(i) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly orindirectly, of securities of the Company representing fifty percent (50%) or more of the totalvoting power represented by the Company’s then outstanding voting securities; or                    (i) The consummation of the sale or disposition by the Company of all or substantially all ofthe Company’s assets;                    (ii) A change in the composition of the Board occurring within a two-year period, as a resultof which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors”means directors who either (A) are Directors as of the effective date of the Plan, or (B) areelected, or nominated for election, to the Board with the affirmative votes of at least a majorityof the Incumbent Directors at the time of such election or nomination (but will not include anindividual whose election or nomination is in connection with an actual or threatened proxy contestrelating to the election of directors to the Company); or                    (iii) The consummation of a merger or consolidation of the Company with any other corporation,other than a merger or consolidation which would result in the voting securities of the Companyoutstanding immediately prior thereto continuing to represent (either by remaining outstanding orby being converted into voting securities of the surviving entity or its parent) at least fiftypercent (50%) of the total voting power represented by the voting securities of the Company or suchsurviving entity or its parent outstanding immediately after such merger or consolidation.               (j) “Code” means the Internal Revenue Code of 1986, as amended. Any reference to asection of the Code herein will be a reference to any successor or amended section of the Code.               (k) “Committee” means a committee of Directors appointed by the Board in accordancewith Section 4 of the Plan.               (l) “Common Stock” means the common stock of the Company, or in the case ofPerformance Units, the cash equivalent thereof.               (m) “Company” means Intevac, Inc., a California corporation, or any successor thereto.               (n) “Consultant” means any natural person, including an advisor, engaged by theCompany or a Parent or Subsidiary to render services to such entity.               (o) “Cost of Sales as a Percentage of Sales” means as to any Performance Period, theCompany’s cost of sales stated as a percentage of sales, determined in accordance with generallyaccepted accounting principles.               (p) “Director” means a member of the Board.               (q) “Disability” means total and permanent disability as defined in Section 22(e)(3)of the Code.
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               (r) “Earnings Per Share” means as to any Performance Period, the Company’s ProfitAfter Tax, divided by a weighted average number of common shares outstanding and dilutive commonequivalent shares deemed outstanding, determined in accordance with generally accepted accountingprinciples.               (s) “Employee” means any person, including Officers and Directors, employed by theCompany or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of adirector’s fee by the Company will be sufficient to constitute “employment” by the Company.               (t) “Exchange Act” means the Securities Exchange Act of 1934, as amended.               (u) “Exchange Program” means a program under which (i) outstanding Awards aresurrendered or cancelled in exchange for Awards of the same type (which may have lower exerciseprices and different terms), Awards of a different type, and/or cash, and/or (ii) the exerciseprice of an outstanding Award is reduced. The terms and conditions of any Exchange Program will bedetermined by the Administrator in its sole discretion.               (v) “Fair Market Value” means, as of any date, the value of Common Stock determined asfollows:                    (i) If the Common Stock is listed on any established stock exchange or a national marketsystem, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market ofThe Nasdaq Stock Market, its Fair Market Value will be the closing sales price for such stock (orthe closing bid, if no sales 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 Administratordeems reliable;                    (ii) If the Common Stock is regularly quoted by a recognized securities dealer but sellingprices are not reported, the Fair Market Value of a Share of Common Stock will be the mean betweenthe high bid and low asked prices for the Common Stock on the day 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 willbe determined in good faith by the Administrator.               (w) “Fiscal Year” means the fiscal year of the Company.               (x) “Free Cash Flow” means as to any Performance Period, the Company’s earnings beforeinterest, taxes, depreciation and amortization (EBITDA), determined in accordance with generallyaccepted accounting principles.               (y) “Freestanding SAR” means a SAR that is granted independently of any Option.
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               (z) “Incentive Stock Option” means an Option intended to qualify as an incentive stockoption within the meaning of Section 422 of the Code and the regulations promulgated thereunder.               (aa) “Inside Director” means a Director who is an Employee.               (bb) “Marketing and Sales Expenses as a Percentage of Sales” means as to anyPerformance Period, the Company’s marketing and sales expenses stated as a percentage of sales,determined in accordance with generally accepted accounting principles.               (cc) “Net Income as a Percentage of Sales” means as to any Performance Period, theCompany’s net income stated as a percentage of sales, determined in accordance with generallyaccepted accounting principles.               (dd) “Nonstatutory Stock Option” means an Option that by its terms does not qualify oris not intended to qualify as an Incentive Stock Option.               (ee) “Officer” means a person who is an officer of the Company within the meaning ofSection 16 of the Exchange Act and the rules and regulations promulgated thereunder.               (ff) “Operating Margin” means as to any Performance Period, the Company’s netoperating income divided by Revenues, determined in accordance with generally accepted accountingprinciples.               (gg) “Option” means a stock option granted pursuant to the Plan.               (hh) “Outside Director” means a Director who is not an Employee.               (ii) “Parent” means a “parent corporation,” whether now or hereafter existing, asdefined in Section 424(e) of the Code.               (jj) “Participant” means a Service Provider who holds an outstanding Award grantedunder the Plan.               (kk) “Performance Goals” means the goal(s) (or combined goal(s)) determined by theCommittee (in its discretion) to be applicable to a Participant with respect to an Award. Asdetermined by the Committee, the Performance Goals applicable to an Award may provide for atargeted level or levels of achievement using one or more of the following measures: (a) Cost ofSales as a Percentage of Sales, (b) Earnings Per Share, (c) Free Cash Flow, (d) Marketing and SalesExpenses as a Percentage of Sales, (e) Net Income as a Percentage of Sales, (f) Operating Margin,(g) Revenue, (h) Total Shareholder Return and (i) Working Capital. The Performance Goals maydiffer from Participant to Participant and from Award to Award. Any criteria used may be measured,as applicable, (i) in absolute terms, (ii) in relative terms (including, but not limited to,passage of time and/or against another company or companies), (iii) on a per-share basis, (iv)against the performance of the Company as a whole or a segment of the Company and/or (v) on apre-tax or after-tax basis. Prior to the latest possible date that will not jeopardize an Award’squalification as “performance-based compensation” under Section 162(m) of the Code, the Committeeshall
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determine whether any element(s) or item(s) shall be included in or excluded from thecalculation of any Performance Goal with respect to any Participants.               (ll) “Performance Period” means the time period of any Fiscal Year or such longerperiod as determined by the Committee in its sole discretion during which the performanceobjectives must be met.               (mm) “Performance Share” means an Award granted to a Participant pursuant to Section10.               (nn) “Performance Unit” means an Award granted to a Participant pursuant to Section10.               (oo) “Period of Restriction” means the period during which the transfer of Shares ofRestricted Stock are subject to restrictions and therefore, the Shares are subject to a substantialrisk of forfeiture. Such restrictions may be based on the passage of time, the achievement oftarget levels of performance, or the occurrence of other events as determined by the Administrator.               (pp) “Plan” means this 2004 Equity Incentive Plan.               (qq) “Profit After Tax” means as to any Performance Period, the Company’s income aftertaxes, determined in accordance with generally accepted accounting principles.               (rr) “Restricted Stock” means shares of Common Stock issued pursuant to a RestrictedStock award under Section 8 of the Plan or issued pursuant to the early exercise of an Option.               (ss) “Revenue” means as to any Performance Period, the Company’s net revenuesgenerated from third parties, determined in accordance with generally accepted accountingprinciples.               (tt) “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.               (uu) “Section 16(b)” means Section 16(b) of the Exchange Act.               (vv) “Service Provider” means an Employee, Director or Consultant.               (ww) “Share” means a share of the Common Stock, as adjusted in accordance with Section13 of the Plan.               (xx) “Stock Appreciation Right” or “SAR” means an Award, granted alone or inconnection with an Option, that pursuant to Section 9 is designated as a SAR.               (yy) “Subsidiary” means a “subsidiary corporation”, whether now or hereafter existing,as defined in Section 424(f) of the Code.
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               (zz) “Tandem SAR” means a SAR that is granted in connection with a related Option, theexercise of which will require forfeiture of the right to purchase an equal number of Shares underthe related Option (and when a Share is purchased under the Option, the SAR will be canceled to thesame extent).               (aaa) “Total Shareholder Return” means as to any Performance Period, the total return(change in share price plus reinvestment of any dividends) of a Share.               (bbb) “Unvested Awards” shall mean Options or Restricted Stock that (i) were grantedto an individual in connection with such individual’s position as an Employee and (ii) are stillsubject to vesting or lapsing of Company repurchase rights or similar restrictions.               (ccc) “Working Capital” means the Company’s current assets minus current liabilities,determined in accordance with generally accepted accounting principles.          3. Stock Subject to the Plan.               (a) Stock Subject to the Plan. Subject to the provisions of Section 13 of the Plan,the maximum aggregate number of Shares that may be optioned and sold under the Plan is 4,400,000Shares plus (a) the number of shares which have been reserved but not issued under the Company’s1995 Stock Option/Stock Issuance Plan (the “1995 Plan”) as of the effective date of the Plan, and(b) any Shares returned to the 1995 Plan as a result of termination of options or repurchase ofShares issued under such plan, with the maximum number of Shares to be added to the Plan pursuantto clauses (a) and (b) equal to 1,500,000 Shares. The Shares may be authorized, but unissued, orreacquired Common Stock. Shares shall not be deemed to have been issued pursuant to the Plan withrespect to any portion of an Award that is settled in cash. Upon payment in Shares pursuant to theexercise of an SAR, the number of Shares available for issuance under the Plan shall be reducedonly by the number of Shares actually issued in such payment. If the exercise price of an Optionis paid by tender to the Company, or attestation to the ownership, of Shares owned by theParticipant, the number of Shares available for issuance under the Plan shall be reduced by thegross number of Shares for which the Option is exercised. Notwithstanding anything to the contraryherein, the total number of Shares subject to Awards other than Options or SARs that were grantedat per Share exercise prices equal to 100% of Fair Market Value per Share on the grant date may notexceed 20% of the Shares reserved for issuance under the Plan.               (b) Lapsed Awards. If an Award expires or becomes unexercisable without having beenexercised in full, or is surrendered pursuant to an Exchange Program, or, with respect to Options,Restricted Stock, Performance Shares or Performance Units, is forfeited back to or repurchased bythe Company, the unpurchased Shares (or for Awards other than Options and SARs, the forfeited orrepurchased Shares) which were subject thereto shall become available for future grant or saleunder the Plan (unless the Plan has terminated). With respect to SARs, only Shares actually issuedpursuant to an SAR shall cease to be available under the Plan; all remaining Shares under SARsshall remain available for future grant or sale under the Plan (unless the Plan has terminated).However, Shares that have actually been issued under the Plan under any Award shall not be returnedto the Plan and shall not become available for future distribution under the Plan, except that ifunvested Shares of Restricted Stock, Performance Shares or Performance Units are repurchased by theCompany or are forfeited to the Company, such Shares shall become available
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for future grant under the Plan. To the extent an Award under the Plan is paid outin cash rather than stock, such cash payment shall not result in reducing the number of Sharesavailable for issuance under the Plan.          4. Administration of the Plan.               (a) Procedure.                    (i) Multiple Administrative Bodies. Different Committees with respect to differentgroups of Service Providers may administer the Plan.                    (ii) Section 162(m). To the extent that the Administrator determines it to bedesirable to qualify Options granted hereunder as “performance-based compensation” within themeaning of Section 162(m) of the Code, the Plan will 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 exemptunder Rule 16b-3, the transactions contemplated hereunder will be structured to satisfy therequirements for exemption under Rule 16b-3.                    (iv) Other Administration. Other than as provided above, the Plan will beadministered by (A) the Board or (B) a Committee, which committee will be constituted to satisfyApplicable Laws.               (b) Powers of the Administrator. Subject to the provisions of the Plan, and in thecase of a Committee, subject to the specific duties delegated by the Board to such Committee, theAdministrator will have the authority, in its discretion:                    (i) to determine the Fair Market Value;                    (ii) to select the Service Providers to whom Awards may be granted hereunder;                    (iii) to determine the number of Shares 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 anyAward granted hereunder. Such terms and conditions include, but are not limited to, the exerciseprice, 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 limitationregarding any Award or the Shares relating thereto, based in each case on such factors as theAdministrator will determine;                    (vi) to institute an Exchange Program;
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                    (vii) to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan;                    (viii) to prescribe, amend and rescind rules and regulations relating to the Plan, includingrules and regulations relating to sub-plans established for the purpose of satisfying applicableforeign laws and/or qualifying for preferred tax treatment under applicable foreign laws;                    (ix) to modify or amend each Award (subject to Section 17(c) of the Plan), including thediscretionary authority to extend the post-termination exercisability period of Awards longer thanis otherwise provided for in the Plan;                    (x) to allow Participants to satisfy withholding tax obligations by electing to have theCompany withhold from the Shares or cash to be issued upon exercise or vesting of an Award thatnumber of Shares or cash having a Fair Market Value equal to the minimum amount required to bewithheld. The Fair Market Value of any Shares to be withheld will be determined on the date thatthe amount of tax to be withheld is to be determined. All elections by a Participant to haveShares or cash withheld for this purpose will be made in such form and under such conditions as theAdministrator may deem necessary or advisable;                    (xi) to authorize any person to execute on behalf of the Company any instrument required toeffect the grant of an Award previously granted by the Administrator;                    (xii) to allow a Participant to defer the receipt of the payment of cash or the delivery ofShares that would otherwise be due to such Participant under an Award;                    (xiii) to make all other determinations deemed necessary or advisable for administering thePlan.               (c) Exchange Program. Notwithstanding anything in this Plan to the contrary, theAdministrator shall not have the authority to institute an Exchange Program without the consent ofthe shareholders.               (d) Effect of Administrator’s Decision. The Administrator’s decisions, determinationsand interpretations will be final and binding on all Participants and any other holders of Awards.          5. Eligibility. Nonstatutory Stock Options, Restricted Stock, Stock AppreciationRights, Performance Units and Performance Shares may be granted to Service Providers. IncentiveStock Options may be granted only to Employees.          6. Limitations.               (a) Each Option will be designated in the Award Agreement as either an Incentive Stock Optionor a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that theaggregate Fair Market Value of the Shares with respect to which Incentive Stock Options areexercisable for the first time by the Participant during any calendar year (under all plans of theCompany and any Parent or Subsidiary) exceeds $100,000, such Options will be treated asNonstatutory Stock Options. For purposes of this Section 6(a), Incentive Stock Options will betaken
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into account in the order in which they were granted. The Fair Market Value of the Shares willbe determined as of the time the Option with respect to such Shares is granted.               (b) The following limitations will apply to grants of Options and Stock Appreciation Rightswith an exercise price equal to or exceeding 100% of Fair Market Value on the grant date:                    (i) No Service Provider will be granted, in any Fiscal Year, Options or SARs to purchase morethan 200,000 Shares.                    (ii) In connection with his or her initial service, a Service Provider may be granted Optionsor SARs to purchase up to an additional 300,000 Shares, which will not count against the limit setforth in Section 6(b)(i) above.                    (iii) The foregoing limitations will be adjusted proportionately in connection with any changein the Company’s capitalization as described in Section 13.                    (iv) If an Option or SAR is cancelled in the same Fiscal Year in which it was granted (otherthan in connection with a transaction described in Section 13), the cancelled Option or SAR will becounted against the limits set forth in subsections (i) and (ii) above. For this purpose, if theexercise price of an Option is reduced, the transaction will be treated as a cancellation of theOption and the grant of a new Option.          7. Stock Options.               (a) Term of Option. The term of each Option will be stated in the Award Agreement. Inthe case of an Incentive Stock Option, the term will be ten (10) years from the date of grant orsuch shorter term as may be provided in the Award Agreement. Moreover, in the case of an IncentiveStock Option granted to a Participant who, at the time the Incentive Stock Option is granted, ownsstock representing more than ten percent (10%) of the total combined voting power of all classes ofstock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option will befive (5) years from the date of grant or such shorter term as may be provided in the AwardAgreement.               (b) Option Exercise Price and Consideration.                    (i) Exercise Price. The per share exercise price for the Shares to be issued pursuantto exercise of an Option will be determined by the Administrator, subject to the following:                         (1) In the case of an Incentive Stock Option                              a) granted to an Employee who, at the time the Incentive Stock Option is granted, owns stockrepresenting more than ten percent (10%) of the voting power of all classes of stock of the Companyor any Parent or Subsidiary, the per Share exercise price will be no less than 110% of the FairMarket Value per Share on the date of grant.
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                              b) granted to any Employee other than an Employee described in paragraph (a) immediatelyabove, the per Share exercise price will be no less than 100% of the Fair Market Value per Share onthe date of grant.                         (2) In the case of a Nonstatutory Stock Option, the per Share exercise price will bedetermined by the Administrator. In the case of a Nonstatutory Stock Option intended to qualify as“performance-based compensation” within the meaning of Section 162(m) of the Code, the per Shareexercise price will be no less than 100% of the Fair Market Value per Share on the date of grant.                         (3) Notwithstanding the foregoing, Incentive Stock Options may be granted with a per Shareexercise price of less than 100% of the Fair Market Value per Share on the date of grant pursuantto a merger or other corporate transaction.                    (ii) Waiting Period and Exercise Dates. At the time an Option is granted, theAdministrator will fix the period within which the Option may be exercised and will determine anyconditions that must be satisfied before the Option may be exercised.                    (iii) Form of Consideration. The Administrator will determine the acceptable form ofconsideration for exercising an Option, including the method of payment. In the case of anIncentive Stock Option, the Administrator will determine the acceptable form of consideration atthe time of grant. Such consideration may consist entirely of: (1) cash; (2) check; (3) promissorynote; (4) other Shares, provided Shares acquired directly or indirectly from the Company, (A) havebeen owned by the Participant and not subject to substantial risk of forfeiture for more than sixmonths on the date of surrender, and (B) have a Fair Market Value on the date of surrender equal tothe aggregate exercise price of the Shares as to which said Option will be exercised; (5)consideration received by the Company under a cashless exercise program implemented by the Companyin connection with the Plan; (6) a reduction in the amount of any Company liability to theParticipant, including any liability attributable to the Participant’s participation in anyCompany-sponsored deferred compensation program or arrangement; (7) any combination of theforegoing methods of payment; or (8) such other consideration and method of payment for theissuance of Shares to the extent permitted by Applicable Laws.               (c) Exercise of Option.                    (i) Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunderwill be exercisable according to the terms of the Plan and at such times and under such conditionsas determined by the Administrator and set forth in the Award Agreement. An Option may not beexercised for a fraction of a Share.                         An Option will be deemed exercised when the Company receives: (x) written or electronic noticeof exercise (in accordance with the Award Agreement) from the person entitled to exercise theOption, and (y) full payment for the Shares with respect to which the Option is exercised. Fullpayment may consist of any consideration and method of payment authorized by the Administrator andpermitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option will beissued in the name of the Participant or, if requested by the Participant, in the name of theParticipant and his or her spouse. Until the Shares are issued (as
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evidenced by theappropriate entry on the books of the Company or of a duly authorized transfer agent of theCompany), no right to vote or receive dividends or any other rights as a stockholder will existwith respect to the Awarded Stock, notwithstanding the exercise of the Option. The Company willissue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustmentwill be made for a dividend or other right for which the record date is prior to the date theShares are issued, except as provided in Section 13 of the Plan.                         Exercising an Option in any manner will 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 whichthe Option is exercised.               (d) Termination of Relationship as a Service Provider. If a Participant ceases to bea Service Provider, other than upon the Participant’s death or Disability, the Participant mayexercise his or her Option within such period of time as is specified in the Award Agreement to theextent that the Option is vested on the date of termination (but in no event later than theexpiration of the term of such Option as set forth in the Award Agreement). In the absence of aspecified time in the Award Agreement, the Option will remain exercisable for three (3) monthsfollowing the Participant’s termination. Unless otherwise provided by the Administrator, if on thedate of termination the Participant is not vested as to his or her entire Option, the Sharescovered by the unvested portion of the Option will revert to the Plan. If after termination theParticipant does not exercise his or her Option within the time specified by the Administrator, theOption will terminate, and the Shares covered by such Option will revert to the Plan.               (e) Disability of Participant. If a Participant ceases to be a Service Provider as aresult of the Participant’s Disability, the Participant may exercise his or her Option within suchperiod of time as is specified in the Award Agreement to the extent the Option is vested on thedate of termination (but in no event later than the expiration of the term of such Option as setforth in the Award Agreement). In the absence of a specified time in the Award Agreement, theOption will remain exercisable for twelve (12) months following the Participant’s termination.Unless otherwise provided by the Administrator, if on the date of termination the Participant isnot vested as to his or her entire Option, the Shares covered by the unvested portion of the Optionwill revert to the Plan. If after termination the Participant does not exercise his or her Optionwithin the time specified herein, the Option will terminate, and the Shares covered by such Optionwill revert to the Plan.               (f) Death of Participant. If a Participant dies while a Service Provider, the Optionmay be exercised following the Participant’s death within such period of time as is specified inthe Award Agreement to the extent that the Option is vested on the date of death (but in no eventmay the option be exercised later than the expiration of the term of such Option as set forth inthe Award Agreement), by the Participant’s designated beneficiary, provided such beneficiary hasbeen designated prior to Participant’s death in a form acceptable to the Administrator. If no suchbeneficiary has been designated by the Participant, then such Option may be exercised by thepersonal representative of the Participant’s estate or by the person(s) to whom the Option istransferred pursuant to the Participant’s will or in accordance with the laws of descent anddistribution. In the absence of a specified time in the Award Agreement, the Option will remainexercisable for twelve (12) months following Participant’s death. Unless otherwise provided by theAdministrator, if at the time of death Participant is not vested as to his or her entire Option,the Shares covered by the unvested portion of the Option will immediately revert to the Plan. Ifthe
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Option is not so exercised within the time specified herein, the Option will terminate, andthe Shares covered by such Option will revert to the Plan.               (g) Buyout Provisions. The Administrator may at any time offer to buy out for apayment in cash or Shares an Option previously granted based on such terms and conditions as theAdministrator shall establish and communicate to the Participant at the time that such offer ismade.          8. Restricted Stock.               (a) Grant of Restricted Stock. Subject to the terms and provisions of the Plan, theAdministrator, at any time and from time to time, may grant Shares of Restricted Stock to ServiceProviders in such amounts as the Administrator, in its sole discretion, will determine providedthat during any Fiscal Year, no Service Provider shall receive more than 125,000 Shares ofRestricted Stock except that such Service Provider may receive up to an additional 175,000 Sharesof Restricted Stock in the fiscal year of the Company in which his or her service as a ServiceProvider first commences.               (b) Restricted Stock Agreement. Each Award of Restricted Stock will be evidenced by anAward Agreement that will specify the Period of Restriction, the number of Shares granted, and suchother terms and conditions as the Administrator, in its sole discretion, will determine. Unlessthe Administrator determines otherwise, Shares of Restricted Stock will be held by the Company asescrow agent until the restrictions on such Shares have lapsed.               (c) Transferability. Except as provided in this Section 8, Shares of Restricted Stockmay not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until theend of the applicable Period of Restriction.               (d) Other Restrictions. The Administrator, in its sole discretion, may impose suchother restrictions on Shares of Restricted Stock as it may deem advisable or appropriate.                    (i) General Restrictions. The Administrator may set restrictions based upon theachievement of specific performance objectives (Company-wide, departmental, or individual),applicable federal or state securities laws, or any other basis determined by the Committee in itsdiscretion.                    (ii) Section 162(m) Performance Restrictions. For purposes of qualifying grants ofRestricted Stock as “performance-based compensation” under Section 162(m) of the Code, theCommittee, in its discretion, may set restrictions based upon the achievement of Performance Goals.The Performance Goals shall be set by the Committee on or before the latest date permissible toenable the Restricted Stock to qualify as “performance-based compensation” under Section 162(m) ofthe Code. In granting Restricted Stock which is intended to qualify under Section 162(m) of theCode, the Committee shall follow any procedures determined by it from time to time to be necessaryor appropriate to ensure qualification of the Restricted Stock under Section 162(m) of the Code(e.g., in determining the Performance Goals).               (e) Removal of Restrictions. Except as otherwise provided in this Section 8, Shares ofRestricted Stock covered by each Restricted Stock grant made under the Plan will be released fromescrow as soon as practicable after the last day of the Period of Restriction. The
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Administrator, in its discretion, may accelerate the time at which any restrictions will lapseor be removed.               (f) Voting Rights. During the Period of Restriction, Service Providers holding Sharesof Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares,unless the Administrator determines otherwise.               (g) Dividends and Other Distributions. During the Period of Restriction, ServiceProviders holding Shares of Restricted Stock will be entitled to receive all dividends and otherdistributions paid with respect to such Shares unless otherwise provided in the Award Agreement.If any such dividends or distributions are paid in Shares, the Shares will be subject to the samerestrictions on transferability and forfeitability as the Shares of Restricted Stock with respectto which they were paid.               (h) Return of Restricted Stock to Company. On the date set forth in the AwardAgreement, the Restricted Stock for which restrictions have not lapsed will revert to the Companyand again will become available for grant under the Plan.          9. Stock Appreciation Rights.               (a) Grant of SARs. Subject to the terms and conditions of the Plan, a SAR may begranted to Service Providers at any time and from time to time as will be determined by theAdministrator, in its sole discretion. The Administrator may grant Affiliated SARs, FreestandingSARs, Tandem SARs, or any combination thereof.               (b) Number of Shares. The Administrator will have complete discretion to determine thenumber of SARs granted to any Service Provider, subject to the limits set forth in Section 6.               (c) Exercise Price and Other Terms. The Administrator, subject to the provisions ofthe Plan, will have complete discretion to determine the terms and conditions of SARs granted underthe Plan; provided, however, that no SAR may have a term of more than ten (10) years from the dateof grant. However, the exercise price of Tandem or Affiliated SARs will equal the exercise price ofthe related Option.               (d) Exercise of Tandem SARs. Tandem SARs may be exercised for all or part of theShares subject to the related Option upon the surrender of the right to exercise the equivalentportion of the related Option. A Tandem SAR may be exercised only with respect to the Shares forwhich its related Option is then exercisable. With respect to a Tandem SAR granted in connectionwith an Incentive Stock Option: (a) the Tandem SAR will expire no later than the expiration of theunderlying Incentive Stock Option; (b) the value of the payout with respect to the Tandem SAR willbe for no more than one hundred percent (100%) of the difference between the exercise price of theunderlying Incentive Stock Option and the Fair Market Value of the Shares subject to the underlyingIncentive Stock Option at the time the Tandem SAR is exercised; and (c) the Tandem SAR will beexercisable only when the Fair Market Value of the Shares subject to the Incentive Stock Optionexceeds the Exercise Price of the Incentive Stock Option.
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               (e) Exercise of Affiliated SARs. An Affiliated SAR will be deemed to be exercised uponthe exercise of the related Option. The deemed exercise of an Affiliated SAR will not necessitate areduction in the number of Shares subject to the related Option.               (f) Exercise of Freestanding SARs. Freestanding SARs will be exercisable on such termsand conditions as the Administrator, in its sole discretion, will determine.               (g) SAR Agreement. Each SAR grant will be evidenced by an Award Agreement that willspecify the exercise price, the term of the SAR, the conditions of exercise, and such other termsand conditions as the Administrator, in its sole discretion, will determine.               (h) Expiration of SARs. An SAR granted under the Plan will expire upon the datedetermined by the Administrator, in its sole discretion, and set forth in the Award Agreement.Notwithstanding the foregoing, the rules of Sections 7(d), 7(e) and 7(f) also will apply to SARs.               (i) Payment of SAR Amount. Upon exercise of an SAR, a Participant will be entitled toreceive payment from the Company in an amount determined by multiplying:                    (i) The difference between the Fair Market Value of a Share on the date of exercise over theexercise price; times                    (ii) The number of Shares with respect to which the SAR is exercised.     At the discretion of the Administrator, the payment upon SAR exercise may be in cash, inShares of equivalent value, or in some combination thereof.               (j) Buyout Provisions. The Administrator may at any time offer to buy out for apayment in cash or Shares a Stock Appreciation Right previously granted based on such terms andconditions as the Administrator shall establish and communicate to the Participant at the time thatsuch offer is made.          10. Performance Units and Performance Shares.               (a) Grant of Performance Units/Shares. Subject to the terms and conditions of thePlan, Performance Units and Performance Shares may be granted to Service Providers at any time andfrom time to time, as will be determined by the Administrator, in its sole discretion. TheAdministrator will have complete discretion in determining the number of Performance Units andPerformance Shares granted to each Service Provider, provided that during any Fiscal Year, (a) noService Provider shall receive Performance Units having an initial value greater than $750,000,except that such Service Provider may receive additional Performance Units in the fiscal year ofthe Company in which his or her service as an Employee first commences with an initial value nogreater than $750,000, and (b) no Service Provider shall receive more than 125,000 PerformanceShares, except that such Service Provider may receive up to an additional 175,000 PerformanceShares in the fiscal year of the Company in which his or her service as a Service Provider firstcommences. The Administrator will have complete discretion in determining the conditions that mustbe satisfied.
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               (b) Value of Performance Units/Shares. Each Performance Unit will have an initialvalue that is established by the Administrator on or before the date of grant. Each PerformanceShare will have an initial value equal to the Fair Market Value of a Share on the date of grant.               (c) Performance Objectives and Other Terms. The Administrator will set performanceobjectives in its discretion which, depending on the extent to which they are met, will determinethe number or value of Performance Units/Shares that will be paid out to the Service Providers.Each Award of Performance Units/Shares will be evidenced by an Award Agreement that will specifythe Performance Period, and such other terms and conditions as the Administrator, in its solediscretion, will determine. The Administrator may set performance objectives based upon theachievement of Company-wide, divisional, or individual goals, applicable federal or statesecurities laws, or any other basis determined by the Administrator in its discretion.               (d) Section 162(m) Performance Objectives. For purposes of qualifying grants ofPerformance Units and/or Performance Shares as “performance-based compensation” under Section162(m) of the Code, the Committee, in its discretion, may determine that the performance objectivesapplicable to Performance Units and/or Performance Shares shall be based on the achievement ofPerformance Goals. The Performance Goals shall be set by the Committee on or before the latestdate permissible to enable the Performance Units and/or Performance Shares to qualify as“performance-based compensation” under Section 162(m) of the Code. In granting Performance Unitsand/or Performance Shares which are intended to qualify under Section 162(m) of the Code, theCommittee shall follow any procedures determined by it from time to time to be necessary orappropriate to ensure qualification of the Performance Units and/or Performance Shares underSection 162(m) of the Code (e.g., in determining the Performance Goals).               (e) Earning of Performance Units/Shares. After the applicable Performance Period hasended, the holder of Performance Units/Shares will be entitled to receive a payout of the number ofPerformance Units/Shares earned by the Participant over the Performance Period, to be determined asa function of the extent to which the corresponding performance objectives have been achieved.After the grant of a Performance Unit/Share, the Administrator, in its sole discretion, may reduceor waive any performance objectives for such Performance Unit/Share.               (f) Formand Timing of Payment of Performance Units/Shares. Payment of earnedPerformance Units/Shares will be made as soon as practicable after the expiration of the applicablePerformance Period. The Administrator, in its sole discretion, may pay earned PerformanceUnits/Shares in the form of cash, in Shares (which have an aggregate Fair Market Value equal to thevalue of the earned Performance Units/Shares at the close of the applicable Performance Period) orin a combination thereof.               (g) Cancellation of Performance Units/Shares. On the date set forth in the AwardAgreement, all unearned or unvested Performance Units/Shares will be forfeited to the Company, andagain will be available for grant under the Plan.     11. Leaves of Absence. Unless the Administrator provides otherwise, vesting ofAwards granted hereunder will be suspended during any unpaid leave of absence, such that vestingshall cease on the first day of any unpaid leave of absence and shall only recommence
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upon return to active service. A Service Provider will not cease to be an Employee in thecase of (i) any leave of absence approved by the Company or (ii) transfers between locations ofthe Company or between the Company, its Parent, or any Subsidiary. For purposes of IncentiveStock Options, no such leave may exceed ninety (90) days, unless reemployment upon expiration ofsuch 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 months following the 91st dayof such leave any Incentive Stock Option held by the Participant will cease to be treated as anIncentive Stock Option and will be treated for tax purposes as a Nonstatutory Stock Option.     12. Transferability of Awards. Unless determined otherwise by the Administrator, anAward may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in anymanner other than by will or by the laws of descent or distribution and may be exercised, duringthe lifetime of the Participant, only by the Participant. If the Administrator makes an Awardtransferable, such Award will contain such additional terms and conditions as the Administratordeems appropriate.     13. Adjustments; Dissolution or Liquidation; or Change in Control.               (a) Adjustments. Subject to any required action by the shareholders of the Company,the number of Shares covered by each outstanding Award, the number of Shares which have beenauthorized for issuance under the Plan but as to which no Awards have yet been granted or whichhave been returned to the Plan upon cancellation or expiration of an Award and the number of Sharesas well as the price per share of Common Stock covered by each such outstanding Award and the162(m) annual share issuance limits under Section 3, 6, 8(a), 9(b) and 10(a) shall beproportionately adjusted for any increase or decrease in the number of issued Shares resulting froma stock split, reverse stock split, stock dividend, combination or reclassification of the CommonStock, or any other increase or decrease in the number of issued Shares effected without receipt ofconsideration by the Company; provided, however, that conversion of any convertible securities ofthe Company shall not be deemed to have been “effected without receipt of consideration.” Suchadjustment shall be made by the Board, whose determination in that respect shall be final, bindingand conclusive. Except as expressly provided herein, no issuance by the Company of shares of stockof any class, or securities convertible into shares of stock of any class, shall affect, and noadjustment by reason thereof shall be made with respect to, the number or price of Shares subjectto an Award.               (b) Dissolution or Liquidation. In the event of the proposed dissolution orliquidation of the Company, the Administrator will notify each Participant as soon as practicableprior to the effective date of such proposed transaction. The Administrator in its discretion mayprovide for a Participant to have the right to exercise his or her Option or SAR until ten (10)days prior to such transaction as to all of the Awarded Stock covered thereby, including Shares asto which the Award would not otherwise be exercisable. In addition, the Administrator may providethat any Company repurchase option or forfeiture rights applicable to any Award shall lapse 100%,and that any Award vesting shall accelerate 100%, provided the proposed dissolution or liquidationtakes place at the time and in the manner contemplated. To the extent it has not been previouslyexercised (with respect to Options and SARs) or vested (with respect to other Awards), an Awardwill terminate immediately prior to the consummation of such proposed action.
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               (c) Change in Control.                    (i) Stock Options and SARS. In the event of a Change in Control, each outstandingOption and SAR shall be assumed or an equivalent option or SAR substituted by the successorcorporation or a Parent or Subsidiary of the successor corporation. In the event that thesuccessor corporation refuses to assume or substitute for the Option or SAR, the Participant shallfully vest in and have the right to exercise the Option or SAR as to all of the Awarded Stock,including Shares as to which it would not otherwise be vested or exercisable. If an Option or SARbecomes fully vested and exercisable in lieu of assumption or substitution in the event of a Changein Control, the Administrator shall notify the Participant in writing or electronically that theOption or SAR shall be fully vested and exercisable for a period of fifteen (15) days from the dateof such notice, and the Option or SAR shall terminate upon the expiration of such period. For thepurposes of this paragraph, the Option or SAR shall be considered assumed if, following the Changein Control, the option or stock appreciation right confers the right to purchase or receive, foreach Share of Awarded Stock subject to the Option or SAR immediately prior to Change in Control,the consideration (whether stock, cash, or other securities or property) received in the Change inControl by holders of Common Stock for each Share held on the effective date of the transaction(and if holders were offered a choice of consideration, the type of consideration chosen by theholders of a majority of the outstanding Shares); provided, however, that if such considerationreceived in the Change in Control is not solely common stock of the successor corporation or itsParent, the Administrator may, with the consent of the successor corporation, provide for theconsideration to be received upon the exercise of the Option or SAR, for each Share of AwardedStock subject to the Option or SAR, to be solely common stock of the successor corporation or itsParent equal in fair market value to the per share consideration received by holders of CommonStock in the Change in Control. Notwithstanding anything herein to the contrary, an Award thatvests, is earned or paid-out upon the satisfaction of one or more performance goals will not beconsidered assumed if the Company or its successor modifies any of such performance goals withoutthe Participant’s consent; provided, however, a modification to such performance goals only toreflect the successor corporation’s post-Change in Control corporate structure will not be deemedto invalidate an otherwise valid Award assumption.                    (ii) Restricted Stock, Performance Shares and Performance Units. In the event of aChange in Control, each outstanding Restricted Stock, Performance Share and Performance Unit awardshall be assumed or an equivalent Restricted Stock, Performance Share and Performance Unit awardsubstituted by the successor corporation or a Parent or Subsidiary of the successor corporation. Inthe event that the successor corporation refuses to assume or substitute for the Restricted Stock,Performance Share or Performance Unit award, the Participant shall fully vest in the RestrictedStock, Performance Share or Performance Unit including as to Shares (or with respect to PerformanceUnits, the cash equivalent thereof) which would not otherwise be vested. For the purposes of thisparagraph, a Restricted Stock, Performance Share and Performance Unit award shall be consideredassumed if, following the Change in Control, the award confers the right to purchase or receive,for each Share (or with respect to Performance Units, the cash equivalent thereof) subject to theAward immediately prior to the Change in Control, the consideration (whether stock, cash, or othersecurities or property) received in the Change in Control by holders of Common Stock for each Shareheld on the effective date of the transaction (and if holders were offered a choice ofconsideration, the type of consideration chosen by the holders of a majority of the outstandingShares); provided, however, that if such consideration received in the Change in Control
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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, foreach Share and each unit/right to acquire a Share subject to the Award, to be solely common stockof the successor corporation or its Parent equal in fair market value to the per shareconsideration received by holders of Common Stock in the Change in Control. Notwithstandinganything herein to the contrary, an Award that vests, is earned or paid-out upon the satisfactionof one or more performance goals will not be considered assumed if the Company or its successormodifies any of such performance goals without the Participant’s consent; provided, however, amodification to such performance goals only to reflect the successor corporation’s post-Change inControl corporate structure will not be deemed to invalidate an otherwise valid Award assumption.     14. No Effect on Employment or Service. Neither the Plan nor any Award will conferupon a Participant any right with respect to continuing the Participant’s relationship as aService Provider with the Company, nor will they interfere in any way with the Participant’sright or the Company’s right to terminate such relationship at any time, with or without cause,to the extent permitted by Applicable Laws.     15. Date of Grant. The date of grant of an Award will be, for all purposes, thedate on which the Administrator makes the determination granting such Award, or such other laterdate as is determined by the Administrator. Notice of the determination will be provided to eachParticipant within a reasonable time after the date of such grant.     16. Term of Plan. Subject to Section 20 of the Plan, the Plan will become effectiveupon its adoption by the Board. It will continue in effect for a term of ten (10) years unlessterminated earlier under Section 17 of the Plan.     17. Amendment and Termination of the Plan.               (a) Amendment and Termination. The Board may at any time amend, alter, suspend orterminate the Plan.               (b) Stockholder Approval. The Company will obtain stockholder approval of any Planamendment to the extent necessary and desirable to comply with Applicable Laws.               (c) Effect of Amendment or Termination. No amendment, alteration, suspension ortermination of the Plan will impair the rights of any Participant, unless mutually agreed otherwisebetween the Participant and the Administrator, which agreement must be in writing and signed by theParticipant and the Company. Termination of the Plan will not affect the Administrator’s abilityto exercise the powers granted to it hereunder with respect to Awards granted under the Plan priorto the date of such termination.          18. Conditions Upon Issuance of Shares.               (a) Legal Compliance. Shares will not be issued pursuant to the exercise of an Awardunless the exercise of such Award and the issuance and delivery of such Shares will comply withApplicable Laws and will be further subject to the approval of counsel for the Company with respectto such compliance.
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               (b) Investment Representations. As a condition to the exercise of an Award, theCompany may require the person exercising such Award to represent and warrant at the time of anysuch exercise that the Shares are being purchased only for investment and without any presentintention to sell or distribute such Shares if, in the opinion of counsel for the Company, such arepresentation is required.     19. Inability to Obtain Authority. The inability of the Company to obtain authorityfrom any regulatory body having jurisdiction, which authority is deemed by the Company’s counselto be necessary to the lawful issuance and sale of any Shares hereunder, will relieve theCompany of any liability in respect of the failure to issue or sell such Shares as to which suchrequisite authority will not have been obtained.     20. Stockholder Approval. The Plan will be subject to approval by the stockholdersof the Company within twelve (12) months after the date the Plan is adopted. Such stockholderapproval will be obtained in the manner and to the degree required under Applicable Laws.
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