**Exhibit10.11**

**2004 EQUITY INCENTIVE PLANOFDEPOMED, INC.**

----

**TABLEOF CONTENTS**
|        | ** **                                     |                                | ** ** | **Page** |
|--------|------------------------------------------------|--------------------------------|------------|----------|
|   |                                           |                           |       |     |
| 1.     | Purpose of this Plan                           |                           | 1          |
|   |                                           |                           |       |     |
| 2.     | Definitions and Rules of Interpretation        |                           | 1          |
|   |                                           |                           |       |     |
|   | 2.1                                            | Definitions                    |       | 1        |
|   | 2.2                                            | Rules of Interpretation        |       | 5        |
|   |                                           |                           |       |     |
| 3.     | Shares Subject to this Plan; Term of this Plan |                           | 6          |
|   |                                           |                           |       |     |
|   | 3.1                                            | Number of Award Shares         |       | 6        |
|   | 3.2                                            | Term of this Plan.             |       | 6        |
|   |                                           |                           |       |     |
| 4.     | Administration                                 |                           | 6          |
|   |                                           |                           |       |     |
|   | 4.1                                            | General.                       |       | 6        |
|   | 4.2                                            | Authority of the Administrator |       | 7        |
|   | 4.3                                            | Scope of Discretion            |       | 8        |
|   |                                           |                           |       |     |
| 5.     | Participants Eligible to Receive Awards        |                           | 8          |
|   |                                           |                           |       |     |
|   | 5.1                                            | Eligible Participants          |       | 8        |
|   | 5.2                                            | Section 162(m) Limitation.     |       | 9        |
|   |                                           |                           |       |     |
| 6.     | Terms and Conditions of Options                |                           | 9          |
|   |                                           |                           |       |     |
|   | 6.1                                            | Price                          |       | 9        |
|   | 6.2                                            | Term                           |       | 9        |
|   | 6.3                                            | Vesting                        |       | 9        |
|   | 6.4                                            | Form and Method of Payment.    |       | 10       |
|   | 6.5                                            | Assignability of Options       |       | 11       |
|   | 6.6                                            | Substitute Options             |       | 11       |
|   |                                           |                           |       |     |
| 7.     | Incentive Stock Options                        |                           | 11         |
|   |                                           |                           |       |     |
| 8.     | Stock Awards                                   |                           | 13         |
|   |                                           |                           |       |     |
|   | 8.1                                            | General                        |       | 13       |
|   | 8.2                                            | Right of Repurchase            |       | 13       |

 

ii

----

 
|        | 8.3                                                          | Form of Payment for Stock Awards                   |   | 13     |
|--------|--------------------------------------------------------------|----------------------------------------------------|--------|--------|
|   | 8.4                                                          | Nonassignability of Stock Awards                   |   | 13     |
|   | 8.5                                                          | Substitute Stock Award                             |   | 14     |
|   | 8.6                                                          | Maximum Number of Stock Awards                     |   | 14     |
|   |                                                         |                                               |   |   |
| 9.     | Exercise of Awards                                           |                                               | 14     |
|   |                                                         |                                               |   |   |
|   | 9.1                                                          | In General                                         |   | 14     |
|   | 9.2                                                          | Time of Exercise                                   |   | 14     |
|   | 9.3                                                          | Issuance of Award Shares                           |   | 14     |
|   | 9.4                                                          | Termination.                                       |   | 15     |
|   |                                                         |                                               |   |   |
| 10.    | Certain Transactions and Events                              |                                               | 17     |
|   |                                                         |                                               |   |   |
|   | 10.1                                                         | In General                                         |   | 17     |
|   | 10.2                                                         | Changes in Capital Structure                       |   | 17     |
|   | 10.3                                                         | Fundamental Transactions                           |   | 18     |
|   | 10.4                                                         | Changes in Control                                 |   | 19     |
|   | 10.5                                                         | Divestiture                                        |   | 19     |
|   | 10.6                                                         | Dissolution                                        |   | 19     |
|   |                                                         |                                               |   |   |
| 11.    | Automatic Option Grants to Non-Employee Directors            |                                               | 19     |
|   |                                                         |                                               |   |   |
|   | 11.1                                                         | Automatic Option Grants to Non-Employee Directors. |   | 19     |
|   | 11.2                                                         | Certain Transactions and Events.                   |   | 21     |
|   | 11.3                                                         | Limited Transferability of Options                 |   | 22     |
|   |                                                         |                                               |   |   |
| 12.    | Withholding and Tax Reporting                                |                                               | 22     |
|   |                                                         |                                               |   |   |
|   | 12.1                                                         | Tax Withholding Alternatives.                      |   | 22     |
|   | 12.2                                                         | Reporting of Dispositions                          |   | 22     |
|   |                                                         |                                               |   |   |
| 13.    | Compliance with Law                                          |                                               | 23     |
|   |                                                         |                                               |   |   |
| 14.    | Amendment or Termination of this Plan or Outstanding  Awards |                                               | 23     |
|   |                                                         |                                               |   |   |
|   | 14.1                                                         | Amendment and Termination                          |   | 23     |
|   | 14.2                                                         | Shareholder Approval                               |   | 23     |
|   | 14.3                                                         | Effect                                             |   | 23     |
|   |                                                         |                                               |   |   |
| 15.    | Reserved Rights                                              |                                               | 24     |
|   |                                                         |                                               |   |   |
|   | 15.1                                                         | Nonexclusivity of this Plan                        |   | 24     |

 

iii

----

 
|        | 15.2                                        | Unfunded Plan                |   | 24     |
|--------|---------------------------------------------|------------------------------|--------|--------|
|   |                                        |                         |   |   |
| 16.    | Special Arrangements Regarding Award Shares |                         | 24     |
|   |                                        |                         |   |   |
|   | 16.1                                        | Escrow of Stock Certificates |   | 24     |
|   | 16.2                                        | Repurchase Rights.           |   | 25     |
|   | 16.3                                        | Market Standoff              |   | 25     |
|   |                                        |                         |   |   |
| 17.    | Beneficiaries                               |                         | 25     |
|   |                                        |                         |   |   |
| 18.    | Miscellaneous                               |                         | 26     |
|   |                                        |                         |   |   |
|   | 18.1                                        | Governing Law                |   | 26     |
|   | 18.2                                        | Determination of Value       |   | 26     |
|   | 18.3                                        | Reservation of Shares        |   | 26     |
|   | 18.4                                        | Electronic Communications    |   | 27     |
|   | 18.5                                        | Notices                      |   | 27     |

 

iv

----

***2004*****EQUITY INCENTIVEPLANOF****DEPOMED, INC.**

***(As Amended through March 23, 2006)***

# 1.**                                       Purposeof this Plan**

The purpose of this 2004 Equity Incentive Plan is toenhance the long-term shareholder value of Depomed, Inc. by offeringopportunities to eligible participants to share in the growth in value of theequity of Depomed, Inc. and to provide incentives to eligible Employees,Company Directors and Consultants to contribute to the success of the Company.

# 2.**                                       Definitionsand Rules of Interpretation**

2.1**                                 Definitions**.  This Plan uses the following defined terms:

### (a)                                  ***“Administrator”***means theBoard, the Committee, or any officer or employee of the Company to whom theBoard or the Committee delegates authority to administer this Plan.

### (b)                                 ***“Affiliate”*** means a “parent” or“subsidiary” (as each is defined in Section 424 of the Code) of the Company andany other entity that the Board or Committee designates as an “Affiliate” forpurposes of this Plan.

### (c)                                  ***“Applicable Law”*** means anyand all laws of whatever jurisdiction, within or without the United States, andthe rules of any stock exchange or quotation system on which Shares are listedor quoted, applicable to the taking or refraining from taking of any actionunder this Plan, including the administration of this Plan and the issuance ortransfer of Awards or Award Shares.

### (d)                                 ***“Award****”*means a Stock Award or Option granted in accordance with the terms of thisPlan.

### (e)                                  ***“Award Agreement”***means thedocument evidencing the grant of an Award.

### (f)                                    ***“Award Shares”***means Sharescovered by an outstanding Award or purchased under an Award.

### (g)                                 ***“Awardee”***means: (i) aperson to whom an Award has been granted, including a holder of a SubstituteAward, (ii) a person to whom an Award has been transferred in accordancewith all applicable requirements of Sections 6.5, 7(h), and 17, or (iii) aperson who holds Award Shares subject to a right of repurchase under Section16.2.

### (h)                                 ***“Board”*** means the board ofdirectors of the Company.

----

### (i)                                     ***“Change in Control”*** means anytransaction or event that the Board specifies as a Change in Control underSection 10.4.

### (j)                                     ***“Code”***means the InternalRevenue Code of 1986.

### (k)                                  ***“Committee***” means a committeecomposed of Company Directors appointed in accordance with the Company’scharter documents and Section 4.

### (l)                                     ***“Company”*** means Depomed,Inc., a California corporation.

### (m)                               ***“Company Director”*** means amember of the Board.

### (n)                                 ***“Consultant”*** means anindividual who, or an entity or employee of any entity that, provides bona fideservices to the Company or an Affiliate not in connection with the offer orsale of securities in a capital-raising transaction, but who is not anEmployee.

### (o)                                 ***“Director”*** means a member ofthe board of directors of the Company or an Affiliate.

### (p)                                 ***“Divestiture”*** means anytransaction or event that the Board specifies as a Divestiture under Section10.5.

### (q)                                 “***Domestic Relations Order****”* means a “domestic relations order” asdefined in, and otherwise meeting the requirements of, Section 414(p) ofthe Code, except that reference to a “plan” in that definition shall be to thisPlan.

### (r)                                    ***“Employee”*** means a regularemployee of the Company or an Affiliate, including an Officer or Director, whois treated as an employee in the personnel records of the Company or anAffiliate, but not individuals who are classified by the Company or anAffiliate as: (i) leased from or otherwise employed by a third party,(ii) independent contractors, or (iii) intermittent or temporaryworkers.  The Company’s or an Affiliate’sclassification of an individual as an “Employee” (or as not an “Employee”) forpurposes of this Plan shall not be altered retroactively even if thatclassification is changed retroactively for another purpose as a result of anaudit, litigation or otherwise.  An Awardeeshall not cease to be an Employee due to transfers between locations of theCompany, or between the Company and an Affiliate, or to any successor to theCompany or an Affiliate that assumes the Awardee’s Options underSection 10.  Neither service as aDirector nor receipt of a director’s fee shall be sufficient to make a Directoran “Employee.”

### (s)                                  ***“Exchange Act”***means theSecurities Exchange Act of 1934.

2

----

### (t)                                    ***“Executive”***means, if theCompany has any class of any equity security registered under Section 12 of theExchange Act, an individual who is subject to Section 16 of the Exchange Act orwho is a “covered employee” under Section 162(m) of the Code, in eithercase****because of the individual’srelationship with the Company or an Affiliate. If the Company does not have any class of any equity security registeredunder Section 12 of the Exchange Act, “Executive” means any (i) Director or(ii) officer elected or appointed by the Board.

### (u)                                 ***“Expiration Date”***means, withrespect to an Award, the date stated in the Award Agreement as the expirationdate of the Award or, if no such date is stated in the Award Agreement, thenthe last day of the maximum exercise period for the Award, disregarding theeffect of an Awardee’s Termination or any other event that would shorten thatperiod.

### (v)                                 ***“Fair Market Value”***means thevalue of Shares as determined under Section 18.2.

### (w)                               ***“Fundamental Transaction”***means any transaction or event described in Section 10.3.

### (x)                                   ***“Grant Date”***means the datethe Administrator approves the grant of an Award.  However, if the Administrator specifies thatan Award’s Grant Date is a future date or the date on which a condition issatisfied, the Grant Date for such Award is that future date or the date thatthe condition is satisfied.

### (y)                                 ***“Incentive Stock Option”***means an Option intended to qualify as an incentive stock option under Section422 of the Code and designated as an Incentive Stock Option in the AwardAgreement for that Option.

### (z)                                   ***“Nonstatutory Option”***means any Option other than an Incentive Stock Option.

### (aa)                            ***“Non-Employee Director”***means any person who is a member of the Board but is not an Employee of theCompany or any Affiliate of the Company and has not been an Employee of theCompany or any Affiliate of the Company at any time during the preceding twelvemonths.  Service as a Director does notin itself constitute employment for purposes of this definition.

3

----

### (bb)                          ***“Objectively Determinable PerformanceCondition”***shall mean a performance condition (i) that isestablished (A) at the time an Award is granted or (B)  no later thanthe earlier of (1) 90 days after the beginning of the period of service towhich it relates, or (2) before the elapse of 25% of the period of serviceto which it relates, (ii) that is uncertain of achievement at the time it isestablished, and (iii) the achievement of which is determinable by a thirdparty with knowledge of the relevant facts. Examples of measures that may be used in Objectively DeterminablePerformance Conditions include achievement of a Company goal, net orderdollars, net profit dollars, net profit growth, net revenue dollars, revenuegrowth, individual performance, earnings per share, return on assets, return onequity, and other financial objectives, objective customer satisfactionindicators and efficiency measures, each with respect to the Company and/or anAffiliate or individual business unit.

### (cc)                            ***“Officer”***means an officer ofthe Company as defined in Rule 16a-1 adopted under the Exchange Act.

### (dd)                          ***“Option”***means a right topurchase Shares of the Company granted under this Plan.

### (ee)                            ***“Option Price”***means theprice payable under an Option for Shares, not including any amount payable inrespect of withholding or other taxes.

### (ff)                                ***“Option Shares”***means Sharescovered by an outstanding Option or purchased under an Option.

### (gg)                          ***“Plan”***means this 2004 EquityIncentive Plan of Depomed, Inc.

### (hh)                          ***“Purchase Price”*** means theprice payable under a Stock Award for Shares, not including any amount payablein respect of withholding or other taxes.

### (ii)                                  ***“Reverse Vesting”*** means that anOption is or was fully exercisable but that, subject to a “reverse” vestingschedule, the Company has a right to repurchase the Option Shares as specifiedin Section 16.2(a), with the Company’s right of repurchase expiring inaccordance with a “forward” vesting schedule that would otherwise have appliedto the Option under which the Option Shares were purchased or in accordancewith some other vesting schedule described in the Award Agreement.

### (jj)                                  ***“Rule 16b-3”***means Rule 16b-3adopted under Section 16(b) of the Exchange Act.

### (kk)                            ***“Securities Act”***means theSecurities Act of 1933.

### (ll)                                  ***“Share”***means a share of theCommon Stock of the Company or other securities substituted for the CommonStock under Section 10.

4

----

### (mm)                      ***“Stock Award”***means an offerby the Company to sell shares subject to certain restrictions pursuant to theAward Agreement as described in Section 8. A Stock Award does not include an option.

### (nn)                          ***“Substitute Award”***means aSubstitute Option or Substitute Stock Award granted in accordance with theterms of this Plan.

### (oo)                          ***“Substitute Option”***means anOption granted in substitution for, or upon the conversion of, an optiongranted by another entity to purchase equity securities in the granting entity.

### (pp)                          ***“Substitute Stock Award”***meansa Stock Award granted in substitution for, or upon the conversion of, a stockaward granted by another entity to purchase equity securities in the grantingentity.

### (qq)                          “***Ten Percent Shareholder***”means any person who, directly or by attribution under Section 424(d) ofthe Code, owns stock possessing more than ten percent of the total combinedvoting power of all classes of stock of the Company or of any Affiliate on theGrant Date.

### (rr)                                ***“Termination”***means that theAwardee has ceased to be, with or without any cause or reason, an Employee,Director or Consultant.  However, unlessso determined by the Administrator, or otherwise provided in this Plan,“Termination” shall not include a change in status from an Employee, Consultantor Director to another such status.  Anevent that causes an Affiliate to cease being an Affiliate shall be treated asthe “Termination” of that Affiliate’s Employees, Directors, and Consultants.

2.2                                 **Rules of Interpretation**.  Anyreference to a “Section,” without more, is to a Section of this Plan.  Captions and titles are used for conveniencein this Plan and shall not, by themselves, determine the meaning of thisPlan.  Except when otherwise indicated bythe context, the singular includes the plural and vice versa.  Any reference to a statute is also areference to the applicable rules and regulations adopted under thatstatute.  Any reference to a statute,rule or regulation, or to a section of a statute, rule or regulation, is areference to that statute, rule, regulation, or section as amended from time totime, both before and after the effective date of this Plan and including anysuccessor provisions.

5

----

# 3.**                                       SharesSubject to this Plan; Term of this Plan**

3.1                                 **Number of Award Shares**.  The ****Shares**** issuable under ****this**** Planshall be authorized but unissued or reacquired ****Shares****, including but notlimited to ****Shares********repurchased by the ****Company****onthe open market.  Subject to adjustmentunder Section 10, the maximum number of Shares that may be issued under thisPlan is 3,500,000****.****  When an Award is granted, the maximum numberof Shares that may be issued under this Plan shall be reduced by the number ofShares covered by that Award.  However,if an Award later terminates or expires without having been exercised in full,the maximum number of shares that may be issued under this Plan shall beincreased by the number of Shares that were covered by, but not purchasedunder, that Award.  By contrast, therepurchase of Shares by the Company shall not increase the maximum number ofShares that may be issued under this Plan.

## 3.2                                 **Term of this Plan**.

### (a)                                  ThisPlan shall be effective on, and Awards may be granted under this Plan after,the date it has been both adopted by the Board and approved by the Company’sshareholders (the “***EffectiveDate***”).

### (b)                                 Subjectto the provisions of Section 14, Awards may be granted under this Plan fora period of ten years from the earlier of the date on which the Board approvesthis Plan and the date the Company’s shareholders approve this Plan.  Accordingly, Awards may not be granted underthis Plan after ten years from the earlier of those dates.

# 4.**                                       Administration**

## 4.1                                 **General**.

### (a)                                  TheBoard shall have ultimate responsibility for administering this Plan.  The Board may delegate certain of itsresponsibilities to a Committee, which shall consist of at least two members ofthe Board.  The Board or the Committeemay further delegate its responsibilities to any Employee of the Company or anyAffiliate.  Where this Plan specifiesthat an action is to be taken or a determination made by the Board, only theBoard may take that action or make that determination.  Where this Plan specifies that an action isto be taken or a determination made by the Committee, only the Committee maytake that action or make that determination. Where this Plan references the “Administrator,” the action may be takenor determination made by the Board, the Committee, or other Administrator.  However, only the Board or the Committee mayapprove grants of Awards to Executives and such other participants as may bespecifically designated by the Board, and an Administrator other than the Boardor the Committee may grant Awards only within guidelines established by theBoard or Committee.  Moreover, allactions and determinations by any Administrator are subject to the provisionsof this Plan.

6

----

### (b)                                 Solong as the Company has registered and outstanding a class of equity securitiesunder Section 12 of the Exchange Act, the Committee shall consist ofCompany Directors who are “Non-Employee Directors” as defined inRule 16b-3 and, after the expiration of any transition period permitted byTreasury Regulations Section 1.162-27(h)(3), who are “outside directors”as defined in Section 162(m) of the Code.

4.2                                 **Authority of the Administrator**.  Subject to the other provisions of this Plan,the Administrator shall have the authority to:

### (a)                                  grantAwards, including Substitute Awards;

### (b)                                 determinethe Fair Market Value of Shares;

### (c)                                  determinethe Option Price and the Purchase Price of Awards;

### (d)                                 selectthe Awardees;

### (e)                                  determinethe times Awards are granted;

### (f)                                    determinethe number of Shares subject to each Award;

### (g)                                 determinethe methods of payment that may be used to purchase Award Shares;

### (h)                                 determinethe methods of payment that may be used to satisfy withholding tax obligations;

### (i)                                     determinethe other terms of each Award, including but not limited to the time or timesat which Awards may be exercised, whether and under what conditions an Award isassignable, and whether an Option is a Nonstatutory Option or an IncentiveStock Option;

### (j)                                     modifyor amend any Award;

### (k)                                  authorizeany person to sign any Award Agreement or other document related to this Planon behalf of the Company;

### (l)                                     determinethe form of any Award Agreement or other document related to this Plan, andwhether that document, including signatures, may be in electronic form;

### (m)                               interpretthis Plan and any Award Agreement or document related to this Plan;

### (n)                                 correctany defect, remedy any omission, or reconcile any inconsistency in this Plan,any Award Agreement or any other document related to this Plan;

7

----

### (o)                                 adopt,amend, and revoke rules and regulations under this Plan, including rules andregulations relating to sub-plans and Plan addenda;

### (p)                                 adopt,amend, and revoke special rules and procedures which may be inconsistent withthe terms of this Plan, set forth (if the Administrator so chooses) insub-plans regarding (for example) the operation and administration of this Planand the terms of Awards, if and to the extent necessary or useful toaccommodate non-U.S. Applicable Laws and practices as they apply to Awards andAward Shares held by, or granted or issued to, persons working or residentoutside of the United States or employed by Affiliates incorporated outside theUnited States;

### (q)                                 inthe case of the Board, determine whether a transaction or event should betreated as a Change in Control, a Divestiture or neither;

### (r)                                    determinethe effect of a Fundamental Transaction and, if the Board determines that atransaction or event should be treated as a Change in Control or a Divestiture,then the effect of that Change in Control or Divestiture; and

### (s)                                  makeall other determinations the Administrator deems necessary or advisable for theadministration of this Plan.

4.3           **Scope of Discretion**.  Subject to the last sentence of this Section4.3, on all matters for which this Plan confers the authority, right or poweron the Board, the Committee, or other Administrator to make decisions, thatbody may make those decisions.  Those decisionswill be final, binding and conclusive. Moreover, but again subject to the last sentence of this Section 4.3, inmaking those decisions, the Board, Committee or other Administrator need nottreat all persons eligible to receive Awards, all Awardees, all Awards or allAward Shares the same way.  However,except as provided in Section 14.3, the discretion of the Board, Committeeor other Administrator is subject to the specific provisions and specificlimitations of this Plan, as well as all rights conferred on specific Awardeesby Award Agreements and other agreements.

# 5.**                                       ParticipantsEligible to Receive Awards**

5.1           **Eligible Participants**.  Awards (including Substitute Awards) may begranted to, and only to, Employees, Directors and Consultants, including toprospective Employees, Directors and Consultants conditioned on the beginningof their service for the Company or an Affiliate.  However, Incentive Stock Options may only begranted to Employees, as provided in Section 7(g).

8

----

## 5.2                                 **Section 162(m) Limitation**.

### (a)                                  **Options**.  So long as the Companyis a “publicly held corporation” within the meaning of Section 162(m) of theCode: (i) no Employee may be granted one or more Options within any fiscalyear of the Company under this Plan to purchase more than 500,000 Shares underOptions, subject to adjustment pursuant to Section 10, (ii) Options may begranted to an Executive only by the Committee (and, notwithstanding Section4.1(a), not by the Board).  If an Optionis cancelled without being exercised or if the Option Price of an Option isreduced, that cancelled or repriced Option shall continue to be counted againstthe limit on Awards that may be granted to any participant under this Section5.2.  Notwithstanding anything herein tothe contrary, in connection with his or her initial employment with the Companyor an Affiliate, a new Employee or prospective Employee shall be eligible toreceive up to a maximum of 750,000 Shares under Options (subject to adjustmentpursuant to Section 10), which Shares shall not be counted toward the 500,000limitation set forth in this Section 5.2(a).

### (b)                                 **Stock Awards**.  Any Stock Award intended as “qualifiedperformance-based compensation” within the meaning of Section 162(m) of theCode must vest or become exercisable contingent on the achievement of one ormore Objectively Determinable Performance Conditions.  The Committee shall have the discretion todetermine the time and manner of compliance with Section 162(m) of the Code.

# 6.**                                       Termsand Conditions of Options**

The following rules apply to all Options:

6.1           **Price**.  No Optionintended as “qualified incentive-based compensation” within the meaning ofSection 162(m) of the Code may have an Option Price less than 100% of theFair Market Value of the Shares on the Grant Date.  In no event will the Option Price of anyOption be less than the par value of the Shares issuable under the Option ifthat is required by Applicable Law.  TheOption Price of an Incentive Stock Option shall be subject toSection 7(f).

6.2           **Term**.  No Option shallbe exercisable after its Expiration Date. No Option may have an Expiration Date that is more than ten years afterits Grant Date.  Additional provisionsregarding the term of Incentive Stock Options are provided in Sections 7(a)and 7(e).

6.3           **Vesting**.  Optionsshall be exercisable: (a) on the Grant Date, or (b) in accordancewith a schedule related to the Grant Date, the date the Awardee’s directorship,employment or consultancy begins, or a different date specified in the AwardAgreement.  If so provided in the AwardAgreement, an Option may be exercisable subject to the application of ReverseVesting to the Option Shares.  Additionalprovisions regarding the vesting of Incentive Stock Options are provided inSection 7(c).  No Option granted toan individual who is subject to the overtime pay provisions of the Fair LaborStandards Act may be exercised before the expiration of six months after theGrant Date.

9

----

## 6.4                                 **Form and Method of Payment**.

### (a)                                  TheAdministrator shall determine the acceptable form and method of payment forexercising an Option.

### (b)                                 Acceptableforms of payment for all Option Shares are cash, check or wire transfer,denominated in U.S. dollars except as specified by the Administrator fornon-U.S. Employees or non-U.S. sub-plans.

### (c)                                  Inaddition, the Administrator may permit payment to be made by any of thefollowing methods:

#### (i)                                     other Shares, orthe designation of other Shares, which (A) are “mature” shares forpurposes of avoiding variable accounting treatment under generally acceptedaccounting principles (generally mature shares are those that have been ownedby the Awardee for more than six months on the date of surrender), and (B) havea Fair Market Value on the date of surrender equal to the Option Price of theShares as to which the Option is being exercised;

#### (ii)                                  provided that apublic market exists for the Shares, consideration received by the Companyunder a procedure under which a licensed broker-dealer advances funds on behalfof an Awardee or sells Option Shares on behalf of an Awardee (a “***Cashless Exercise Procedure***”),provided that if the Company extends or arranges for the extension of credit toan Awardee under any Cashless Exercise Procedure, no Officer or Director mayparticipate in that Cashless Exercise Procedure;

#### (iii)                               subject to Section 6.4(e), one or morepromissory notes meeting the requirements of Section 6.4(e) provided,however, that promissory notes may not be used for any portion of an Awardwhich is not vested at the time of exercise;

#### (iv)                              cancellation of any debtowed by the Company or any Affiliate to the Awardee including withoutlimitation waiver of compensation due or accrued for services previouslyrendered to the Company or an Affiliate; and

#### (v)                                 any combination of themethods of payment permitted by any paragraph of this Section 6.4.

#### (d)                                 The Administrator mayalso permit any other form or method of payment for Option Shares permitted byApplicable Law.

10

----

### (e)           The promissory notesreferred to in Section 6.4(c)(iii) shall be full recourse.  Unless the Administrator specifies otherwiseafter taking into account any relevant accounting issues, the promissory notesshall bear interest at a fair market value rate when the Option isexercised.  Interest on the promissorynotes shall also be at least sufficient to avoid imputation of interest underSections 483, 1274, and 7872 of the Code. The promissory notes and their administration shall at all times complywith any applicable margin rules of the Federal Reserve.  The promissory notes may also include suchother terms as the Administrator specifies. Payment may not be made by promissory note by Officers or Directors ifShares are registered under Section 12 of the Exchange Act.

6.5**           Assignabilityof Options**.  Except asdetermined by the Administrator, no Option shall be assignable or otherwisetransferable by the Awardee except by will or by the laws of descent anddistribution.  However, Options may betransferred and exercised in accordance with a Domestic Relations Order and maybe exercised by a guardian or conservator appointed to act for theAwardee.  Incentive Stock Options mayonly be assigned in compliance with Section 7(h).

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

# 7.**                                       IncentiveStock Options**

The following rules apply only to Incentive StockOptions and only to the extent these rules are more restrictive than the rulesthat would otherwise apply under this Plan. With the consent of the Awardee, or where this Plan provides that anaction may be taken notwithstanding any other provision of this Plan, theAdministrator may deviate from the requirements of this Section,notwithstanding that any Incentive Stock Option modified by the Administratorwill thereafter be treated as a Nonstatutory Option.

(a)           The Expiration Date of an IncentiveStock Option shall not be later than ten years from its Grant Date, with theresult that no Incentive Stock Option may be exercised after the expiration of tenyears from its Grant Date.

(b)           No Incentive Stock Option may begranted more than ten years from the date this Plan was approved by the Board.

11

----

(c)           Options intended to be incentivestock options under Section 422 of the Code that are granted to any singleAwardee under all incentive stock option plans of the Company and itsAffiliates, including incentive stock options granted under this Plan, may notvest at a rate of more than $100,000 (or such other amount that may behereafter specified in the applicable section of the Code) in Fair Market Valueof stock (measured on the grant dates of the options) during any calendaryear.  For this purpose, an option vestswith respect to a given share of stock the first time its holder may purchasethat share, notwithstanding any right of the Company to repurchase thatshare.  Unless the administrator of thatoption plan specifies otherwise in the related agreement governing the option,this vesting limitation shall be applied by, to the extent necessary to satisfythis $100,000 (or other amount) rule, by treating certain stock options thatwere intended to be incentive stock options under Section 422 of the Code asNonstatutory Options.  The stock optionsor portions of stock options to be reclassified as Nonstatutory Options arethose with the highest option prices, whether granted under this Plan or anyother equity compensation plan of the Company or any Affiliate that permitsthat treatment.  This Section 7(c)shall not cause an Incentive Stock Option to vest before its original vestingdate or cause an Incentive Stock Option that has already vested to cease to bevested.

### (d)           Inorder for an Incentive Stock Option to be exercised for any form of paymentother than those described in Section 6.4(b), that form of payment must bestated at the time of grant in the Award Agreement relating to that IncentiveStock Option.

### (e)           AnyIncentive Stock Option granted to a Ten Percent Shareholder, must have anExpiration Date that is not later than five years from its Grant Date, with theresult that no such Option may be exercised after the expiration of five yearsfrom the Grant Date.

### (f)            TheOption Price of an Incentive Stock Option shall never be less than the FairMarket Value of the Shares at the Grant Date. The Option Price for the Shares covered by an Incentive Stock Optiongranted to a Ten Percent Shareholder shall never be less than 110% of the FairMarket Value of the Shares at the Grant Date.

### (g)           IncentiveStock Options may be granted only to Employees. If an Awardee changes status from an Employee to a Consultant, thatAwardee’s Incentive Stock Options become Nonstatutory Options if not exercisedwithin the time period described in Section 7(i) (determined by treatingthat change in status as a Termination solely for purposes of this Section7(g)).

### (h)           Norights under an Incentive Stock Option may be transferred by the Awardee, otherthan by will or the laws of descent and distribution.  During the life of the Awardee, an IncentiveStock Option may be exercised only by the Awardee.  The Company’s compliance with a DomesticRelations Order, or the exercise of an Incentive Stock Option by a guardian orconservator appointed to act for the Awardee, shall not violate this Section7(h).

12

----

### (i)            An Incentive StockOption shall be treated as a Nonstatutory Option if it remains exercisableafter, and is not exercised within, the three-month period beginning with theAwardee’s Termination for any reason other than the Awardee’s death ordisability (as defined in Section 22(e) of the Code).  In the case of Termination due to death, anIncentive Stock Option shall continue to be treated as an Incentive StockOption if it remains exercisable after, and is not exercised within, thethree-month period after the Awardee’s Termination provided it is exercisedbefore the Expiration Date.  In the caseof Termination due to disability, an Incentive Stock Option shall be treated asa Nonstatutory Option if it remains exercisable after, and is not exercisedwithin, one year after the Awardee’s Termination.

### (j)            An Incentive StockOption may only be modified by the Board or the Committee.

# 8.**                                       StockAwards**

8.1**           General**. The specific terms and conditions of a Stock Award applicable to theAwardee shall be provided for in the Award Agreement. The Award Agreement shallstate the number of Shares that the Awardee shall be entitled to receive orpurchase, the terms and conditions on which the Shares shall vest, the price tobe paid and, if applicable, the time within which the Awardee must accept such offer.The offer shall be accepted by execution of the Award Agreement.  The Administrator may require that all Sharessubject to a right of repurchase or risk of forfeiture be held in escrow untilsuch repurchase right or risk of forfeiture lapses.  The grant or vesting of a Stock Award may bemade contingent on the achievement of Objectively Determinable PerformanceConditions.

8.2**           Right of Repurchase**.  If so provided in the Award Agreement, AwardShares acquired pursuant to a Stock Award may be subject to repurchase by theCompany or an Affiliate if not vested in accordance with the Award Agreement.

8.3**           Form of Payment for Stock Awards**.  The Administrator shall determine theacceptable form and method of payment for exercising a Stock Award.  Acceptable forms of payment for all AwardShares are cash, check or wire transfer, denominated in U.S. dollars except asspecified by the Administrator for non-U.S. Employees or non-U.S.sub-plans.  In addition, theAdministrator may permit payment to be made by any of the methods permittedwith respect to the exercise of Options pursuant to Section 6.4.

8.4**           Nonassignability of Stock Awards**.  Except as determined by the Administrator, noStock Award shall be assignable or otherwise transferable by the Awardee exceptby will or by the laws of descent and distribution (including withoutlimitation Section 17).  Notwithstandinganything to the contrary herein, Stock Awards may be transferred and exercisedin accordance with a Domestic Relations Order.

13

----

8.5**           Substitute Stock Award**.  The Board may cause the Company to grantSubstitute Stock Awards in connection with the acquisition by the Company or anAffiliate of equity securities of any entity (including by merger, tenderoffer, or other similar transaction) or of all or a portion of the assets ofany entity.  Any such substitution shallbe effective on the effective date of the acquisition.  Unless and to the extent specified otherwiseby the Board, Substitute Stock Awards shall have the same terms and conditionsas the stock awards they replace, except that (subject to the provisions ofSection 10) Substitute Stock Awards shall be Stock Awards to purchaseShares rather than equity securities of the granting entity and shall have aPurchase Price that, as determined by the Board in its sole and absolutediscretion, properly reflects the substitution.

8.6**           MaximumNumber of Stock Awards**.  Themaximum aggregate number of Shares that may be issued pursuant to Stock Awardsunder this Plan shall not exceed ten percent (10%) of the number of Shares thatmay be issued pursuant to this Plan under Section 3.1.

# 9.**                                       Exerciseof Awards**

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

9.2**           Time of Exercise**.  Options and Stock Awardsshall be considered exercised when the Company receives: (a) writtennotice of exercise from the person entitled to exercise the Option or StockAward, (b) full payment, or provision for payment, in a form and methodapproved by the Administrator, for the Shares for which the Option or StockAward is being exercised, and (c) with respect to Nonstatutory Options,payment, or provision for payment, in a form approved by the Administrator, ofall applicable withholding taxes due upon exercise.  An Award may not be exercised for a fractionof a Share.

9.3**           Issuance of Award Shares**.  The Company shall issueAward Shares in the name of the person properly exercising the Award.  If the Awardee is that person and sorequests, the Award Shares shall be issued in the name of the Awardee and theAwardee’s spouse.  The Company shallendeavor to issue Award Shares promptly after an Award is exercised.  Until Award Shares are actually issued, asevidenced by the appropriate entry on the stock register of the Company or itstransfer agent, the Awardee will not have the rights of a shareholder withrespect to those Award Shares, even though the Awardee has completed all thesteps necessary to exercise the Award. No adjustment shall be made for any dividend, distribution, or otherright for which the record date precedes the date the Award Shares are issued,except as provided in Section 10.

14

----

## 9.4           **Termination**.

### (a)           **In General**.  Except as provided in an Award Agreement orin writing by the Administrator, and as otherwise provided inSections 9.4(b), (c), (d) and (e) after an Awardee’s Termination, theAwardee’s Awards shall be exercisable to the extent (but only to the extent)they are vested on the date of that Termination and only during the threemonths after the Termination, but in no event after the Expiration Date.  To the extent the Awardee does not exercisean Award within the time specified for exercise, the Award shall automaticallyterminate.

### (b)           **Leaves of Absence**.  Unless otherwise provided in the Award Agreementor in writing by the Administrator, no Award may be exercised more than threemonths after the beginning of a leave of absence, other than a personal ormedical leave approved by an authorized representative of the Company withemployment guaranteed upon return. Awards shall not continue to vest during a leave of absence, unlessotherwise determined in writing by the Administrator with respect to anapproved personal or medical leave with employment guaranteed upon return.

### (c)           **Death or Disability**. Unless otherwise provided in the Award Agreement or in writing by theAdministrator, if an Awardee’s Termination is due to death or disability (asdetermined by the Administrator with respect to all Awards other than IncentiveStock Options and as defined by Section 22(e) of the Code with respect toIncentive Stock Options), all Awards of that Awardee to the extent exercisableat the date of that Termination may be exercised for one year after thatTermination, but in no event after the Expiration Date.  In the case of Termination due to death, anAward may be exercised as provided in Section 17.  In the case of Termination due to disability,if a guardian or conservator has been appointed to act for the Awardee and beengranted this authority as part of that appointment, that guardian orconservator may exercise the Award on behalf of the Awardee.  Death or disability occurring after anAwardee’s Termination shall not cause the Termination to be treated as havingoccurred due to death or disability.  Tothe extent an Award is not so exercised within the time specified for itsexercise, the Award shall automatically terminate.

### (d)           **Divestiture**.  If an Awardee’s Termination is due to aDivestiture, the Board may take any one or more of the actions described inSection 10.3 or 10.4 with respect to the Awardee’s Awards.

15

----

### (e)           **Termination for Cause**.  In the discretion of the Administrator, whichmay be exercised on the date of grant, or at a date later in time, if anAwardee’s Termination is due to Cause, all of the Awardee’s Awards shallautomatically terminate and cease to be exercisable at the time ofTermination.  “***Cause***” means employment-related dishonesty, fraud,misconduct or disclosure or misuse of confidential information, or otheremployment-related conduct that is likely to cause significant injury to theCompany, an Affiliate, or any of their respective employees, officers ordirectors (including, without limitation, commission of a felony or similaroffense whether or not employment-related), in each case as determined by theAdministrator.  “Cause” shall not requirethat a civil judgment or criminal conviction have been entered against orguilty plea shall have been made by the Awardee regarding any of the mattersreferred to in the previous sentence.  Accordingly,the Administrator shall be entitled to determine “Cause” based on theAdministrator’s good faith belief.  Ifthe Awardee is criminally charged with a felony or similar offense, that shallbe a sufficient, but not a necessary, basis for such a belief.

### (f)            **Administrator Discretion**. Notwithstanding the provisions of Section 9.4 (a)-(e), the Administratorshall have complete discretion, exercisable either at the time an Award isgranted or at any time while the Award remains outstanding, to:

#### (i)            Extendthe period of time for which the Award is to remain exercisable, following theAwardee’s Termination, from the limited exercise period otherwise in effect forthat Award to such greater period of time as the Administrator shall deemappropriate, but in no event beyond the Expiration Date; and/or

#### (ii)           Permitthe Award to be exercised, during the applicable post-Termination exerciseperiod, not only with respect to the number of vested Shares for which suchAward may be exercisable at the time of the Awardee’s Termination but also withrespect to one or more additional installments in which the Awardee would havevested had the Awardee not been subject to Termination.

### (g)           **Consulting or EmploymentRelationship**. Nothing in this Plan or in any Award Agreement, and noAward or the fact that Award Shares remain subject to repurchase rights,shall:  (A) interfere with or limitthe right of the Company or any Affiliate to terminate the employment orconsultancy of any Awardee at any time, whether with or without cause orreason, and with or without the payment of severance or any other compensationor payment, (B) interfere with the application of any provision in any of theCompany’s or any Affiliate’s charter documents or Applicable Law relating tothe election, appointment, term of office, or removal of a Director or (C)interfere with the Company’s right to terminate any consultancy.

16

----

# 10.**                                 CertainTransactions and Events**

10.1**         In General**. Except as provided in this Section 10, no change in the capitalstructure of the Company, merger, sale or other disposition of assets or asubsidiary, change in control, issuance by the Company of shares of any classof securities or securities convertible into shares of any class of securities,exchange or conversion of securities, or other transaction or event shallrequire or be the occasion for any adjustments of the type described in thisSection 10.  Additional provisionswith respect to the foregoing transactions are set forth in Section 14.3.

10.2**         Changes in Capital Structure**.  In the event of any stock split, reversestock split, recapitalization, combination or reclassification of stock, stockdividend, spin-off, or similar change to the capital structure of theCompany (not including a Fundamental Transaction or Change in Control), theBoard shall make whatever adjustments it concludes are appropriate to:(a) the number and type of Awards that may be granted under this Plan,(b) the number and type of Options that may be granted to any participantunder this Plan, (c) the Purchase Price and number and class of securitiesissuable under each outstanding Stock Award, (d) the Option Price andnumber and class of securities issuable under each outstanding Option, and (e)the repurchase price of any securities substituted for Award Shares that aresubject to repurchase rights.  Thespecific adjustments shall be determined by the Board.  Unless the Board specifies otherwise, anysecurities issuable as a result of any such adjustment shall be rounded down tothe next lower whole security.  The Boardneed not adopt the same rules for each Award or each Awardee.

17

----

10.3**         Fundamental Transactions**.  Except for grants to Non-Employee Directorspursuant to Section 11, in the event of (a) a merger or consolidation in whichthe Company is not the surviving corporation (other than a merger orconsolidation with a wholly-owned subsidiary, a reincorporation of the Companyin a different jurisdiction, or other transaction in which there is nosubstantial change in the shareholders of the Company or their relative stockholdings and the Awards granted under this Plan are assumed, converted orreplaced by the successor corporation, which assumption shall be binding on allparticipants under this Plan), (b) a merger in which the Company is the survivingcorporation but after which the shareholders of the Company immediately priorto such merger (other than any shareholder that merges, or which owns orcontrols another corporation that merges, with the Company in such merger)cease to own their shares or other equity interest in the Company, (c) the saleof all or substantially all of the assets of the Company, or (d) theacquisition, sale, or transfer of more than 50% of the outstanding shares ofthe Company by tender offer or similar transaction (each, a “***Fundamental Transaction***”),any or all outstanding Awards may be assumed, converted or replaced by thesuccessor corporation (if any), which assumption, conversion or replacementshall be binding on all participants under this Plan.  In the alternative, the successor corporationmay substitute equivalent Awards or provide substantially similar considerationto participants as was provided to the Company’s shareholders (after takinginto account the existing provisions of the Awards).  The successor corporation may also issue, inplace of outstanding Shares held by participants, substantially similar sharesor other property subject to repurchase restrictions no less favorable to theparticipants. In the event such successor corporation (if any) does not assumeor substitute Awards, as provided above, pursuant to a transaction described inthis Section 10.3, the vesting with respect to such Awards shall fully andimmediately accelerate or the repurchase rights of the Company shall fully andimmediately terminate, as the case may be, so that the Awards may be exercisedor the repurchase rights shall terminate before, or otherwise in connectionwith the closing or completion of the Fundamental Transaction or event, butthen terminate.  Notwithstanding anythingin this Plan to the contrary, the Board may, in its sole discretion, providethat the vesting of any or all Award Shares subject to vesting or a right ofrepurchase shall accelerate or lapse, as the case may be, upon a transactiondescribed in this Section 10.3. If the Board exercises such discretion withrespect to Options, such Options shall become exercisable in full prior to theconsummation of such event at such time and on such conditions as the Boarddetermines, and if such Options are not exercised prior to the consummation ofthe Fundamental Transaction, they shall terminate at such time as determined bythe Board.  The Board need not adopt thesame rules for each Award or each Awardee. Subject to any greater rights granted to participants under theforegoing provisions of this Section 10.3, in the event of the occurrence ofany Fundamental Transaction, any outstanding Awards shall be treated asprovided in the applicable agreement or plan of merger, consolidation,dissolution, liquidation, or sale of assets.

18

----

10.4**         Changesin Control**.  The Boardmay also, but need not, specify that other transactions or events constitute a “***Change in Control***”.  The Board may do that either before or afterthe transaction or event occurs. Examples of transactions or events that the Board may treat as Changesin Control are: (a) any person or entity, including a “group” ascontemplated by Section 13(d)(3) of the Exchange Act, acquires securitiesholding 50% or more of the total combined voting power or value of the Company,or (b) as a result of or in connection with a contested election ofCompany Directors, the persons who were Company Directors immediately beforethe election cease to constitute a majority of the Board.  In connection with a Change in Control, notwithstandingany other provision of this Plan, the Board may, but need not, take any one ormore of the actions described in Section 10.3. In addition, the Board may extend the date for the exercise of Awards(but not beyond their original Expiration Date).  The Board need not adopt the same rules foreach Award or each Awardee.

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

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

# **11.****                               AutomaticOption Grants to Non-Employee Directors**

## 11.1         **Automatic Option Grants to Non-Employee Directors**.

### (a)           **Annual Grant**.  On thedate of the last regular meeting of directors during each calendar year eachindividual who is serving as a Non-Employee Director shall automatically begranted a Nonstatutory Option to purchase 15,000 Shares (the “***Annual Grant***”),provided, however, that such individual has served as a Non-Employee Directorfor at least six months.

### (b)           **Initial Grant**.  Uponthe first appointment or election of an individual as a Non-Employee Director,such individual shall automatically be granted a Nonstatutory Option topurchase 25,000 Shares (the “***InitialGrant***”).

19

----

### (c)           **Exercise Price**.

#### (i)            TheOption Price shall be equal to one hundred percent (100%) of the Fair MarketValue of the Shares on the Option grant date.

#### (ii)           TheOption Price shall be payable in one or more of the alternative formsauthorized pursuant to Section 6.4. Except to the extent the sale and remittance procedure specifiedthereunder is utilized, payment of the Option Price must be made on the date ofexercise.

### (d)           **Option Term**.  EachOption shall have a term of ten (10) years measured from the Option grant date.

### (e)           **Exercise and Vesting of Options**.  The Shares underlying each Option issuedpursuant to each Initial Grant shall vest and be exercisable in a series offorty-eight (48) successive equal monthly installments at the end of each fullmonth from the date of grant, for so long as the Non-Employee Directorcontinuously remains a Director. The Shares underlying each Option issuedpursuant to each Annual Grant shall vest and be exercisable in a series oftwelve (12) successive equal monthly installments at the end of each full monthfrom the date of grant, for so long as the Non-Employee Director continuouslyremains a Director.

### (f)            **Termination of Board Service**.  The following provisions shall govern theexercise of any Options held by the Awardee at the time the Awardee ceases toserve as a Non-Employee Director:

#### (i)            ***In General***.  Except as otherwise provided in Section 11.3,after cessation of service as a Director (the “***Cessation Date***”),the Awardee’s Options shall be exercisable to the extent (but only to theextent) they are vested on the Cessation Date and only during the three monthsafter such Cessation Date, but in no event after the Expiration Date.  To the extent the Awardee does not exercisean Option within the time specified for exercise, the Option shallautomatically terminate.

#### (ii)           ***Death or Disability***.  If an Awardee’s cessation of service on theBoard is due to death or disability (as determined by the Board), allNon-Employee Director Options of that Awardee, whether or not exercisable uponsuch Cessation Date, may be exercised at any time on or prior to the ExpirationDate.  In the case of a cessation ofservice due to death, an Option may be exercised as provided inSection 17.  In the case of acessation of service due to disability, if a guardian or conservator has beenappointed to act for the Awardee and been granted this authority as part ofthat appointment, that guardian or conservator may exercise the Option onbehalf of the Awardee.  Death ordisability occurring after an Awardee’s cessation of service shall not causethe cessation of service to be treated as having occurred due to death ordisability.  To the extent an Option isnot so exercised within the time specified for its exercise, the Option shallautomatically terminate.

20

----

## 11.2         **Certain Transactions and Events**.

### (a)           In the event of aFundamental Transaction while the Awardee remains a Non-Employee Director, theShares at the time subject to each outstanding Option held by such Awardeepursuant to Section 11, but not otherwise vested, shall automatically vest infull so that each such Option shall, immediately prior to the effective date ofthe Fundamental Transaction, become exercisable for all the Shares as fullyvested Shares and may be exercised for any or all of those vested Shares.Immediately following the consummation of the Fundamental Transaction, eachOption shall terminate and cease to be outstanding, except to the extentassumed by the successor corporation (or Affiliate thereof).

### (b)           Inthe event of a Change in Control while the Awardee remains a Non-EmployeeDirector, the Shares at the time subject to each outstanding Option held bysuch Awardee pursuant to Section 11, but not otherwise vested, shallautomatically vest in full so that each such Option shall, immediately prior tothe effective date of the Change in Control, become exercisable for all theShares as fully vested Shares and may be exercised for any or all of thosevested Shares. Each such Option shall remain exercisable for such fully vestedShares until the expiration or sooner termination of the Option term inconnection with a Change in Control.

### (c)           Each Option which isassumed in connection with a Fundamental Transaction shall be appropriatelyadjusted, immediately after such Fundamental Transaction, to apply to thenumber and class of securities which would have been issuable to the Awardee inconsummation of such Fundamental Transaction had the Option been exercisedimmediately prior to such Fundamental Transaction. Appropriate adjustmentsshall also be made to the Option Price payable per share under each outstandingOption, provided the aggregate Option Price payable for such securities shallremain the same.

### (d)           The grant of Optionspursuant to Section 11 shall in no way affect the right of the Company toadjust, reclassify, reorganize or otherwise change its capital or businessstructure or to merge, consolidate, dissolve, liquidate or sell or transfer allor any part of its business or assets.

### (e)           The remaining termsof each Option granted pursuant to Section 11 shall, as applicable, be the sameas terms in effect for Awards granted under this Plan.  Notwithstanding the foregoing, the provisionsof Section 9.4 and Section 10 shall not apply to Options granted pursuant toSection 11.

21

----

11.3**         Limited Transferability of Options**.  Each Option granted pursuant to Section 11may be assigned in whole or in part during the Awardee’s lifetime to one ormore members of the Awardee’s family or to a trust established exclusively forone or more such family members or to an entity in which the Awardee ismajority owner or to the Awardee’s former spouse, to the extent such assignmentis in connection with the Awardee’s estate or financial plan or pursuant to aDomestic Relations Order. The assigned portion may only be exercised by theperson or persons who acquire a proprietary interest in the Option pursuant tothe assignment. The terms applicable to the assigned portion shall be the sameas those in effect for the Option immediately prior to such assignment and shallbe set forth in such documents issued to the assignee as the Administrator maydeem appropriate. The Awardee may also designate one or more persons as thebeneficiary or beneficiaries of his or her outstanding Options under Section11, and those Options shall, in accordance with such designation, automaticallybe transferred to such beneficiary or beneficiaries upon the Awardee’s deathwhile holding those Options. Such beneficiary or beneficiaries shall take thetransferred Options subject to all the terms and conditions of the applicableAward Agreement evidencing each such transferred Option, including withoutlimitation, the limited time period during which the Option may be exercisedfollowing the Awardee’s death.

# 12.**                                 Withholdingand Tax Reporting**

## 12.1         **Tax Withholding Alternatives**.

### (a)           **General**.  Whenever Award Shares are issued or becomefree of restrictions, the Company may require the Awardee to remit to theCompany an amount sufficient to satisfy any applicable tax withholdingrequirement, whether the related tax is imposed on the Awardee or theCompany.  The Company shall have noobligation to deliver Award Shares or release Award Shares from an escrow orpermit a transfer of Award Shares until the Awardee has satisfied those taxwithholding obligations.

### (b)           **Method of Payment**.  The Awardee shall pay any requiredwithholding using the forms of consideration described in Section 6.4(b),except that, in the discretion of the Administrator, the Company may alsopermit the Awardee to use any of the forms of payment described in Section6.4(c).  The Administrator, in its solediscretion, may also permit Award Shares to be withheld to pay requiredwithholding.  If the Administratorpermits Award Shares to be withheld, the Fair Market Value of the Award Shareswithheld, as determined as of the date of withholding, shall not exceed theamount determined by the applicable minimum statutory withholding rates.

12.2**         Reporting of Dispositions**.  Any holder of OptionShares acquired under an Incentive Stock Option shall promptly notify theAdministrator, following such procedures as the Administrator may require, ofthe sale or other disposition of any of those Option Shares if the dispositionoccurs during:  (a) the longer oftwo years after the Grant Date of the Incentive Stock Option and one year afterthe date the Incentive Stock Option was exercised, or (b) such otherperiod as the Administrator has established.

22

----

# 13.**                                 Compliancewith Law**

The grant of Awards and the issuance and subsequenttransfer of Award Shares shall be subject to compliance with all ApplicableLaw, including all applicable securities laws. Awards may not be exercised, and Award Shares may not be transferred, inviolation of Applicable Law.  Thus, forexample, Awards may not be exercised unless: (a) a registration statement under the Securities Act is then ineffect with respect to the related Award Shares, or (b) in the opinion oflegal counsel to the Company, those Award Shares may be issued in accordancewith an applicable exemption from the registration requirements of theSecurities Act and any other applicable securities laws.  The failure or inability of the Company toobtain from any regulatory body the authority considered by the Company’s legalcounsel to be necessary or useful for the lawful issuance of any Award Sharesor their subsequent transfer shall relieve the Company of any liability forfailing to issue those Award Shares or permitting their transfer.  As a condition to the exercise of any Awardor the transfer of any Award Shares, the Company may require the Awardee tosatisfy any requirements or qualifications that may be necessary or appropriateto comply with or evidence compliance with any Applicable Law.

# 14.**                                 Amendmentor Termination of this Plan or Outstanding Awards**

14.1**         Amendment and Termination**.  Subject to Section 14.2 and 14.3, the Boardmay at any time amend, suspend, or terminate this Plan.

14.2**         Shareholder Approval**.  The Company shall obtain the approval of theCompany’s shareholders for any amendment to this Plan if shareholder approvalis necessary or desirable to comply with any Applicable Law or with therequirements applicable to the grant of Awards intended to be Incentive StockOptions.  The Board may also, but neednot, require that the Company’s shareholders approve any other amendments tothis Plan.

14.3**         Effect**.  No amendment, suspension, ortermination of this Plan, and no modification of any Award even in the absenceof an amendment, suspension, or termination of this Plan, shall impair anyexisting contractual rights of any Awardee unless the affected Awardee consentsto the amendment, suspension, termination, or modification.  However, no such consent shall be required ifthe Board determines, in its sole and absolute discretion, that the amendment,suspension, termination, or modification: (a) is required or advisable in order for the Company, this Plan or theAward to satisfy Applicable Law, to meet the requirements of any accountingstandard or to avoid any adverse accounting treatment, or (b) in connectionwith any transaction or event described in Section 10, is in the best interestsof the Company or its shareholders.  TheBoard may, but need not, take the tax or accounting consequences to affectedAwardees into consideration in acting under the preceding sentence.  Those decisions shall be final, binding andconclusive.  Termination of this Planshall not affect the Administrator’s ability to exercise the powers granted toit under this Plan with respect to (i) Awards granted before the termination ofthis Plan or (ii) Award Shares issued under such Awards even if those AwardShares are issued after the termination of this Plan.

23

----

# 15.**                                 ReservedRights**

15.1**         Nonexclusivity of this Plan**.  ThisPlan shall not limit the power of the Company or any Affiliate to adopt otherincentive arrangements including, for example, the grant or issuance of stockoptions, stock, or other equity-based rights under other plans.

15.2**         Unfunded Plan**.  This Plan shall beunfunded.  Although bookkeeping accountsmay be established with respect to Awardees, any such accounts will be usedmerely as a convenience.  The Companyshall not be required to segregate any assets on account of this Plan, thegrant of Awards, or the issuance of Award Shares.  The Company and the Administrator shall notbe deemed to be a trustee of stock or cash to be awarded under this Plan.  Any obligations of the Company to any Awardeeshall be based solely upon contracts entered into under this Plan, such asAward Agreements.  No such obligationsshall be deemed to be secured by any pledge or other encumbrance on any assetsof the Company.  Neither the Company northe Administrator shall be required to give any security or bond for theperformance of any such obligations.

# 16.**                                 SpecialArrangements Regarding Award Shares**

16.1**         Escrow of Stock Certificates**.  To enforce any restrictions on Award Shares,the Administrator may require their holder to deposit the certificatesrepresenting Award Shares, with stock powers or other transfer instrumentsapproved by the Administrator endorsed in blank, with the Company or an agentof the Company to hold in escrow until the restrictions have lapsed orterminated.  The Administrator may alsocause a legend or legends referencing the restrictions to be placed on thecertificates.  Any Awardee who delivers apromissory note as partial or full consideration for the purchase of AwardShares will be required to pledge and deposit with the Company some or all ofthe Award Shares as collateral to secure the payment of the note.  However, the Administrator may require oraccept other or additional forms of collateral to secure the note and, in anyevent, the Company will have full recourse against the maker of the note,notwithstanding any pledge or other collateral.

24

----

## 16.2         **Repurchase Rights**.

### (a)           **General**.** **Ifan Option is subject to Reverse Vesting or a Stock Award is subject to vestingconditions, the Company shall have the right, during the seven months after theAwardee’s Termination, to repurchase any or all of the Award Shares that wereunvested as of the date of that Termination. If the Award Shares were purchased with a promissory note, therepurchase price shall be the lower of: (a) the Purchase Price for the Award Shares (minus the amount of anycash dividends paid or payable with respect to the Award Shares for which therecord date precedes the repurchase) and (b) the Fair Market Value at the dateof Termination.  In all other cases, therepurchase price shall be determined by the Administrator in accordance withthis Section 16.2 which shall be either (i) the Purchase Price for theAward Shares (minus the amount of any cash dividends paid or payable withrespect to the Award Shares for which the record date precedes the repurchase)or (ii) the lower of (A) the Option Price or Purchase Price for theAward Shares or (B) the Fair Market Value of those Award Shares as of thedate of the Termination.  The repurchaseprice shall be paid in cash or if the Award Shares were purchased in whole orin part with a promissory note, cancellation in whole or in part ofindebtedness under that note, or a combination of those means.  The Company may assign this right ofrepurchase.

### (b)           **Procedure**.  The Company or its assignee may choose togive the Awardee a written notice of exercise of its repurchase rights underthis Section 16.2.  However, the Company’sfailure to give such a notice shall not affect its rights to repurchase AwardShares.  The Company must, however,tender the repurchase price during the period specified in this Section 16.2for exercising its repurchase rights in order to exercise such rights.

**Market Standoff**.  If requested by the Company or arepresentative of its underwriters in connection with a registration of anysecurities of the Company under the Securities Act, Awardees or certainAwardees shall be prohibited from selling some or all of their Award Sharesduring a period not to exceed 180 days after the effective date of the Company’sregistration statement.  This restrictionshall not apply to any registration statement on Form S-8, Form S-4 or anequivalent registration statement.

# 17.**                                 Beneficiaries**

An Awardee may file a written designation of one ormore beneficiaries who are to receive the Awardee’s rights under the Awardee’sAwards after the Awardee’s death.  Suchdesignation shall be accompanied by a signed acknowledgment from the Awardee’sspouse, if any, consenting to such designation. An Awardee may change such a designation at any time by writtennotice.  If an Awardee designates abeneficiary, the beneficiary may exercise the Awardee’s Awards after theAwardee’s death.  If an Awardee dies whenthe Awardee has no living beneficiary designated under this Plan, the Companyshall allow the executor or administrator of the Awardee’s estate to exercisethe Award or, if there is none, the person entitled to exercise the Optionunder the Awardee’s will or the laws of descent and distribution.  In any case, no Award may be exercised afterits Expiration Date.

25

----

# 18.**                                 Miscellaneous**

18.1**         Governing Law**.  This Plan, the AwardAgreements and all other agreements entered into under this Plan, and allactions taken under this Plan or in connection with Awards or Award Shares,shall be governed by the laws of the State of California.

18.2**         Determination of Value**.  Fair Market Value shall be determined asfollows:

### (a)           **Listed Stock**.  If the Shares are traded on any establishedstock exchange or quoted on a national market system, Fair Market Value shallbe the closing sales price for the Shares as quoted on that stock exchange orsystem for the date the value is to be determined (the “***Value Date***”) as reported by such stock exchange ornational market system, or, if not reported by such stock exchange or nationalmarket system, as reported in *The**Wall Street Journal* or a similar publication.  If no sales are reported as having occurredon the Value Date, Fair Market Value shall be that closing sales price for thelast preceding trading day on which sales of Shares are reported as havingoccurred.  If no sales are reported ashaving occurred during the five trading days before the Value Date, Fair MarketValue shall be the closing bid for Shares on the Value Date.  If Shares are listed on multiple exchanges orsystems, Fair Market Value shall be based on sales or bid prices on the primaryexchange or system on which Shares are traded or quoted.

### (b)           **Stock Quoted by SecuritiesDealer**.  If Shares areregularly quoted by a recognized securities dealer but selling prices are notreported on any established stock exchange or quoted on a national market system,Fair Market Value shall be the mean between the high bid and low asked priceson the Value Date.  If no prices arequoted for the Value Date, Fair Market Value shall be the mean between the highbid and low asked prices on the last preceding trading day on which any bid andasked prices were quoted.

### (c)           **No Established Market**.  If Shares are not traded on any establishedstock exchange or quoted on a national market system and are not quoted by arecognized securities dealer, the Board or Committee will determine Fair MarketValue in good faith.  The Board orCommittee will consider the following factors, and any others it considerssignificant, in determining Fair Market Value: (i) the price at whichother securities of the Company have been issued to purchasers other thanEmployees, Directors, or Consultants, (ii) the Company’s shareholder’sequity, prospective earning power, dividend-paying capacity, and non-operatingassets, if any, and (iii) any other relevant factors, including theeconomic outlook for the Company and the Company’s industry, the Company’sposition in that industry, the Company’s goodwill and other intellectualproperty, and the values of securities of other businesses in the sameindustry.

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

26

----

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

18.5**         Notices**.  Unless the Administrator specifiesotherwise, any notice to the Company under any Award Agreement or with respectto any Awards or Award Shares shall be in writing (or, if so authorized bySection 18.4, communicated electronically), shall be addressed to theCompany, and shall only be effective when received by the Company.

Adopted by the Board on:  March 19, 2004

Approved by the shareholders on:  May 27, 2004

Effective date of this Plan:  May 27, 2004

Amended by the Boardon:  March 23, 2006

27

----