ofthe Option unless the Board otherwise specifically provides in the Option.

 

**7.             PROVISIONS OF STOCK AWARDS OTHERTHAN OPTIONS.**

 

**(a)            StockBonus Awards.**  Each Stock Bonus Award Agreement shall be insuch form and shall contain such terms and conditions as the Board shall deemappropriate.  At the Board’s election,shares of Common Stock may be (i) held in book entry form subject to theCompany’s instructions until any restrictions relating to the Stock Bonus Awardlapse; or (ii) evidenced by a certificate, which certificate shall be held insuch form and manner as determined by the Board.  The terms and conditions of Stock Bonus Award Agreements maychange from time to time, and the terms and conditions of separate Stock BonusAward Agreements need not be identical, but each Stock Bonus Award Agreementshall include (through incorporation of provisions hereof by reference in theagreement or otherwise) the substance of each of the following provisions:

 

**(i)           Consideration.** A Stock Bonus Award may be awarded in consideration for past servicesactually rendered to the Company or an Affiliate for its benefit or in anyother form of legal consideration that may be acceptable to the Board in itsdiscretion.

 

**(ii)         Vesting.** Shares of Common Stock awarded under the Stock Bonus Award Agreementmay, but need not, be subject to forfeiture to the Company or a sharerepurchase option in favor of the Company in accordance with a vesting scheduleto be determined by the Board.

 

**(iii)        Terminationof Participant’s Continuous Service.**  In the eventa Participant’s Continuous Service terminates, the Company may reacquire (orreceive via  a forfeiture condition) anyor all of the shares of Common Stock held by the Participant which have notvested as of the date of termination of Continuous Service under the terms ofthe Stock Bonus Award Agreement.

 

**(iv)         Transferability.** Rights to acquire shares of Common Stock under the Stock Bonus AwardAgreement shall be transferable by the Participant only upon such terms andconditions as are set forth in the Stock Bonus Award Agreement, as the Boardshall determine in its discretion, so long as Common Stock awarded under theStock Bonus Award Agreement remains subject to the terms of the Stock BonusAward Agreement.

 

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**(b)            StockPurchase Awards.**  Each Stock Purchase Award Agreement shall bein such form and shall contain such terms and conditions as the Board shalldeem appropriate.  At the Board’selection, shares of Common Stock may be (i) held in book entry form subject tothe Company’s instructions until any restrictions relating to the StockPurchase Award lapse; or (ii) evidenced by a certificate, which certificateshall be held in such form and manner as determined by the Board.  The terms and conditions of Stock PurchaseAward Agreements may change from time to time, and the terms and conditions ofseparate Stock Purchase Award Agreements need not be identical, *provided, however,*that each StockPurchase Award Agreement shall include (through incorporation of the provisionshereof by reference in the agreement or otherwise) the substance of each of thefollowing provisions:

 

**(i)           PurchasePrice.**  At the time of the grant of a Stock PurchaseAward, the Board will determine the price to be paid by the Participant foreach share subject to the Stock Purchase Award. To the extent required byapplicable law, the price to be paid by the Participant for each share of theStock Purchase Award will not be less than the par value of a share of CommonStock.

 

**(ii)         Consideration.** At the time of the grant of a Stock Purchase Award, the Board willdetermine the consideration permissible for the payment of the purchase priceof the Stock Purchase Award.  Thepurchase price of Common Stock acquired pursuant to the Stock Purchase Awardshall be paid either: (i) in cash at the time of purchase or (ii) in any otherform of legal consideration that may be acceptable to the Board in itsdiscretion.

 

**(iii)        Vesting.** Shares of Common Stock acquired under aStock Purchase Award may, but need not, be subject to forfeiture to the Companyor a share repurchase option in favor of the Company in accordance with avesting schedule to be determined by the Board.

 

**(iv)         Terminationof Participant’s Continuous Service.** In the event that a Participant’s Continuous Serviceterminates, the Company shall have the right, but not the obligation, torepurchase or otherwise reacquire, any or all of the shares of Common Stockheld by the Participant that have not vested as of the date of terminationunder the terms of the Stock Purchase Award Agreement.  At the Board’s election, the repurchaseprice, if any, paid by the Company may be at the lower of: (i) the Fair MarketValue on the relevant date; or (ii) the Participant’s original cost.  The Company shall not be required toexercise its repurchase option until at least six (6) months (or such longer orshorter period of time required to avoid a charge to earnings for financialaccounting purposes) have elapsed following the purchase of the restrictedstock unless otherwise determined by the Board or provided in the StockPurchase Award Agreement.

 

**(v)          Transferability.** Rights to purchase or receive shares ofCommon Stock granted under a Stock Purchase Award shall be transferable by theParticipant only upon such terms and conditions as are set forth in the StockPurchase Award Agreement, as the Board shall determine in its discretion, andso long as Common Stock awarded under the Stock Purchase Award remains subjectto the terms of the Stock Purchase Award Agreement.

 

**(c)            Stock Unit Awards. **Each Stock Unit Award Agreement shall be in such formand shall contain such terms and conditions as the Board shall deemappropriate.  The terms and conditionsof Stock Unit Award Agreements may change from time to time, and the terms andconditions of separate Stock Unit Award Agreements need not be identical, *provided, however,*that each Stock UnitAward Agreement shall include (through incorporation of the provisions hereofby reference in the agreement or otherwise) the substance of each of thefollowing provisions:

 

**(i)           Consideration.** At the time of grant of a Stock Unit Award, the Board will determine theconsideration, if any, to be paid by the Participant upon delivery of eachshare of Common Stock subject to the Stock Unit Award. To the extent requiredby applicable law, the consideration to be paid by the Participant for 

 

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each share of Common Stock subject to a Stock UnitAward will not be less than the par value of a share of Common Stock.  The consideration may be paid in any formpermitted under applicable law.

 

**(ii)         Vesting. **At the time of the grant of a Stock Unit Award, theBoard may impose such restrictions or conditions to the vesting of the StockUnit Award as it, in its absolute discretion, deems appropriate.

 

**(iii)        AdditionalRestrictions. **At the time of the grant of Stock Unit,the Board may impose such restrictions or conditions that delay the delivery ofthe consideration after its vesting as the Board, in its absolute discretion,deems appropriate, with such terms to be contained in the Stock Unit agreement.

 

**(iv)         Payment**.  Stock UnitAwards may be settled in Common Stock or in cash or any combination of the two,or in any other form of consideration as determined by the Board and containedin the Stock Unit Award Agreement.

 

**(v)          DividendEquivalents. **Dividend equivalents may be credited inrespect of shares covered by a Stock Unit Award, as determined by the Board andcontained in the Stock Unit Award Agreement. At the discretion of the Board, such dividend equivalents may beconverted into additional shares covered by the Stock Unit Award in such manneras determined by the Board.  Anyadditional shares covered by the Stock Unit Award credited by reason of suchdividend equivalents will be subject to all the terms and conditions of theunderlying Stock Unit Award Agreement to which they relate.

 

**(vi)         Terminationof Participant’s Continuous Service. **Except as otherwise provided in theapplicable Stock Unit Award Agreement, such portion of the Stock Unit Awardthat has not vested will be forfeited upon the Participant’s termination ofContinuous Service for any reason.

 

**(d)            Stock Appreciation Rights. **Each Stock Appreciation Right Agreement shall be insuch form and shall contain such terms and conditions as the Board shall deemappropriate.  The terms and conditionsof Stock Appreciation Right Agreements may change from time to time, and theterms and conditions of separate Stock Appreciation Right Agreements need notbe identical, but each Stock Appreciation Right Agreement shall include(through incorporation of provisions hereof by reference in the agreement orotherwise) the substance of each of the following provisions:

 

**(i)           StrikePrice and Calculation of Appreciation.** Each Stock Appreciation Right will be denominated in share of CommonStock equivalents.  The appreciationdistribution payable on the exercise of a Stock Appreciation Right will be notgreater than an amount equal to the excess of (A) the aggregate Fair MarketValue (on the date of the exercise of the Stock Appreciation Right) of a numberof shares of Common Stock equal to the number of share of Common Stockequivalents in which the Participant is vested under such Stock AppreciationRight and with respect to which the Participant is exercising the StockAppreciation Right on such date, over (B) an amount that will be determined bythe Board at the time of grant of the Stock Appreciation Right.

 

**(ii)         Vesting. **At the time of the grant of a Stock AppreciationRight, the Board may impose such restrictions or conditions to the vesting ofsuch Stock Appreciate Right as it, in its absolute discretion, deemsappropriate.

 

**(iii)        Exercise.** To exercise any outstanding Stock Appreciation Right, the Participantmust provide written notice of exercise to the Company in compliance with theprovisions of the Stock Appreciation Right Agreement evidencing such StockAppreciation Right.

 

**(iv)         Payment**.  Theappreciation distribution in respect to a Stock Appreciation Right may be paidin Common Stock, in cash, in any combination of the two or in any other form ofconsideration as 

 

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determined by the Board and contained in the StockAppreciation Right Agreement evidencing such Stock Appreciation Right.

 

**(v)          Terminationof Continuous Service.**  In the event that aParticipant’s Continuous Service terminates, the Participant may exercise hisor her Stock Appreciation Right (to the extent that the Participant wasentitled to exercise such Stock Appreciation Right as of the date oftermination) but only within such period of time ending on the earlier of (i)the date three (3) months following the termination of the Participant’sContinuous Service (or such longer or shorter period specified in the StockAppreciation Right Agreement) or (ii) the expiration of the term of the StockAppreciation Right as set forth in the Stock Appreciation Right Agreement.  If, after termination, the Participant doesnot exercise his or her Stock Appreciation Right within the time specified inthe Stock Appreciation Right Agreement, the Stock Appreciation Right shallterminate.

 

**(e)            Other Stock Awards**. Other forms of Stock Awards valued in whole or in part by reference to,or otherwise based on, Common Stock may be granted either alone or in additionto Stock Awards provided for under Section 6 and the preceding provisions ofthis Section 7.  Subject to theprovisions of the Plan, the Board shall have sole and complete authority todetermine the persons to whom and the time or times at which such Other StockAwards will be granted, the number of shares of Common Stock (or the cashequivalent thereof) to be granted pursuant to such Awards and all other termsand conditions of such Awards.

 

**8.             SECURITIES LAW COMPLIANCE.**

 

The Company shall seek to obtain from each regulatorycommission or agency having jurisdiction over the Plan such authority as may berequired to grant Stock Awards and to issue and sell shares of Common Stockupon exercise of the Stock Awards; *provided, however,* that this undertakingshall not require the Company to register under the Securities Act the Plan,any Stock Award or any Common Stock issued or issuable pursuant to any suchStock Award.  If, after reasonableefforts, the Company is unable to obtain from any such regulatory commission oragency the authority which counsel for the Company deems necessary for thelawful issuance and sale of Common Stock under the Plan, the Company shall berelieved from any liability for failure to issue and sell Common Stock uponexercise of such Stock Awards unless and until such authority is obtained.

 

**9.             USE OF PROCEEDS FROM STOCK.**

 

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

 

**10.          MISCELLANEOUS.**

 

**(a)            Accelerationof Exercisability and Vesting.**  The Boardshall have the power to accelerate the time at which a Stock Award may first beexercised or the time during which a Stock Award or any part thereof will vestin accordance with the Plan, notwithstanding the provisions in the Stock Awardstating the time at which it may first be exercised or the time during which itwill vest.

 

**(b)            ShareholderRights.**  No Participant shall be deemed to be theholder of, or to have any of the rights of a holder with respect to, any sharesof Common Stock subject to such Stock Award unless and until such Participanthas satisfied all requirements for exercise of the Stock Award pursuant to itsterms.

 

**(c)            NoEmployment or other Service Rights.**  Nothing inthe Plan or any instrument executed or Stock Award granted pursuant theretoshall confer upon any Participant any right to continue to serve the Company oran Affiliate in the capacity in effect at the time the Stock Award was grantedor shall affect the right of the Company or an Affiliate to terminate (i) theemployment of an Employee with or without notice and with or without cause,(ii) the service of a Consultant pursuant to the terms of such Consultant’sagreement with 

 

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the Company or an Affiliate or (iii) the service of aDirector pursuant to the Bylaws of the Company or an Affiliate, and anyapplicable provisions of the corporate law of the state in which the Company orthe Affiliate is incorporated, as the case may be.

 

**(d)            InvestmentAssurances.**  The Company may require a Participant, as acondition of exercising or acquiring Common Stock under any Stock Award, (i) togive written assurances satisfactory to the Company as to the Participant’sknowledge and experience in financial and business matters and/or to employ apurchaser representative reasonably satisfactory to the Company who isknowledgeable and experienced in financial and business matters and that he orshe is capable of evaluating, alone or together with the purchaserrepresentative, the merits and risks of exercising the Stock Award; and (ii) togive written assurances satisfactory to the Company stating that theParticipant is acquiring Common Stock subject to the Stock Award for theParticipant’s own account and not with any present intention of selling orotherwise distributing the Common Stock. The foregoing requirements, and any assurances given pursuant to suchrequirements, shall be inoperative if (1) the issuance of the shares of CommonStock upon the exercise or acquisition of Common Stock under the Stock Awardhas been registered under a then currently effective registration statementunder the Securities Act or (2) as to any particular requirement, adetermination is made by counsel for the Company that such requirement need notbe met in the circumstances under the then applicable securities laws.  The Company may, upon advice of counsel to theCompany, place legends on stock certificates issued under the Plan as suchcounsel deems necessary or appropriate in order to comply with applicablesecurities laws, including, but not limited to, legends restricting thetransfer of the Common Stock.

 

**(e)            WithholdingObligations.**  To the extent provided by the terms of aStock Award Agreement, the Participant shall, as may be determined by theCompany in its sole discretion, satisfy any federal, state or local taxwithholding obligation relating to a Stock Award by any of the following means(in addition to the Company’s right to withhold from any compensation paid tothe Participant by the Company) or by a combination of such means:  (i) tendering a cash payment; (ii)authorizing the Company to withhold shares of Common Stock from the shares ofCommon Stock issued or otherwise issuable to the Participant in connection withthe Stock Award; or (iii) such other consideration as may be set forth in theStock Award Agreement.

 

**11.          ADJUSTMENTS UPON CHANGES IN STOCK.**

 

**(a)            CapitalizationAdjustments**.  If any change is made in, or other eventoccurs with respect to, the Common Stock subject to the Plan or subject to anyStock Award without the receipt of consideration by the Company (throughmerger, consolidation, reorganization, recapitalization, reincorporation, stockdividend, dividend in property other than cash, stock split, liquidatingdividend, combination of shares, exchange of shares, change in corporatestructure or other transaction not involving the receipt of consideration bythe Company (each a “Capitalization Adjustment”), the Plan will beappropriately adjusted in the class(es) and maximum number of securitiessubject to the Plan pursuant to Section 4(a) and the outstanding Stock Awardswill be appropriately adjusted in the class(es) and number of securities andprice per share of Common Stock subject to such outstanding Stock Awards.  The Board shall make such adjustments, andits determination shall be final, binding and conclusive.  (The conversion of any convertiblesecurities of the Company shall not be treated as a transaction “withoutreceipt of consideration” by the Company.)

 

**(b)            Dissolutionor Liquidation**.  In the event of a dissolution or liquidationof the Company, then all outstanding Stock Awards shall terminate immediatelyprior to the completion of such dissolution or liquidation

 

**(c)**            **CorporateTransaction**.  In the event ofa Corporate Transaction, any surviving corporation or acquiring corporation mayassume or continue any or all Stock Awards outstanding under the Plan or maysubstitute similar stock awards for Stock Awards outstanding under the Plan (itbeing understood that similar stock awards include, but are not limited to,awards to acquire the same consideration paid to the stockholders or theCompany, as the case may be, pursuant to the Corporate Transaction), and anyreacquisition or repurchase 

 

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rights held by the Company in respect of Common Stockissued pursuant to Stock Awards may be assigned by the Company to the successorof the Company (or the successor’s parent company), if any, in connection withsuch Corporate Transaction.  In theevent that any surviving corporation or acquiring corporation does not assumeor continue all such outstanding Stock Awards or substitute similar stockawards for all such outstanding Stock Awards, then with respect to Stock Awardsthat have been not assumed, continued or substituted and that are held byParticipants whose Continuous Service has not terminated prior to the effectivetime of the Corporate Transaction, the vesting of such Stock Awards (and, ifapplicable, the time at which such Stock Awards may be exercised) shall(contingent upon the effectiveness of the Corporate Transaction) be acceleratedin full to a date prior to the effective time of such Corporate Transaction asthe Board shall determine (or, if the Board shall not determine such a date, tothe date that is five (5) days prior to the effective time of the CorporateTransaction), the Stock Awards shall terminate if not exercised (if applicable)at or prior to such effective time, and any reacquisition or repurchase rightsheld by the Company with respect to such Stock Awards held by Participantswhose Continuous Service has not terminated shall (contingent upon theeffectiveness of the Corporate Transaction) lapse.

 

**(d)           ****Change in Control.**  A Stock Awardmay be subject to additional acceleration of vesting and exercisability upon orafter a Change in Control as may be provided in the Stock Award Agreement forsuch Stock Award or as may be provided in any other written agreement betweenthe Company or any Affiliate and the Participant, but in the absence of suchprovision, no such acceleration shall occur.

 

**12.          AMENDMENT OF THE PLAN AND STOCKAWARDS.**

 

**(a)            Amendmentof Plan.**  Subject to the limitations, if any, ofapplicable law, the Board at any time, and from time to time, may amend thePlan.  The Board may, in its discretion,provide that any such amendment is effective upon obtaining the approval of thestockholders of the Company.

 

**(b)            NoImpairment of Rights.**  Rights under any Stock Awardgranted before amendment of the Plan shall not be impaired by any amendment ofthe Plan unless (i) the Company requests the consent of the Participant and(ii) the Participant consents in writing.

 

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

 

**13.          TERMINATION OR SUSPENSION OF THE PLAN.**

 

**(a)            PlanTerm.**  The Board may suspend or terminate the Planat any time.  No Stock Awards may begranted under the Plan while the Plan is suspended or after it is terminated.

 

**(b)            NoImpairment of Rights.**  Suspension or termination ofthe Plan shall not impair rights and obligations under any Stock Award grantedwhile the Plan is in effect except with the consent of the Participant.

 

**14.          EFFECTIVE DATE OF PLAN.**

 

**ThePlan shall become effective as determined by the Board.**

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**15.          CHOICE OF LAW.**

 

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

 

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