Filed by Bowne Pure Compliance





Exhibit 10.4




VAXGEN, INC.




AMENDED AND RESTATED

1996 STOCK OPTION PLAN

Amended and Restated Effective May 29, 2002

Amended by the Board of Directors December 16, 2002

Amended by the Board of Directors August 5, 2008




This Amended and Restated 1996 Stock Option Plan (the “Plan”) provides for the grant of
options to acquire shares of common stock, $0.01 par value (the “Common Stock”), of VaxGen, Inc., a
Delaware corporation (the “Company”). Stock options granted under this Plan that qualify as
incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended (the
“Code”), are referred to in this Plan as “Incentive Stock Options.” Incentive Stock Options and
stock options that do not qualify as such under Section 422 of the Code (“Non-Qualified Stock
Options”) granted under this Plan are referred to as “Options.”



The Plan was initially adopted on October 29, 1996 and was subsequently amended and restated
on May 29, 2002 and subsequently amended on December 16, 2002. The Plan is hereby amended and
restated as of August 5, 2008.




1. PURPOSES.



The purposes of this Plan are to retain the services of non-employee directors, valued key
employees and consultants of the Company, to encourage such persons to acquire a greater
proprietary interest in the Company, thereby strengthening their incentive to achieve the
objectives of the stockholders of the Company, and to serve as an aid and inducement in the hiring
of new employees and to provide an equity incentive to directors, consultants a other persons
selected by the Board of Directors in accordance with Section 3 below.




2. ADMINISTRATION.



This Plan shall be administered by the full Board of Directors of the Company (the “Board”) or
if the Board so desires, by committee designated by the Board and composed of two (2) or more
“Non-Employee Directors” (as defined below). The term “Non-Employee Directors” shall have the
meaning assigned to it under Rule 16b-3 (as amended from time to time) under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). In the event that the Company is or becomes
subject to the provisions of Section 16 of the Exchange Act, the Board shall attempt to provide for
administration of the Plan, insofar as it relates to the participation of officers, directors or
stockholders of the Company who at the time in question are subject to the reporting and liability
provisions of Section 16 of the Exchange Act (the “Insiders”), in a manner which shall qualify the
grant, exercise, expiration or surrender of options under this Plan for the treatment afforded by
Rule 16b-3 under the Exchange Act, as amended from time to time, or any successor rule or
regulatory requirement. The term “Board” when used in any provision of this Plan other than
Section 5(n) shall be deemed to refer to the Board or any committee thereof appointed to administer
this Plan.


 


 









 





Subject to the provisions of this Plan, and with a view to effecting its purpose, the Board
shall have sole authority, in its absolute discretion to (a) construe and interpret this Plan; (b) define the terms used in this Plan; (c) prescribe, amend and rescind rules and regulations
relating to this Plan; (d) correct any defect, supply any omission or reconcile any inconsistency
in this Plan; (e) grant Options under this Plan; (f) determine the individuals to whom Options
shall be granted under this Plan and whether the Option is an Incentive Stock Option or a
Non-Qualified Stock Option; (g) determine the time or times at which Options shall be granted under
this Plan; (h) determine the number of shares of Common Stock subject to each Option, the exercise
price of each Option, the duration of each Option and the times at which each Option shall become
exercisable; (i) to effect, at any time and from time to time, with the consent of any adversely
affected Optionee, (1) the reduction of the exercise price of any outstanding Option under the
Plan, (2) the cancellation of any outstanding Option under the Plan and the grant in substitution
therefor (A) a new Option under the Plan covering the same or a different number of shares of
Common Stock, (B) a stock bonus under an equity incentive plan of the Company other than the Plan,
(C) the right to acquire restricted stock under an equity incentive plan of the Company other than
the Plan, and/or (D) cash, or (3) any other action that is treated as a repricing under generally
accepted accounting principles; (j) determine all other terms and conditions of Options; and (k)
make all other determinations necessary or advisable for the administration of this Plan. All
decisions, determinations and interpretations made by the Board shall be binding and conclusive on
all participants in this Plan and on their legal representatives, heirs and beneficiaries.




3. ELIGIBILITY.



Incentive Stock Options may be granted to any individual who, at the time the Option is
granted, is an employee of the Company or any Related Corporation (as defined below), including
employees who are directors of the Company (“Employees”). Non-Qualified Stock Options may be
granted to Employees, Non-Employee Directors and consultants. Options may be granted in
substitution for outstanding options of another corporation in connection with the merger,
consolidation, acquisition of property or stock or other reorganization between such other
corporation and the Company or any subsidiary of the Company. Options also may be granted in
exchange for outstanding Options. Any person to whom an Option is granted under this Plan is
referred to as an “Optionee.” Any person who is the owner of an Option is referred to as a
“Holder.”



As used in this Plan, the term “Related Corporation,” shall mean any corporation that is a
“Parent Corporation” of the Company or “Subsidiary Corporation” of the Company, as those terms are
defined in Sections 424 and 424(f), respectively, of the Code (or any successor provisions), and
the regulations thereunder (as amended from time to time).




4. STOCK.



The Board is authorized to grant Options to acquire up to a total of 8,673,970 shares of the
Company’s Common Stock, which number shall consist of the Company’s authorized but unissued, or
reacquired, Common Stock. In no event shall more than 4,750,000 shares of Stock be cumulatively
available for issuance pursuant to the exercise of Incentive Stock Options. The number of shares
with respect to which Options may be granted hereunder is subject to adjustment as set forth in
Section 5(n) hereof. In the event that any outstanding Option expires or is terminated for any
reason, the shares of Common Stock allocable to the unexercised portion of such Option may again be subject to an Option to the same Optionee (subject to the
next sentence) or to a different person eligible under Section 3 of this Plan. Any canceled
Options will be counted against the maximum number of shares with respect to which Options may be
granted to the person previously holding the canceled Options.


 


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5. TERMS AND CONDITIONS OF OPTIONS.



Each Option granted under this Plan shall be evidenced by a written agreement approved by the
Board (the “Agreement”). Agreements may contain such provisions, not inconsistent with this Plan,
as the Board in its discretion may deem advisable. All Options also shall comply with the
following requirements:



(a) Number of Shares and Type of Option. Each Agreement shall state the number of shares of
Common Stock to which it pertains and whether the Option is intended to be an Incentive Stock
Option or a Non-Qualified Stock Option. In the absence of action to the contrary by the Board in
connection with the grant of an Option, all Options shall be Non-Qualified Stock Options. The
aggregate fair market value (determined at the Date of Grant, as defined below) of the stock with
respect to which Incentive Stock Options are exercisable for the first time by the Optionee during
any calendar year (granted under this Plan and all other Incentive Stock Option plans of the
Company, a Related Corporation or a predecessor corporation) shall not exceed $100,000, or such
other limit as may be prescribed by the Code as it may be amended from time to time. Any portion
of an Option which exceeds the annual limit shall not be void but rather shall be a Non-Qualified
Stock Option.



(b) Date of Grant. Each Agreement shall state the date the Board has deemed to be the
effective date of the Option for purposes of this Plan (the “Date of Grant”).



(c) Exercise Price. Each Agreement shall state the price per share of Common Stock at which
it is exercisable. Options granted in substitution for outstanding options of another corporation
in connection with the merger, consolidation, acquisition of property or stock or other
reorganization involving such other corporation and the Company or any subsidiary of the Company
may be granted with an exercise price equal to the exercise price for the substituted option of the
other corporation, subject to any adjustment consistent with the terms of the transaction pursuant
to which the substitution is to occur.



(i) The per share exercise price for an Incentive Stock Option shall not be less than the fair
market value per share of the Common Stock at the Date of Grant as determined by the Board in good
faith. With respect to Incentive Stock Options granted to greater-than-ten percent ( (greater
than) 10%) stockholders of the Company (as determined with reference to Section 424(d) of the
Code), the exercise price per share shall not be less than one hundred ten percent (110%) of the
fair market value per share of the Common Stock at the Date of Grant as determined by the Board in
good faith.



(ii) The per share exercise price for a Non-Qualified Stock Option shall not be less than
eighty-five percent (85%) of the fair market value per share of the Common Stock at the Date of
Grant as determined by the Board in good faith.


 


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(d) Duration of Options. At the time of the grant of the Option, the Board shall designate,
subject to paragraph 5(g) below, the expiration date of the Option. The expiration date of any
Incentive Stock Option granted to a greater-than-ten percent ((greater than) 10%) stockholder of
the Company (as determined with reference to Section 424(d) of the Code) shall not be later than
five years from the Date of Grant. The expiration date of any other Incentive Stock Option shall
not be later than ten (10) years from the Date of Grant. With respect to all other Options, in the
absence of action to the contrary by the Board in connection with the grant of a particular Option,
all Options granted under this Section 5 shall expire ten (10) years from the Date of Grant.



(e) Vesting Schedule. No Option shall be exercisable until it has vested. The vesting
schedule for each Option may be specified by the Board at the time of grant of the Option prior to
the provision of services with respect to which such Option is granted. If no vesting schedule is
specified at the time of grant, the number of vested shares subject to the Option shall be
determined by multiplying the total number of shares subject to the Option by the “Vested Ratio” as
determined according to the following schedule:



	 	 	 	 	 
	 	 	VESTED	 
	 	 	RATIO	 
	On the first anniversary of the Date of Grant
	 	 	1/4	 
	Plus:
	 	 	 	 
	For each full month of the Optionee’s continuous service from the
first anniversary of the Date of Grant until the Vested Ratio is
1/1, an additional
	 	 	1/48	 






The Board may specify a vesting schedule for all or any portion of an Option based on the
achievement of performance objectives established in advance of the commencement by the Optionee of
services related to the achievement of the performance objectives. Performance objectives may be
expressed in terms of one or more of the following: return on equity, return on assets, share
price, market share, sales, earnings per share, costs, net earnings, net worth, inventories, cash
and cash equivalents, gross margin, the Company’s performance relative to its internal business
plan or such other basis as determined by the Board. Performance objectives may be in respect of
the performance of the Company as a whole (whether on a consolidated or unconsolidated basis), a
Related Corporation, or a subdivision, operating unit, product or such other basis. Performance
objectives may be absolute or relative and may be expressed in terms of a progression or a range.
An Option which is exercisable (in whole or in part) upon the achievement of one or more
performance objectives may be exercised only following written notice to the Optionee from the
Board that the performance objective has been achieved.



(f) Acceleration of Vesting. The vesting of one or more outstanding options may be
accelerated by the Board at such times and in such amounts as it shall determine in its sole discretion. The vesting of Options also shall be accelerated under the circumstances
described in Sections 5(n) and 5(o) below.


 


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(g) Term of Option. Vested Options shall terminate, to the extent not previously exercised,
upon the first to occur of the following events: (i) the expiration of the Option; (ii) the date
of an Optionee’s termination of employment (or service as a director or consultant with the Company
or any Related Corporation for cause (as determined in the sole discretion of the Board); (iii) the
expiration of ninety (90) days from the date of an Optionee’s termination of employment or service
as a director or consultant with the Company or any Related Corporation for any reason whatsoever
other than cause, death or Disability (as defined below) unless, the exercise period is extended by
the Board until a date not later than the expiration date of the Option; or (iv) the expiration of
one year from (A) the date of death of the Optionee or (B) cessation of an Optionee’s employment or
contractual relationship by reason of Disability (as defined below) unless, the exercise period is
extended by the Board until a date not later than the expiration date of the Option. If an
Optionee’s employment or contractual relationship is terminated by death, any Option held by the
Optionee shall be exercisable only by the person or persons to whom such Optionee’s rights under
such Option shall pass by the Optionee’s will or by the laws of descent and distribution of the
state or county of the Optionee’s domicile at the time of death. For purposes of the Plan, unless
otherwise defined in the Agreement, “Disability” shall mean any physical, mental or other health
condition which substantially impairs the Optionee’s ability to perform his or her assigned duties
for one hundred twenty (120) days or more in any two hundred forty (240) day period or that can be
expected to result in death. The Board shall determine whether an Optionee has incurred a
Disability on the basis of medical evidence acceptable to the Board. Upon making a determination
of Disability, the Board shall, for purposes of the Plan, determine the date of an Optionee’s
termination of employment or contractual relationship.



Unless accelerated in accordance with Section 5(f) above, unvested Options shall terminate
immediately upon termination of employment of the Optionee by the Company for any reason
whatsoever, including death or Disability. For purposes of this Plan, transfer of employment
between or among the Company and any Related Corporation, or among Related Corporations shall not
be deemed to constitute a termination of employment with the Company or any Related Corporation.
For purposes of this subsection with respect to Incentive Stock Options, employment shall be deemed
to continue while the Optionee is on military leave, sick leave or other bona fide leave of absence
(as determined by the Board). The foregoing notwithstanding, employment shall not be deemed to
continue beyond the first ninety (90) days of such leave, unless the Optionee’s re-employment
rights are guaranteed by statute or by contract.



(h) Exercise of Options. Options shall be exercisable, either all or in part, at any time
after vesting, until termination. If less than all of the shares included in the vested portion of
any Option are purchased, the remainder may be purchased at any subsequent time prior to the
expiration of the Option term. If the vested portion of any Option is less than one hundred (100)
shares, it may be exercised with respect to all shares for which it is vested. In all other cases,
no portion of any Option for less than one hundred (100) shares (as adjusted pursuant to Section
5(m) below) may be exercised. Only whole shares may be issued pursuant to an Option, and to the
extent that an Option covers less than one (1) share, it is unexercisable.


 


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Options or portions thereof may be exercised by giving written notice to the Company, which
notice shall specify the number of shares to be purchased, and be accompanied by payment in the
amount of the aggregate exercise price for the Common Stock so purchased, which payment shall be in
the form specified in Section 5(i) below. The Company shall not be obligated to issue, transfer or
deliver a certificate of Common Stock to the Holder of any Option, until provision has been made by
the Holder, to the satisfaction of the Company, for the payment of the aggregate exercise price for
all shares for which the Option shall have been exercised and for any satisfaction of any tax
withholding obligations associated with such exercise. During the lifetime of an Optionee, Options
are exercisable only by the Optionee or a transferee who takes title to the Option in the manner
permitted by Section 5(1) hereof.



(i) Payment upon Exercise of Option. Upon the exercise of any Option, the aggregate exercise
price shall be paid to the Company in cash or by certified or cashier’s check. In addition, the
Holder, at its or the Company’s option, may pay for all or any portion of the aggregate exercise
price by complying with one or more of the following alternatives:



(1) by delivering to the Company shares of Common Stock previously held by such Holder which
shares of Common Stock received shall have a fair market value at the date of exercise (as
determined by the Board) equal to the aggregate exercise price to be paid by the Optionee upon such
exercise;



(2) by delivering a properly executed exercise notice together with irrevocable instructions
to a broker to promptly deliver to the Company the amount of sale or loan proceeds to pay the
exercise price;



(3) by delivering a full recourse promissory note for all or part of the aggregate exercise
price, payable on such terms and bearing such interest rate as determined by the Board (but in no
event less than the minimum interest rate specified under the Code at which no additional interest
would be imputed and in no event more than the maximum interest rate allowed under applicable usury
laws), which promissory note may be either secured or unsecured in such manner as the Board shall
approve (including, without limitation, by a security interest in the shares of the Company);




(4) by delivering a combination of (1), (2) and (3) above.



(j) Net Issue Exercise. Notwithstanding the provisions of Paragraph (i), above, if, at the
date of making the calculation set forth below, the fair market value of one share of Common Stock
is greater than the exercise price of the Option, then in lieu of exercising the Option for cash,
the Holder may elect to convert the Option and receive Common Stock equal to the value (as
determined below) of the Option (or the portion thereof being exercised) by surrender of the Option
together with a notice of the Holder’s election to proceed pursuant to this Paragraph (j). In such
an event, the Company shall issue to the Holder that number of shares of Common Stock derived
utilizing the following formula:



	 	 	 	 	 	 	 	 	 
	 

	 	X
	 	=
	 	Y (A-B)
 

     A
	 	 





 


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	Where

	 	X =
	 	the number of shares of Common Stock to
be issued to the Holder pursuant to
election under this Section 5(j)

	 
	 	 	 	 
	 

	 	Y =
	 	the number of shares of Common Stock
purchasable under the Option or, if only
a portion of the Option is being
exercised, the portion of the Option
being converted and canceled (at the
date of such calculation)

	 
	 	 	 	 
	 

	 	A =
	 	the fair market value of one share of Common Stock (at the date of such calculation)
	 
	 	 	 	 
	 

	 	B =
	 	the exercise price (as adjusted to the date of such calculation).






For purposes of the above calculation, the “fair market value” of one share of Common Stock shall
equal:



(i) In the event the Option is exercised in connection with the Company’s initial public
offering of n Stock, the per share offering price to the public in such public offering.



(ii) In other circumstances in which a public market exists for the Common Stock at the time
of such the average of the closing bid and asked prices of the Common Stock quoted in the
Over-The-Counter Market Summary or the last quoted sale price of the Common Stock or the closing
price quoted on the Nasdaq National Market or on any exchange on which the Common Stock is listed,
whichever is applicable, as published in The Wall Street Journal for the five (5) trading days
prior to the date of determination of the fair market value.



(iii) In all other circumstances, such value as is established by the Board acting in good
faith.



(k) Rights as a Stockholder. A Holder shall have no rights as a stockholder with respect to
any shares covered by an Option until such Holder becomes a record holder of such shares,
irrespective of whether such Holder has given notice of exercise. Subject to the provisions of
Sections 5(n) and 5(o) hereof, no rights shall accrue to a Holder and no adjustments shall be made
on account of dividends (ordinary or extraordinary, whether in cash, securities or other property)
or distributions or other rights declared on, or created in, the Common Stock for which the record
date is prior to the date the Holder becomes a record holder of the shares of Common Stock covered
by the Option, irrespective of whether such Holder has given notice of exercise.



(l) Transfer of Option. No Option granted under this Plan shall be assignable or otherwise
transferable by the optionee except by will or by the laws of descent and distribution. Upon any
attempt to transfer, assign, pledge, hypothecate or otherwise dispose of any Option or of any right
or privilege conferred by this Plan contrary to the provisions hereof, or upon the sale, levy or
any attachment or similar process upon the rights and privileges conferred by this Plan, such
Option shall thereupon terminate and become null and void. During the life of the optionee, an
Option shall be exercisable only by the optionee.


 


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(m) Securities Regulation and Tax Withholding.



(1) Shares shall not be issued with respect to an Option unless the exercise of such Option
and the issuance and delivery of such shares shall comply with all relevant provisions of law,
including, without limitation, any applicable state securities laws, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations hereunder and the requirements of any stock
exchange upon which such shares may then be listed, and such issuance shall be further subject to
the approval of counsel for the Company with respect to such compliance, including the availability
of an exemption from registration for the issuance and sale of such shares.



The inability of the Company to obtain from any regulatory body the authority deemed by the
Company to be necessary for the lawful issuance and sale of any shares under this Plan, or the
unavailability of an exemption from registration for the issuance and sale of any shares under this
Plan, shall relieve the Company of any liability with respect to the non-issuance or sale of such
shares.



As a condition to the exercise of an Option, the Board may require the Holder to represent and
warrant in writing at the time of such exercise that the shares are being purchased only for
investment and without any then-present intention to sell or distribute such shares. At the option
of the Board, a stop-transfer order against such shares may be placed on the stock books and
records of the Company, and a legend indicating that the stock may not be pledged, sold or
otherwise transferred unless an opinion of counsel is provided stating that such transfer is not in
violation of any applicable law or regulation, may be stamped on the certificates representing such
shares in order to assure an exemption from registration. The Board also may require such other
documentation as may from time to time be necessary to comply with federal and state securities
laws. THE COMPANY HAS NO OBLIGATION TO UNDERTAKE REGISTRATION OF OPTIONS OR THE SHARES OF STOCK
ISSUABLE UPON THE EXERCISE OF OP IONS.



(2) The Holder shall pay to the Company by certified or cashier’s check, promptly upon
exercise of an Option r, if later, the date that the amount of such obligations becomes
determinable, all applicable federal, state, local and foreign withholding taxes that the Board, in
its discretion, determines to result upon exercise of an Option or from a transfer or other
disposition of shares of Common Stock acquired upon exercise of an Option or otherwise related to
an Option or shares of Common Stock acquired in connection with an Option. Upon approval of the
Board, a Holder may satisfy such obligation by complying with one or more of the following
alternatives selected by the Board:



(A) by delivering to the Company shares of Common Stock previously held by such Holder or by
the Company withholding shares of Common Stock otherwise deliverable pursuant to the exercise of
the Option, which shares of Common Stock received or withheld shall have a fair market value at the
date of exercise (as determined by the Board) equal to the tax obligation to be paid by the
Optionee upon such exercise; provided that if the Holder is an Insider or if beneficial ownership
of the shares issuable upon exercise of the Option is attributable to an Insider pursuant to the
regulations under Section 16 of the Exchange Act, the grant of such Option to such Holder was
specifically approved (or, in the case of clause


 


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(b), ratified) (i) by the entire Board or a committee of the Board composed solely of two or
more Non-Employee Directors (as defined in Rule 16b-3(b)(3)(i) of the Exchange Act) or (ii) in
compliance with Section 14 of the Exchange Act by the holders of a majority of the securities of
the Company present, or represented, and entitled to vote at a meeting duly held in accordance with
the laws of the state of incorporation of the Company, or the written consent of the holders of a
majority of the securities of the Company entitled to vote, so long as such ratification occurred
no later than the date of the next annual meeting of stockholders; or



(B) by executing appropriate loan documents approved by the Board by which the Holder borrows
funds from the Company to pay the withholding taxes due under this Paragraph 2, with such repayment
terms as the Board shall select.



(3) The issuance, transfer or delivery of certificates of Common Stock pursuant to the
exercise of Options may be delayed, at the discretion of the Board, until the Board is satisfied
that the applicable requirements of the federal and state securities laws and the withholding
provisions of the Code have been meet.




(n) Stock Dividend, Reorganization or Liquidation.



(1) If (i) the Company shall at any time be involved in a transaction described in Section
424(a) of the Code (or any successor provision) or any “corporate transaction” described in the
regulations thereunder; (ii) the Company shall declare a dividend payable in, or shall subdivide or
combine, its Common Stock or (iii) any other event with substantially the same effect shall occur,
the Board shall, with respect to each outstanding Option, proportionately adjust the number of
shares of Common Stock subject to such Option, the exercise price per share or both so as to
preserve the rights of the Holder substantially proportionate to the rights of the Holder prior to
such event, and to the extent that such action shall an increase or decrease in the number of
shares of Common Stock subject to outstanding Options, the number of shares available under Section
4 of this Plan shall automatically be increased or decreased, as the case may be, proportionately,
without further action on the part of the Board, the Company, the Company’s stockholders, or any
Holder.



(2) If the Company shall at any time declare an extraordinary dividend with respect to the
Common Stock, whether payable in cash or other property, the Board may, in the exercise of its sole
discretion and with respect to each outstanding Option, proportionately adjust the number of shares
of Common Stock subject to such Option, the exercise price per share or both so as to preserve the
rights of the Holder substantially proportionate to the rights of the Holder prior to such event,
and to the extent that such action shall include an increase or decrease in the number of shares of
Common Stock subject to outstanding Options, the number of shares available under Section 4 of this
Plan shall automatically be increased or decreased, as the case may be, proportionately, without
further action on the part of the he Company, the Company’s stockholders, or any Holder.



(3) If the Company is liquidated or dissolved, the Board may allow the Holders of any
outstanding Options to exercise all or any part of the unvested portion of the Options held by
them, provided they do so prior to the effective date of such liquidation or dissolution. If the Holders do not exercise their Options prior to such effective date, each
outstanding Option shall terminate as of the effective date of the liquidation or dissolution.


 


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(4) The foregoing adjustments in the shares subject to Options shall be made by the Board, or
by any successor administrator of this Plan, or by the applicable terms of any assumption or
substitution document.



(5) The grant of an Option shall not affect in any way the right or power of the Company to
make adjustments, reclassifications, reorganizations or changes of its capital or business
structure, to merge, consolidate or dissolve, to liquidate or to sell or transfer all or any part
of its business or assets.




(o) Change in Control.



(1) Any and all Options that are outstanding under the Plan at the time of occurrence of any
of the events described in Subparagraphs (A), (B), (C) and (D) below (an “Eligible Option”) shall
become immediately vested and fully exercisable for the periods indicated (each such exercise
period referred to as an “Acceleration Window”):



(A) For a period of forty-five (45) days beginning on the day on which any Person together
with all Affiliates and Associates (as such terms are defined below) of such Person shall become e
Beneficial Owner (as defined below) of fifty percent (50%) or more of the shares of Common Stock
then outstanding, but shall not include the Company, any subsidiary of the Company, any employee
benefit plan of the Company or of any subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the terms of any such employee benefit
plan;



(B) Beginning on the date that a tender or exchange offer for Common Stock by any Person
(other than the Company, any subsidiary of the Company, any employee benefit plan of the Company or
of any subsidiary of the Company, or any Person or entity organized, appointed or established by
the Company for or pursuant to the terms of any such employee benefit plan) is first published or
sent or given within the meaning of Rule 14d-2 under the Exchange Act and continuing so long as
such offer remains open (including any extensions or renewals of such offer), unless by the terms
of such offer the offeror, upon consummation thereof, would be the beneficial Owner of less than
fifty percent (50%) of the shares of Common Stock then outstanding;



(C) For a period of twenty (20) days beginning on the day on which the stockholders of the
Company (or, if later, approval by the stockholders of any Person) duly approve any merger,
consolidation, reorganization or other transaction providing for the conversion or exchange of ore
than fifty percent (50%) of the outstanding shares of Common Stock into securities of any Person,
or cash, or property, or a combination of any of the foregoing, unless the holders of the voting
stock of the Company immediately prior to such transaction hold not less than fifty percent (0%) of
the voting rights in the surviving entity; or


 


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(D) For a period of twenty (20) days beginning on the day on which, at any meeting of the
stockholders of the Company involving a contest for the election of directors, individuals
constituting a majority of the Board who were not the Board’s nominees for election immediately prior to the meeting are elected; provided, however, that with
respect to the events specified in Subparagraphs (A), (B) and (C) above, such accelerated vesting
shall not occur if the event that would otherwise trigger the accelerated vesting of Eligible
Options has received the prior approval f a majority of all of the directors of the Company,
excluding for such purposes the votes of directors who are directors or officers of, or have a
material financial interest in any Person (other tan the Company) who is a party to the event
specified in Subparagraph (A), (B) or (C) above which otherwise would trigger acceleration of
vesting and provided, further, that no Option which i to be converted into an option to purchase
shares of Exchange Stock as stated at item (3) below all be accelerated pursuant to this Section
5(n).



(2) The exercisability of any Eligible Option which remains unexercised following expiration
of an Acceleration Window shall be governed by the vesting schedule and other terms of the
Agreement ting such Option.



(3) If the stockholders of the Company receive shares of capital stock of another Person
(“Exchange Stock”) in exchange for or in place of shares of Common Stock in any transaction
involving any merger, consolidation, reorganization or other transaction providing for the
conversion or exchange of all or substantially all outstanding shares of Common Stock into Exchange
Stock, then at the closing of such transaction all Options granted hereunder shall be converted
into options to purchase shares of Exchange Stock unless the Company (by the affirmative vote of a
majority of all of the directors of the Company, excluding for such purposes the votes of directors
who are directors or officers of, or have a material financial interest in the Person issuing the
Exchange Stock and any Affiliate of such Person), in its sole discretion, determines that any or
all such Options granted hereunder shall not be so converted but instead shall terminate. The
amount and price of converted Options shall be determined by adjusting the amount and price of the
Options granted hereunder in the same proportion as used for determining the shares f Exchange
Stock the holders of the Common Stock received in such merger, consolidation, reorganization or
other transaction. Unless altered by the Board, the vesting schedule set forth in the Agreement
shall continue to apply to the Options granted for Exchange Stock. For the purposes of this
Section 5(n): (i) “Person” shall include any individual, firm, corporation, partnership or other
entity; (ii) “Affiliate” and “Associate” shall have the meanings assigned to them in Rule 12b-2
under the Exchange Act; and (iii) “Beneficial Owner” shall have the meaning assigned to it in Rule
16a-1 under the Exchange Act.




6. EFFECTIVE DATE; TERM.



This Plan shall be effective as of September 1, 1996. Incentive Stock Options and
Non-Qualified Stock Options may be granted by the Board from time to time thereafter until the
tenth anniversary of the May 29, 2002 amendment and restatement of the Plan. Termination of this
Plan shall not terminate any Option granted prior to such termination. Any Options granted by the
Board prior to the approval of this Plan by the stockholders of the Company shall be granted
subject to ratification of this Plan by the stockholders of the Company within twelve (12) months
after this Plan is adopted by the Board. The Board may require any stockholder approval that it
considers necessary for the Company to comply with or to avail the Company and/or the Optionees of
the benefits of any securities, tax, market listing or other administrative or regulatory
requirement. If such stockholder ratification is sought within twelve (12) months after this Plan is adopted by the Board and such stockholder ratification is not obtained, each and
every Option granted under this Plan shall be null and void and shall convey no rights to the
Holder thereof.


 


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7. NO OBLIGATIONS TO EXERCISE OPTION.




The grant of an Option shall impose no obligation upon the Optionee to exercise such Option.




8. NO RIGHT TO OPTIONS OR TO EMPLOYMENT.



Whether or not any Options are to be granted under this Plan shall be exclusively within the
discretion of the Board, and nothing contained in this Plan shall be construed as giving any person
any right to participate under this Plan. The grant of an Option shall in no way constitute any
form of agreement or understanding binding on any Related Corporation, express or implied, that the
Company or any Related Corporation will act with an Optionee for any length of time, nor shall it
interfere in any way with the Company’s or, where applicable, a Related Corporation’s right to
terminate Optionee’s employment at any time, which right is hereby reserved.




9. APPLICATION OF FUNDS.



The proceeds received by the Company from the sale of Common Stock issued upon the exercise of
Options shall be used for general corporate purposes, unless otherwise directed by the Board.




10. INDEMNIFICATION OF THE BOARD.



In addition to all other rights of indemnification they may have as members of the Board,
directors shall be indemnified by the Company for all reasonable expenses and liabilities of any
type or nature, including attorneys’ fees, incurred in connection with any action, suit or
proceeding to which they or any of them are a party by reason of, or in connection with, this Plan
or any Option granted under this Plan, and against all amounts paid by them in settlement thereof
(provided that such settlement is approved by independent legal counsel selected by the Company),
except to the extent that such expenses relate to matters for which it is adjudged that such
director is liable for willful misconduct; provided, that within fifteen (15) days after the
institution of any such action, suit or proceeding, the director involved therein shall, in
writing, notify the Company of such action, suit or proceeding, so that the Company may have the
opportunity to make appropriate o prosecute or defend the same.




11. AMENDMENT OF PLAN



The Board may, at any time, modify, amend or terminate this Plan or modify or amend Options
granted under this Plan, including, without limitation, such modifications or amendments as are
necessary to maintain compliance with applicable statutes, rules or regulations; provided, however,
no amendment with respect to an outstanding Option which has the effect of reducing the benefits
afforded to the Holder thereof shall be made over the objection of such Holder; provided further,
that the events triggering acceleration of vesting of outstanding Options may be modified, expanded or eliminated without the consent of Holders. The Board may
condition the effectiveness of any such amendment on the receipt of stockholder approval at such
time and in such manner as the Board may consider necessary for the Company to comply with or to
avail the Company, the Optionees or both of the benefits of any securities, tax, market listing or
other administrative or regulatory requirement which the Board determines to be desirable. Without
limiting the generality of the foregoing, the Board may modify grants to persons who are eligible
to receive Options under this Plan who are foreign nationals or employed outside the United States
to recognize differences in local law, tax policy or custom.




 


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