exv10w1






Exhibit 10.1




QuinStreet, Inc.

2008 Equity Incentive Plan




Adopted by the Board of Directors: January 30, 2008

Approved by the Shareholders: January 30, 2008

Amended by the Board of Directors: July 25, 2008

Amendment approved by the Shareholders: July 25, 2008

Amended by the Board of Directors: August 7, 2009

Amendment Approved by the Shareholders: August 7, 2009

Termination Date: January 29, 2018




1. General.




     (a) Amendment and Restatement. The Plan is adopted to amend and restate the Company’s 1999
Equity Incentive Plan (the “Original Plan”). All outstanding stock awards granted before the
adoption of the amendment and restatement of the Original Plan by the Board shall continue to be
governed by the terms of the Original Plan, except as provided by Section 9(l). All Stock Awards
granted after the Effective Date shall be governed by the terms contained herein.



     (b) Eligible Stock Award Recipients. The persons eligible to receive Stock Awards are
Employees, Directors and Consultants.



     (c) Available Stock Awards. The Plan provides for the grant of the following Stock Awards:
(i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) Restricted Stock Awards, and
(iv) Restricted Stock Unit Awards.



     (d) Purpose. The Company, by means of the Plan, seeks to secure and retain the services of
the group of persons eligible to receive Stock Awards as set forth in Section 1(b), to provide
incentives for such persons to exert maximum efforts for the success of the Company and any
Affiliate, and to provide a means by which such eligible recipients may be given an opportunity to
benefit from increases in value of the Common Stock through the granting of Stock Awards.


2. Definitions. As used in the Plan, the following definitions shall apply to the
capitalized terms indicated below:




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



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



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     (c) “Capitalization Adjustment” means any change that is made in, or other events that occur
with respect to, the Common Stock subject to the Plan or subject to any Stock Award after the
Effective Date without the receipt of consideration by the Company (through merger, consolidation,
reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than
cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in
corporate structure or other transaction not involving the receipt of consideration by the
Company). Notwithstanding the foregoing, the conversion of any convertible securities of the
Company shall not be treated as a transaction “without the receipt of consideration” by the
Company.



     (d) “Change in Control” means the occurrence, in a single transaction or in a series of
related transactions, of any one or more of the following events:



          (i) any Exchange Act Person becomes the Owner, directly or indirectly, of securities of the
Company representing more than fifty percent (50%) of the combined voting power of the Company’s
then outstanding securities other than by virtue of a merger, consolidation or similar transaction.
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur (A) on account of
the acquisition of securities of the Company by an investor, any affiliate thereof or any other
Exchange Act Person that acquires the Company’s securities in a transaction or series of related
transactions the primary purpose of which is to obtain financing for the Company through the
issuance of equity securities or (B) solely because the level of Ownership held by any Exchange Act
Person (the “Subject Person”) exceeds the designated percentage threshold of the outstanding voting
securities as a result of a repurchase or other acquisition of voting securities by the Company
reducing the number of shares outstanding, provided that if a Change in Control would occur (but
for the operation of this sentence) as a result of the acquisition of voting securities by the
Company, and after such share acquisition, the Subject Person becomes the Owner of any additional
voting securities that, assuming the repurchase or other acquisition had not occurred, increases
the percentage of the then outstanding voting securities Owned by the Subject Person over the
designated percentage 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) the Company and, immediately after the consummation of such merger, consolidation or
similar transaction, the shareholders of the Company immediately prior thereto do not Own, directly
or indirectly, either (A) outstanding voting securities representing more than fifty percent (50%)
of the combined outstanding voting power of the surviving Entity in such merger, consolidation or
similar transaction or (B) more than fifty percent (50%) of the combined outstanding voting power
of the parent of the surviving Entity in such merger, consolidation or similar transaction, in each
case in substantially the same proportions as their Ownership of the outstanding voting securities
of the Company immediately prior to such transaction;




          (iii) there is consummated a sale, lease, exclusive license or other disposition of all or
substantially all of the consolidated assets of the Company and its Subsidiaries, other than a
sale, lease, license or other disposition of all or substantially all of the consolidated assets



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of the Company and its Subsidiaries to an Entity, more than fifty percent (50%) of the
combined voting power of the voting securities of which are Owned by shareholders of the Company in
substantially the same proportions as their Ownership of the outstanding voting securities of the
Company immediately prior to such sale, lease, license or other disposition; or




          (iv) individuals who, on the date this Plan is adopted 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
the Board; provided, however, that if the appointment or election (or nomination for election) of
any new Board member was approved or recommended by a majority vote of the members of the Incumbent
Board then still in office, such new member shall, for purposes of this Plan, be considered as a
member of the Incumbent Board.



Notwithstanding the foregoing definition or any other provision of this Plan, (A) the term Change
in Control shall not include a sale of assets, merger or other transaction effected exclusively for
the purpose of changing the domicile of the Company, and (B) the definition of Change in Control
(or any analogous term) in an individual written agreement between the Company or any Affiliate and
the Participant shall supersede the foregoing definition with respect to Stock Awards subject to
such agreement; provided, however, that if no definition of Change in Control or any analogous term
is set forth in such an individual written agreement, the foregoing definition shall apply.




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



     (f) “Committee” means a committee of two (2) or more Directors to whom authority has been
delegated by the Board in accordance with Section 3(c).



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



     (h) “Company” means QuinStreet, Inc., a California corporation.



     (i) “Consultant” means any person, including an advisor, who is (i) engaged by the Company or
an Affiliate to render consulting or advisory services and is compensated for such services, or
(ii) serving as a member of the board of directors of an Affiliate and is compensated for such
services. However, service solely as a Director, or payment of a fee for such service, shall not
cause a Director to be considered a “Consultant” for purposes of the Plan.



     (j) “Continuous Service” means that the Participant’s service with the Company or an
Affiliate, whether as an Employee, Director or Consultant, is not interrupted or terminated. A
change in the capacity in which the Participant renders service to the Company or an Affiliate as
an Employee, Director, or Consultant or a change in the Entity for which the Participant renders
such service, provided that there is no interruption or termination of the Participant’s service
with the Company or an Affiliate, shall not terminate a Participant’s Continuous Service; provided,
however, if the Entity for which a Participant is rendering service ceases to qualify as an
Affiliate, as determined by the Board in its sole discretion, such Participant’s Continuous Service
shall be considered to have terminated on the date such Entity ceases to qualify as an Affiliate.
For example, a change in status from an employee of the Company to a consultant of



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an Affiliate or to a Director shall not constitute an interruption of Continuous Service. To
the extent permitted by law, the Board or the chief executive officer of the Company, in that
party’s sole discretion, may determine whether Continuous Service shall be considered interrupted
in the case of any leave of absence approved by that party, including sick leave, military leave or
any other personal leave. Notwithstanding the foregoing, a leave of absence shall be treated as
Continuous Service for purposes of vesting in a Stock Award only to such extent as may be provided
in the Company’s leave of absence policy, in the written terms of any leave of absence agreement or
policy applicable to the Participant, or as otherwise required by law.




     (k) “Corporate Transaction” means the occurrence, in a single transaction or in a series of
related transactions, of any one or more of the following events:



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




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




          (iii) the consummation of a merger, consolidation or similar transaction following which the
Company is not the surviving corporation; or




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




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



     (m) “Disability” means the inability of a Participant to engage in any substantially gainful
activity by reason of any medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for a continuous period
of not less than twelve (12) months, and shall be determined by the Board on the basis of such
medical evidence as the Board deems warranted under the circumstances.



     (n) “Effective Date” means the effective date of this Plan, which is the earlier of (i) the
date that this Plan is first approved by the Company’s shareholders, or (ii) the date this Plan is
adopted by the Board.



     (o) “Employee” means any person employed by the Company or an Affiliate. However, service
solely as a Director, or payment of a fee for such services, shall not cause a Director to be
considered an “Employee” for purposes of the Plan.



     (p) “Entity” means a corporation, partnership, limited liability company or other entity.



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



     (r) “Exchange Act Person” means any natural person, Entity or “group” (within the meaning of
Section 13(d) or 14(d) of the Exchange Act), except that “Exchange Act Person” shall not include
(i) the Company or any Subsidiary of the Company, (ii) any employee benefit plan of the Company or
any Subsidiary of the Company or any trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any Subsidiary of the Company, (iii) an underwriter
temporarily holding securities pursuant to an offering of such securities, (iv) an Entity Owned,
directly or indirectly, by the shareholders of the Company in substantially the same proportions as
their Ownership of stock of the Company; or (v) any natural person, Entity or “group” (within the
meaning of Section 13(d) or 14(d) of the Exchange Act) that, as of the Effective Date of the Plan
as set forth in Section 12, is the Owner, directly or indirectly, of securities of the Company
representing more than fifty percent (50%) of the combined voting power of the Company’s then
outstanding securities.



     (s) “Fair Market Value” means, as of any date, the value of the Common Stock determined by the
Board in compliance with Section 409A of the Code or, in the case of an Incentive Stock Option, in
compliance with Section 422 of the Code.



     (t) “Incentive Stock Option” means an Option that qualifies as an “incentive stock option”
within the meaning of Section 422 of the Code and the regulations promulgated thereunder.



     (u) “Nonstatutory Stock Option” means an Option that does not qualify as an Incentive Stock
Option.



     (v) “Officer” means any person designated by the Company as an officer.



     (w) “Option” means an Incentive Stock Option or a Nonstatutory Stock Option to purchase shares
of Common Stock granted pursuant to the Plan.



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



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



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



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



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     (bb) “Plan” means this QuinStreet, Inc. 2008 Equity Incentive Plan.



     (cc) “Restricted Stock Award” means an award of shares of Common Stock which is granted
pursuant to the terms and conditions of Section 7(a).



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



     (ee) “Restricted Stock Unit Award” means a right to receive shares of Common Stock which is
granted pursuant to the terms and conditions of Section 7(b).



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



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



     (hh) “Stock Award” means any right to receive Common Stock granted under the Plan, including
an Incentive Stock Option, a Nonstatutory Stock Option, a Restricted Stock Award, or a Restricted
Stock Unit Award.



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



     (jj) “Subsidiary” means, with respect to the Company, (i) any corporation of which more than
fifty percent (50%) of the outstanding capital stock having ordinary voting power to elect a
majority of the board of directors of such corporation (irrespective of whether, at the time, stock
of any other class or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly, Owned by the Company,
and (ii) any partnership, limited liability company or other entity in which the Company has a
direct or indirect interest (whether in the form of voting or participation in profits or capital
contribution) of more than fifty percent (50%) .



     (kk) “Ten Percent Shareholder” means a person who Owns (or is deemed to Own pursuant to
Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or any Affiliate.



3. Administration.




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



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



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




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




          (iii) To settle all controversies regarding the Plan and Stock Awards granted under it.




          (iv) To accelerate the time at which a Stock Award may first be exercised or the time during
which a Stock Award or any part thereof will vest in accordance with the Plan, notwithstanding the
provisions in the Stock Award stating the time at which it may first be exercised or the time
during which it will vest.




          (v) To suspend or terminate the Plan at any time. Suspension or termination of the Plan shall
not impair rights and obligations under any Stock Award granted while the Plan is in effect except
with the written consent of the affected Participant.




          (vi) To amend the Plan in any respect the Board deems necessary or advisable, including,
without limitation, relating to Incentive Stock Options and certain nonqualified deferred
compensation under Section 409A of the Code and/or to bring the Plan or Stock Awards granted under
the Plan into compliance therewith, subject to the limitations, if any, of applicable law. However,
except as provided in Section 10(a) relating to Capitalization Adjustments, to the extent required
by applicable law, shareholder approval shall be required for any amendment of the Plan that either
(i) materially increases the number of shares of Common Stock available for issuance under the
Plan, (ii) materially expands the class of individuals eligible to receive Stock Awards under the
Plan, (iii) materially increases the benefits accruing to Participants under the Plan or materially
reduces the price at which shares of Common Stock may be issued or purchased under the Plan, (iv)
materially extends the term of the Plan, or (v) expands the types of Stock Awards available for
issuance under the Plan. Except as provided above, rights under any Stock Award granted before
amendment of the Plan shall not be impaired by any amendment of the Plan unless (i) the Company
requests the consent of the affected Participant, and (ii) such Participant consents in writing.




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          (vii) To submit any amendment to the Plan for shareholder approval, including, but not limited
to, amendments to the Plan intended to satisfy the requirements of Section 422 of the Code
regarding Incentive Stock Options.




          (viii) To approve forms of Stock Award Agreements for use under the Plan and to amend the
terms of any one or more Stock Awards, including, but not limited to, amendments to provide terms
more favorable than previously provided in the Stock Award Agreement, subject to any specified
limits in the Plan that are not subject to Board discretion; provided however, that, the rights
under any Stock Award shall not be impaired by any such amendment unless (i) the Company requests
the consent of the affected Participant, and (ii) such Participant consents in writing.
Notwithstanding the foregoing, subject to the limitations of applicable law, if any, and without
the affected Participant’s consent, the Board may amend the terms of any one or more Stock Awards
if necessary to maintain the qualified status of the Stock Award as an Incentive Stock Option or to
bring the Stock Award into compliance with Section 409A of the Code and the related guidance
thereunder.




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




          (x) To adopt such procedures and sub-plans as are necessary or appropriate to permit
participation in the Plan by Employees, Directors or Consultants who are foreign nationals or
employed outside the United States.




          (xi) To effect, at any time and from time to time, with the consent of any adversely affected
Optionholder, (1) the reduction of the exercise price of any outstanding Option under the Plan, (2)
the cancellation of any outstanding Option under the Plan and the grant in substitution therefor of
(A) a new Option under the Plan or another equity plan of the Company covering the same or a
different number of shares of Common Stock, (B) a Restricted Stock Award, (C) a Restricted Stock
Unit, (D) cash and/or (E) other valuable consideration (as determined by the Board, in its sole
discretion), or (3) any other action that is treated as a repricing under generally accepted
accounting principles; provided, however, that no such reduction or cancellation may be effected if
it is determined, in the Company’s sole discretion, that such reduction or cancellation would
result in any such outstanding Option becoming subject to the requirements of Section 409A of the
Code.




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     (c) Delegation to Committee. The Board may delegate some or all of the administration of the
Plan to a Committee or Committees. If administration of the Plan is delegated to a Committee, the
Committee shall have, in connection with the administration of the Plan, the powers theretofore
possessed by the Board that have been delegated to the Committee, including the power to delegate
to a subcommittee of the Committee any of the administrative powers the Committee is authorized to
exercise (and references in this Plan to the Board shall thereafter be to the Committee or
subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the
Plan, as may be adopted from time to time by the Board. The Board may retain the authority to
concurrently administer the Plan with the Committee and may, at any time, revest in the Board some
or all of the powers previously delegated.



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



4. Shares Subject to the Plan.




     (a) Share Reserve. Subject to Section 10(a) relating to Capitalization Adjustments, the
aggregate number of shares of Common Stock of the Company that may be issued pursuant to Stock
Awards after the Effective Date shall not exceed eighteen million three hundred fifty-six thousand
(18,356,000) shares. For clarity, the limitation in this Section 4(a) is a limitation of the
number of shares of Common Stock that may be issued pursuant to the Plan. Accordingly, this
Section 4(a) does not limit the granting of Stock Awards except as provided in Section 8(a).



     (b) Reversion of Shares to the Share Reserve. If any shares of Common Stock issued pursuant
to a Stock Award are forfeited back to the Company because of the failure to meet a contingency or
condition required to vest such shares in the Participant, then the shares which are forfeited
shall revert to and again become available for issuance under the Plan. Also, any shares
reacquired by the Company pursuant to Section 9(g) or as consideration for the exercise of an
Option shall again become available for issuance under the Plan. Furthermore, if a Stock Award (i)
expires or otherwise terminates without having been exercised in full or (ii) is settled in cash
(i.e., the holder of the Stock Award receives cash rather than stock), such expiration, termination
or settlement shall not reduce (or otherwise offset) the number of shares of Common Stock that may
be issued pursuant to the Plan. Notwithstanding the provisions of this Section 4(b), any such
shares shall not be subsequently issued pursuant to the exercise of Incentive Stock Options.



     (c) Incentive Stock Option Limit. Notwithstanding anything to the contrary in this Section
4(c), subject to the provisions of Section 10(a) relating to Capitalization Adjustments, the
aggregate maximum number of shares of Common Stock that may be issued pursuant to the exercise of
Incentive Stock Options shall be thirteen million one hundred forty-one thousand one hundred
sixty-four (13,141,164) shares of Common Stock.



     (d) Source of Shares. The stock issuable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock, including shares repurchased by the Company on the open
market.



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5. Eligibility.




     (a) Eligibility for Specific Stock Awards. Incentive Stock Options may be granted only to
employees of the Company or a “parent corporation” or “subsidiary corporation” thereof (as such
terms are defined in Sections 424(e) and (f) of the Code). Stock Awards other than Incentive Stock
Options may be granted to Employees, Directors and Consultants.



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



     (c) Consultants. A Consultant shall not be eligible for the grant of a Stock Award if, at the
time of grant, either the offer or the sale of the Company’s securities to such Consultant is not
exempt under Rule 701 of the Securities Act (“Rule 701”) because of the nature of the services that
the Consultant is providing to the Company, because the Consultant is not a natural person, or
because of any other provision of Rule 701, unless the Company determines that such grant need not
comply with the requirements of Rule 701 and will satisfy another exemption under the Securities
Act as well as comply with the securities laws of all other relevant jurisdictions.



6. Option Provisions.




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



     (a) Term. Subject to the provisions of Section 5(b) regarding Ten Percent Shareholders, no
Option shall be exercisable after the expiration of ten (10) years from the date of its grant or
such shorter period specified in the Option Agreement.



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



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     (c) Consideration. The purchase price of Common Stock acquired pursuant to the exercise of an
Option shall be paid, to the extent permitted by applicable law and as determined by the Board in
its sole discretion, by any combination of the methods of payment set forth below. The Board shall
have the authority to grant Options that do not permit all of the following methods of payment (or
otherwise restrict the ability to use certain methods) and to grant Options that require the
consent of the Company to utilize a particular method of payment. The permitted methods of payment
are as follows:



          (i) by cash, check, bank draft or money order payable to the Company;




          (ii) pursuant to a program developed under Regulation T as promulgated by the Federal Reserve
Board that, prior to the issuance of the stock subject to the Option, results in either the receipt
of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate
exercise price to the Company from the sales proceeds;




          (iii) by delivery to the Company (either by actual delivery or attestation) of shares of
Common Stock;




          (iv) by a “net exercise” arrangement pursuant to which the Company will reduce the number of
shares of Common Stock issued upon exercise by the largest whole number of shares with a Fair
Market Value that does not exceed the aggregate exercise price; provided, however, that the Company
shall accept a cash or other payment from the Participant to the extent of any remaining balance of
the aggregate exercise price not satisfied by such reduction in the number of whole shares to be
issued; provided, further, that shares of Common Stock will no longer be outstanding under an
Option and will not be exercisable thereafter to the extent that (A) shares are used to pay the
exercise price pursuant to the “net exercise,” (B) shares are delivered to the Participant as a
result of such exercise, and (C) shares are withheld to satisfy tax withholding obligations;




          (v) according to a deferred payment or similar arrangement with the Optionholder; provided,
however, that interest shall compound at least annually and shall be charged at the minimum rate of
interest necessary to avoid (A) the imputation of interest income to the Company and compensation
income to the Optionholder under any applicable provisions of the Code, and (B) the classification
of the Option as a liability for financial accounting purposes; or




          (vi) in any other form of legal consideration that may be acceptable to the Board.




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



          (i) Restrictions on Transfer. An Option shall not be transferable except by will or by the
laws of descent and distribution and shall be exercisable during the lifetime of the



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Optionholder only by the Optionholder; provided, however, that the Board may, in its sole
discretion, permit transfer of the Option to such extent as permitted by Rule 701 of the Securities
Act at the time of the grant of the Option and in a manner consistent with applicable tax and
securities laws upon the Optionholder’s request.




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




          (iii) Beneficiary Designation. Notwithstanding the foregoing, the Optionholder may, by
delivering written notice to the Company, in a form provided by or otherwise satisfactory to the
Company, designate a third party who, in the event of the death of the Optionholder, shall
thereafter be the beneficiary of an Option with the right to exercise the Option and receive the
Common Stock or other consideration resulting from the Option exercise.




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



     (f) Termination of Continuous Service. Except as otherwise provided in the applicable Option
Agreement or other agreement between the Optionholder and the Company, in the event that an
Optionholder’s Continuous Service terminates (other than upon the Optionholder’s death or
Disability), the Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise such Option as of the date of termination of Continuous Service) but only
within such period of time ending on the earlier of (i) the date three (3) months following the
termination of the Optionholder’s Continuous Service (or such longer or shorter period specified in
the Option Agreement, which period shall not be less than thirty (30) days), or (ii) the expiration
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 specified
herein or in the Option Agreement (as applicable), the Option shall terminate.



     (g) Extension of Termination Date. Except as otherwise provided in the applicable Option
Agreement or other agreement between the Optionholder and the Company, if the exercise of the
Option following the termination of the Optionholder’s Continuous Service (other than upon the
Optionholder’s death or Disability) would be prohibited at any time solely because the issuance of
shares of Common Stock would violate the registration requirements under the Securities Act, then
the Option shall terminate on the earlier of (i) the expiration of a period of three (3) months
after the termination of the Optionholder’s Continuous Service during which the exercise of the
Option would not be in violation of such registration requirements, or (ii) the expiration of the
term of the Option as set forth in the Option Agreement.



12.









 





     (h) Disability of Optionholder. Except as otherwise provided in the applicable Option
Agreement or other agreement between the Optionholder and the Company, in the event that an
Optionholder’s Continuous Service terminates as a result of the Optionholder’s Disability, the
Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to
exercise such Option as of the date of termination of Continuous Service), but only within such
period of time ending on the earlier of (i) the date twelve (12) months following such termination
of Continuous Service (or such longer or shorter period specified in the Option Agreement, which
period shall not be less than six (6) months), or (ii) the expiration 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 specified herein or in the Option Agreement (as
applicable), the Option shall terminate.



     (i) Death of Optionholder. Except as otherwise provided in the applicable Option Agreement or
other agreement between the Optionholder and the Company, in the event that (i) an Optionholder’s
Continuous Service terminates as a result of the Optionholder’s death, or (ii) the Optionholder
dies within the period (if any) specified in the Option Agreement after the termination of the
Optionholder’s Continuous Service for a reason other than death, then the Option may be exercised
(to the extent the Optionholder was entitled to exercise such Option as of the date of death) by
the Optionholder’s estate, by a person who acquired the right to exercise the Option by bequest or
inheritance or by a person designated as the beneficiary of the Option upon the Optionholder’s
death, but only within the period ending on the earlier of (i) the date eighteen (18) months
following the date of death (or such longer or shorter period specified in the Option Agreement,
which period shall not be less than six (6) months), or (ii) the expiration of the term of such
Option as set forth in the Option Agreement. If, after the Optionholder’s death, the Option is not
exercised within the time specified herein or in the Option Agreement (as applicable), the Option
shall terminate. If the Optionholder designates a third party beneficiary of the Option in
accordance with Section 6(d)(iii), then upon the death of the Optionholder such designated
beneficiary shall have the sole right to exercise the Option and receive the Common Stock or other
consideration resulting from the Option exercise.



     (j) Non-Exempt Employees. No Option granted to an Employee that is a non-exempt employee for
purposes of the Fair Labor Standards Act of 1938, as amended, shall be first exercisable for any
shares of Common Stock until at least six months following the date of grant of the Option. The
foregoing provision is intended to operate so that any income derived by a non-exempt employee in
connection with the exercise or vesting of an Option will be exempt from his or her regular rate of
pay.



     (k) Early Exercise. The Option may, but need not, include a provision whereby the
Optionholder may elect at any time before the Optionholder’s Continuous Service terminates to
exercise the Option as to any part or all of the shares of Common Stock subject to the Option prior
to the full vesting of the Option. Subject to the “Repurchase Limitation” in Section 9(k), any
unvested shares of Common Stock so purchased may be subject to a repurchase option in favor of the
Company or to any other restriction the Board determines to be appropriate. Provided that the
“Repurchase Limitation” in Section 9(k) is not violated, the Company shall not be required to
exercise its repurchase option until at least six (6) months (or such longer or



13.









 




shorter period of time required to avoid classification of the Option as a liability for
financial accounting purposes) have elapsed following exercise of the Option unless the Board
otherwise specifically provides in the Option Agreement.




     (l) Right of Repurchase. Subject to the “Repurchase Limitation” in Section 9(k), the Option
may include a provision whereby the Company may elect to repurchase all or any part of the vested
shares of Common Stock acquired by the Optionholder pursuant to the exercise of the Option.



     (m) Right of First Refusal. The Option may include a provision whereby the Company may elect
to exercise a right of first refusal following receipt of notice from the Optionholder of the
intent to transfer all or any part of the shares of Common Stock received upon the exercise of the
Option. Such right of first refusal shall be subject to the “Repurchase Limitation” in Section
9(k). Except as expressly provided in this Section 6(m) or in the Option Agreement, such right of
first refusal shall otherwise comply with any applicable provisions of the Bylaws of the Company.



7. Provisions of Stock Awards other than Options.




     (a) Restricted Stock Awards. Each Restricted Stock Award Agreement shall be in such form and
shall contain such terms and conditions as the Board shall deem appropriate. To the extent
consistent with the Company’s Bylaws, at the Board’s election, shares of Common Stock may be (1)
held in book entry form subject to the Company’s instructions until any restrictions relating to
the Restricted Stock Award lapse; or (2) evidenced by a certificate, which certificate shall be
held in such form and manner as determined by the Board. The terms and conditions of Restricted
Stock Award Agreements may change from time to time, and the terms and conditions of separate
Restricted Stock Award Agreements need not be identical; provided, however, that each Restricted
Stock Award Agreement shall include (through incorporation of the provisions hereof by reference in
the agreement or otherwise) the substance of each of the following provisions:



          (i) Consideration. A Restricted Stock Award may be awarded in consideration for (A) past
services actually rendered to the Company or an Affiliate, or (B) any other form of legal
consideration that may be acceptable to the Board in its sole discretion and permissible under
applicable law.




          (ii) Vesting. Subject to the “Repurchase Limitation” in Section 9(k), shares of Common Stock
awarded under the Restricted Stock Award Agreement may be subject to forfeiture to the Company in
accordance with a vesting schedule to be determined by the Board.




          (iii) Termination of Participant’s Continuous Service. In the event a Participant’s
Continuous Service terminates, the Company may receive via a forfeiture condition, any or all of
the shares of Common Stock held by the Participant which have not vested as of the date of
termination of Continuous Service under the terms of the Restricted Stock Award Agreement.




14.









 








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




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



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




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




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




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




          (v) Dividend Equivalents. Dividend equivalents may be credited in respect of shares of Common
Stock covered by a Restricted Stock Unit Award, as determined by the Board and contained in the
Restricted Stock Unit Award Agreement. At the sole discretion of the Board, such dividend
equivalents may be converted into additional shares of Common Stock covered by the Restricted Stock
Unit Award in such manner as determined by the Board. Any additional shares covered by the
Restricted Stock Unit Award credited by reason of such dividend equivalents will be subject to all
the terms and conditions of the underlying Restricted Stock Unit Award Agreement to which they
relate.




          (vi) Termination of Participant’s Continuous Service. Except as otherwise provided in the
applicable Restricted Stock Unit Award Agreement, such portion of the



15.









 






Restricted Stock Unit Award that has not vested will be forfeited upon the Participant’s
termination of Continuous Service.




          (vii) Compliance with Section 409A of the Code. Notwithstanding anything to the contrary set
forth herein, any Restricted Stock Unit Award granted under the Plan that is not exempt from the
requirements of Section 409A of the Code shall contain such provisions so that such Restricted
Stock Unit Award will comply with the requirements of Section 409A of the Code. Such restrictions,
if any, shall be determined by the Board and contained in the Restricted Stock Unit Award Agreement
evidencing such Restricted Stock Unit Award. For example, such restrictions may include, without
limitation, a requirement that any Common Stock that is to be issued in a year following the year
in which the Restricted Stock Unit Award vests must be issued in accordance with a fixed
pre-determined schedule.




8. Covenants of the Company.




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



     (b) Securities Law Compliance. The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such authority as may be required to grant
Stock Awards and to issue and sell shares of Common Stock upon exercise of the Stock Awards;
provided, however, that this undertaking shall not require the Company to register under the
Securities Act the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any
such Stock Award. If, after reasonable efforts, the Company is unable to obtain from any such
regulatory commission or agency the authority that counsel for the Company deems necessary for the
lawful issuance and sale of Common Stock under the Plan, the Company shall be relieved from any
liability for failure to issue and sell Common Stock upon exercise of such Stock Awards unless and
until such authority is obtained.



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



9. Miscellaneous.




     (a) Use of Proceeds from Sales of Common Stock. Proceeds from the sale of shares of Common
Stock pursuant to Stock Awards shall constitute general funds of the Company.



     (b) Corporate Action Constituting Grant of Stock Awards. Corporate action constituting a
grant by the Company of a Stock Award to any Participant shall be deemed completed as of the date
of such corporate action, unless otherwise determined by the Board,



16.









 




regardless of when the instrument, certificate, or letter evidencing the Stock Award is
communicated to, or actually received or accepted by, the Participant.




     (c) Shareholder Rights. No Participant shall be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares of Common Stock subject to such Stock Award
unless and until such Participant has satisfied all requirements for exercise of the Stock Award
pursuant to its terms and the Participant shall not be deemed to be a shareholder of record until
the issuance of the Common Stock pursuant to such exercise has been entered into the books and
records of the Company.



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



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



     (f) Investment Assurances. The Company may require a Participant, as a condition of
exercising or acquiring Common Stock under any Stock Award, (i) to give written assurances
satisfactory to the Company as to the Participant’s knowledge and experience in financial and
business matters and/or to employ a purchaser representative reasonably satisfactory to the Company
who is knowledgeable and experienced in financial and business matters and that he or she is
capable of evaluating, alone or together with the purchaser representative, the merits and risks of
exercising the Stock Award; and (ii) to give written assurances satisfactory to the Company stating
that the Participant is acquiring Common Stock subject to the Stock Award for the Participant’s own
account and not with any present intention of selling or otherwise distributing the Common Stock.
The foregoing requirements, and any assurances given pursuant to such requirements, shall be
inoperative if (1) the issuance of the shares upon the exercise or acquisition of Common Stock
under the Stock Award has been registered under a then currently effective registration statement
under the Securities Act, or (2) as to any particular requirement, a determination is made by
counsel for the Company that such requirement need not be met in the circumstances under the then
applicable securities laws. The Company may, upon advice of counsel to the Company, place legends
on stock certificates issued under the Plan as such



17.









 




counsel deems necessary or appropriate in order to comply with applicable securities laws,
including, but not limited to, legends restricting the transfer of the Common Stock.




     (g) Withholding Obligations. To the extent provided by the terms of a Stock Award Agreement,
the Company may, in its sole discretion, satisfy any federal, state or local tax withholding
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 to the Participant by the Company) or by a combination
of such means: (i) causing the Participant to tender a cash payment; (ii) withholding shares of
Common Stock from the shares of Common Stock issued or otherwise issuable to the Participant in
connection with the Stock Award; provided, however, that no shares of Common Stock are withheld
with a value exceeding the minimum amount of tax required to be withheld by law (or such lower
amount as may be necessary to avoid classification of the Stock Award as a liability for financial
accounting purposes); (iii) withholding payment from any amounts otherwise payable to the
Participant; (iv) withholding cash from a Stock Award settled in cash; or (v) by such other method
as may be set forth in the Stock Award Agreement.



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



     (i) Deferrals. To the extent permitted by applicable law, the Board, in its sole discretion,
may determine that the delivery of Common Stock or the payment of cash, upon the exercise, vesting
or settlement of all or a portion of any Stock Award may be deferred and may establish programs and
procedures for deferral elections to be made by Participants. Deferrals by Participants will be
made in accordance with Section 409A of the Code. Consistent with Section 409A of the Code, the
Board may provide for distributions while a Participant is still an employee. The Board is
authorized to make deferrals of Stock Awards and determine when, and in what annual percentages,
Participants may receive payments, including lump sum payments, following the Participant’s
termination of employment or retirement, and implement such other terms and conditions consistent
with the provisions of the Plan and in accordance with applicable law.



     (j) Compliance with Section 409A. To the extent that the Board determines that any Stock
Award granted hereunder is subject to Section 409A of the Code, the Stock Award Agreement
evidencing such Stock Award shall incorporate the terms and conditions necessary to avoid the
consequences specified in Section 409A(a)(1) of the Code. To the extent applicable, the Plan and
Stock Award Agreements shall be interpreted in accordance with Section 409A of the Code and
Department of Treasury regulations and other interpretive guidance issued thereunder, including
without limitation any such regulations or other guidance that may be issued or amended after the
Effective Date. Notwithstanding any provision of the Plan to the contrary, in the event that
following the Effective Date the Board determines that any Stock Award may be subject to Section
409A of the Code and related Department of Treasury guidance (including such Department of Treasury
guidance as may be issued after the Effective Date), the Board may adopt such amendments to the
Plan and the applicable Stock Award Agreement or adopt other policies and procedures (including
amendments, policies and



18.









 




procedures with retroactive effect), or take any other actions, that the Board determines are
necessary or appropriate to (1) exempt the Stock Award from Section 409A of the Code and/or
preserve the intended tax treatment of the benefits provided with respect to the Stock Award, or
(2) comply with the requirements of Section 409A of the Code and related Department of Treasury
guidance.




     (k) Repurchase Limitation. The terms of any repurchase option shall be specified in the Stock
Award Agreement. The repurchase price for vested shares of Common Stock shall be the Fair Market
Value of the shares of Common Stock on the date of repurchase. The repurchase price for unvested
shares of Common Stock shall be the lower of (i) the Fair Market Value of the shares of Common
Stock on the date of repurchase or (ii) their original purchase price. However, the Company shall
not exercise its repurchase option until at least six (6) months (or such longer or shorter period
of time necessary to avoid classification of the Stock Award as a liability for financial
accounting purposes) have elapsed following delivery of shares of Common Stock subject to the Stock
Award, unless otherwise specifically provided by the Board.



     (l) Compliance with Exemption Provided by Rule 12h-1(f). If: (i) the aggregate of the number
of Optionholders and the number of holders of all other outstanding compensatory employee stock
options to purchase shares of Common Stock equals or exceeds five hundred (500), and (ii) the
assets of the Company at the end of the Company’s most recently completed fiscal year exceeds $10
million, then the following restrictions shall apply during any period during which the Company
does not have a class of its securities registered under Section 12 of the Exchange Act and is not
required to file reports under Section 15(d) of the Exchange Act: (A) the Options and, prior to
exercise, the shares of Common Stock acquired upon exercise of the Options may not be transferred
until the Company is no longer relying on the exemption provided by Rule 12h-1(f) promulgated under
the Exchange Act (“Rule 12h-1(f)”), except: (1) as permitted by Rule 701(c) promulgated under the
Securities Act, (2) to a guardian upon the disability of the Optionholder, or (3) to an executor
upon the death of the Optionholder (collectively, the “Permitted Transferees”); provided, however,
the following transfers are permitted: (i) transfers by the Optionholder to the Company, and (ii)
transfers in connection with a change of control or other acquisition involving the Company, if
following such transaction, the Options no longer remain outstanding and the Company is no longer
relying on the exemption provided by Rule 12h-1(f); provided further, that any Permitted
Transferees may not further transfer the Options; (B) except as otherwise provided in (A) above,
the Options and shares of Common Stock acquired upon exercise of the Options are restricted as to
any pledge, hypothecation, or other transfer, including any short position, any “put equivalent
position” as defined by Rule 16a-1(h) promulgated under the Exchange Act, or any “call equivalent
position” as defined by Rule 16a-1(b) promulgated under the Exchange Act by the Optionholder prior
to exercise of an Option until the Company is no longer relying on the exemption provided by Rule
12h-1(f); and (C) at any time that the Company is relying on the exemption provided by Rule
12h-1(f), the Company shall deliver to Optionholders (whether by physical or electronic delivery or
written notice of the availability of the information on an internet site) the information required
by Rule 701(e)(3), (4), and (5) promulgated under the Securities Act every six (6) months,
including financial statements that are not more than one hundred eighty (180) days old;



19.









 




provided, however, that the Company may condition the delivery of such information upon the
Optionholder’s agreement to maintain its confidentiality.




10. Adjustments upon Changes in Common Stock; Other Corporate Events.




     (a) Capitalization Adjustments. In the event of a Capitalization Adjustment, the Board shall
proportionately and appropriately adjust: (i) the class(es) and maximum number of securities
subject to the Plan pursuant to Section 4(a), (ii) the class(es) and maximum number of securities
that may be issued pursuant to the exercise of Incentive Stock Options pursuant to Section 4(c),
and (iii) the class(es) and number of securities and price per share of stock subject to
outstanding Stock Awards. The Board shall make such adjustments, and its determination shall be
final, binding and conclusive.



     (b) Dissolution or Liquidation. Except as otherwise provided in the Stock Award Agreement, in
the event of a dissolution or liquidation of the Company, all outstanding Stock Awards (other than
Stock Awards consisting of vested and outstanding shares of Common Stock not subject to the
Company’s right of repurchase) shall terminate immediately prior to the completion of such
dissolution or liquidation, and the shares of Common Stock subject to the Company’s repurchase
option may be repurchased by the Company notwithstanding the fact that the holder of such Stock
Award is providing Continuous Service, provided, however, that the Board may, in its sole
discretion, cause some or all Stock Awards to become fully vested, exercisable and/or no longer
subject to repurchase or forfeiture (to the extent such Stock Awards have not previously expired or
terminated) before the dissolution or liquidation is completed but contingent on its completion.



     (c) Corporate Transaction. The following provisions shall apply to Stock Awards in the event
of a Corporate Transaction unless otherwise provided in the instrument evidencing the Stock Award
or any other written agreement between the Company or any Affiliate and the holder of the Stock
Award or unless otherwise expressly provided by the Board at the time of grant of a Stock Award.



          (i) Stock Awards May Be Assumed. Except as otherwise stated in the Stock Award Agreement, in
the event of a Corporate Transaction, any surviving corporation or acquiring corporation (or the
surviving or acquiring corporation’s parent company) may assume or continue any or all Stock Awards
outstanding under the Plan or may substitute similar stock awards for Stock Awards outstanding
under the Plan (including but not limited to, awards to acquire the same consideration paid to the
shareholders of the Company pursuant to the Corporate Transaction), and any reacquisition or
repurchase rights held by the Company in respect of Common Stock issued pursuant to Stock Awards
may be assigned by the Company to the successor of the Company (or the successor’s parent company,
if any), in connection with such Corporate Transaction. A surviving corporation or acquiring
corporation (or its parent) may choose to assume or continue only a portion of a Stock Award or
substitute a similar stock award for only a portion of a Stock Award. The terms of any assumption,
continuation or substitution shall be set by the Board in accordance with the provisions of Section
3.




20.









 








          (ii) Stock Awards Held by Current Participants. Except as otherwise stated in the Stock Award
Agreement, in the event of a Corporate Transaction in which the surviving corporation or acquiring
corporation (or its parent company) does not assume or continue such outstanding Stock Awards or
substitute similar stock awards for such outstanding Stock Awards, then with respect to Stock
Awards that have not been assumed, continued or substituted and that are held by Participants whose
Continuous Service has not terminated prior to the effective time of the Corporate Transaction
(referred to as the “Current Participants”), the vesting of such Stock Awards (and, if applicable,
the time at which such Stock Awards may be exercised) shall (contingent upon the effectiveness of
the Corporate Transaction) be accelerated in full to a date prior to the effective time of such
Corporate Transaction as the Board shall determine (or, if the Board shall not determine such a
date, to the date that is five (5) days prior to the effective time of the Corporate Transaction),
and such Stock Awards shall terminate if not exercised (if applicable) at or prior to the effective
time of the Corporate Transaction, and any reacquisition or repurchase rights held by the Company
with respect to such Stock Awards shall lapse (contingent upon the effectiveness of the Corporate
Transaction).




          (iii) Stock Awards Held by Persons other than Current Participants. Except as otherwise
stated in the Stock Award Agreement, in the event of a Corporate Transaction in which the surviving
corporation or acquiring corporation (or its parent company) does not assume or continue such
outstanding Stock Awards or substitute similar stock awards for such outstanding Stock Awards, then
with respect to Stock Awards that have not been assumed, continued or substituted and that are held
by persons other than Current Participants, the vesting of such Stock Awards (and, if applicable,
the time at which such Stock Award may be exercised) shall not be accelerated and such Stock Awards
(other than a Stock Award consisting of vested and outstanding shares of Common Stock not subject
to the Company’s right of repurchase) shall terminate if not exercised (if applicable) prior to the
effective time of the Corporate Transaction; provided, however, that any reacquisition or
repurchase rights held by the Company with respect to such Stock Awards shall not terminate and may
continue to be exercised notwithstanding the Corporate Transaction.




          (iv) Payment for Stock Awards in Lieu of Exercise. Notwithstanding the foregoing, in the
event a Stock Award will terminate if not exercised prior to the effective time of a Corporate
Transaction, the Board may provide, in its sole discretion, that the holder of such Stock Award may
not exercise such Stock Award but will receive a payment, in such form as may be determined by the
Board, equal in value to the excess, if any, of (A) the value of the property the holder of the
Stock Award would have received upon the exercise of the Stock Award, over (B) any exercise price
payable by such holder in connection with such exercise.




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



21.









 





11. Termination or Suspension of the Plan.




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



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



12. Effective Date of Plan.




     The Plan shall become effective on the Effective Date.



13. Choice of Law.




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




22.