Exhibit 10.5


 


FAVRILLE, INC.

2001 EQUITY INCENTIVE PLAN


 


INITIALLY
ADOPTED BY THE BOARD OF DIRECTORS AND APPROVED BY STOCKHOLDERS ON

JUNE 6, 2001

AMENDMENT AND RESTATEMENT ADOPTED BY THE BOARD OF DIRECTORS ON DECEMBER 31, 2004, AND APPROVED BY
STOCKHOLDERS ON DECEMBER 31, 2004


 


TERMINATION
DATE: JUNE 5, 2011


 


1.             PURPOSES.


 


(a)           Amendment and
Restatement.  The
Plan amends and restates the Favrille, Inc. 2001 Equity Incentive Plan
(the “Prior Plan”).
All outstanding awards granted under the Prior Plan shall remain subject to the
terms of the Prior Plan. All options granted subsequent to the effective date
of this Plan shall be subject to the terms of this Plan.


 


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


 


(c)           Available Stock
Awards.  The
purpose of the Plan is to provide a means by which eligible recipients of Stock
Awards may be given an opportunity to benefit from increases in the value of
the Common Stock through the granting of the following Stock Awards: (i) Incentive
Stock Options, (ii) Nonstatutory Stock Options, (iii) Stock Purchase
Awards, (iv) Stock Bonus Awards, (v) Stock Appreciation Rights, (vi) Stock
Unit Awards and (vii) Other Stock Awards.


 


(d)           General Purpose.  The Company, by means of the Plan,
seeks to retain the services of the group of persons eligible to receive Stock
Awards, to secure and retain the services of new members of this group and to
provide incentives for such persons to exert maximum efforts for the success of
the Company and its Affiliates.


 


2.             DEFINITIONS.


 


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


 


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


 


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


 


(d)           “Cause” means, with respect to a Participant, the
occurrence of any of the following: (i) such Participant’s commission of
any felony or any crime involving fraud, dishonesty or moral turpitude under
the laws of the United States or any state therof; (ii) such Participant’s
attempted commission of, or participation in, a fraud or act of dishonesty against
the Company; (iii) such Participant’s intentional, material violation of
any contract or agreement between the Participant and the Company or any
statutory duty owed to the Company; (iv) such Participant’s unauthorized
use or disclosure of the Company’s confidential information or trade secrets; (v) such
Participant’s gross misconduct; or (vi) such Participant’s conduct that
constitutes gross insubordination, incompetence or habitual neglect of duties
and that results in (or might reasonably result in) material harm to the
business of the Company. The determination that a termination is for Cause
shall be made by the Company in its sole and exclusive judgment and discretion.
Any determination by the Company that the Continuous Service of a Participant
was terminated by reason of dismissal without Cause for the purposes of
outstanding Stock Awards held by such Participant shall have no effect upon any
determination of the rights or obligations of the Company or such Participant
for any other purpose.


 


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


 


(i)  any Exchange Act Person becomes the
Owner, directly or indirectly, of securities of the Company representing more
than fifty percent (50%) of the combined voting power of the Company’s then


 





















 


outstanding
securities other than by virtue of a merger, consolidation or similar
transaction. Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur (A) on account of the acquisition of securities of the
Company by an investor, any affiliate thereof or any other Exchange Act Person
from the Company in a transaction or series of related transactions the primary
purpose of which is to obtain financing for the Company through the issuance of
equity securities or (B) solely because the level of Ownership held by any
Exchange Act Person (the “Subject
Person”) exceeds the designated percentage threshold of the
outstanding voting securities as a result of a repurchase or other acquisition
of voting securities by the Company reducing the number of shares outstanding,
provided that if a Change in Control would occur (but for the operation of this
sentence) as a result of the acquisition of voting securities by the Company,
and after such share acquisition, the Subject Person becomes the Owner of any
additional voting securities that, assuming the repurchase or other acquisition
had not occurred, increases the percentage of the then outstanding voting
securities Owned by the Subject Person over the designated percentage
threshold, then a Change in Control shall be deemed to occur;


 


(ii)  there is consummated a merger,
consolidation or similar transaction involving (directly or indirectly) the
Company and, immediately after the consummation of such merger, consolidation
or similar transaction, the stockholders of the Company immediately prior
thereto do not Own, directly or indirectly, either (A) outstanding voting
securities representing more than fifty percent (50%) of the combined
outstanding voting power of the surviving Entity in such merger, consolidation
or similar transaction or (B) more than fifty percent (50%) of the
combined outstanding voting power of the parent of the surviving Entity in such
merger, consolidation or similar transaction, in each case in substantially the
same proportions as their Ownership of the outstanding voting securities of the
Company immediately prior to such transaction;


 


(iii)  the stockholders of the Company approve
or the Board approves a plan of complete dissolution or liquidation of the
Company, or a complete dissolution or liquidation of the Company shall
otherwise occur;


 


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


 


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


 


Notwithstanding the foregoing or any other provision of this Plan, the
definition of Change in Control (or any analogous term) in an individual
written agreement between the Company or any Affiliate and the Participant
shall supersede the foregoing definition with respect to Stock Awards subject
to such agreement (it being understood, however, that if no definition of
Change in Control or any analogous term is set forth in such an individual
written agreement, the foregoing definition shall apply).


 


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


 


(g)           “Committee” means a committee of one (1) or more
members of the Board appointed by the Board in accordance with Section 3(c).


 


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


 


(i)            “Company” means Favrille, Inc., a Delaware
corporation.


 





















 


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


 


(k)           “Continuous Service” means that the Participant’s
service with the Company or an Affiliate, whether as an Employee, Director or
Consultant, is not interrupted or terminated. A change in the capacity in which
the Participant renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Participant
renders such service, provided that there is no interruption or termination of
the Participant’s service with the Company or an Affiliate, shall not terminate
a Participant’s Continuous Service. For example, a change in status from an
Employee of the Company to a Consultant of an Affiliate or to a Director shall
not constitute an interruption of Continuous Service. The Board or the chief
executive officer of the Company, in that party’s sole discretion, may
determine whether Continuous Service shall be considered interrupted in the
case of any leave of absence approved by that party, including sick leave,
military leave or any other personal leave. Notwithstanding the foregoing, a
leave of absence shall be treated as Continuous Service for purposes of vesting
in a Stock Award only to such extent as may be provided in the Company’s leave
of absence policy or in the written terms of the Participant’s leave of
absence.


 


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


 


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


 


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


 


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


 


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


 


(m)          “Covered Employee” means the chief executive officer
and the four (4) other highest compensated officers of the Company for
whom total compensation is required to be reported to stockholders under the
Exchange Act, as determined for purposes of Section 162(m) of the Code.


 


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


 


(o)           “Disability” means the permanent and total disability of
a person within the meaning of Section 22(e)(3) of the Code.


 


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


 


(q)           “Entity” means a corporation, partnership or other
entity.


 


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


 


(s)           “Exchange Act Person” means any natural person, Entity
or “group” (within the meaning of Section 13(d) or 14(d) of the
Exchange Act), except that “Exchange Act Person” shall not include (A) the
Company or any Subsidiary of the Company, (B) any employee benefit plan of
the Company or any Subsidiary of the Company or any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any
Subsidiary of the Company, (C) an underwriter temporarily holding
securities pursuant to an offering of such securities, (D) an


 





















 


Entity Owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their Ownership of stock of
the Company.


 


(t)            “Fair Market Value” means, as of any
date, the value of the Common Stock determined as follows:


 


(i)  If the Common Stock is listed on any
established stock exchange or traded on the Nasdaq National Market or the
Nasdaq SmallCap Market, the Fair Market Value of a share of Common Stock shall
be the closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such exchange or market (or the exchange or market with
the greatest volume of trading in the Common Stock) on the last market trading
day prior to the day of determination, as reported in The Wall Street Journal or such other
source as the Board deems reliable.


 


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


 


(u)           “Incentive Stock Option” means an Option
intended to qualify as an incentive stock option within the meaning of Section 422
of the Code and the regulations promulgated thereunder.


 


(v)            “IPO Date” means the effective date of the initial
public offering of the Common Stock.


 


(w)           “Non-Employee Director” means a Director who either (i) is
not a current Employee or Officer of the Company or an Affiliate, does not
receive compensation, either directly or indirectly, from the Company or an Affiliate
for services rendered as a consultant or in any capacity other than as a
Director (except for an amount as to which disclosure would not be required
under Item 404(a) of Regulation S-K promulgated pursuant to the
Securities Act (“Regulation S-K”)),
does not possess an interest in any other transaction for which disclosure
would be required under Item 404(a) of Regulation S-K, and is not
engaged in a business relationship for which disclosure would be required
pursuant to Item 404(b) of Regulation S-K; or (ii) is otherwise
considered a “non-employee director” for purposes of Rule 16b-3.


 


(x)           “Nonstatutory Stock Option” means an Option not intended to
qualify as an Incentive Stock Option.


 


(y)           “Officer” means a person who is an officer of the
Company within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.


 


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


 


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


 


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


 


(cc)         “Other Stock Award” means an award based in whole or
in part by reference to the Common Stock which is granted pursuant to the terms
and conditions of Section 7(e).


 


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


 


(ee)         “Outside Director” means a Director who either (i) is
not a current employee of the Company or an “affiliated corporation” (within
the meaning of Treasury Regulations promulgated under Section 162(m) of
the Code), is not a former employee of the Company or an “affiliated
corporation” who receives compensation for prior services (other than benefits
under a tax-qualified retirement plan) during the taxable year, has not been an
officer of the Company or an “affiliated corporation”, and does not receive
remuneration from the Company or an “affiliated corporation,” either directly
or indirectly, in any capacity other than as a Director or (ii) is
otherwise considered an “outside director” for purposes of Section 162(m)
of the Code.


 





















 


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


 


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


 


(hh)         “Plan” means this Favrille, Inc.
2001 Equity Incentive Plan, as amended and restated.


 


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


 


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


 


(kk)        “Stock Appreciation
Right”
means a right to receive the appreciation of Common Stock that is granted pursuant
to the terms and conditions of Section 7(d).


 


(ll)           “Stock Appreciation
Right Agreement” means a written agreement between the Company and a holder of a Stock
Appreciation Right evidencing the terms and conditions of a Stock Appreciation
Right grant. Each Stock Appreciation Right Agreement shall be subject to the
terms and conditions of the Plan.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 





















 


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


 


3.             ADMINISTRATION.


 


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


 


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


 


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


 


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


 


(iii)  To effect, at any time and from time to
time, with the consent of any adversely affected Optionholder, (1) the
reduction of the exercise price of any outstanding Option under the Plan, (2) the
cancellation of any outstanding Option under the Plan and the grant in
substitution therefor of (A) a new Option under the Plan or another equity
plan of the Company covering the same or a different number of shares of Common
Stock, (B) a Stock Purchase Award, (C) a Stock Bonus Award, (D) a
Stock Appreciation Right, (E) a Stock Unit Award (F) an Other Stock
Award, (G) cash and/or (H) other valuable consideration (as
determined by the Board, in its sole discretion), or (3) any other action
that is treated as a repricing under generally accepted accounting principles.


 


(iv)  To amend the Plan or a Stock Award as
provided in Section 12.


 


(v)  To terminate or suspend the Plan as
provided in Section 13.


 


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


 


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


 


(c)           Delegation to
Committee.


 


(i)            General.  The Board may delegate
some or all of the administration of the Plan to a Committee or Committees of
one (1) or more members of the Board, and the term “Committee” shall
apply to any person or persons to whom such authority has been delegated. If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore
possessed by the Board that have been delegated to the Committee, including the
power to delegate to a subcommittee any of the administrative powers the
Committee is authorized to exercise (and references in this Plan to the Board
shall thereafter be to the Committee or subcommittee), subject, however, to
such resolutions, not inconsistent with the provisions of the Plan, as may be
adopted from time to time by the Board. The Board may retain the authority to
concurrently administer the Plan with the Committee and may, at any time,
revest in the Board some or all of the powers previously delegated.


 





















 


(ii)           Section 162(m) and Rule 16b-3 Compliance.  In the discretion of
the Board, the Committee may consist solely of two or more Outside Directors,
in accordance with Section 162(m) of the Code, and/or solely of two or
more Non-Employee Directors, in accordance with Rule 16b-3. In
addition, the Board or the Committee, in its discretion, may (1) delegate
to a committee of one or more members of the Board who need not be Outside
Directors the authority to grant Stock Awards to eligible persons who are
either (a) not then Covered Employees and are not expected to be Covered
Employees at the time of recognition of income resulting from such Stock Award,
or (b) not persons with respect to whom the Company wishes to comply with Section 162(m)
of the Code, and/or (2) delegate to a committee of one or more members of
the Board who need not be Non-Employee Directors the authority to grant Stock
Awards to eligible persons who are not then subject to Section 16 of the
Exchange Act.


 


(d)           Delegation to an
Officer.  The Board may delegate to one or more
Officers of the Company the authority to do one or both of the following (i) designate
Officers and Employees of the Company or any of its Subsidiaries to be
recipients of Stock Awards and (ii) determine the number of shares of
Common Stock to be subject to such Stock Awards granted to such Officers and
Employees of the Company; provided, however,
that the Board resolutions regarding such delegation shall specify the total
number of shares of Common Stock that may be subject to the Stock Awards
granted by such Officer and that such Officer may not grant a Stock Award to
himself or herself. Notwithstanding anything to the contrary in this Section 3(d),
the Board may not delegate to an Officer authority to determine the Fair Market
Value of the Common Stock pursuant to Section 2(t)(ii) above.


 


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


 


4.             SHARES SUBJECT TO
THE PLAN.


 


(a)           Share Reserve.  Subject to the
provisions of Section 11(a) relating to Capitalization Adjustments,
the shares of Common Stock that may be issued pursuant to Stock Awards shall
not exceed in the aggregate two million seven hundred
seventy-three thousand eight hundred ninety-nine (2,773,899) shares of Common Stock plus an
annual increase to be added on the first day of each Company fiscal year,
beginning in 2006 and ending in (and including) 2014, equal to the least of the
following amounts: (i) five percent (5%) of the Company’s outstanding
shares of Common Stock on the day preceding the first day of such fiscal year
(rounded to the nearest whole share), (ii) one million three hundred
thousand (1,300,000) shares of Common Stock, or (iii) an amount determined
by the Board.


 


(b)           Reversion of
Shares to the Share Reserve.  If any Stock Award shall for any reason
expire or otherwise terminate, in whole or in part, without having been
exercised in full, or if any shares of Common Stock issued to a Participant
pursuant to a Stock Award are forfeited to or repurchased by the Company,
including, but not limited to, any repurchase or forfeiture caused by the
failure to meet a contingency or condition required for the vesting of such
shares, then the shares of Common Stock not issued under such Stock Award, or
forfeited to or repurchased by the Company, shall revert to and again become
available for issuance under the Plan. If any shares subject to a Stock Award
are not delivered to a Participant because such shares are withheld for the
payment of taxes or the Stock Award is exercised through a reduction of shares
subject to the Stock Award (i.e.,
“net exercised”), the number of shares that are not delivered to the
Participant shall remain available for issuance under the Plan. If the exercise
price of any Stock Award is satisfied by tendering shares of Common Stock held
by the Participant (either by actual delivery or attestation), then the number
of shares so tendered shall remain available for issuance under the Plan.
Notwithstanding anything to the contrary in this Section 4(b), subject to
the provisions of Section 11(a) relating to Capitalization
Adjustments the aggregate maximum number of shares of Common Stock that may be
issued as Incentive Stock Options shall be twenty-three million six hundred
seventy-nine thousand two hundred (23,679,200) shares of Common Stock.


 


(c)           Source of Shares.  The shares of Common Stock subject
to the Plan may be unissued shares or reacquired shares, bought on the market
or otherwise.


 


5.             ELIGIBILITY.


 


(a)           Eligibility for
Specific Stock Awards.  Incentive Stock Options may be granted only to Employees. Stock Awards
other than Incentive Stock Options may be granted to Employees, Directors and
Consultants.


 





















 


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


 


(c)           Section 162(m)
Limitation on Annual Grants.  Subject to the provisions of Section 11(a) relating
to Capitalization Adjustments, at such time as the Company may be subject to
the applicable provisions of Section 162(m) of the Code, no Employee shall
be eligible to be granted Options or Stock Appreciation Rights covering more
than one million (1,000,000) shares of Common Stock during any calendar year.


 


(d)           Consultants.  A Consultant shall not be eligible
for the grant of a Stock Award if, at the time of grant, a Form S-8
Registration Statement under the Securities Act (“Form S-8”) is not available
to register either the offer or the sale of the Company’s securities to such
Consultant because of the nature of the services that the Consultant is
providing to the Company, because the Consultant is not a natural person, or
because of any other rule governing the use of Form S-8.


 


6.             OPTION
PROVISIONS.


 


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


 


(a)           Term.  The Board shall determine the term
of an Option; provided however that,
subject to the provisions of Section 5(b) regarding Ten Percent
Stockholders, no Incentive Stock Option shall be exercisable after the
expiration of ten (10) years from the date on which it was granted.


 


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


 


(c)           Exercise Price of
a Nonstatutory Stock Option.  The Board, in its discretion, shall determine
the exercise price of each Nonstatutory Stock Option.


 


(d)           Consideration.  The purchase price of Common Stock
acquired pursuant to an Option shall be paid, to the extent permitted by
applicable law, either (i) in cash at the time the Option is exercised or (ii) at
the discretion of the Board at the time of the grant of the Option (or
subsequently in the case of a Nonstatutory Stock Option) (1) by delivery
to the Company (either by actual delivery or attestation) of other Common Stock
at the time the Option is exercised, (2) according to a deferred payment
or other similar arrangement with the Optionholder, (3) by a “net exercise”
of the Option (as further described below), (4) pursuant to a program
developed under Regulation T as promulgated by the Federal Reserve Board
that, prior to the issuance of Common Stock, results in either the receipt of
cash (or check) by the Company or the receipt of irrevocable instructions to pay
the aggregate exercise price to the Company from the sales proceeds or (5) in
any other form of legal consideration that may be acceptable to the Board.
Unless otherwise specifically provided in the Option, the purchase price of
Common Stock acquired pursuant to an Option that is paid by delivery to the
Company of other Common Stock acquired, directly or indirectly from the
Company, shall be paid only by shares of the Common Stock of the Company that
have been held for more than six (6) months (or such longer or shorter
period of time required to avoid a charge to earnings for financial accounting
purposes). At any time that the Company is incorporated in Delaware, payment of
the Common Stock’s “par value,” as defined in the Delaware General Corporation
Law, shall not be made by deferred payment.


 





















 


In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid (1) the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest
under the deferred payment arrangement and (2) the treatment of the Option
as a variable award for financial accounting purposes.


 


In the case of a “net exercise” of an Option, the Company will not
require a payment of the exercise price of the Option from the Participant but
will reduce the number of shares of Common Stock issued upon the exercise by
the largest number of whole shares that has a Fair Market Value that does not
exceed the aggregate exercise price. With respect to any remaining balance of
the aggregate exercise price, the Company shall accept a cash payment from the
Participant. Shares of Common Stock will no longer be outstanding under an
Option (and will therefore not thereafter be exercisable) following the
exercise of such Option to the extent of (i) shares used to pay the
exercise price of an Option under the “net exercise”, (ii) shares actually
delivered to the Participant as a result of such exercise and (iii) shares
withheld for purposes of tax withholding.


 


(e)           Transferability
of an Incentive Stock Option.  An Incentive Stock Option shall not be
transferable except by will or by the laws of descent and distribution and
shall be exercisable during the lifetime of the Optionholder only by the
Optionholder. Notwithstanding the foregoing, the Optionholder may, by
delivering written notice to the Company, in a form provided by or otherwise
satisfactory to the Company, designate a third party who, in the event of the
death of the Optionholder, shall thereafter be entitled to exercise the Option.


 


(f)            Transferability
of a Nonstatutory Stock Option.  A Nonstatutory Stock Option shall be
transferable to the extent provided in the Option Agreement. If the Nonstatutory
Stock Option does not provide for transferability, then the Nonstatutory Stock
Option shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionholder
only by the Optionholder. Notwithstanding the foregoing, the Optionholder may,
by delivering written notice to the Company, in a form provided by or otherwise
satisfactory to the Company, designate a third party who, in the event of the
death of the Optionholder, shall thereafter be entitled to exercise the Option.


 


(g)           Vesting
Generally.  The total number of shares of Common Stock subject to an Option may
vest and therefore become exercisable in periodic installments that may be
equal. The Option may be subject to such other terms and conditions on the time
or times when it may be exercised (which may be based on performance or other
criteria) as the Board may deem appropriate. The vesting provisions of
individual Options may vary. The provisions of this Section 6(g) are
subject to any Option provisions governing the minimum number of shares of
Common Stock as to which an Option may be exercised.


 


(h)           Termination of
Continuous Service.  In the event that an Optionholder’s Continuous Service terminates (for
reasons other than Cause or upon the Optionholder’s death or Disability), the
Optionholder may exercise his or her Option (to the extent that the
Optionholder was entitled to exercise such Option as of the date of termination
of Continuous Service) but only within such period of time ending on the
earlier of (i) the expiration of the term of the Option as set forth in
the Option Agreement or (ii) the date three (3) months following the
termination of the Optionholder’s Continuous Service (or such longer or shorter
period specified in the Option Agreement). If, after termination of Continuous
Service, the Optionholder does not exercise his or her Option within the time
specified herein or in the Option Agreement (as applicable), the Option shall
terminate.


 


(i)            Extension of
Termination Date.  An Optionholder’s Option Agreement may provide that if the exercise of
the Option following the termination of the Optionholder’s Continuous Service
(for reasons other than Cause or upon the Optionholder’s death or Disability)
would be prohibited at any time solely because the issuance of shares of Common
Stock would violate the registration requirements under the Securities Act,
then the Option shall terminate on the earlier of (i) the expiration of
the term of the Option set forth in the Option Agreement or (ii) the
expiration of a period of three (3) months after the termination of the
Optionholder’s Continuous Service during which the exercise of the Option would
not be in violation of such registration requirements.


 


(j)            Disability of
Optionholder.  In the event that an Optionholder’s Continuous Service terminates as a
result of the Optionholder’s Disability, the Optionholder may exercise his or
her Option (to the extent that the Optionholder was entitled to exercise such
Option as of the date of termination of Continuous Service), but only


 





















 


within such
period of time ending on the earlier of (i) the expiration of the term of
the Option as set forth in the Option Agreement or (ii) the date twelve
(12) months following such termination of Continuous Service (or such
longer or shorter period specified in the Option Agreement). If, after
termination of Continuous Service, the Optionholder does not exercise his or
her Option within the time specified herein or in the Option Agreement (as
applicable), the Option shall terminate.


 


(k)           Death of
Optionholder.  In the event that (i) an Optionholder’s Continuous Service
terminates as a result of the Optionholder’s death or (ii) the
Optionholder dies within the period (if any) specified in the Option Agreement
after the termination of the Optionholder’s Continuous Service for a reason
other than death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise such Option as of the date of death) by
the Optionholder’s estate, by a person who acquired the right to exercise the
Option by bequest or inheritance or by a person designated to exercise the
option upon the Optionholder’s death pursuant to Section 6(e) or
6(f), but only within the period ending on the earlier of (i) the
expiration of the term of such Option as set forth in the Option Agreement or (ii) the
date eighteen (18) months following the date of death (or such longer or
shorter period specified in the Option Agreement). If, after the Optionholder’s
death, the Option is not exercised within the time specified herein or in the
Option Agreement (as applicable), the Option shall terminate.


 


(l)            Termination for
Cause.  In
the event that an Optionholder’s Continuous Service is terminated for Cause,
the Option shall terminate upon the termination date of such Optionholder’s
Continuous Service, and the Optionholder shall be prohibited from exercising
his or her Option from and after the time of such termination of Continuous
Service.


 


(m)          Early Exercise.  The Option may include
a provision whereby the Optionholder may elect at any time before the
Optionholder’s Continuous Service terminates to exercise the Option as to any
part or all of the shares of Common Stock subject to the Option prior to the
full vesting of the Option. Any unvested shares of Common Stock so purchased
may be subject to a repurchase option in favor of the Company or to any other
restriction the Board determines to be appropriate. The Company shall not be
required to exercise its repurchase option until at least six (6) months
(or such longer or shorter period of time required to avoid a charge to
earnings for financial accounting purposes) have elapsed following exercise of
the Option unless the Board otherwise specifically provides in the Option.


 


7.             PROVISIONS OF
STOCK AWARDS OTHER THAN OPTIONS.


 


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


 


(i)            Purchase Price.  At the time of the grant of a
Stock Purchase Award, the Board will determine the price to be paid by the
Participant for each share subject to the Stock Purchase Award. To the extent
required by applicable law, the price to be paid by the Participant for each
share of the Stock Purchase Award will not be less than the par value of a
share of Common Stock.


 


(ii)           Consideration.  At the time of the grant of a Stock Purchase
Award, the Board will determine the consideration permissible for the payment
of the purchase price of the Stock Purchase Award. The purchase price of Common
Stock acquired pursuant to the Stock Purchase Award shall be paid either: (i) in
cash at the time of purchase or (ii) in any other form of legal
consideration that may be acceptable to the Board and permissible under the
Delaware General Corporation Law.


 


(iii)         Vesting.  Shares of Common Stock acquired under a Stock
Purchase Award may be subject to a share repurchase right or option in favor of
the Company in accordance with a vesting schedule to be determined by the
Board.


 





















 


(iv)          Termination of Participant’s Continuous Service.  In the event that a
Participant’s Continuous Service terminates, the Company shall have the right,
but not the obligation, to repurchase or otherwise reacquire, any or all of the
shares of Common Stock held by the Participant that have not vested as of the
date of termination under the terms of the Stock Purchase Award Agreement. At
the Board’s election, the repurchase right may be at the least of: (i) the
Fair Market Value on the relevant date or (ii) the Participant’s original
cost. The Company shall not be required to exercise its repurchase option until
at least six (6) months (or such longer or shorter period of time required
to avoid a charge to earnings for financial accounting purposes) have elapsed
following the purchase of the restricted stock unless otherwise determined by
the Board or provided in the Stock Purchase Award Agreement.


 


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


 


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


 


(i)            Consideration.  A Stock Bonus Award may be awarded
in consideration for past services actually rendered to the Company or an
Affiliate.


 


(ii)           Vesting.  Shares of Common Stock awarded under the
Stock Bonus Award Agreement may be subject to forfeiture to the Company in
accordance with a vesting schedule to be determined by the Board.


 


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


 


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


 


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


 


(i)            Consideration.  At the time of grant of a Stock
Unit Award, the Board will determine the consideration, if any, to be paid by
the Participant upon delivery of each share of Common Stock subject to the
Stock Unit Award. To the extent required by applicable law, the consideration
to be paid by the Participant for each share of Common Stock subject to a Stock
Unit Award will not be less than the par value of a share of Common Stock. The
consideration may be paid in any form permitted under applicable law.


 





















 


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


 


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


 


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


 


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


 


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


 


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


 


(i)            Strike Price and
Calculation of Appreciation.  Each Stock Appreciation Right will be
denominated in share of Common Stock equivalents. The appreciation distribution
payable on the exercise of a Stock Appreciation Right will be not greater than
an amount equal to the excess of (A) the aggregate Fair Market Value (on
the date of the exercise of the Stock Appreciation Right) of a number of shares
of Common Stock equal to the number of share of Common Stock equivalents in
which the Participant is vested under such Stock Appreciation Right, and with
respect to which the Participant is exercising the Stock Appreciation Right on
such date, over (B) an amount (the strike price) that will be determined
by the Board at the time of grant of the Stock Appreciation Right.


 


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


 


(iii)         Exercise.  To exercise any outstanding Stock
Appreciation Right, the Participant must provide written notice of exercise to
the Company in compliance with the provisions of the Stock Appreciation Right
Agreement evidencing such Stock Appreciation Right.


 


(iv)          Payment.  The appreciation distribution in respect to a
Stock Appreciation Right may be paid in Common Stock, in cash, in any
combination of the two or in any other form of consideration as determined by
the Board and contained in the Stock Appreciation Right Agreement evidencing
such Stock Appreciation Right.


 


(v)            Termination of
Continuous Service.  In
the event that a Participant’s Continuous Service terminates, the Participant
may exercise his or her Stock Appreciation Right (to the extent that the
Participant was entitled to exercise such Stock Appreciation Right as of the
date of termination) but only


 





















 


within such
period of time ending on the earlier of (i) the date three (3) months
following the termination of the Participant’s Continuous Service (or such
longer or shorter period specified in the Stock Appreciation Right Agreement)
or (ii) the expiration of the term of the Stock Appreciation Right as set
forth in the Stock Appreciation Right Agreement. If, after termination, the
Participant does not exercise his or her Stock Appreciation Right within the
time specified herein or in the Stock Appreciation Right Agreement (as
applicable), the Stock Appreciation Right shall terminate.


 


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


 


8.             COVENANTS OF THE
COMPANY.


 


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


 


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


 


9.             USE OF PROCEEDS
FROM STOCK.


 


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


 


10.          MISCELLANEOUS.


 


(a)           Acceleration of
Exercisability and Vesting.  The Board shall have the power to accelerate
the time at which a Stock Award may first be exercised or the time during which
a Stock Award or any part thereof will vest in accordance with the Plan,
notwithstanding the provisions in the Stock Award stating the time at which it
may first be exercised or the time during which it will vest.


 


(b)           Stockholder
Rights.  No
Participant shall be deemed to be the holder of, or to have any of the rights
of a holder with respect to, any shares of Common Stock subject to such Stock
Award unless and until such Participant has satisfied all requirements for
exercise of the Stock Award pursuant to its terms.


 


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


 


(d)           Incentive Stock
Option $100,000 Limitation.  To the extent that the aggregate Fair Market
Value (determined at the time of grant) of Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by any Optionholder
during any calendar year (under all plans of the Company and its Affiliates)
exceeds one hundred thousand dollars ($100,000), the Options or portions
thereof that exceed such limit (according


 





















 


to the order in
which they were granted) shall be treated as Nonstatutory Stock Options, notwithstanding
any contrary provision of the applicable Option Agreement(s).


 


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


 


(f)            Withholding
Obligations.  To the extent provided by the terms of a Stock Award Agreement, the
Company may in its sole discretion, satisfy any federal, state or local tax
withholding obligation relating to a Stock Award by any of the following means
(in addition to the Company’s right to withhold from any compensation paid to
the Participant by the Company) or by a combination of such means: (i) causing
the Participant to tender a cash payment; (ii) withholding shares of
Common Stock from the shares of Common Stock issued or otherwise issuable to
the Participant in connection with the Stock Award; or (iii) by such other
method as may be set forth in the Stock Award Agreement.


 


11.          ADJUSTMENTS UPON CHANGES IN
STOCK.


 


(a)           Capitalization
Adjustments.  If
any change is made in, or other event occurs with respect to, the Common Stock
subject to the Plan or subject to any Stock Award without the receipt of
consideration by the Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange
of shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company (each a “Capitalization Adjustment”), the Plan will
be appropriately adjusted in the class(es) and maximum number of securities
subject to the Plan pursuant to Sections 4(a) and 4(b) and the
maximum number of securities subject to award to any person pursuant to Section 5(c),
and the outstanding Stock Awards will be appropriately adjusted in the
class(es) and number of securities and price per share of Common Stock subject
to such outstanding Stock Awards. The Board shall make such adjustments, and
its determination shall be final, binding and conclusive. (Notwithstanding the
foregoing, the conversion of any convertible securities of the Company shall
not be treated as a transaction “without receipt of consideration” by the
Company.)


 


(b)           Dissolution or
Liquidation.  In
the event of a dissolution or liquidation of the Company, then all outstanding
Stock Awards shall terminate immediately prior to the completion of such
dissolution or liquidation.


 


(c)           Corporate
Transaction.  In
the event of a Corporate Transaction, any surviving corporation or acquiring corporation
may assume or continue any or all Stock Awards outstanding under the Plan or
may substitute similar stock awards for Stock Awards outstanding under the Plan
(including but not limited to, awards to acquire the same consideration paid to
the stockholders of the Company, as the case may be, pursuant to the Corporate
Transaction), and any reacquisition or repurchase rights held by the Company in
respect of Common Stock issued pursuant to Stock Awards may be assigned by the
Company to the successor of the Company (or the successor’s parent company), if
any, in connection with such Corporate Transaction. In the event that any
surviving corporation or acquiring corporation does not assume or continue all
such outstanding Stock Awards or substitute similar stock awards for all such
outstanding Stock Awards, then with respect to Stock Awards that have been not
assumed, continued or substituted and that are held by Participants whose
Continuous Service has not terminated prior to the effective time of the Corporate
Transaction, the vesting of such Stock Awards (and, if applicable, the time at
which


 





















 


such Stock Awards
may be exercised) shall (contingent upon the effectiveness of the Corporate
Transaction) be accelerated in full to a date prior to the effective time of
such Corporate Transaction as the Board shall determine (or, if the Board shall
not determine such a date, to the date that is five (5) days prior to the
effective time of the Corporate Transaction), and such Stock Awards shall
terminate if not exercised (if applicable) at or prior to such effective time,
and any reacquisition or repurchase rights held by the Company with respect to
such Stock Awards shall (contingent upon the effectiveness of the Corporate
Transaction) lapse. With respect to any other Stock Awards outstanding under
the Plan that have not been assumed, continued or substituted, the vesting of
such Stock Awards (and, if applicable, the time at which such Stock Award may
be exercised) shall not be accelerated, unless otherwise provided in a written
agreement between the Company or any Affiliate and the holder of such Stock
Award, and such Stock Awards shall terminate if not exercised (if applicable)
prior to the effective time of the Corporate Transaction.


 


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


 


12.          AMENDMENT OF THE PLAN AND
STOCK AWARDS.


 


(a)           Amendment of
Plan.  Subject
to the limitations, if any, of applicable law, the Board at any time, and from
time to time, may amend the Plan. However, except as provided in Section 11(a) relating
to Capitalization Adjustments, no amendment shall be effective unless approved
by the stockholders of the Company to the extent stockholder approval is necessary
to satisfy applicable law.


 


(b)           Stockholder
Approval.  The
Board, in its sole discretion, may submit any other amendment to the Plan for
stockholder approval, including, but not limited to, amendments to the Plan
intended to satisfy the requirements of Section 162(m) of the Code and the
regulations thereunder regarding the exclusion of performance-based
compensation from the limit on corporate deductibility of compensation paid to
Covered Employees.


 


(c)           Contemplated
Amendments.  It
is expressly contemplated that the Board may amend the Plan in any respect the
Board deems necessary or advisable to provide eligible Employees with the
maximum benefits provided or to be provided under the provisions of the Code
and the regulations promulgated thereunder relating to Incentive Stock Options
and/or to bring the Plan and/or Incentive Stock Options granted under it into
compliance therewith.


 


(d)           No Impairment of
Rights.  Rights
under any Stock Award granted before amendment of the Plan shall not be impaired
by any amendment of the Plan unless (i) the Company requests the consent
of the Participant and (ii) the Participant consents in writing.


 


(e)           Amendment of
Stock Awards.  The Board at any time, and from time to time, may amend the terms of
any one or more Stock Awards, including, but not limited to, amendments to
provide terms more favorable than previously provided in the agreement
evidencing a Stock Award, subject to any specified limits in the Plan that are
not subject to Board discretion; provided,
however, that the rights under any Stock Award shall not be impaired
by any such amendment unless (i) the Company requests the consent of the
Participant and (ii) the Participant consents in writing.


 


13.          TERMINATION OR SUSPENSION OF
THE PLAN.


 


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


 


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


 





















 


14.          EFFECTIVE DATE OF PLAN.


 


The Plan shall become effective on the IPO Date, but no Stock Award
shall be exercised (or, in the case of a stock bonus, shall be granted) unless
and until the Plan has been approved by the stockholders of the Company, which
approval shall be within twelve (12) months before or after the date the
Plan is adopted by the Board.


 


15.          CHOICE OF LAW.


 


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