exv10w3a



 







Exhibit 10.3A




OMNITURE, INC.



2006 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 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,
SARs, Restricted Stock, Restricted Stock 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; or



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



 









 





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



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



          (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 Omniture, 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.



          (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



-2-









 







exercise prices and different terms), Awards of a different type, and/or cash, and/or (ii) the
exercise price of an outstanding Award is reduced. The 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) “Optioned Stock” means the Common Stock subject to an Award.



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



-3-









 





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



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



          (bb) “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.



          (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 2006 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” or “SAR” means an Award, granted alone or in
connection with an Option, that pursuant to Section 9 is designated as a SAR.



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



     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 optioned and sold under the Plan is the number
of Shares which have been reserved but not issued under the Company’s 1999 Stock Plan



-4-









 




(the “1999 Plan”) as of the Registration Date, up to a maximum of _________Shares, (ii) any
Shares returned to the 1999 Plan as a result of termination of options or repurchase of Shares
issued under such plan, up to a maximum of _________Shares, and (iii) an annual increase to be
added on the first day of the Company’s fiscal year beginning with the Company’s 2007 fiscal year,
equal to the lesser of (A) 60,000,000 Shares, or (B) five percent (5%) of the outstanding Shares on
the last day of the immediately preceding Company fiscal year. The Shares may be authorized, but
unissued, or reacquired Common Stock.




          (b) 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 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 SARs 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 SARs, only Shares
actually issued pursuant to an SAR will cease to be available under the Plan; all remaining Shares
under SARs 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 of Restricted Stock or Performance Shares are repurchased by the
Company or are forfeited to the Company due to their failure to vest, 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 minimum statutory withholding obligations related to an Award will become available for
future grant or sale 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, any Shares that become available for issuance under
the Plan under this Section 3(b).



          (c) 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.



     4. Administration of the Plan.



          (a) Procedure.



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



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



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



-5-









 





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



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



               (i) to determine the Fair Market Value;



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



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



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



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



               (vi) to institute an Exchange Program;



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



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



               (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 longer than
is otherwise provided for in the Plan (subject to compliance with Code Section 409A);



               (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



-6-









 





               (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, Restricted Stock, Restricted Stock Units,
Stock Appreciation Rights and Performance Shares 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 $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.



          (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 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 100% of the Fair Market Value per Share on
the date of grant.



-7-









 





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



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



          (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) 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; (4) consideration received
by the Company under a broker-assisted cashless exercise program; (5) any combination of the
foregoing methods of payment; or (6) 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 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 an 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 Optioned Stock, notwithstanding the exercise
of the Option. The Company will issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right for which the record
date is prior to the date the Shares are issued, except as provided in Section 14 of the Plan.



-8-









 





               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 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.



-9-









 





     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 otherwise provided in the Award Agreement.
If any such dividends or distributions are paid in Shares, the Shares will be subject to the same
restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect
to which they were paid.



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



     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.



-10-









 





          (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 specified in the Restricted Stock Unit Award
Agreement. 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) set forth in the Restricted Stock Unit Award
Agreement. The Administrator may only settle earned Restricted Stock Units in Shares.



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



     9. Stock Appreciation Rights.



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



          (b) Number of Shares. The Administrator will have complete discretion to determine
the number of SARs 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 SAR shall be determined by the Administrator and shall be no less
than 100% of the Fair Market Value per 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 SARs granted under the Plan; provided, however,
that no SAR may have a term of more than ten (10) years from the date of grant.



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



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



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



-11-









 





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



               (ii) The number of Shares with respect to which the SAR is exercised.



     The payment upon SAR exercise may only be in Shares of equivalent value (rounded down to the
nearest whole Share).



     10. Performance Shares.



     (a) Grant of Performance Shares. Subject to the terms and conditions of the Plan,
Performance Shares may be granted to Participants at any time as shall be determined by the
Administrator, in its sole discretion. The Administrator shall have complete discretion to
determine (i) the number of Shares subject to a Performance Share award granted to any Participant,
and (ii) the conditions that must be satisfied, which typically will be based principally or solely
on achievement of performance milestones but may include a service-based component, upon which is
conditioned the grant or vesting of Performance Shares. Performance Shares shall be granted in the
form of units to acquire Shares. Each such unit shall be the equivalent of one Share for purposes
of determining the number of Shares subject to an Award. Until the Shares are issued, no right to
vote or receive dividends or any other rights as a stockholder shall exist with respect to the
units to acquire Shares.



     (b) Other Terms. The Administrator, subject to the provisions of the Plan, shall have
complete discretion to determine the terms and conditions of Performance Shares granted under the
Plan. Performance Share grants shall be subject to the terms, conditions, and restrictions
determined by the Administrator at the time the stock is awarded, which may include such
performance-based milestones as are determined appropriate by the Administrator. The Administrator
may require the recipient to sign a Performance Shares Award Agreement as a condition of the award.
Any certificates representing the Shares of stock awarded shall bear such legends as shall be
determined by the Administrator.



     (c) Performance Share Award Agreement. Each Performance Share grant shall be
evidenced by an Award Agreement that shall specify such other terms and conditions as the
Administrator, in its sole discretion, shall determine.



     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.



-12-









 





          (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 person who first becomes an Outside Director following the
Registration Date will be automatically granted a SAR for 50,000 Shares (the “Initial Award”) on or
about the date on which such person first becomes an Outside Director, 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 a SAR for
25,000 Shares (an “Annual Award”) on each date of the annual meeting of the stockholders of the
Company beginning in 2006, 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-third (1/3rd) of the Shares subject to such Award on the first anniversary of its
date of grant and the remainder shall vest quarterly thereafter, so as to be 100% vested on the
third anniversary of the 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 100% of
the Shares subject to such Award on the day prior to the next years annual shareholder meeting,
provided that the Participant continues to serve as a Director through such date.



          (g) Amendment. The Administrator in its discretion may change the number of Shares
subject to the First Awards and Subsequent Awards.



     12. Leaves of Absence. 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 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-









 





     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
enlargement of the benefits or potential benefits intended to be made available under the Plan, may
(in its sole discretion) 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, the numerical
Share limits in Section 3 of the Plan and the number of Shares issuable pursuant to Options to be
granted under Section 11.




          (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 100% on-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



-14-









 







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 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 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 Optioned Stock, 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 Performance Shares,
all performance goals or other vesting criteria will be deemed achieved at 100% on-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 (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



-15-









 







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 unless
terminated earlier under Section 19 of the Plan.



     19. Amendment and Termination of the Plan.



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



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



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



     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.



-16-









 





     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. Such stockholder
approval will be obtained in the manner and to the degree required under Applicable Laws.




-17-