**EXHIBIT 10.3**

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**MONACO COACH CORPORATION**

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**1993 INCENTIVE STOCK OPTION PLAN**

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(as amended and restated May 16, 2002, as furtheramended October 23, 2002, and as further amended on November 9, 2005)

 

# 1.                                       Purposes of the Plan.  Thepurposes of this Stock Plan are:

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•                                          to attractand retain the best available personnel for positions of substantialresponsibility,

 

•                                          to provideadditional incentive to Employees, Directors and Consultants, and

 

•                                          to promotethe success of the Company’s business.

 

Options granted under the Plan may be Incentive StockOptions or Nonstatutory Stock Options, as determined by the Administrator atthe time of grant.  Stock Purchase Rightsand Restricted Stock Units may also be granted under the Plan.

 

# 2.                                       Applicability of May 2002 Amendments.  Optionsor, as the case may be, Restricted Stock granted on or prior to May 16,2002 shall not be subject to Section 11(e) of the Plan.  Options or, as the case may be, RestrictedStock granted subsequent to May 16, 2002 shall be subject to Section 11(e) ofthe Plan.

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# 3.                                       Definitions.  As used herein, the followingdefinitions shall apply:

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## (a)                                  “Administrator”means the Board or any of its Committees as shall be administering the Plan, inaccordance with Section 5 of the Plan.

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## (b)                                 “ApplicableLaws” means the requirements relating to the administration of equityincentive plans under U.S. state corporate laws, U.S. federal and statesecurities laws, the Code, any stock exchange or quotation system on which theCommon Stock is listed or quoted and the applicable laws of any foreign countryor jurisdiction where Options or Stock Purchase Rights are, or will be, grantedunder the Plan.

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## (c)                                  “Board”means the Board of Directors of the Company.

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## (d)                                 “Changein Control” means the occurrence of any of the following events:

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### (i)                                     Any“person” (as such term is used in Sections 13(d) and 14(d) of theExchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 ofthe Exchange Act), directly or indirectly, of securities of the Companyrepresenting fifty percent (50%) or more of the total voting power representedby the Company’s then outstanding voting securities; or

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### (ii)                                  Theconsummation of the sale or disposition by the Company of all or substantiallyall of the Company’s assets;

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### (iii)                               Achange in the composition of the Board occurring within a two-year period, as aresult of which fewer than a majority of the directors are IncumbentDirectors.  “Incumbent

 

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### Directors” meansdirectors who either (A) are Directors as of the effective date of thePlan, or (B) are elected, or nominated for election, to the Board with theaffirmative votes of at least a majority of the Incumbent Directors at the timeof such election or nomination (but will not include an individual whoseelection or nomination is in connection with an actual or threatened proxycontest relating to the election of directors to the Company); or

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### (iv)                              Theconsummation of a merger or consolidation of the Company with any othercorporation, other than a merger or consolidation which would result in thevoting securities of the Company outstanding immediately prior theretocontinuing to represent (either by remaining outstanding or by being convertedinto voting securities of the surviving entity or its parent) at least fiftypercent (50%) of the total voting power represented by the voting securities ofthe Company or such surviving entity or its parent outstanding immediatelyafter such merger or consolidation.

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

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## (f)                                    “Committee”means a committee of Directors appointed by the Board in accordance with Section 5of the Plan.

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## (g)                                 “CommonStock” means the common stock of the Company.

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## (h)                                 “Company”means Monaco Coach Corporation, a Delaware corporation.

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## (i)                                     “Consultant”means any natural person, including an advisor, engaged by the Company or aParent or Subsidiary to render services to such entity.

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

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## (k)                                  “Disability”means total and permanent disability as defined in Section 22(e)(3) ofthe Code.

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## (l)                                     “Employee”means any person, including Officers and Directors, employed by the Company orany Parent or Subsidiary of the Company. A Service Provider shall not cease to be an Employee in the case of (i) anyleave of absence approved by the Company or (ii) transfers betweenlocations of the Company or between the Company, its Parent, any Subsidiary, orany successor.  For purposes of IncentiveStock Options, no such leave may exceed ninety days, unless reemployment uponexpiration of such leave is guaranteed by statute or contract.  If reemployment upon expiration of a leave ofabsence approved by the Company is not so guaranteed, then three (3) monthsfollowing the 91st day of such leave any Incentive Stock Option heldby the Optionee shall cease to be treated as an Incentive Stock Option andshall be treated for tax purposes as a Nonstatutory Stock Option.  Neither service as a Director nor payment ofa director’s fee by the Company shall be sufficient to constitute “employment”by the Company.

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## (m)                               “ExchangeAct” means the Securities Exchange Act of 1934, as amended.

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## (n)                                 “FairMarket Value” means, as of any date, the value of Common Stock determinedas follows:

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### (i)                                     Ifthe Common Stock is listed on any established stock exchange or a nationalmarket system, including without limitation the Nasdaq National Market or TheNasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shallbe the closing sales price for such stock (or

 

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### the closing bid, if nosales were reported) as quoted on such exchange or system on the day ofdetermination, as reported in *The Wall Street Journal*or such other source as the Administrator deems reliable;

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### (ii)                                  Ifthe Common Stock is regularly quoted by a recognized securities dealer butselling prices are not reported, the Fair Market Value of a Share of CommonStock shall be the mean between the high bid and low asked prices for theCommon Stock on the day of determination, as reported in *The WallStreet Journal* or such other source as the Administrator deemsreliable; or

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### (iii)                               Inthe absence of an established market for the Common Stock, the Fair MarketValue shall be determined in good faith by the Administrator.

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## (o)                                 “IncentiveStock Option” means an Option intended to qualify as an incentive stockoption within the meaning of Section 422 of the Code and the regulationspromulgated thereunder.

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## (p)                                 “LimitedNumber” means a number of Shares not to exceed 10% of the total sharesauthorized for issuance under the Plan.

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## (q)                                 “NonstatutoryStock Option” means an Option not intended to qualify as an Incentive StockOption.

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## (r)                                    “Noticeof Grant” means a written or electronic notice evidencing certain terms andconditions of an individual Option, Stock Purchase Right or Restricted StockUnit grant.  The Notice of Grant is partof the Option Agreement.

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

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## (t)                                    “Option”means a stock option granted pursuant to the Plan.

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## (u)                                 “OptionAgreement” means an agreement between the Company and an Optioneeevidencing the terms and conditions of an individual Option grant.  The Option Agreement is subject to the termsand conditions of the Plan.

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## (v)                                 “OptionExchange Program” means a program whereby outstanding Options are repricedor surrendered in exchange for other Options.

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## (w)                               “OptionedStock” means the Common Stock subject to an Option or Stock Purchase Right.

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## (x)                                   “Optionee”means the holder of an outstanding Option, Stock Purchase Right or RestrictedStock Unit granted under the Plan.

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## (y)                                 “Parent”means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) ofthe Code.

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## (z)                                   “Plan”means this 1993 Incentive Stock Option Plan, as amended.

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## (aa)                            “RestrictedStock” means shares of Common Stock acquired pursuant to a grant of StockPurchase Rights under Section 12 of the Plan.

 

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## (bb)                          “RestrictedStock Purchase Agreement” means a written agreement between the Company andthe Optionee evidencing the terms and restrictions applying to stock purchasedunder a Stock Purchase Right.  TheRestricted Stock Purchase Agreement is subject to the terms and conditions ofthe Plan and the Notice of Grant.

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## (cc)                            “Restricted Stock Unit” means abookkeeping entry representing an amount equal to the Fair Market Value of oneShare, granted pursuant to Section 13. Each Restricted Stock Unit represents an unfunded and unsecuredobligation of the Company.

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## (dd)                          RestrictedStock Unit Agreement” means a written or electronic agreement between theCompany and the Optionee evidencing the terms and restrictions applying to anaward of Restricted Stock Units.  TheRestricted Stock Unit Agreement is subject to the terms and conditions of thePlan and the Notice of Grant.

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## (ee)                            “Retirement”means a Service Provider who retires from the Company on or after age sixty-two(62) and such Service Provider has at least five (5) years of service withthe Company at the date of retirement; provided, that, the Administrator,notwithstanding the foregoing, has the discretion to determine when a ServiceProvider retires so long as such determination is not less favorable than providedfor in the foregoing definition.

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## (ff)                                “Rule 16b-3”means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3,as in effect when discretion is being exercised with respect to the Plan.

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## (gg)                          “Section 16(b)”means Section 16(b) of the Exchange Act.

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## (hh)                          “ServiceProvider” means an Employee, Director or Consultant, in all cases excludingDirectors who are not Employees.

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## (ii)                                  “Share”means a share of the Common Stock, as adjusted in accordance with Section 15 of the Plan.

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## (jj)                                  “StockPurchase Right” means the right to purchase Common Stock pursuant to Section 12of the Plan, as evidenced by a Notice of Grant.

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## (kk)                            “Subsidiary”means a “subsidiary corporation”, whether now or hereafter existing, as definedin Section 424(f) of the Code.

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# 4.                                       Stock Subject to the Plan.  Subjectto the provisions of Section 15of the Plan, the maximum aggregate number of Shares that may be optioned andsold under the Plan is 3,257,813 Shares.  The Shares may be authorized, but unissued,or reacquired Common Stock.

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If anOption or Stock Purchase Right expires or becomes unexercisable without havingbeen exercised in full, or is surrendered pursuant to an Option ExchangeProgram, or, with respectto Shares of Restricted Stock or Restricted Stock Units, is forfeited to orrepurchased by the Company, the unpurchased Shares (or the forfeited orrepurchased Shares) which were subject thereto will become available for futuregrant or sale under the Plan (unless the Plan has terminated); provided,however, that if unvested Shares ofRestricted Stock or Restricted Stock Units are repurchased by the Company orare forfeited to the Company, such Shares will become available for futuregrant under the Plan.

 

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# 5.                                       Administration of the Plan.

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## (a)                                  Procedure.

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### (i)                                     MultipleAdministrative Bodies.  DifferentCommittees with respect to different groups of Service Providers may administerthe Plan.

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### (ii)                                  Section 162(m).  To the extent that the Administratordetermines it to be desirable to qualify Options granted hereunder as “performance-basedcompensation” within the meaning of Section 162(m) of the Code, the Planshall be administered by a Committee of two or more “outside directors” withinthe meaning of Section 162(m) of the Code.

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### (iii)                               Rule 16b-3.  To the extent desirable to qualifytransactions hereunder as exempt under Rule 16b-3, the transactionscontemplated hereunder shall be structured to satisfy the requirements forexemption under Rule 16b-3.

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### (iv)                              OtherAdministration.  Other than asprovided above, the Plan shall be administered by (A) the Board or (B) aCommittee, which committee shall be constituted to satisfy Applicable Laws.

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## (b)                                 Powersof the Administrator.  Subject to theprovisions of the Plan, and in the case of a Committee, subject to the specificduties delegated by the Board to such Committee, the Administrator shall havethe authority, in its discretion:

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### (i)                                     todetermine the Fair Market Value;

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### (ii)                                  toselect the Service Providers to whom Options, Stock Purchase Rights andRestricted Stock Units may be granted hereunder;

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### (iii)                               todetermine the number of shares of Common Stock to be covered by each Option,Stock Purchase Right or award of Restricted Stock Units granted hereunder;

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### (iv)                              toapprove forms of agreement for use under the Plan;

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### (v)                                 todetermine the terms and conditions, not inconsistent with the terms of thePlan, of any Option, Stock Purchase Right or Restricted Stock Unit grantedhereunder.  Such terms and conditionsinclude, but are not limited to, the exercise price, the time or times whenOptions, Stock Purchase Rights or Restricted Stock Units may be exercised(which may be based on performance criteria), any vesting acceleration orwaiver of forfeiture restrictions, and any restriction or limitation regardingany Option, Stock Purchase Right, Restricted Stock Unit or the shares of CommonStock relating thereto, based in each case on such factors as theAdministrator, in its sole discretion, shall determine;

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### (vi)                              toconstrue and interpret the terms of the Plan and awards granted pursuant to thePlan;

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### (vii)                           toprescribe, amend and rescind rules and regulations relating to the Plan,including rules and regulations relating to sub-plans established for thepurpose of satisfying applicable foreign laws;

 

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### (viii)                        to modifyor amend each Option, Stock Purchase Right or Restricted Stock Unit (subject toSection 17(c) of thePlan), including the discretionary authority to extend the post-terminationexercisability period of Options longer than is otherwise provided for in thePlan;

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### (ix)                                toallow Optionees to satisfy withholding tax obligations by electing to have theCompany withhold from the Shares to be issued upon exercise or settlement of an Option, Stock Purchase Right or RestrictedStock Unit that number of Shares having a Fair Market Value equal to theminimum amount required to be withheld. The Fair Market Value of the Shares to be withheld shall be determinedon the date that the amount of tax to be withheld is to be determined.  All elections by an Optionee to have Shareswithheld for this purpose shall be made in such form and under such conditionsas the Administrator may deem necessary or advisable;

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### (x)                                   toauthorize any person to execute on behalf of the Company any instrumentrequired to effect the grant of an Option , Stock Purchase Right or RestrictedStock Unit previously granted by the Administrator;

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### (xi)                                tomake all other determinations deemed necessary or advisable for administering thePlan.

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## (c)                                  Effectof Administrator’s Decision. The Administrator’s decisions, determinations and interpretations shallbe final and binding on all Optionees and any other holders of Options, StockPurchase Rights or Restricted Stock Units.

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## (d)                                 Administrator’sDiscretion.  Notwithstanding anycontrary provision of the Plan, the Administrator may, in its sole and absolutediscretion, (i) grant a Limited Number of Options or Restricted Stock thatdo not conform to the requirements of general limitation imposed by the Plan(such as the term of the Option, the lapse of any restriction right or theexercise price or purchase price) provided such Options or Restricted Stock aregranted by a committee composed entirely of Directors who are not Employees; (ii) implementan Option Exchange Program provided such program is authorized by a committeecomposed entirely of Directors who are not Employees, such program is rarelyused (and then only to maintain option value due to circumstances beyond theCompany’s control), and such program is limited to a Limited Number of Shares.

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# 6.                                       Eligibility.  Nonstatutory Stock Options, StockPurchase Rights and Restricted Stock Units may be granted to ServiceProviders.  Incentive Stock Options maybe granted only to Employees.

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# 7.                                       Limitations.

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## (a)                                  EachOption shall be designated in the Option Agreement as either an Incentive StockOption or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that theaggregate Fair Market Value of the Shares with respect to which Incentive StockOptions are exercisable for the first time by the Optionee during any calendaryear (under all plans of the Company and any Parent or Subsidiary) exceeds$100,000, such Options shall be treated as Nonstatutory Stock Options.  For purposes of this Section 7(a),Incentive Stock Options shall be taken into account in the order in which theywere granted.  The Fair Market Value ofthe Shares shall be determined as of the time the Option with respect to suchShares is granted.

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## (b)                                 Neitherthe Plan nor any Option or Stock Purchase Right shall confer upon an Optioneeany right with respect to continuing the Optionee’s relationship as a ServiceProvider with the

 

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## Company, nor shall theyinterfere in any way with the Optionee’s right or the Company’s right toterminate such relationship at any time, with or without cause.

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## (c)                                  Thefollowing limitations shall apply to grants of Options:

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### (i)                                     NoService Provider shall be granted, in any fiscal year of the Company, Optionsto purchase more than 100,000 Shares.

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### (ii)                                  Theforegoing limitations shall be adjusted proportionately in connection with anychange in the Company’s capitalization as described in Section 15.

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### (iii)                               Ifan Option is cancelled in the same fiscal year of the Company in which it wasgranted (other than in connection with a transaction described in Section 15), the cancelled Option will becounted against the limits set forth in subsections (i) and (ii) above.  For this purpose, if the exercise price of anOption is reduced, the transaction will be treated as a cancellation of theOption and the grant of a new Option.

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# 8.                                       Term of Plan.  Subject to Section 21****of the Plan,the Plan shall become effective upon its adoption by the Board.  It shall continue in effect for a term of ten(10) years unless terminated earlier under Section 17****of the Plan.

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# 9.                                       Term of Option.  The term of each Option shall bestated in the Option Agreement.  In thecase of an Incentive Stock Option, the term shall be ten (10) years fromthe date of grant or such shorter term as may be provided in the OptionAgreement.  Moreover, in the case of anIncentive Stock Option granted to an Optionee who, at the time the IncentiveStock Option is granted, owns stock representing more than ten percent (10%) ofthe total combined voting power of all classes of stock of the Company or anyParent or Subsidiary, the term of the Incentive Stock Option shall be five (5) yearsfrom the date of grant or such shorter term as may be provided in the OptionAgreement.

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# 10.                                 Option Exercise Price and Consideration.

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## (a)                                  ExercisePrice.  The per share exercise pricefor the Shares to be issued pursuant to exercise of an Option shall bedetermined by the Administrator, subject to the following:

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### (i)                                     Inthe case of an Incentive Stock Option

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#### (A)                              grantedto an Employee who, at the time the Incentive Stock Option is granted, ownsstock representing more than ten percent (10%) of the voting power of allclasses of stock of the Company or any Parent or Subsidiary, the per Shareexercise price shall be no less than 110% of the Fair Market Value per Share onthe date of grant.

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#### (B)                                grantedto any Employee other than an Employee described in paragraph (A) immediatelyabove, the per Share exercise price shall be no less than 100% of the FairMarket Value per Share on the date of grant.

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### (ii)                                  Inthe case of a Nonstatutory Stock Option, the per Share exercise price shall notbe less than 100% of the Fair Market Value per Share on the date of grant;provided, however, that options may be granted with an exercise price equal toor greater than 85% of the Fair Market Value on the date of grant provided such“discount” is granted in lieu of a reasonable amount of cash compensation orcash bonus payable by the Company to a Service Provider.  In the case of a Nonstatutory Stock Optionintended to

 

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### qualify as “performance-basedcompensation” within the meaning of Section 162(m) of the Code, the per Shareexercise price shall be no less than 100% of the Fair Market Value per Share onthe date of grant.

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### (iii)                               Notwithstandingthe foregoing, Options may be granted with a per Share exercise price of lessthan 100% of the Fair Market Value per Share on the date of grant pursuant to aChange in Control.

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## (b)                                 WaitingPeriod and Exercise Dates.  At thetime an Option is granted, the Administrator shall fix the period within whichthe Option may be exercised and shall determine any conditions that must besatisfied before the Option may be exercised.

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## (c)                                  Form ofConsideration.  The Administratorshall determine the acceptable form of consideration for exercising an Option,including the method of payment.  In thecase of an Incentive Stock Option, the Administrator shall determine theacceptable form of consideration at the time of grant.  Such consideration may consist entirely of:

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### (i)                                     cash;

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### (ii)                                  check;

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### (iii)                               promissorynote;

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### (iv)                              otherShares which, in the case of Shares acquired directly or indirectly from theCompany, (A) have been owned by the Optionee for more than six (6) monthson the date of surrender, and (B) have a Fair Market Value on the date ofsurrender equal to the aggregate exercise price of the Shares as to which saidOption shall be exercised;

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### (v)                                 considerationreceived by the Company under a cashless exercise program implemented by theCompany in connection with the Plan;

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### (vi)                              areduction in the amount of any Company liability to the Optionee, including anyliability attributable to the Optionee’s participation in any Company-sponsoreddeferred compensation program or arrangement;

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### (vii)                           anycombination of the foregoing methods of payment; or

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### (viii)                        such otherconsideration and method of payment for the issuance of Shares to the extentpermitted by Applicable Laws.

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# 11.                                 Exercise of Option.

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## (a)                                  Procedurefor Exercise; Rights as a Stockholder. Any Option granted hereunder shall be exercisable according to the termsof the Plan and at such times and under such conditions as determined by theAdministrator and set forth in the Option Agreement.  Unless the Administrator provides otherwise,vesting of Options granted hereunder shall be suspended during any unpaid leaveof absence.  An Option may not beexercised for a fraction of a Share.

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An Option shall be deemedexercised when the Company receives: (i) written or electronic notice ofexercise (in accordance with the Option Agreement) from the person entitled toexercise the Option, and (ii) full payment for the Shares with respect towhich the Option is exercised.  Fullpayment may consist of

 

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anyconsideration and method of payment authorized by the Administrator andpermitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name ofthe Optionee or, if requested by the Optionee, in the name of the Optionee andhis or her spouse.  Until the Shares areissued (as evidenced by the appropriate entry on the books of the Company or ofa duly authorized transfer agent of the Company), no right to vote or receivedividends or any other rights as a stockholder shall exist with respect to theOptioned Stock, notwithstanding the exercise of the Option.  The Company shall issue (or cause to beissued) such Shares promptly after the Option is exercised.  No adjustment will be made for a dividend orother right for which the record date is prior to the date the Shares areissued, except as provided in Section 15****of the Plan.

 

Exercising an Option in any manner shall decrease thenumber of Shares thereafter available, both for purposes of the Plan and forsale under the Option, by the number of Shares as to which the Option isexercised.

 

## (b)                                 Terminationof Relationship as a Service Provider. If an Optionee ceases to be a Service Provider, other than upon theOptionee’s death, Disability, or Retirement the Optionee may exercise his orher Option within such period of time as is specified in the Option Agreementto the extent that the Option is vested on the date of termination (but in noevent later than the expiration of the term of such Option as set forth in theOption Agreement).  In the absence of aspecified time in the Option Agreement, the Option shall remain exercisable forthree (3) months following the Optionee’s termination.  If, on the date of termination, the Optioneeis not vested as to his or her entire Option, the Shares covered by theunvested portion of the Option shall revert to the Plan.  If, after termination, the Optionee does notexercise his or her Option within the time specified by the Administrator, theOption shall terminate, and the Shares covered by such Option shall revert tothe Plan.

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## (c)                                  Disabilityof Optionee.  If an Optionee ceasesto be a Service Provider as a result of the Optionee’s Disability, the Optiongranted hereunder to such Optionee shall become vested and exercisable for thefull number of Shares covered by the Option. The Optionee may exercise his or her Option at any time within twelve(12) months from the date of such termination (but in no event later than theexpiration of the term of such Option as set forth in the Notice ofGrant).  If, after termination, theOptionee does not exercise his or her Option within the time specified herein,the Option shall terminate, and the Shares covered by such Option shall revertto the Plan.

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## (d)                                 Deathof Optionee.  If an Optionee dieswhile a Service Provider, the Option shall become vested and exercisable forthe full number of Shares covered by the Option.  The Option held by the Optionee at the timeof death may be exercised at any time within twelve (12) months following thedate of death of Optionee by the Optionee’s designated beneficiary, providedsuch beneficiary has been designated prior to Optionee’s death in a formacceptable to the Administrator.  In noevent shall an Option be exercised later than the expiration of the term of theOption, as set forth in the Option Agreement. If no such beneficiary has been designated by the Optionee, then suchOption may be exercised by the personal representative of the Optionee’s estateor by the person(s) to whom the Option is transferred pursuant to the Optionee’swill or in accordance with the laws of descent and distribution.  If the Option is not so exercised within the timespecified herein, the Option shall terminate, and the Shares covered by suchOption shall revert to the Plan.

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## (e)                                  Retirementof Optionee.  In the event of anOptionee’s Retirement while a Service Provider, the Option shall become vestedand exercisable for the full number of Shares covered by the Option.  The Option held by the Optionee at the timeof Retirement may be exercised at any time within twelve (12) months followingthe date of Retirement; provided, however, that (i) this subsection (e) shallnot apply to grants made on or before May 16, 2002, and (ii) this subsection (e) shallapply to grants made on or after May

 

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## 17, 2002.  In no event shall an Option be exercisedlater than the expiration of the term of the Option, as set forth in the OptionAgreement.  If the Option is not soexercised within the time specified herein, the Option shall terminate, and theShares covered by such Option shall revert to the Plan.

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# 12.                                 Stock Purchase Rights.

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## (a)                                  Rightsto Purchase.  Stock Purchase Rightsmay be issued either alone, in addition to, or in tandem with other awardsgranted under the Plan and/or cash awards made outside of the Plan.  After the Administrator determines that itwill offer Stock Purchase Rights under the Plan, it shall advise the offeree inwriting or electronically, by means of a Notice of Grant, of the terms,conditions and restrictions related to the offer, including the number ofShares that the offeree shall be entitled to purchase, the price to be paid,and the time within which the offeree must accept such offer.  The offer shall be accepted by execution of aRestricted Stock Purchase Agreement in the form determined by theAdministrator.

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## (b)                                 RepurchaseOption.  Unless the Administratordetermines otherwise, the Restricted Stock Purchase Agreement shall grant theCompany a repurchase option exercisable upon the voluntary or involuntarytermination of the purchaser’s service with the Company for any reason(including death or Disability).  Thepurchase price for Shares repurchased pursuant to the Restricted Stock PurchaseAgreement shall be the original price paid by the purchaser and may be paid bycancellation of any indebtedness of the purchaser to the Company.  The repurchase option shall lapse at a ratedetermined by the Administrator, but generally such repurchase option shall notlapse at an annual rate greater than 33% of the total number of number ofShares subject to the Restricted Stock Purchase Agreement.

 

## (c)                                  OtherProvisions.  The Restricted StockPurchase Agreement shall contain such other terms, provisions and conditionsnot inconsistent with the Plan as may be determined by the Administrator in itssole discretion.

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## (d)                                 Rightsas a Stockholder.  Once the StockPurchase Right is exercised, the purchaser shall have the rights equivalent tothose of a stockholder, and shall be a stockholder when his or her purchase isentered upon the records of the duly authorized transfer agent of the Company.  No adjustment will be made for a dividend orother right for which the record date is prior to the date the Stock PurchaseRight is exercised, except as provided in Section 15 of the Plan.

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# 13.                                 Restricted Stock Units.

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## (a)                                  Grant of Restricted Stock Units. Subject to the terms and provisions of the Plan, the Administrator, atany time and from time to time, may grant awards of Restricted Stock Units toService Providers in such amounts as the Administrator, in its sole discretion,will determine.

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## (b)                                 Restricted Stock Unit Agreement.  Eachaward of Restricted Stock Units will be evidenced by a Restricted Stock UnitAgreement that will specify the number of Restricted Stock Units granted andsuch other terms and conditions as the Administrator, in its sole discretion,will determine.

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## (c)                                  Vesting Criteria and Other Terms.  TheAdministrator will set vesting criteria in its discretion, which, depending onthe extent to which the criteria are met, will determine the number ofRestricted Stock Units that will be paid out to the Optionee.  The Administrator may set vesting criteriabased upon the achievement of Company-wide, business unit, or individual goals(including, but not limited to, continued employment), or any other basisdetermined by the Administrator in its discretion, but generally butgenerally awards of Restricted Stock Units will not vest at an annual rategreater than 33% of the total number of Restricted Stock Units subject to theRestricted Stock Unit Agreement.

 

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## (d)                                 Retirement of Optionee. Notwithstanding anything coxhintrary in this Section 13, in theevent of a Optionee’s Retirement while a Service Provider, the award ofRestricted Stock Units will vest in full and any performance objectives orother vesting provisions will be considered to be satisfied; provided, however,to the extent an award of Restricted Stock Units is to vest upon theachievement of performance criteria, then the Optionee will only vest in theaward to the extent the performance criteria is actually achieved and will onlyvest in a fraction of the award that is subject to the performance vestingcriteria the numerator of which will equal the number of calendar days betweensuch award’s date of grant and the date of the Optionee’s Retirement and thedenominator of which will equal the number of calendar days between the award’sdate of grant and the date the performance criteria is actually achieved.

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## (e)                                  Earning Restricted Stock Units.  Uponmeeting the applicable vesting criteria, the Optionee will be entitled toreceive a payout as specified in the Award Agreement.  Notwithstanding the foregoing, at any timeafter the grant of Restricted Stock Units, the Administrator, in its solediscretion, may reduce or waive any vesting criteria that must be met toreceive a payout.

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## (f)                                    Form and Timing of Payment. Payment of earned Restricted Stock Units will be made as soon aspracticable after the date(s) set forth in the Restricted Stock UnitAgreement.  The Administrator, in its solediscretion, may pay earned Restricted Stock Units in cash, Shares, or acombination thereof.  Shares representedby Restricted Stock Units that are fully paid in cash again will be availablefor grant under the Plan.

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## (g)                                 Cancellation.  Onthe date set forth in the Restricted Stock Unit Agreement, all unearnedRestricted Stock Units will be forfeited to the Company.

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# 14.                                 Transferability of Options, Stock Purchase Rightsor RestrictedStock Units.  Unless determined otherwise by theAdministrator, an Option, Stock Purchase Right or Restricted Stock Unit may not be sold, pledged, assigned, hypothecated,transferred, or disposed of in any manner other than by will or by the laws ofdescent or distribution and may be exercised, during the lifetime of theOptionee, only by the Optionee.  If the Administratormakes an Option, Stock Purchase Right or Restricted Stock Unit transferable, such award shall contain suchadditional terms and conditions as the Administrator deems appropriate.

#  

# 15.                                 Adjustments Upon Changes in Capitalization, Mergeror Change in Control.

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## (a)                                  Changesin Capitalization.  Subject to anyrequired action by the stockholders of the Company, the number of shares ofCommon Stock that have been authorized for issuance under the Plan but as towhich no Options, Stock Purchase Rights or Restricted Stock Units have yet been granted or which have beenreturned to the Plan upon cancellation or expiration of an Option, StockPurchase Right or Restricted Stock Unitand the number of shares of Common Stock as well as the price per share ofCommon Stock covered by each such outstanding Option, Stock Purchase Right or Restricted Stock Unit, shall beproportionately adjusted for any increase or decrease in the number of issuedshares of Common Stock resulting from a stock split, reverse stock split, stockdividend, combination or reclassification of the Common Stock, or any otherincrease or decrease in the number of issued shares of Common Stock effectedwithout receipt of consideration by the Company; provided, however, that conversionof any convertible securities of the Company shall not be deemed to have been “effectedwithout receipt of consideration.”  Suchadjustment shall be made by the Board, whose determination in that respectshall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company ofshares of stock of any class, or securities convertible into shares of stock ofany class, shall affect, and no adjustment by reason thereof shall be made withrespect to, the number or price of shares of Common Stock subject to an Option,Stock Purchase Right or RestrictedStock Unit.

 

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## (b)                                 Dissolutionor Liquidation.  In the event of theproposed dissolution or liquidation of the Company, the Administrator shallnotify each Optionee as soon as practicable prior to the effective date of suchproposed transaction.  The Administratorin its discretion may provide for an Optionee to have the right to exercise hisor her Option or Stock Purchase Right until ten (10) days prior to suchtransaction as to all of the Optioned Stock covered thereby, including Sharesas to which the Option or Stock Purchase Right would not otherwise beexercisable.  In addition, theAdministrator may provide that any Company repurchase option applicable to anyShares purchased upon exercise of an Option or Stock Purchase Right shall lapseas to all such Shares and all vesting conditions with respect to awards ofRestricted Stock Units will lapse, provided the proposed dissolution orliquidation takes place at the time and in the manner contemplated.  To the extent it has not been previouslyexercised, an Option, Stock Purchase Right or Restricted Stock Unit will terminate immediately prior to theconsummation of such proposed action.

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## (c)                                  Mergeror Change in Control.  In the eventof a merger of the Company with or into another corporation, or a Change inControl, each outstanding Option,Stock Purchase Right Restricted StockUnit shall be assumed or an equivalent award substituted by thesuccessor corporation or a Parent or Subsidiary of the successor corporation.

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In the event that the successor corporation refuses to assume orsubstitute for the Option, Stock Purchase Right or Restricted Stock Unit, the Optionee shall fully vest in andhave the right to exercise the Option or Stock Purchase Right as to all of theOptioned Stock, including Shares as to which it would not otherwise be vestedor exercisable, all restrictions on Restricted Stock will lapse,and, with respect to Restricted Stock Units, all performance goals or othervesting criteria will be deemed achieved at target levels and all other termsand conditions met.  In addition, if an Option or Stock PurchaseRight becomes fully vested and exercisable in lieu of assumption orsubstitution in the event of a merger or sale of assets, the Administratorshall notify the Optionee in writing or electronically that the Option or StockPurchase Right shall be fully vested and exercisable for a period of fifteen(15) days from the date of such notice, and the Option or Stock Purchase Rightshall terminate upon the expiration of such period.

 

For the purposes of this subsection (c), theOption or Stock Purchase Right shall be considered assumed if, following themerger or Change in Control, the option or right confers the right to purchaseor receive, for each Share of Optioned Stock subject to the Option or StockPurchase Right immediately prior to the merger or Change in Control, theconsideration (whether stock, cash, or other securities or property) or, in the caseof a Restricted Stock Unit which the Administrator can determine to pay incash, received in themerger or Change in Control by holders of Common Stock for each Share held onthe effective date of the transaction (and if holders were offered a choice ofconsideration, the type of consideration chosen by the holders of a majority ofthe outstanding Shares); provided, however, that if such consideration receivedin the merger or Change in Control is not solely common stock of the successorcorporation or its Parent, the Administrator may, with the consent of thesuccessor corporation, provide for the consideration to be received upon theexercise of the Option or Stock Purchase Right, or upon the payout of aRestricted Stock Unit,for each Share of Optioned Stock subject to the Option or Stock Purchase Right (or in the caseof Restricted Stock Units, the number of implied shares determined by dividingthe value of the Restricted Stock Units by the per share consideration receivedby holders of Common Stock in the merger or Change in Control), to be solely common stock of thesuccessor corporation or its Parent equal in fair market value to the per shareconsideration received by holders of Common Stock in the merger or Change inControl.

 

# 16.                                 Date of Grant.  The date of grant of an Option,Stock Purchase Right or Restricted Stock Unit shall be, for all purposes, thedate on which the Administrator makes the determination granting such award, orsuch other later date as is determined by the Administrator.  Notice of the determination shall be providedto each Optionee within a reasonable time after the date of such grant.

 

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# 17.                                 Amendment and Termination of the Plan.

#  

## (a)                                  Amendmentand Termination.  The Board may atany time amend, alter, suspend or terminate the Plan.

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## (b)                                 StockholderApproval.  The Company shall obtainstockholder approval of any Plan amendment to the extent necessary anddesirable to comply with Applicable Laws. Notwithstanding the foregoing, the Company shall obtain stockholderapproval of a Plan amendment that would (i) increase the number ofsecurities that may be issued under the Plan, (ii) materially modify therequirements for participation in the plan other than amendment that narrowsthe class of persons eligible to participate in the Plan and (iii) materiallyincrease the benefits accruing to participants in the Plan.

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## (c)                                  Effectof Amendment or Termination.  Noamendment, alteration, suspension or termination of the Plan shall impair therights of any Optionee, unless mutually agreed otherwise between the Optioneeand the Administrator, which agreement must be in writing and signed by theOptionee and the Company.  Termination ofthe Plan shall not affect the Administrator’s ability to exercise the powersgranted to it hereunder with respect to Options granted under the Plan prior tothe date of such termination.

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# 18.                                 Conditions Upon Issuance of Shares.

#  

## (a)                                  LegalCompliance.  Shares shall not beissued pursuant to an Option, Stock Purchase Right or Restricted Stock Unit, unlessthe exercise of such award and the issuance and delivery of such Shares pursuantto such award shall comply with Applicable Laws and shall be further subject tothe approval of counsel for the Company with respect to such compliance.

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## (b)                                 InvestmentRepresentations.  As a condition tothe exercise of an Option or Stock Purchase Right or the receipt of Sharespursuant to a Restricted Stock Unit, the Company may require the person exercisingsuch Option or Stock Purchase Right or receiving Shares pursuant to aRestricted Stock Unit to represent and warrant at the time of any such exerciseor issuance that the Shares are being purchased or received only for investmentand without any present intention to sell or distribute such Shares if, in theopinion of counsel for the Company, such a representation is required.

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# 19.                                 Inability to Obtain Authority.  Theinability of the Company to obtain authority from any regulatory body havingjurisdiction, which authority is deemed by the Company’s counsel to benecessary to the lawful issuance and sale of any Shares hereunder, shallrelieve the Company of any liability in respect of the failure to issue or sellsuch Shares as to which such requisite authority shall not have been obtained.

#  

# 20.                                 Reservation of Shares.  TheCompany, during the term of this Plan, will at all times reserve and keepavailable such number of Shares as shall be sufficient to satisfy therequirements of the Plan.

#  

# 21.                                 Stockholder Approval.  The Planshall be subject to approval by the stockholders of the Company within twelve(12) months after the date the Plan is adopted. Such stockholder approval shall be obtained in the manner and to thedegree required under Applicable Laws.

 

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