Exhibit 10.3


 


SYMYX
TECHNOLOGIES, INC.


 


1997 STOCK
PLAN


 


(AS AMENDED AND RESTATED JANUARY 30,
2006)

(AS AMENDED AND RESTATED APRIL 7, 2005)


 


1.             Purposes
of the Plan. The purposes of this 1997 Stock Plan are:


 


•      to attract and
retain the best available personnel for positions of substantial
responsibility,


 


•      to provide
additional incentive to Employees, Directors and Consultants, and


 


•      to promote the
success of the Company’s business.


 


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


 


2.             Definitions.
As used herein, the following definitions shall apply:


 


(a)           “Administrator”
means the Board or any of its Committees as shall be administering the Plan, in
accordance with Section 4 of the Plan.


 


(b)           “Applicable
Laws” means the requirements relating to the administration of stock plans
under U.S. state corporate laws, U.S. federal and state securities laws, the
Code, any stock exchange or quotation system on which the Common Stock is
listed or quoted and the applicable laws of any foreign country or jurisdiction
where Awards are, or will be, granted under the Plan.


 


(c)           “Award”
means the grant of an Option, Stock Purchase Right or Restricted Stock Unit
under the Plan.


 


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


 


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


 


(f)            “Committee”
means a committee of Directors appointed by the Board in accordance with Section 4
of the Plan.


 


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


 


(h)           “Company”
means Symyx Technologies, Inc., a Delaware corporation.


 


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


 


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


 


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


 


(l)            “Employee”
means any person, including Officers and Directors, employed by the Company or
any Parent or Subsidiary of the Company. A Service Provider shall not cease to
be an Employee in the case of (i) any leave of absence approved by the
Company or (ii) transfers between locations of the Company or between the
Company, its Parent, any Subsidiary, or any successor. For purposes of
Incentive Stock Options, no such leave may exceed three (3) months,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, any Incentive Stock Option held by the Grantee
shall cease to be treated as an Incentive Stock Option and shall be treated for
tax purposes as a Nonstatutory Stock Option three (3) months and one (1) day
after the end of such three (3) month leave. Neither service as a Director
nor payment of a director’s fee by the Company shall be sufficient to constitute
“employment” by the Company.


 


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


 


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


 


(i)            If
the Common Stock is listed on any established stock exchange or a national
market system, including without limitation the Nasdaq National Market or The
Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall
be the closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such exchange or system on the date of determination, as
reported in The Wall Street Journal or such other source as the Administrator
deems reliable;


 


(ii)           If
the Common Stock is regularly quoted by a recognized securities dealer but
selling prices are not reported, the Fair Market Value of a Share of Common
Stock shall be the mean between the high bid and low asked prices for the
Common Stock on the date of determination, as reported in The Wall Street
Journal or such other source as the Administrator deems reliable; or


 


(iii)         In
the absence of an established market for the Common Stock, the Fair Market
Value shall be determined in good faith by the Administrator.


 


(o)           “Grantee”
means the holder of an outstanding Award granted under the Plan.


 


(p)           “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.


 


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


 


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(r)           “Notice
of Grant” means a written or electronic notice evidencing certain times and
conditions of an individual Award grant. The Notice of Grant is part of
the Award Agreement.


 


(s)           “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.


 


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


 


(u)           “Option
Agreement” means an agreement between the Company and a Grantee evidencing the
terms and conditions of an individual Option grant. The Option Agreement is
subject to the terms and conditions of the Plan.


 


(v)            “Optioned
Stock” means the Common Stock subject to an Award.


 


(w)           “Outside
Director” means a Director who is not an Employee.


 


(x)           “Parent”
means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of
the Code.


 


(y)           “Plan”
means this 1997 Stock Plan, as amended and restated.


 


(z)           “Restricted
Stock” means shares of Common Stock acquired pursuant to a grant of Stock
Purchase Rights under Section 11 of the Plan.


 


(aa)         “Restricted
Stock Units” means an award which may be earned in whole or in part upon
the passage of time or the attainment of performance criteria established by
the Administrator and which may be settled for cash, Shares or other
securities or a combination of cash, Shares or other securities as established
by the Administrator.


 


(bb)         “Restricted
Stock Purchase Agreement” means a written agreement between the Company and the
Grantee evidencing the terms and restrictions applying to stock purchased under
a Stock Purchase Right. The Restricted Stock Purchase Agreement is subject to the
terms and conditions of the Plan and the Notice of Grant.


 


(cc)         “Restricted
Stock Unit Agreement” means a written agreement between the Company and the
Grantee evidencing the terms and restrictions applying to an award of
Restricted Stock Units. The Restricted Stock Unit Agreement is subject to the
terms and conditions of the Plan and the Notice of Grant.


 


(dd)         “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.


 


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


 


(ff)           “Service
Provider” means an Employee, Director or Consultant.


 


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(gg)         “Share”
means a share of the Common Stock, as adjusted in accordance with Section 14
of the Plan.


 


(hh)         “Stock
Purchase Right” means the right to purchase Common Stock pursuant to Section 11
of the Plan, as evidenced by a Notice of Grant.


 


(ii)           “Subsidiary”
means a “subsidiary corporation”, whether now or hereafter existing, as defined
in Section 424(f) of the Code.


 


3.             Stock
Subject to the Plan. Subject to the provisions of Section 14 of the
Plan, the maximum aggregate number of Shares which may be issued under the
Plan is 6,500,000 Shares, plus (a) any Shares which were reserved but
unissued under the Company’s 1996 Stock Plan (“1996 Plan”) as of the date of
stockholder approval of the original adoption of this Plan, (b) any Shares
subsequently returned to the 1996 Plan as a result of termination of options or
repurchase of Shares issued under the 1996 Plan, and (c) an annual
increase to be added on the first day of the Company’s fiscal year beginning in
fiscal year 2000 equal to the lesser of (i) 1,500,000 shares, (ii) 4%
of the outstanding shares on such date, or (iii) an amount determined by
the Board. The Shares may be authorized, but unissued, or reacquired
Common Stock.


 


If an Award
expires or becomes unexercisable without having been exercised in full the
unpurchased Shares which were subject thereto shall become available for future
grant or sale under the Plan (unless the Plan has terminated); provided,
however, that Shares that have actually been issued under the Plan, whether
upon exercise of an Option, Stock Purchase Right or Restricted Stock Unit, shall
not be returned to the Plan and shall not become available for future
distribution under the Plan, except that if Shares of Restricted Stock are
repurchased by the Company at their original purchase price, such Shares shall
become available for future grant under the Plan.


 


4.             Administration
of the Plan.


 


(a)           Procedure.


 


(i)            Multiple
Administrative Bodies. The Plan may be administered by different
Committees with respect to different groups of Service Providers.


 


(ii)           Section 162(m).
To the extent that the Administrator determines it to be desirable to qualify
Options or Stock Purchase Rights granted hereunder as “performance-based
compensation” within the meaning of Section 162(m) of the Code, the Plan
shall be administered by a Committee of two or more “outside directors” within
the meaning of Section 162(m) of the Code.


 


(iii)         Rule 16b-3.
To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3,
the transactions contemplated hereunder shall be structured to satisfy the
requirements for exemption under Rule 16b-3.


 


(iv)          Other
Administration. Other than as provided above, the Plan shall be administered by
(A) the Board or (B) a Committee, which committee shall be
constituted to satisfy Applicable Laws. Notwithstanding the foregoing, the
Board or a Committee may


 


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authorize one or
more Officers of the Company to grant Awards to Employees or Consultants who
are neither Directors nor Officers of the Company.


 


(b)           Powers
of the Administrator. Subject to the provisions of the Plan, and in the case of
a Committee, subject to the specific duties delegated by the Board to such
Committee, the Administrator shall have the authority, in its discretion:


 


(i)            to
determine Fair Market Value;


 


(ii)           to
select the Service Providers to whom Awards may be granted hereunder;


 


(iii)         to
determine the number of shares of Common Stock to be covered by each Award
granted hereunder;


 


(iv)          to
approve forms of agreement for use under the Plan;


 


(v)            to
determine the terms and conditions, not inconsistent with the terms of the
Plan, of any Award granted hereunder. Such terms and conditions include, but
are not limited to, the exercise price, the time or times when Awards may be
exercised (which may be based on performance criteria), any vesting
acceleration or waiver of forfeiture restrictions, and any restriction or
limitation regarding any Award or the shares of Common Stock relating thereto,
based in each case on such factors as the Administrator, in its sole discretion,
shall determine. The performance criteria established by the Administrator may be
based on any one of, or combination of, the following: (A) increase in
share price, (B) earnings per share, (C) total stockholder return, (D) operating
margin, (E) gross margin, (F) return on equity, (G) return on
assets, (H) return on investment, (I) operating income, (J) net operating
income, (K) pre-tax profit, (L) cash flow, (M) revenue, (N) expenses, (O)
earnings before interest, taxes and depreciation, (P) economic value added and
(Q) market share. The performance criteria may be applicable to the
Company, a Parent or Subsidiary of the Company and/or any individual business
units of the Company or any Parent or Subsidiary of the Company. Partial
achievement of the specified criteria may result in a payment or vesting
corresponding to the degree of achievement as specified in the award agreement;


 


(vi)          to
construe and interpret the terms of the Plan and awards granted pursuant to the
Plan;


 


(vii)         to
prescribe, amend and rescind rules and regulations relating to the Plan,
including rules and regulations relating to sub-plans established for the
purpose of qualifying for preferred tax treatment under foreign tax laws;


 


(viii)        to
modify or amend each Award (subject to Section 16(c) of the Plan),
including the discretionary authority to extend the post-termination
exercisability period of Options longer than is otherwise provided for in the
Plan, provided that (A) the reduction of the exercise price of any Option
awarded under the Plan shall be subject to stockholder approval and (B) canceling
an Option at a time when its exercise price exceeds the Fair Market Value of
the underlying Shares, in exchange for another Award shall be subject to
stockholder approval,


 


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unless the
cancellation and exchange occurs in connection with a merger or other corporate
transaction;


 


(ix)          to
allow Grantees to satisfy withholding tax obligations by electing to have the
Company withhold from the Shares to be issued upon exercise or vesting of an Award
that number of Shares having a Fair Market Value equal to the amount required
to be withheld. The Fair Market Value of the Shares to be withheld shall be
determined on the date that the amount of tax to be withheld is to be
determined. All elections by a Grantee to have Shares withheld for this purpose
shall be made in such form and under such conditions as the Administrator may deem
necessary or advisable;


 


(x)           to
authorize any person to execute on behalf of the Company any instrument
required to effect the grant of an Award previously granted by the
Administrator;


 


(xi)          to
make all other determinations deemed necessary or advisable for administering
the Plan.


 


(c)           Effect
of Administrator’s Decision. The Administrator’s decisions, determinations and
interpretations shall be final and binding on all Grantees and any other
holders of Options or Stock Purchase Rights.


 


5.             Eligibility.
Nonstatutory Stock Options, Stock Purchase Rights and Restricted Stock Units may be
granted to Service Providers. Incentive Stock Options may be granted only
to Employees.


 


6.             Limitations.


 


(a)           Each
Option shall be designated in the Option Agreement as either an Incentive Stock
Option or a Nonstatutory Stock Option. However, notwithstanding such
designation, to the extent that the aggregate Fair Market Value of the Shares
with respect to which Incentive Stock Options are exercisable for the first
time by the Grantee during any calendar year (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 6(a),
Incentive Stock Options shall be taken into account in the order in which they
were granted. The Fair Market Value of the Shares shall be determined as of the
time the Option with respect to such Shares is granted.


 


(b)           Neither
the Plan nor any Award shall confer upon a Grantee any right with respect to
continuing the Grantee’s relationship as a Service Provider with the Company,
nor shall they interfere in any way with the Grantee’s right or the Company’s
right to terminate such relationship at any time, with or without cause.


 


(c)           The
following limitations shall apply to grants of Options:


 


(i)            No
Service Provider shall be granted, in any fiscal year of the Company, Options
to purchase more than 500,000 Shares.


 


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(ii)           In
connection with his or her initial service, a Service Provider may be
granted Options to purchase up to an additional 100,000 Shares, which shall not
count against the limit, set forth in subsection (i) above.


 


(iii)         The
foregoing limitations shall be adjusted proportionately in connection with any
change in the Company’s capitalization as described in Section 14.


 


(iv)          If
an Option is cancelled in the same fiscal year of the Company in which it was
granted (other than in connection with a transaction described in Section 14),
the cancelled Option will be counted against the limits set forth in subsections
(i) and (ii) above. For this purpose, if the exercise price of an
Option is reduced, the transaction will be treated as a cancellation of the
Option and the grant of a new Option.


 


(d)           For
awards of Restricted Stock that are intended to qualify as “performance-based
compensation” within the meaning of Section 162(m) of the Code, the
maximum number of Shares that may be granted to any Grantee in any fiscal
year of the Company shall be 500,000. The foregoing limitation shall be
adjusted proportionately in connection with any change in the Company’s
capitalization as described in Section 14.


 


7.             Term
of Plan. Subject to Section 20 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 16 of
the Plan.


 


8.             Term
of Option. The term of each Option shall be stated in the Option Agreement.
In the case of an Incentive Stock Option, the term shall be ten (10) years
from the date of grant or such shorter term as may be provided in the
Option Agreement. Moreover, in the case of an Incentive Stock Option granted to
a Grantee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary, the term of
the Incentive Stock Option shall be five (5) years from the date of grant
or such shorter term as may be provided in the Option Agreement.


 


9.             Option
Exercise Price and Consideration.


 


(a)           Exercise
Price. The per share exercise price for the Shares to be issued pursuant to
exercise of an Option shall be determined by the Administrator, subject to the
following:


 


(i)            In
the case of an Incentive Stock Option


 


(A)          granted
to an Employee who, at the time the Incentive Stock Option is granted, owns
stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the per Share
exercise price shall be no less than 110% of the Fair Market Value per Share on
the date of grant.


 


(B)          granted
to any Employee other than an Employee described in paragraph (A) immediately
above, the per Share exercise price shall be no less than 100% of the Fair
Market Value per Share on the date of grant.


 


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(ii)           In
the case of a Nonstatutory Stock Option, the per Share exercise price shall be
no less than 100% of the Fair Market Value per Share on the date of grant.


 


(iii)         Notwithstanding
the foregoing, Options may be granted with a per Share exercise price of
less than 100% of the Fair Market Value per Share on the date of grant pursuant
to a merger or other corporate transaction.


 


(b)           Waiting
Period and Exercise Dates. At the time an Option is granted, the Administrator
shall fix the period within which the Option may be exercised and shall
determine any conditions that must be satisfied before the Option may be
exercised.


 


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


 


(i)            cash;


 


(ii)           check;


 


(iii)         other
Shares which (A) in the case of Shares acquired upon exercise of an
option, have been owned by the Grantee for more than six (6) months on the
date of surrender, and (B) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised;


 


(iv)          consideration
received by the Company under a cashless exercise program implemented by the
Company in connection with the Plan;


 


(v)            a
reduction in the amount of any Company liability to the Grantee, including any
liability attributable to the Grantee’s participation in any Company-sponsored
deferred compensation program or arrangement;


 


(vi)          any
combination of the foregoing methods of payment; or


 


(vii)         such
other consideration and method of payment for the issuance of Shares to the
extent permitted by Applicable Laws.


 


10.          Exercise
of Option.


 


(a)           Procedure
for Exercise; Rights as a Shareholder. Any Option granted hereunder shall be
exercisable according to the terms of the Plan and at such times and under such
conditions as determined by the Administrator and set forth in the Option
Agreement. Unless the Administrator provides otherwise, vesting of Options
granted hereunder shall be tolled during any unpaid leave of absence. An Option
may not be exercised for a fraction of a Share.


 


An Option
shall be deemed exercised when the Company receives: (i) written or
electronic notice of exercise (in accordance with the Option Agreement) from
the person entitled to exercise the Option, and (ii) full payment for the
Shares with respect to which the Option is


 


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exercised. Full
payment may consist of any consideration and method of payment authorized
by the Administrator and permitted by the Option Agreement and the Plan. Shares
issued upon exercise of an Option shall be issued in the name of the Grantee
or, if requested by the Grantee, in the name of the Grantee and his or her
spouse. Until the Shares are issued (as evidenced by the appropriate entry on
the books of the Company or of a duly authorized transfer agent of the
Company), no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. The Company shall issue (or cause to be issued) such
Shares promptly after the Option is exercised. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the
Shares are issued, except as provided in Section 14 of the Plan.


 


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


 


(b)           Termination
of Relationship as a Service Provider. Subject to Section 14, if a Grantee
ceases to be a Service Provider (but not in the event of a Grantee’s change of
status from Employee to Consultant (in which case an Employee’s Incentive Stock
Option shall automatically convert to a Nonstatutory Stock Option three (3) months
and one (1) day following such change of status) or from Consultant to
Employee), such Grantee may, but only within such period of time as is specified
in the Option Agreement (but in no event later than the expiration date of the
term of such Option as set forth in the Option Agreement), exercise his or her
Option to the extent that Grantee was entitled to exercise it at the date of
such termination. In the absence of a specified time in the Option Agreement,
the Option shall remain exercisable for three (3) months following the Grantee’s
termination. If, on the date of termination, the Grantee is not vested as to
his or her entire Option, the Shares covered by the unvested portion of the
Option shall revert to the Plan. If, after termination, the Grantee does not
exercise his or her Option within the time specified by the Administrator, the
Option shall terminate, and the Shares covered by such Option shall revert to
the Plan.


 


(c)           Disability
of Grantee. If a Grantee ceases to be a Service Provider as a result of the Grantee’s
Disability, the Grantee may, but only within twelve (12) months from the date
of such termination (and in no event later than the expiration date of the term
of such Option as set forth in the Option Agreement), exercise his or her
Option the extent the Option is vested on the date of termination. If, on the
date of termination, the Grantee is not vested as to his or her entire Option,
the Shares covered by the unvested portion of the Option shall revert to the
Plan. If, after termination, the Grantee does not exercise his or her Option
within the time specified herein, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan.


 


(d)           Death
of Grantee. If a Grantee dies while a Service Provider, the Option may be
exercised at any time within twelve (12) months following the date of death
(but in no event later than the expiration of the term of such Option as set
forth in the Notice of Grant), by the Grantee’s estate or by a person who
acquires the right to exercise the Option by bequest or inheritance, but only
to the extent that the Option is vested on the date of death. If, at the time
of death, the Grantee is not vested as to his or her entire Option, the Shares
covered by the unvested portion of the Option shall immediately revert to the
Plan. The Option may be exercised by the executor or administrator of the Grantee’s
estate or, if none, by the person(s) entitled to exercise


 


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the Option under
the Grantee’s will or the laws of descent or distribution. If the Option is not
so exercised within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.


 


(e)           Buyout
Provisions. The Administrator may at any time offer to buy out for a
payment in cash or Shares an Option previously granted based on such terms and
conditions as the Administrator shall establish and communicate to the Grantee
at the time that such offer is made.


 


11.          Stock
Purchase Rights and Restricted Stock Units.


 


(a)           Rights
to Purchase. Stock Purchase Rights may be issued either alone, in addition
to, or in tandem with other awards granted under the Plan and/or cash awards
made outside of the Plan. After the Administrator determines that it will offer
Stock Purchase Rights under the Plan, it shall advise the offeree in writing or
electronically, by means of a Notice of Grant, of the terms, conditions and
restrictions related to the offer, including the number of Shares 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 a Restricted Stock Purchase Agreement in the form determined
by the Administrator.


 


(b)           Repurchase
Option. Unless the Administrator determines otherwise, the Restricted Stock
Purchase Agreement shall grant the Company a repurchase option exercisable upon
the voluntary or involuntary termination of the purchaser’s service with the
Company for any reason (including death or Disability). The purchase price for
Shares repurchased pursuant to the Restricted Stock Purchase Agreement shall be
the original price paid by the purchaser and may be paid by cancellation
of any indebtedness of the purchaser to the Company. The repurchase option
shall lapse at a rate determined by the Administrator.


 


(c)           Restricted
Stock Units. Restricted Stock Units may be issued either alone, in
addition to, or in tandem with other awards granted under the Plan and/or cash
awards made outside of the Plan. After the Administrator determines that it
will offer Restricted Stock Units under the Plan, it shall advise the offeree
in writing or electronically, by means of a Notice of Grant, of the terms,
conditions and restrictions related to the offer, including the number of Restricted
Stock Units. The offer shall be accepted by execution of a Restricted Stock Unit
Agreement in the form determined by the Administrator.


 


(d)           Other
Provisions. The Restricted Stock Purchase Agreement and Restricted Stock Unit
Agreement (as applicable) shall contain such other terms, provisions and
conditions not inconsistent with the Plan as may be determined by the
Administrator in its sole discretion.


 


(e)           Rights
as a Shareholder. Once the Stock Purchase Right is exercised, the purchaser
shall have the rights equivalent to those of a shareholder, and shall be a
shareholder when his or her purchase is entered upon the records of the duly
authorized transfer agent of the Company. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the
Stock Purchase Right is exercised, except as provided in Section 14 of the
Plan.


 


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12.          Non-Transferability
of Awards. Unless determined otherwise by the Administrator, an Award may not
be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Grantee, only by the Grantee. If the
Administrator makes an Award transferable, such Award shall contain such
additional terms and conditions as the Administrator deems appropriate.


 


13.          Formula
Option Grants to Outside Directors. Outside Directors shall be
automatically granted Options each year in accordance with the following
provisions:


 


(a)           All
Options granted pursuant to this Section shall be Nonstatutory Stock
Options and, except as otherwise provided herein, shall be subject to the other
terms and conditions of the Plan.


 


(b)           Each
Outside Director shall be automatically granted an Option to purchase 10,000
Shares following each annual meeting of the stockholders of the Company.


 


(c)           Any
exercise of an Option granted before the Company has obtained stockholder
approval of the Plan in accordance with Section 20 hereof shall be
conditioned upon obtaining such stockholder approval of the Plan in accordance
with Section 20 hereof.


 


(d)           The
terms of each Option granted pursuant to this Section shall be as follows:


 


(i)            the
term of the Option shall be ten (10) years.


 


(ii)           the
exercise price per Share shall be 100% of the Fair Market Value per Share on
the date of grant of the Option.


 


(iii)         Each
Option shall vest as to 1/12 of the Optioned Stock each month following the
date of grant, such that the Option shall be fully vested and exercisable one
year from the date of grant of the Option.


 


14.          Adjustments
Upon Changes in Capitalization, Dissolution, Merger or Asset Sale.


 


(a)           Changes
in Capitalization. Subject to any required action by the shareholders of the
Company, the number of shares of Common Stock covered by each outstanding Award,
the number of shares of Common Stock covered by formula options to be granted
to Outside Directors under Section 13 of the Plan, the maximum number of
shares that may be granted in any fiscal year to subject to Options and
Stock Purchase Rights, the number of shares of Common Stock which have been
authorized for issuance under the Plan but as to which no Awards have yet been
granted or which have been returned to the Plan upon cancellation or expiration
of an Award and the number of shares of Common Stock which may be added to
the Plan each fiscal year (pursuant to Section 3), as well as the price
per share of Common Stock covered by each such outstanding Award, shall be
proportionately adjusted for (i) any increase or decrease in the number of
issued Shares resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Shares, or similar transaction
affecting the Shares, (ii) any other increase or decrease in the number of
issued Shares effected without receipt of consideration by the Company, or (iii) as
the Administrator may determine in its discretion,


 


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any other
transaction with respect to Common Stock including a corporate merger,
consolidation, acquisition of property or stock, separation (including a
spin-off or other distribution of stock or property), reorganization,
liquidation (whether partial or complete) or any similar transaction; provided,
however that conversion of any convertible securities of the Company shall not
be deemed to have been “effected without receipt of consideration.”  In the event of any distribution of cash or
other assets to stockholders other than a normal cash dividend, the
Administrator may also, in its discretion, make adjustments in connection with
the events described in (i)-(iii) of this Section 14(a) or
substitute, exchange or grant Awards with respect to the shares of any Parent
or Subsidiary of the Company (collectively “adjustments”). In determining
adjustments to be made under this Section 14(a), the Administrator may take
into account such factors as it deems appropriate, including (x) the
restrictions of Applicable Law, (y) the potential tax, accounting or other
consequences of an adjustment and (z) the possibility that some Grantees might
receive an adjustment and a distribution or other unintended benefit, and in
light of such factors or circumstances may make adjustments that are not
uniform or proportionate among outstanding Awards, modify vesting dates,
defer the delivery of stock certificates or make other equitable adjustments. Any
such adjustments to outstanding Awards will be effected in a manner that
precludes the material enlargement of rights and benefits under such Awards. Adjustments,
if any, and any determinations or interpretations, including any determination
of whether a distribution is other than a normal cash dividend, shall be made
by the Administrator and its determination shall be final, binding and
conclusive. In connection with the foregoing adjustments, the Administrator may,
in its discretion, prohibit the exercise of Awards during certain periods of
time. Except as the Administrator determines, no issuance by the Company of
shares of any class, or securities convertible into shares of any class, shall
affect, and no adjustment by reason hereof shall be made with respect to, the
number or price of Shares subject to an Award.


 


(b)           Dissolution
or Liquidation. In the event of the proposed dissolution or liquidation of the
Company, the Administrator shall notify each Grantee at least 15 days prior to
such proposed action. To the extent it has not been previously exercised, an Award
will terminate immediately prior to the consummation of such proposed action.


 


(c)           Merger
or Asset Sale. In the event of a merger of the Company with or into another
corporation, or the sale of substantially all of the assets of the Company,
each outstanding Award shall be assumed or an equivalent option or right
substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. In the event that the successor corporation refuses to
assume or substitute for the Award, the Grantee shall fully vest in and have
the right to exercise the Award as to all of the Optioned Stock, including
Shares as to which it would not otherwise be vested or exercisable. If an Award
becomes fully vested and exercisable in lieu of assumption or substitution in
the event of a merger or sale of assets, the Administrator shall notify the Grantee
in writing or electronically that the Award shall be fully vested and
exercisable for a period of fifteen (15) days from the date of such notice, and
the Award shall terminate upon the expiration of such period. For the purposes
of this paragraph, the Award shall be considered assumed if, following the
merger or sale of assets, the option or right confers the right to purchase or
receive, for each Share of Optioned Stock subject to the Award immediately
prior to the merger or sale of assets, the consideration (whether stock, cash,
or other securities or property) received in the merger or sale of assets by
holders of Common Stock for each Share held on the effective date of the
transaction (and if holders were offered a


 


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choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares); provided, however, that if such consideration received
in the merger or sale of assets is not solely common stock of the successor
corporation or its Parent, the Administrator may, with the consent of the
successor corporation, provide for the consideration to be received upon the
exercise of the Award, for each Share of Optioned Stock subject to the Award,
to be solely common stock of the successor corporation or its Parent equal in
fair market value to the per share consideration received by holders of Common
Stock in the merger or sale of assets.


 


15.          Date
of Grant. The date of grant of an Award shall be, for all purposes, the
date on which the Administrator makes the determination granting such Award, or
such other later date as is determined by the Administrator. Notice of the
determination shall be provided to each Grantee within a reasonable time after
the date of such grant.


 


16.          Amendment
and Termination of the Plan.


 


(a)           Amendment
and Termination. The Board may at any time amend, alter, suspend or
terminate the Plan.


 


(b)           Shareholder
Approval. The Company shall obtain shareholder approval of any Plan amendment
to the extent necessary and desirable to comply with Applicable Laws.


 


(c)           Effect
of Amendment or Termination. No amendment, alteration, suspension or
termination of the Plan shall impair the rights of any Grantee, unless mutually
agreed otherwise between the Grantee and the Administrator, which agreement
must be in writing and signed by the Grantee and the Company. Termination of
the Plan shall not affect the Administrator’s ability to exercise the powers
granted to it hereunder with respect to Awards granted under the Plan prior to
the date of such termination.


 


17.          Conditions
Upon Issuance of Shares.


 


(a)           Legal
Compliance. Shares shall not be issued pursuant to the exercise of an Award unless
the exercise of such Award and the issuance and delivery of such Shares shall
comply with Applicable Laws and shall be further subject to the approval of
counsel for the Company with respect to such compliance.


 


(b)           Investment
Representations. As a condition to the exercise of an Award, the Company may require
the person exercising such Award to represent and warrant at the time of any
such exercise that the Shares are being acquired only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required.


 


18.          Inability
to Obtain Authority. The inability of the Company to obtain authority from
any regulatory body having jurisdiction, which authority is deemed by the
Company’s counsel to be necessary to the lawful issuance and sale of any Shares
hereunder, shall relieve the Company of any liability in respect of the failure
to issue or sell such Shares as to which such requisite authority shall not
have been obtained.


 


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19.          Reservation
of Shares. The Company, during the term of this Plan, will at all times
reserve and keep available such number of Shares as shall be sufficient to
satisfy the requirements of the Plan.


 


20.          Plan
Approval. The Plan was adopted by the Board and shareholders of the Company
in 1997 and amended and restated in 1999. In 2003, the Board and shareholders
approved an amendment to the Plan to increase the automatic option grant to
Outside Directors under Section 13 of the Plan from 7,500 shares to 10,000
shares. On April 7, 2005, the Board approved an amendment and restatement
of the Plan to adopt a limit on the maximum number of Shares with respect to
which Options and Stock Purchase Rights may be granted to any Grantee in
any fiscal year of the Company and certain other administrative provisions to
comply with the performance-based compensation exception to the deduction limit
of Section 162(m) of the Code, which amendments were approved by the
shareholders of the Company on May 26, 2005. On January 30, 2006, the
Board approved an amendment and restatement of the Plan to provide (a) for
the grant of Restricted Stock Units and (b) that the Board or a Committee may authorize
one or more Officers of the Company to grant Awards to Employees or Consultants
who are neither Directors nor Officers of the Company, which amendment and
restatement is not subject to approval by the shareholders of the Company.


 


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