exv10w1



 






Exhibit 10.1




	 	 	 	 	 	 
	 	2004 EQUITY INCENTIVE PLAN
	 	 	
	 	as enacted by the Board of Directors and approved by the Stockholders
	 	 	11.10.04	 
	 








1. Purpose of this Plan




The purpose of this 2004 Equity Incentive Plan is to enhance the long-term stockholder value of
Hyperion Solutions Corporation, by offering opportunities to eligible individuals to participate in
the growth in value of the equity of Hyperion Solutions Corporation.




2. Definitions and Rules of Interpretation




          2.1 Definitions.



               This Plan uses the following defined terms:




	 	(a)  	“Administrator” means the Board or the Committee, or any officer
or employee of the Company to whom the Board 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 and any other entity that the Board
or Committee designates as an “Affiliate” for purposes of this Plan.
	 
	 	(c)  	“Applicable Law” means any and all laws of whatever jurisdiction,
within or without the United States, and the rules of any stock exchange or
quotation system on which Shares are listed or quoted, applicable to the taking
or refraining from taking of any action under this Plan, including the
administration of this Plan and the issuance or transfer of Awards or Award
Shares.
	 
	 	(d)  	“Award” means a Stock Award (e.g. restricted stock unit award),
Cash Award, or Option granted in accordance with the terms of this Plan.
	 
	 	(e)  	“Award Agreement” means the document evidencing the grant of an
Award.
	 
	 	(f)  	“Award Shares” means Shares covered by an outstanding Award or
purchased under an Award.
	 
	 	(g)  	“Awardee” means: (i) a person to whom an Award has been granted,
including a holder of a Substitute Award and (ii) a person to whom an Award has
been transferred in accordance with all applicable requirements of Sections 6.5,
7(h), and 17.
	 
	 	(h)  	“Board” means the Board of Directors of the Company.
	 
	 	(i)  	“Brio Plan Shares” means the Shares, which were originally
reserved for issuance under the Brio Software, Inc. 1998 Stock Option Plan and
1998 Directors’ Stock Option Plan but that were not issued or subject to options
as of the consummation of the transactions contemplated by that certain
Agreement and Plan of Merger and Reorganization dated July 23, 2002, among
parties including the Company and Brio Software, Inc., on a post-converted basis
under such agreement, and became available for issuance pursuant to the Former
Plan.
	 
	 	(j)  	“Cash Award” means the right to receive cash as described in
Section 8.3.
	 
	 	(k)  	“Change in Control” means any transaction or event that the Board
specifies as a Change in Control under Section 10.4.
	 
	 	(l)  	“Code” means the Internal Revenue Code of 1986.
	 
	 	(m)  	“Committee” means a committee composed of Company Directors
appointed in accordance with the Company’s charter documents and Section 4.
	 
	 	(n)  	“Company” means Hyperion Solutions Corporation, a Delaware
corporation.
	 
	 	(o)  	“Company Director” means a member of the Board.
	 
	 	(p)  	“Consultant” means an individual who, or an employee of any
entity that, provides bona fide services to the Company or an Affiliate not in

connection with the offer or sale of securities in a capital-raising
transaction, but who is not an Employee.
	 
	 	(q)  	“Director” means a member of the Board or a member of the board
of directors of an Affiliate.





	 	 	 	 
	 	 	 	 
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	 	(r)  	“Divestiture” means any transaction or event that the Board
specifies as a Divestiture under Section 10.5.
	 
	 	(s)  	“Domestic Relations Order” means a “domestic relations order” as
defined in, and otherwise meeting the requirements of, Section 414(p) of the
Code, except that reference to a “plan” in that definition shall be to this
Plan.
	 
	 	(t)  	“Effective Date” means the later of the date on which this Plan
is approved by the Company’s stockholders and the date on which this Plan is
approved by the Board.
	 
	 	(u)  	“Employee” means a regular employee of the Company or an
Affiliate, including an officer or an individual who is also a Director, who is
treated as an employee in the personnel records of the Company or an Affiliate,
but not individuals who are classified by the Company or an Affiliate as: (i)
leased from or otherwise employed by a third party, (ii) independent
contractors, or (iii) intermittent or temporary workers. The Company’s or an
Affiliate’s classification of an individual as an “Employee” (or as not an
“Employee”) for purposes of this Plan shall not be altered retroactively even if
that classification is changed retroactively for another purpose as a result of
an audit, litigation or otherwise. An Awardee shall not cease to be an Employee
due to transfers between locations of the Company, or between the Company and an
Affiliate, or to any successor to the Company or an Affiliate that assumes the
Awardee’s Options under Section 10. Neither service as a Director nor receipt
of a director’s fee shall be sufficient to make a Director an “Employee.”
	 
	 	(v)  	“Exchange Act” means the Securities Exchange Act of 1934.
	 
	 	(w)  	“Executive” means, if the Company has any class of any equity
security registered under Section 12 of the Exchange Act, an individual who is
subject to Section 16 of the Exchange Act or who is a “covered employee” under
Section 162(m) of the Code, in either case because of the individual’s
relationship with the Company or an Affiliate. If the Company does not have any
class of any equity security registered under Section 12 of the Exchange Act,
“Executive” means any (i) Director, (ii) officer elected or appointed by the
Board, or (iii) beneficial owner of more than 10% of any class of the Company’s
equity securities.
	 
	 	(x)  	“Expiration Date” means, with respect to an Award, the date
stated in the Award Agreement as the expiration date of the Award or, if no such
date is stated in the Award Agreement, then the last day of the maximum exercise
period for the Award, disregarding the effect of an Awardee’s Termination or any
other event that would shorten that period.
	 
	 	(y)  	“Fair Market Value” means the value of Shares as determined under
Section 18.2.
	 
	 	(z)  	“Former Plan” means the Company’s 1995 Stock Option/Stock
Issuance Plan.
	 
	 	(aa)  	“Fundamental Transaction” means any transaction or event
described in Section 10.3.
	 
	 	(bb)  	“Grant Date” means the date the Administrator approves the grant
of an Award. However, if the Administrator specifies that an Award’s Grant Date
is a future date or the date on which a condition is satisfied, the Grant Date
for such Award is that future date or the date that the condition is satisfied.
	 
	 	(cc)  	“Incentive Stock Option” means an Option intended to qualify as
an incentive stock option under Section 422 of the Code and designated as an
Incentive Stock Option in the Award Agreement for that Option.
	 
	 	(dd)  	“Nonstatutory Option” means any Option other than an Incentive
Stock Option.
	 
	 	(ee)  	“Non-Employee Director” means any person who is a member of the
Board but is not an Employee of the Company or any Affiliate of the Company and
has not been an Employee of the Company or any Affiliate of the Company at any
time during the preceding twelve months. Service as a Director does not in
itself constitute employment for purposes of this definition.
	 
	 	(ff)  	“Objectively Determinable Performance Condition” shall mean a
performance condition (i) that is established (A) at the time an Award is
granted or (B) no later than the earlier of (1) 90 days after the beginning of
the period of service to which it relates, or (2) before the elapse of 25% of
the period of service to which it relates, (ii) that is uncertain of achievement
at the time it is established, and (iii) the achievement of which is
determinable by a third party with knowledge of the relevant facts. Examples of
measures that may be used in Objectively Determinable Performance Conditions
include net order dollars, net profit dollars, net profit growth, net revenue
dollars, revenue growth, individual performance, earnings per share, return on
assets, return on equity, and other financial objectives, objective customer
satisfaction indicators and efficiency measures, each with respect to the
Company and/or an Affiliate or individual business unit.
	 
	 	(gg)  	“Officer” means an officer of the Company as defined in Rule
16a-1 adopted under the Exchange Act.





	 	 	 	 
	 	 	 	 
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	 	(hh)  	“Option” means a right to purchase Shares of the Company granted
under this Plan.
	 
	 	(ii)  	“Option Price” means the price payable under an Option for
Shares, not including any amount payable in respect of withholding or other
taxes.







	 	(jj)  	“Option Shares” means Shares covered by an outstanding Option or purchased under an Option.
	 
	 	(kk)  	“Plan” means this 2004 Equity Incentive Plan of Hyperion Solutions Corporation.
	 
	 	(ll)  	“Purchase Price” means the price payable under a Stock Award for
Shares, not including any amount payable in respect of withholding or other
taxes.
	 
	 	(mm)   	“Rule 16b-3” means Rule 16b-3 adopted under Section 16(b) of the Exchange Act.
	 
	 	(nn)  	“Securities Act” means the Securities Act of 1933.
	 
	 	(oo)  	“Share” means a share of the common stock of the Company or other
securities substituted for the common stock under Section 10.
	 
	 	(pp)  	“Stock Award” means an offer by the Company to sell shares
subject to certain restrictions pursuant to the Award Agreement as described in
Section 8.2 or, as determined by the Committee, a notional account representing
the right to be paid an amount based on Shares.
	 
	 	(qq)  	“Substitute Award” means a Substitute Option or Substitute Stock
Award granted in accordance with the terms of this Plan.
	 
	 	(rr)  	“Substitute Option” means an Option granted in substitution for,
or upon the conversion of, an option granted by another entity to purchase
equity securities in the granting entity.
	 
	 	(ss)  	“Substitute Stock Award” means a Stock Award granted in
substitution for, or upon the conversion of, a stock award granted by another
entity to purchase equity securities in the granting entity.
	 
	 	(tt)  	“Termination” means that the Awardee has ceased to be, with or
without any cause or reason, an Employee, Director or Consultant. However,
unless so determined by the Administrator, or otherwise provided in this Plan,
“Termination” shall not include a change in status from an Employee, Consultant
or Director to another such status. An event that causes an Affiliate to cease
being an Affiliate shall be treated as the “Termination” of that Affiliate’s
Employees, Directors, and Consultants.





          2.2 Rules of Interpretation. Any reference to a “Section,” without more, is to a
Section of this Plan. Captions and titles are used for convenience in this Plan and shall not, by
themselves, determine the meaning of this Plan. Except when otherwise indicated by the context,
the singular includes the plural and vice versa. Any reference to a statute is also a reference to
the applicable rules and regulations adopted under that statute. Any reference to a statute, rule
or regulation, or to a section of a statute, rule or regulation, is a reference to that statute,
rule, regulation, or section as amended from time to time, both before and after the Effective Date
and including any successor provisions.



3. Shares Subject to this Plan; Term of this Plan




          3.1 Number of Award Shares. The Shares issuable under this Plan shall only be those
Shares available for grant under the Former Plan (including (a) Shares which were subject to
previous awards under the Former Plan but which become available for subsequent grant under the
terms of the Former Plan and (b) Brio Plan Shares) plus an additional 1,500,000 Shares. The number
of Shares initially reserved for issuance over the term of this Plan shall be increased by those
Shares that are restored pursuant to the decision of the Board or Committee pursuant to Section
6.4(a) to deliver only such Shares as are necessary to award the net Share appreciation. Except as
required by applicable law, Shares shall not reduce the number of Shares reserved for issuance
under this Plan until the earlier of the date such Shares are vested pursuant to the terms of the
applicable Award or the actual date of delivery of the Shares to the Awardee. Also, 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 be increased by the number of Shares that were covered by,
but not purchased under, that Award.



          3.2 Source of Shares. Award Shares may be: (a) Shares that have never been issued,
(b) Shares that have been issued but are no longer outstanding, or (c) Shares that are outstanding
and are acquired to discharge the Company’s obligation to deliver Award Shares.



          3.3 Term of this Plan.




	 	(a)  	This Plan shall be effective on, and Awards may be granted under
this Plan on and after the Effective Date.
	 
	 	(b)  	Subject to the provisions of Section 14, Awards may be granted
under this Plan for a period of ten years from the earlier of the date on which
the Board approves this Plan and the date the Company’s 





	 	 	 	 
	 	 	 	 
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	 	  	stockholders approve this Plan. Accordingly, Awards may not be granted under this Plan after the
ten-year anniversary of the earlier of those dates.





4. Administration




          4.1 General.




	 	(a)  	The Board shall have ultimate responsibility for administering
this Plan. The Board may delegate certain of its responsibilities to a
Committee, which shall consist of at least two members of the Board. The Board
or the Committee may further delegate its responsibilities to any Employee of
the Company or any Affiliate. Where this Plan specifies that an action is to be
taken or a determination made by the Board, only the Board may take that action
or make that determination. Where this Plan specifies that an action is to be
taken or a determination made by the Committee, only the Committee may take that
action or make that determination. Where this Plan references the
“Administrator,” the action may be taken or determination made by the Board, the
Committee, or other Administrator. However, only the Board or the Committee may
approve grants of Awards to Executives, and an Administrator other than the
Board or the Committee may grant Awards only within the guidelines established
by the Board or Committee. Moreover, all actions and determinations by any
Administrator are subject to the provisions of this Plan.
	 
	 	(b)  	So long as the Company has registered and outstanding a class of
equity securities under Section 12 of the Exchange Act, the Committee shall
consist of Company Directors who are “Non-Employee Directors” as defined in Rule
16b-3 and, after the expiration of any transition period permitted by Treasury
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 Board or the Committee. Subject to the other provisions of this
Plan, the Board or the Committee shall have the authority to:




	 	(a)  	grant Awards, including Substitute Awards;
	 
	 	(b)  	determine the Fair Market Value of Shares;
	 
	 	(c)  	determine the Option Price and the Purchase Price of Awards;
	 
	 	(d)  	select the Awardees;
	 
	 	(e)  	determine the times Awards are granted;
	 
	 	(f)  	determine the number of Shares subject to each Award;
	 
	 	(g)  	determine the methods of payment that may be used to purchase
Award Shares;
	 
	 	(h)  	determine the methods of payment that may be used to satisfy
withholding tax obligations;
	 
	 	(i)  	determine the other terms of each Award, including but not
limited to the time or times at which Awards may be exercised, whether and under
what conditions an Award is assignable, and whether an Option is a Nonstatutory
Option or an Incentive Stock Option;
	 
	 	(j)  	modify or amend any Award;
	 
	 	(k)  	authorize any person to sign any Award Agreement or other
document related to this Plan on behalf of the Company;
	 
	 	(l)  	determine the form of any Award Agreement or other document
related to this Plan, and whether that document, including signatures, may be in
electronic form;
	 
	 	(m)  	interpret this Plan and any Award Agreement or document related
to this Plan;
	 
	 	(n)  	correct any defect, remedy any omission, or reconcile any
inconsistency in this Plan, any Award Agreement or any other document related to
this Plan;
	 
	 	(o)  	adopt, amend, and revoke rules and regulations under this Plan,
including rules and regulations relating to sub-plans and Plan addenda;
	 
	 	(p)  	adopt, amend, and revoke special rules and procedures which may
be inconsistent with the terms of this Plan, set forth (if the Administrator so
chooses) in sub-plans regarding (for example) the operation and administration
of this Plan and the terms of Awards, if and to the extent necessary or useful
to accommodate non-U.S. Applicable Laws and practices as they apply to Awards
and Award Shares held by, or granted or issued to, persons working or resident
outside of the United States or employed by Affiliates incorporated outside the
United States;
	 
	 	(q)  	determine whether a transaction or event should be treated as a
Change in Control, a Divestiture or neither;






	 	 	 	 
	 	 	 	 
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	 	(r)  	determine the effect of a Fundamental Transaction and, if the
Board determines that a transaction 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)  	make all other determinations the Administrator deems necessary
or advisable for the administration of this Plan.






          4.3 Scope of Discretion. Subject to the provisions of this Section 4.3, on all
matters for which this Plan confers the authority, right or power on the Board, the Committee, or
other Administrator to make decisions, that body may make those decisions in its sole and absolute
discretion. Those decisions will be final, binding and conclusive. In making its decisions, the
Board, Committee or other Administrator need not treat all persons eligible to receive Awards, all
Awardees, all Awards or all Award Shares the same way. Notwithstanding anything herein to the
contrary, and except as provided in Section 14.3, the discretion of the Board, Committee or other
Administrator is subject to the specific provisions and specific limitations of this Plan, as well
as all rights conferred on specific Awardees by Award Agreements and other agreements.



5. Persons Eligible to Receive Awards





          5.1 Eligible Individuals. Awards (including Substitute Awards) may be granted to, and
only to, Employees, Directors and Consultants, including to prospective Employees, Directors and
Consultants conditioned on the beginning of their service for the Company or an Affiliate.
However, Incentive Stock Options may only be granted to Employees, as provided in Section 7(g).



          5.2 Section 162(m) Limitation.




	 	(a)  	Options. Subject to the provisions of this Section 5.2, for so
long as the Company is a “publicly held corporation” within the meaning of
Section 162(m) of the Code: (i) no Employee may be granted one or more Options
within any fiscal year of the Company under this Plan to purchase more than
700,000 Shares under Options, subject to adjustment pursuant to Section 10 and
(ii) Options may be granted to an Executive only by the Committee (and,
notwithstanding anything to the contrary in Section 4.1(a), not by the Board).
If an Option is cancelled without being exercised or if the Option Price of an
Option is reduced, that cancelled or repriced Option shall continue to be
counted against the limit on Awards that may be granted to any individual under
this Section 5.2. Notwithstanding anything herein to the contrary, a new
Employee of the Company or an Affiliate shall be eligible to receive up to a
maximum of 1,200,000 Shares under Options in the calendar year in which they
commence employment, subject to adjustment pursuant to Section 10.
	 
	 	(b)  	Cash Awards and Stock Awards. Any Cash Award or Stock Award
intended as “qualified performance-based compensation” within the meaning of
Section 162(m) of the Code must vest or become exercisable contingent on the
achievement of one or more Objectively Determinable Performance Conditions. The
Committee shall have the discretion to determine the time and manner of
compliance with Section 162(m) of the Code.





6. Terms and Conditions of Options



The following rules apply to Options granted pursuant to this Section 6.



          6.1 Price. No Option may have an Option Price less than the Fair Market Value of the
Shares on the Grant Date.



          6.2 Term. No Option shall be exercisable after its Expiration Date. No Option may
have an Expiration Date that is more than six years after its Grant Date. Additional provisions
regarding the term of Incentive Stock Options are provided in Sections 7(a) and 7(e).



          6.3 Vesting. Options shall be vested and exercisable in accordance with a schedule
related to the Grant Date, the date the Optionee’s directorship, employment or consultancy begins,
or a different date specified in the Option Agreement provided, however, Options shall not vest or
be exercisable within a six month period starting on the Grant Date.



          6.4 Form and Method of Payment.




	 	(a)  	The Board or Committee shall determine the acceptable form and
method of payment for exercising an Option. So long as variable accounting
pursuant to “APB 25” does not apply and the Board or




	 	 	 	 
	 	 	 	 
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	 	   	Committee otherwise
determines there is no material adverse accounting consequence at the time of
exercise, the Board or Committee may require the delivery in Shares for the
value of the net appreciation of the Shares at the time of exercise over the
exercise price. The difference between full number of Shares covered by the exercised portion of the Award and the number of
Shares actually delivered shall be restored to the amount of Shares reserved for
issuance under Section 3.1.
	 
	 	(b)  	Acceptable forms of payment for all Option Shares are cash, check
or wire transfer, denominated in U.S. dollars except as specified by the
Administrator for non-U.S. Employees or non-U.S. sub-plans.
	 
	 	(c)  	In addition, the Administrator may permit payment to be made by
any of the following methods:






	 	I.  	OTHER SHARES, OR THE DESIGNATION OF OTHER SHARES, WHICH
(A) ARE “MATURE” SHARES FOR PURPOSES OF AVOIDING VARIABLE ACCOUNTING
TREATMENT UNDER GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GENERALLY MATURE
SHARES ARE THOSE THAT HAVE BEEN OWNED BY THE OPTIONEE FOR MORE THAN SIX
MONTHS ON THE DATE OF SURRENDER), AND (B) HAVE A FAIR MARKET VALUE ON THE
DATE OF SURRENDER EQUAL TO THE OPTION PRICE OF THE SHARES AS TO WHICH THE
OPTION IS BEING EXERCISED;
	 
	 	II.  	PROVIDED THAT A PUBLIC MARKET EXISTS FOR THE SHARES,
CONSIDERATION RECEIVED BY THE COMPANY UNDER A PROCEDURE UNDER WHICH A
LICENSED BROKER-DEALER ADVANCES FUNDS ON BEHALF OF AN OPTIONEE OR SELLS
OPTION SHARES ON BEHALF OF AN OPTIONEE (A “CASHLESS EXERCISE PROCEDURE”),
PROVIDED THAT IF THE COMPANY EXTENDS OR ARRANGES FOR THE EXTENSION OF
CREDIT TO AN OPTIONEE UNDER ANY CASHLESS EXERCISE PROCEDURE, NO OFFICER OR
DIRECTOR MAY PARTICIPATE IN THAT CASHLESS EXERCISE PROCEDURE;
	 
	 	III.  	CANCELLATION OF ANY DEBT OWED BY THE COMPANY OR ANY
AFFILIATE TO THE OPTIONEE BY THE COMPANY INCLUDING WITHOUT LIMITATION
WAIVER OF COMPENSATION DUE OR ACCRUED FOR SERVICES PREVIOUSLY RENDERED TO
THE COMPANY; AND
	 
	 	IV.  	ANY COMBINATION OF THE METHODS OF PAYMENT PERMITTED BY
ANY PARAGRAPH OF THIS SECTION 6.4.
	 
	 	v.  	The Administrator may also permit any other form or
method of payment for Option Shares permitted by Applicable Law.





          6.5 Nonassignability of Options. Except as determined by the Administrator, no Option
shall be assignable or otherwise transferable by the Optionee except by will or by the laws of
descent and distribution. However, Options may be transferred and exercised in accordance with a
Domestic Relations Order and may be exercised by a guardian or conservator appointed to act for the
Optionee. Incentive Stock Options may only be assigned in compliance with Section 7(h).



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



          6.7 Repricings. Options may not be repriced, replaced or regranted through
cancellation or modification without stockholder approval.



7. Incentive Stock Options



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



	 	 	 	 
	 	 	 	 
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	 	(a)  	The Expiration Date of an Incentive Stock Option shall not be
later than six years from its Grant Date, with the result that no Incentive
Stock Option may be exercised after the expiration of six years from its Grant
Date.
	 
	 	(b)  	No Incentive Stock Option may be granted more than ten years from
the date this Plan was approved by the Board.
	 
	 	(c)  	Options intended to be incentive stock options under Section 422
of the Code that are granted to any single Optionee under all incentive stock
option plans of the Company and its Affiliates, including incentive stock
options granted under this Plan, may not vest at a rate of more than $100,000 in
Fair Market Value of stock (measured on the grant dates of the options) during
any calendar year. For this purpose, an option vests with respect to a given
share of stock the first time its holder may purchase that share,
notwithstanding any right of the Company to repurchase that share. Unless the
administrator of that option plan specifies otherwise in the related agreement
governing the option, this vesting limitation shall be applied by, to the extent
necessary to satisfy this $100,000 rule, treating certain stock options that
were intended to be incentive stock options under Section 422 of the Code as
Nonstatutory Options. The stock options or portions of stock options to be
reclassified as Nonstatutory Options are those with the highest option prices,
whether granted under this Plan or any other equity compensation plan of the
Company or any Affiliate that permits that treatment. This Section 7(c) shall
not cause an Incentive Stock Option to vest before its original vesting date or
cause an Incentive Stock Option that has already vested to cease to be vested.
	 
	 	(d)  	In order for an Incentive Stock Option to be exercised for any
form of payment other than those described in Section 6.4(b), that right must be
stated at the time of grant in the Option Agreement relating to that Incentive
Stock Option.
	 
	 	(e)  	Any Incentive Stock Option granted to a Ten Percent Stockholder,
must have an Expiration Date that is not later than five years from its Grant
Date, with the result that no such Option may be exercised after the expiration
of five years from the Grant Date. A “Ten Percent Stockholder” is any person
who, directly or by attribution under Section 424(d) of the Code, owns stock
possessing more than ten percent of the total combined voting power of all
classes of stock of the Company or of any Affiliate on the Grant Date.
	 
	 	(f)  	The Option Price of an Incentive Stock Option shall never be less
than the Fair Market Value of the Shares at the Grant Date. The Option Price for
the Shares covered by an Incentive Stock Option granted to a Ten Percent
Stockholder shall never be less than 110% of the Fair Market Value of the Shares
at the Grant Date.
	 
	 	(g)  	Incentive Stock Options may be granted only to Employees. If an
Optionee changes status from an Employee to a Consultant, that Optionee’s
Incentive Stock Options become Nonstatutory Options if not exercised within the
time period described in Section 7(i) (determined by treating that change in
status as a Termination solely for purposes of this Section 7(g)).
	 
	 	(h)  	No rights under an Incentive Stock Option may be transferred by
the Optionee, other than by will or the laws of descent and distribution. During
the life of the Optionee, an Incentive Stock Option may be exercised only by the
Optionee. The Company’s compliance with a Domestic Relations Order, or the
exercise of an Incentive Stock Option by a guardian or conservator appointed to
act for the Optionee, shall not violate this Section 7(h).
	 
	 	(i)  	An Incentive Stock Option shall be treated as a Nonstatutory
Option if it remains exercisable after, and is not exercised within, the
three-month period beginning with the Optionee’s Termination for any reason
other than the Optionee’s death or disability (as defined in Section 22(e) of
the Code). In the case of Termination due to disability, an Incentive Stock
Option shall be treated as a Nonstatutory Option if it remains exercisable
after, and is not exercised within, one year after the Optionee’s Termination.
In the case of Termination due to death, an Incentive Stock Option shall
continue to be treated as an Incentive Stock Option while it remains
exercisable.
	 
	 	(j)  	An Incentive Stock Option may only be modified by the Board.




	 	 	 	 
	 	 	 	 
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8. Stock Awards and Cash Awards




          8.1 Reserved.



          8.2 Stock Awards. The following rules apply to all Stock Awards:




	 	(a)  	General. Total Stock Awards shall not exceed 785,000 Shares plus
such restricted stock awards which do not vest and are repurchased by the
Company pursuant to the Former Plan. The specific terms and conditions of a
Stock Award applicable to the Awardee shall be provided for in the Award
Agreement. The Award Agreement shall state the number of Shares that the Awardee
shall be entitled to receive or purchase, the terms and conditions on which the
Shares shall vest, the price to be paid, whether Shares are to be delivered at
the time of grant or at some deferred date specified in the Award Agreement
(e.g. a restricted stock unit award agreement), whether the Award is payable
solely in Shares, cash or either 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 Shares subject to a
right of repurchase or risk of forfeiture be held in escrow until such
repurchase right or risk of forfeiture lapses. The grant or vesting of a Stock
Award may be made contingent on the achievement of Objectively Determinable
Performance Conditions.
	 
	 	(b)  	Right of Repurchase. If so provided in the Award Agreement,
Award Shares acquired pursuant to a Stock Award may be subject to repurchase by
the Company or an Affiliate if not vested in accordance with the Award
Agreement.
	 
	 	(c)  	Form of Payment. The Administrator shall determine the
acceptable form and method of payment for exercising a Stock Award. Acceptable
forms of payment for all Award Shares are cash, check or wire transfer,
denominated in U.S. dollars except as specified by the Administrator for
non-U.S. sub-plans. In addition, the Administrator may permit payment to be
made by any of the methods permitted with respect to the exercise of Options
pursuant to Section 6.4.
	 
	 	(d)  	Nonassignability of Stock Awards. Except as determined by the
Administrator, no Stock Award shall be assignable or otherwise transferable by
the Awardee except by will or by the laws of descent and distribution.
Notwithstanding anything to the contrary herein, Stock Awards may be transferred
and exercised in accordance with a Domestic Relations Order.
	 
	 	(e)  	Substitute Stock Award. The Board may cause the Company to grant
Substitute Stock Awards in connection with the acquisition by the Company or an
Affiliate of equity securities of any entity (including by merger) or all or a
portion of the assets of any entity. Unless and to the extent specified
otherwise by the Board, Substitute Stock Awards shall have the same terms and
conditions as the stock awards they replace, except that (subject to the
provisions of Section 10) Substitute Stock Awards shall be Stock Awards to
purchase Shares rather than equity securities of the granting entity and shall
have a Purchase Price that, as determined by the Board in its sole and absolute
discretion, properly reflects the substitution. Any such Substituted Stock
Award shall be effective on the effective date of the acquisition.





          8.3 Cash Awards. The following rules apply to all Cash Awards:



Cash Awards may be granted either alone, in addition to, or in tandem with other Awards granted
under this Plan. After the Administrator determines that it will offer a Cash Award, it shall
advise the Awardee, by means of an Award Agreement, of the terms, conditions and restrictions
related to the Cash Award.



9. Exercise of Awards




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



          9.2 Time of Exercise. Options and Stock Awards shall be considered exercised when the
Company receives: (a) written notice of exercise from the person entitled to exercise the Option or
Stock Award, (b) full payment, or provision for payment, in a form and method approved by the
Administrator, for the Shares for which the Option or Stock Award is being exercised, and (c) with
respect to Nonstatutory Options, payment, or provision for payment, in a form approved by the Administrator,
of all applicable withholding taxes due upon exercise. An Award may not be exercised for a
fraction of a Share.



	 	 	 	 
	 	 	 	 
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          9.3 Issuance of Award Shares. The Company shall issue Award Shares in the name of the
person properly exercising the Award. If the Awardee is that person and so requests, the Award
Shares shall be issued in the name of the Awardee and the Awardee’s spouse. The Company shall
endeavor to issue Award Shares promptly after an Award is exercised or after the Grant Date of a
Stock Award, as applicable. Until Award Shares are actually issued, as evidenced by the
appropriate entry on the stock register of the Company or its transfer agent, the Awardee will not
have the rights of a stockholder with respect to those Award Shares, even though the Awardee has
completed all the steps necessary to exercise the Award. No adjustment shall be made for any
dividend, distribution, or other right for which the record date precedes the date the Award Shares
are issued, except as provided in Section 10.



          9.4 Termination.




	 	(a)  	In General. Except as provided in an Award Agreement or in
writing by the Administrator, including in an Award Agreement, and as otherwise
provided in Sections 9.4(b), (c), (d) and (e) after an Awardee’s Termination,
the Awardee’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 three months
after the Termination, but in no event after the Expiration Date. To the extent
the Awardee does not exercise an Award within the time specified for exercise,
the Award shall automatically terminate. Unless waived by the Company’s Human
Resources department (which determination may be made on a case by case basis
without any requirement to consider whether or not this provision was waived in
any previous case whether similar or not, except that the Company’s Human
Resources department may not exercise such discretion with respect to a person
who is or within six months of his termination was a reporting person for
purposes of Section 16 of the Exchange Act), in the event the Awardee is
terminated by the Company for Cause, any vested Options which are unexercised as
of the date of Awardee’s Termination shall expire and become unexercisable
thereafter. In the case of persons subject to Section 16 of the Exchange Act,
such waiver must be made by the Board or Committee if so required under the
rules of the Exchange Act. For purposes of this Section 9.4, Cause shall mean
the commission of any act of fraud, embezzlement or dishonesty by the Awardee,
any unauthorized use or disclosure by such person of confidential information or
trade secrets of the Company, or any other intentional misconduct by such person
adversely affecting the business or affairs of the Company in a material manner.
The foregoing definition shall not be deemed to be inclusive of all the acts or
omissions which the Company may consider as grounds for the dismissal or
discharge of any Awardee or other person in the service of the Company.
	 
	 	(b)  	Leaves of Absence. Unless otherwise provided in the Award
Agreement, no Award may be exercised more than three months after the beginning
of a leave of absence, other than a personal or medical leave approved by an
authorized representative of the Company with employment guaranteed upon return.
Awards shall not continue to vest during a leave of absence, unless otherwise
determined by the Administrator with respect to an approved personal or medical
leave with employment guaranteed upon return.
	 
	 	(c)  	Death or Disability. Unless otherwise provided by the
Administrator, if an Awardee’s Termination is due to death or disability (as
determined by the Administrator with respect to all Awards other than Incentive
Stock Options and as defined by Section 22(e) of the Code with respect to
Incentive Stock Options), all Awards of that Awardee to the extent exercisable
at the date of that Termination may be exercised for one year after that
Termination, but in no event after the Expiration Date. In the case of
Termination due to death, an Award 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 been granted this authority as part of
that appointment, that guardian or conservator may exercise the Award on behalf
of the Awardee. Death or disability occurring after an Awardee’s Termination
shall not cause the Termination to be treated as having occurred due to death or
disability. To the extent an Award is not so exercised within the time
specified for its exercise, the Award shall automatically terminate.
	 
	 	(d)  	Divestiture. If an Awardee’s Termination is due to a
Divestiture, the Board may take any one or more of the actions described in
Section 10.3 or 10.4 with respect to the Awardee’s Awards.
	 
	 	(e)  	Administrator Discretion. Notwithstanding the provisions of
Section 9.4 (a)-(e), the Plan Administrator shall have complete discretion,
exercisable either at the time an Award is granted or at any time while the
Award remains outstanding, to:




	 	 	 	 
	 	 	 	 
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	 	I.  	EXTEND THE PERIOD OF TIME FOR WHICH THE AWARD IS TO
REMAIN EXERCISABLE FOLLOWING THE AWARDEE’S TERMINATION, FROM THE LIMITED
EXERCISE PERIOD OTHERWISE IN EFFECT FOR THAT AWARD TO SUCH GREATER PERIOD
OF TIME AS THE ADMINISTRATOR SHALL DEEM APPROPRIATE, BUT IN NO EVENT BEYOND
THE EXPIRATION DATE; AND/OR
	 
	 	II.  	PERMIT THE AWARD TO BE EXERCISED DURING THE APPLICABLE
POST-TERMINATION EXERCISE PERIOD, NOT ONLY WITH RESPECT TO THE NUMBER OF
VESTED SHARES FOR WHICH SUCH AWARD MAY BE EXERCISABLE AT THE TIME OF THE
AWARDEE’S TERMINATION BUT ALSO WITH RESPECT TO ONE OR MORE ADDITIONAL
INSTALLMENTS IN WHICH THE AWARDEE WOULD HAVE VESTED HAD THE AWARDEE NOT
BEEN SUBJECT TO TERMINATION.






	 	(f)  	Consulting or Employment Relationship. Nothing in this Plan or
in any Award Agreement, and no Award or the fact that Award Shares remain
subject to repurchase rights, shall: (A) interfere with or limit the right of
the Company or any Affiliate to terminate the employment or consultancy of any
Awardee at any time, whether with or without cause or reason, and with or
without the payment of severance or any other compensation or payment, or (B)
interfere with the application of any provision in any of the Company’s or any
Affiliate’s charter documents or Applicable Law relating to the election,
appointment, term of office, or removal of a Director.





10. Certain Transactions and Events




          10.1 In General. Except as provided in this Section 10, no change in the capital
structure of the Company, merger, sale or other disposition of assets or a subsidiary, change in
control, issuance by the Company of shares of any class of securities or securities convertible
into shares of any class of securities, exchange or conversion of securities, or other transaction
or event shall require or be the occasion for any adjustments of the type described in this Section
10. Additional provisions with 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, reverse stock
split, recapitalization, combination or reclassification of stock, stock dividend, spin-off,
extraordinary cash or other property dividend or similar change to the capital structure of the
Company (not including a Fundamental Transaction or Change in Control), the Board 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 individual
under this Plan, (c) the Purchase Price of any Stock Award, (d) the Option Price and number and
class of securities issuable under each outstanding Option, and (e) the repurchase price of any
securities substituted for Award Shares that are subject to repurchase rights. The specific
adjustments shall be determined by the Board. Unless the Board specifies otherwise, any securities
issuable as a result of any such adjustment shall be rounded down to the next lower whole security.
The Board need not adopt the same rules for each Award or each Awardee.



          10.3 Fundamental Transactions. Except for grants to Non-Employee Directors pursuant
to Section 11 herein, in the event of (a) a merger or consolidation in which the Company is not the
surviving corporation (other than a merger or consolidation with a wholly-owned subsidiary, a
reincorporation of the Company in a different jurisdiction, or other transaction in which there is
no substantial change in the stockholders of the Company or their relative stock holdings and the
Awards granted under this Plan are assumed, converted or replaced by the successor corporation,
which assumption shall be binding on all Participants), (b) a merger in which the Company is the
surviving corporation but after which the stockholders of the Company immediately prior to such
merger (other than any stockholder that merges, or which owns or controls another corporation that
merges, with the Company in such merger) cease to own their shares or other equity interest in the
Company, (c) the sale of all or substantially all of the assets of the Company, or (d) the
acquisition, sale, or transfer of more than 50% of the outstanding shares of the Company by tender
offer or similar transaction (each, a “Fundamental Transaction”), any or all outstanding Awards may
be assumed, converted or replaced by the successor corporation (if any), which assumption,
conversion or replacement shall be binding on all participants under this Plan. In the
alternative, the successor corporation may substitute equivalent Awards or provide substantially
similar consideration to participants as was provided to stockholders (after taking into account
the existing provisions of the Awards). The successor corporation may also issue, in place of outstanding
Shares held by the participants, substantially similar shares or other property subject to
repurchase restrictions no less favorable to the participant. In the event such successor
corporation (if any) does not assume or substitute Awards, as provided above, pursuant to a
transaction described in this Subsection 10.3, the vesting with respect



	 	 	 	 
	 	 	 	 
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to such Awards shall fully
and immediately accelerate or the repurchase rights of the Company shall fully and immediately
terminate, as the case may be, so that the Awards may be exercised or the repurchase rights shall
terminate before, or otherwise in connection with the closing or completion of the Fundamental
Transaction or event, but then terminate. Notwithstanding anything in this Plan to the contrary,
the Committee may, in its sole discretion, provide that the vesting of any or all Award Shares
subject to vesting or right of repurchase shall accelerate or lapse, as the case may be, upon a
transaction described in this Section 10.3. If the Committee exercises such discretion with
respect to Options, such Options shall become exercisable in full prior to the consummation of such
event at such time and on such conditions as the Committee determines, and if such Options are not
exercised prior to the consummation of the Fundamental Transaction, they shall terminate at such
time as determined by the Committee. Subject to any greater rights granted to participants under
the foregoing provisions of this Section 10.3, in the event of the occurrence of any Fundamental
Transaction, any outstanding Awards shall be treated as provided in the applicable agreement or
plan of merger, consolidation, dissolution, liquidation, or sale of assets.




          10.4 Changes of Control. The Board may also, but need not, specify that other
transactions or events constitute a “Change in Control”. The Board may do that either before or
after the transaction or event occurs. Examples of transactions or events that the Board may treat
as Changes of Control are: (a) any person or entity, including a “group” as contemplated by Section
13(d)(3) of the Exchange Act, acquires securities holding 30% 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 of
Company Directors, the persons who were Company Directors immediately before the election cease to
constitute a majority of the Board. In connection with a Change in Control, notwithstanding any
other provision of this Plan, the Board may, but need not, take any one or more 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 for each
Award or each Awardee. Notwithstanding anything in this Plan to the contrary, in the event of an
involuntary Termination of services for any reason other than death, disability or Cause, within 18
months following the consummation of a Fundamental Transaction or Change in Control, any Awards,
assumed or substituted in a Fundamental Transaction or Change in Control, which are subject to
vesting conditions and/or the right of repurchase in favor of the Company or a successor entity,
shall accelerate fully so that such Award Shares are immediately exercisable upon Termination or,
if subject to the right of repurchase in favor of the Company, such repurchase rights shall lapse
as of the date of Termination. Such Awards shall be exercisable for a period of one (1) year
following termination, but in no event after the Expiration Date.



          10.5 Divestiture. If the Company or an Affiliate sells or otherwise transfers equity
securities of an Affiliate to a person or entity other than the Company or an Affiliate, or leases,
exchanges or transfers all or any portion of its assets to such a person or entity, then the Board
may specify that such transaction or event 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 10.3 or 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 a Termination. The Board need not adopt the same rules for each Award or Awardee.



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



          10.7 Cut-Back to Preserve Benefits. If the Administrator determines that the net
after-tax amount to be realized by any Awardee, taking into account any accelerated vesting,
termination of repurchase rights, or cash payments to that Awardee in connection with any
transaction or event set forth in this Section 10 would be greater if one or more of those steps
were not taken or payments were not made with respect to that Awardee’s Awards or Award Shares,
then, at the election of the Awardee, to such extent, one or more of those steps shall not be taken
and payments shall not be made.



	 	 	 	 
	 	 	 	 
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11. Non-Employee Director Awards




          11.1 Non-Employee Director Awards.




	 	(a)  	General. Awards may be granted pursuant to this Section 11.1 to:
(i) each Non-Employee Director who is first elected or appointed to the Board at
any time after the Effective Date, and (ii) commencing in 2004, on the date of
each annual meeting of stockholders, each individual who is to continue serving
as a Non-Employee Director, provided, however, that such individual has served
as a Non-Employee Director for at least six (6) months. Subject to this Section
11.1, the Committee shall determine the terms of each such Award, including,
without limitation, the type of Award, the number of Shares subject to such
Award, the Option Price (but not below the Fair Market Value at the date of
grant), of any such Awards, the term of the Award (which shall not exceed six
years) and the time or times at which any such Awards may be exercised.
	 
	 	(b)  	Termination of Service. Except as otherwise provided in Section
11.3, after Awardee ceases to serve as a Non-Employee Director, Employee or
Consultant (the “Cessation Date”) Awards granted pursuant to Section 11.1 held
by the Awardee on the Cessation Date shall be exercisable to the extent (but
only to the extent) they are vested on the Cessation Date and only during the
twelve months after such Cessation Date, but in no event after the Expiration
Date. To the extent the Awardee does not exercise an Award within the twelve
months after the Cessation Date, the Award shall automatically terminate. In
the case of a cessation of service due to death, an Award may be exercised as
provided in Section 17. In the case of a cessation of service due to
disability, if a guardian or conservator has been appointed to act for the
Awardee and been granted this authority as part of that appointment, that
guardian or conservator may exercise the Award on behalf of the Awardee. Death
or disability occurring after an Awardee’s cessation of service shall not cause
the cessation of service to be treated as having occurred due to death or
disability.
	 
	 	(c)  	Board Discretion. The Awards under this Section 11.1 are not
intended as the exclusive Awards that may be made to Non-Employee Directors
under this Plan. The Board may, in its discretion, amend the Plan with respect
to the terms of the Awards herein, may add or substitute other Awards or may
temporarily or permanently suspend Awards hereunder, all without approval of the
Company’s stockholders.





          11.2 Reserved.



          11.3 Certain Transactions and Events.




	 	(a)  	In the event of a Fundamental Transaction while the Awardee
remains a Non-Employee Director, the Shares at the time subject to each
outstanding Option held by such Awardee pursuant to Section 11, but not
otherwise vested, shall automatically vest in full so that each such Option
shall, immediately prior to the effective date of the Fundamental Transaction,
become exercisable for all the Shares as fully vested Shares and may be
exercised for any or all of those vested Shares. Immediately following the
consummation of the Fundamental Transaction, each Option shall terminate and
cease to be outstanding, except to the extent assumed by the successor
corporation (or Affiliate thereof).
	 
	 	(b)  	In the event of a Change in Control while the Awardee remains a
Non-Employee Director, the Shares at the time subject to each outstanding Option
held by such Awardee pursuant to Section 11, but not otherwise vested, shall
automatically vest in full so that each such Option shall, immediately prior to
the effective date of the Change in Control, become exercisable for all the
Shares as fully vested Shares and may be exercised for any or all of those
vested Shares. Each such Option shall remain exercisable for such fully vested
Shares until the expiration or sooner termination of the Option term in
connection with a Change in Control.
	 
	 	(c)  	Each Option which is assumed in connection with a Fundamental
Transaction shall be appropriately adjusted, immediately after such Fundamental
Transaction, to apply to the number and class of securities which would have
been issuable to the Awardee in consummation of such Fundamental Transaction had
the Option been exercised immediately prior to such Fundamental Transaction.
Appropriate adjustments shall also be made to the Option Price payable per share
under each outstanding Option, provided the aggregate Option Price payable for
such securities shall remain the same. To the extent the actual holders of the
Company’s outstanding Common Stock receive cash




	 	 	 	 
	 	 	 	 
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	 	   	consideration for their Common Stock in consummation of the Fundamental Transaction, the successor corporation may, in connection with the assumption of the outstanding Options
granted pursuant to Section 11, substitute one or more shares of its own common
stock with a fair market value equivalent to the cash consideration paid per share
of Common Stock in such Fundamental Transaction.
	 
	 	(d)  	The grant of Options pursuant to Section 11 shall in no way
affect the right of the Company to adjust, reclassify, reorganize or otherwise
change its capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.






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





          11.4 Limited Transferability of Options. Each Option granted pursuant to Section 11
may be assigned in whole or in part during the Awardee’s lifetime to one or more members of the
Awardee’s family or to a trust established exclusively for one or more of such family members or to
an entity in which the Awardee is majority owner or to the Awardee ’s former spouse, to the extent
such assignment is in connection with the Awardee ’s estate or financial plan or pursuant to a
Domestic Relations Order. The assigned portion may only be exercised by the person or persons who
acquire a proprietary interest in the Option pursuant to the assignment. The terms applicable to
the assigned portion shall be the same as those in effect for the Option immediately prior to such
assignment and shall be set forth in such documents issued to the assignee as the Administrator may
deem appropriate. The Awardee may also designate one or more persons as the beneficiary or
beneficiaries of his or her outstanding Options under Section 11, and those Options shall, in
accordance with such designation, automatically be transferred to such beneficiary or beneficiaries
upon the Awardee ‘s death while holding those Options. Such beneficiary or beneficiaries shall take
the transferred Options subject to all the terms and conditions of the applicable Award Agreement
evidencing each such transferred Option, including (without limitation) the limited time period
during which the Option may be exercised following the Awardee ’s death.



12. Withholding and Tax Reporting




          12.1 Tax Withholding Alternatives.




	 	(a)  	General. Whenever Award Shares are issued or become free of
restrictions, the Company may require the Awardee to remit to the Company an
amount sufficient to satisfy any applicable tax withholding requirement, whether
the related tax is imposed on the Awardee or the Company. The Company shall
have no obligation to deliver Award Shares or release Award Shares from an
escrow or permit a transfer of Award Shares until the Awardee has satisfied
those tax withholding obligations. Whenever payment in satisfaction of Awards
is made in cash, the payment will be reduced by an amount sufficient to satisfy
all tax withholding requirements.
	 
	 	(b)  	Method of Payment. The Awardee shall pay any required
withholding using the forms of consideration described in Section 6.4(b), except
that, in the discretion of the Administrator, the Company may also permit the
Awardee to use any of the forms of payment described in Section 6.4(c). The
Administrator, in its sole discretion, may also permit Award Shares to be
withheld to pay required withholding. If the Administrator permits Award Shares
to be withheld, the Fair Market Value of the Award Shares withheld, as
determined as of the date of withholding, shall not exceed the amount determined
by the applicable minimum statutory withholding rates.





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



13. Compliance with Law



The grant of Awards and the issuance and subsequent transfer of Award Shares shall be subject to
compliance with all Applicable Law, including all applicable securities laws. Awards may not be
exercised, and Award Shares may not be transferred, in violation of Applicable Law. Thus, for
example, Awards may not be exercised unless: (a) a registration statement under the Securities Act
is then in effect with respect to the related Award Shares, or (b) in the opinion of legal



	 	 	 	 
	 	 	 	 
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counsel to the Company, those Award Shares may be issued in accordance with an applicable exemption from
the registration requirements of the Securities Act and any other applicable securities laws. The
failure or inability of the Company to obtain from any regulatory body the authority considered by
the Company’s legal counsel to be necessary or useful for the lawful issuance of any Award Shares or their subsequent transfer shall relieve the Company of any
liability for failing to issue those Award Shares or permitting their transfer. As a condition to
the exercise of any Award or the transfer of any Award Shares, the Company may require the Awardee
to satisfy any requirements or qualifications that may be necessary or appropriate to comply with
or evidence compliance with any Applicable Law.




14. Amendment or Termination of this Plan or Outstanding Awards




          14.1 Amendment and Termination. The Board may at any time amend, suspend, or
terminate this Plan.



          14.2 Stockholder Approval. The Company shall obtain the approval of the Company’s
stockholders for any amendment to this Plan if stockholder approval is necessary or desirable to
comply with any Applicable Law or with the requirements applicable to the grant of Awards intended
to be Incentive Stock Options. The Board may also, but need not, require that the Company’s
stockholders approve any other amendments to this Plan.



          14.3 Effect. No amendment, suspension, or termination of this Plan, and no
modification of any Award even in the absence of an amendment, suspension, or termination of this
Plan, shall impair any existing contractual rights of any Awardee unless the affected Awardee
consents to the amendment, suspension, termination, or modification. Notwithstanding anything
herein to the contrary, no such consent shall be required if the 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 the Award to satisfy Applicable Law, to meet
the requirements of any accounting standard or to avoid any adverse accounting treatment, or (b) in
connection with any transaction or event described in Section 10, is in the best interests of the
Company or its stockholders. The Board may, but need not, take the tax or accounting consequences
to affected Awardees into consideration in acting under the preceding sentence. Those decisions
shall be final, binding and conclusive. Termination of this Plan shall not affect the

Administrator’s ability to exercise the powers granted to it under this Plan with respect to Awards
granted before the termination of Award Shares issued under such Awards even if those Award Shares
are issued after the termination.



15. Reserved Rights




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



          15.2 Unfunded Plan. This Plan shall be unfunded. Although bookkeeping accounts may
be established with respect to Awardees, any such accounts will be used merely as a convenience.
The Company shall not be required to segregate any assets on account of this Plan, the grant of
Awards, or the issuance of Award Shares. The Company and the Administrator shall not be deemed to
be a trustee of stock or cash to be awarded under this Plan. Any obligations of the Company to any
Awardee shall be based solely upon contracts entered into under this Plan, such as Award
Agreements. No such obligations shall be deemed to be secured by any pledge or other encumbrance
on any assets of the Company. Neither the Company nor the Administrator shall be required to give
any security or bond for the performance of any such obligations.



16. Special Arrangements 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 certificates representing Award Shares, with
stock powers or other transfer instruments approved by the Administrator endorsed in blank, with
the Company or an agent of the Company to hold in escrow until the restrictions have lapsed or
terminated. The Administrator may also cause a legend or legends referencing the restrictions to
be placed on the certificates.



          16.2 Repurchase Rights.




	 	(a)  	General. If a Stock Award is subject to vesting conditions, the
Company shall have the right, during the seven months after the Awardee’s
Termination, to repurchase any or all of the Award Shares that were unvested as
of the date of that Termination. The repurchase price shall be determined by
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	 	   	Administrator in accordance with this Section 16.2 which shall be either (i) the
Purchase Price for the Award Shares (minus the amount of any cash dividends paid
or payable with respect to the Award Shares for which the record date precedes the
repurchase) or (ii) the lower of (A) the Purchase Price for the Shares or (B) the
Fair Market Value of those Award Shares as of the date of the Termination. The
repurchase price shall be paid in cash. The Company may assign this right of
repurchase.
	 
	 	(b)  	Procedure. The Company or its assignee may choose to give the
Awardee a written notice of exercise of its repurchase rights under this Section
16.2. However, the Company’s failure to give such a notice shall not affect its
rights to repurchase Award Shares. The Company must, however, tender the
repurchase price during the period specified in this Section 16.2 for exercising
its repurchase rights in order to exercise such rights.





17. Beneficiaries



An Awardee may file a written designation of one or more beneficiaries who are to receive the
Awardee’s rights under the Awardee’s Awards after the Awardee’s death. An Awardee may change such
a designation at any time by written notice. If an Awardee designates a beneficiary, the
beneficiary may exercise the Awardee’s Awards after the Awardee’s death. If an Awardee dies when
the Awardee has no living beneficiary designated under this Plan, the Company shall allow the
executor or administrator of the Awardee’s estate to exercise the Award or, if there is none, the
person entitled to exercise the Option under the Awardee’s will or the laws of descent and
distribution. In any case, no Award may be exercised after its Expiration Date.



18. Miscellaneous




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



          18.2 Determination of Value. Fair Market Value shall be determined as follows:




	 	(a)  	Listed Stock. If the Shares are traded on any established stock
exchange or quoted on a national market system, Fair Market Value shall be the
closing sales price for the Shares as quoted on that stock exchange or system
for the date the value is to be determined (the “Value Date”) as reported in The
Wall Street Journal or a similar publication. If no sales are reported as
having occurred on the Value Date, Fair Market Value shall be that closing sales
price for the last preceding trading day on which sales of Shares are reported
as having occurred. If no sales are reported as having occurred during the five
trading days before the Value Date, Fair Market Value shall be the closing bid
for Shares on the Value Date. If Shares are listed on multiple exchanges or
systems, Fair Market Value shall be based on sales or bid prices on the primary
exchange or system on which Shares are traded or quoted.
	 
	 	(b)  	Stock Quoted by Securities Dealer. If Shares are regularly
quoted by a recognized securities dealer but selling prices are not reported 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 prices on the
Value Date. If no prices are quoted for the Value Date, Fair Market Value shall
be the mean between the high bid and low asked prices on the last preceding
trading day on which any bid and asked prices were quoted.
	 
	 	(c)  	No Established Market. If Shares are not traded on any
established stock exchange or quoted on a national market system and are not
quoted by a recognized securities dealer, the Administrator (following
guidelines established by the Board or Committee) will determine Fair Market
Value in good faith. The Administrator will consider the following factors, and
any others it considers significant, in determining Fair Market Value: (i) the
price at which other securities of the Company have been issued to purchasers
other than Employees, Directors, or Consultants, (ii) the Company’s
stockholders’ equity, prospective earning power, dividend-paying capacity, and
non-operating assets, if any, and (iii) any other relevant factors, including
the economic outlook for the Company and the Company’s industry, the Company’s
position in that industry, the Company’s goodwill and other intellectual
property, and the values of securities of other businesses in the same industry.





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



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



          18.5 Notices. Unless the Administrator specifies otherwise, any notice to the Company
under any Option Agreement or with respect to any Awards or Award Shares shall be in writing (or,
if so authorized by Section 18.4, communicated electronically), shall be addressed to the Secretary
of the Company, and shall only be effective when received by the Secretary of the Company.




 




	 	 	 	 
	 	 	 	 
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