**Exhibit 10.3**

 

**SYMYXTECHNOLOGIES, INC.**

 

**1997 STOCKPLAN**

 

(AS AMENDED AND RESTATED JANUARY 30,2006)(AS AMENDED AND RESTATED APRIL 7, 2005)

 

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

 

•      to attract andretain the best available personnel for positions of substantialresponsibility,

 

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

 

•      to promote thesuccess of the Company’s business.

 

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

 

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

 

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

 

**(b)****          **“ApplicableLaws” means the requirements relating to the administration of stock plansunder U.S. state corporate laws, U.S. federal and state securities laws, theCode, any stock exchange or quotation system on which the Common Stock islisted or quoted and the applicable laws of any foreign country or jurisdictionwhere Awards are, or will be, granted under the Plan.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

**(l)****           **“Employee”means any person, including Officers and Directors, employed by the Company orany Parent or Subsidiary of the Company. A Service Provider shall not cease tobe an Employee in the case of (i) any leave of absence approved by theCompany or (ii) transfers between locations of the Company or between theCompany, its Parent, any Subsidiary, or any successor. For purposes ofIncentive Stock Options, no such leave may exceed three (3) months,unless reemployment upon expiration of such leave is guaranteed by statute orcontract. If reemployment upon expiration of a leave of absence approved by theCompany is not so guaranteed, any Incentive Stock Option held by the Granteeshall cease to be treated as an Incentive Stock Option and shall be treated fortax purposes as a Nonstatutory Stock Option three (3) months and one (1) dayafter the end of such three (3) month leave. Neither service as a Directornor payment of a director’s fee by the Company shall be sufficient to constitute“employment” by the Company.

 

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

 

**(n)****          **“FairMarket Value” means, as of any date, the value of Common Stock determined asfollows:

 

**(i)****           **Ifthe Common Stock is listed on any established stock exchange or a nationalmarket system, including without limitation the Nasdaq National Market or TheNasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shallbe the closing sales price for such stock (or the closing bid, if no sales werereported) as quoted on such exchange or system on the date of determination, asreported in The Wall Street Journal or such other source as the Administratordeems reliable;

 

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

 

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

 

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

 

**(p)****          **“IncentiveStock Option” means an Option intended to qualify as an incentive stock optionwithin the meaning of Section 422 of the Code and the regulationspromulgated thereunder.

 

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

 

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**(r)****          **“Noticeof Grant” means a written or electronic notice evidencing certain times andconditions of an individual Award grant. The Notice of Grant is part ofthe Award Agreement.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

**(aa)****        **“RestrictedStock Units” means an award which may be earned in whole or in part uponthe passage of time or the attainment of performance criteria established bythe Administrator and which may be settled for cash, Shares or othersecurities or a combination of cash, Shares or other securities as establishedby the Administrator.

 

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

 

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

 

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

 

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

 

**(ff)****          **“ServiceProvider” means an Employee, Director or Consultant.

 

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

 

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

 

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

 

**3.****             StockSubject to the Plan**. Subject to the provisions of Section 14 of thePlan, the maximum aggregate number of Shares which may be issued under thePlan is 6,500,000 Shares, plus (a) any Shares which were reserved butunissued under the Company’s 1996 Stock Plan (“1996 Plan”) as of the date ofstockholder approval of the original adoption of this Plan, (b) any Sharessubsequently returned to the 1996 Plan as a result of termination of options orrepurchase of Shares issued under the 1996 Plan, and (c) an annualincrease to be added on the first day of the Company’s fiscal year beginning infiscal year 2000 equal to the lesser of (i) 1,500,000 shares, (ii) 4%of the outstanding shares on such date, or (iii) an amount determined bythe Board. The Shares may be authorized, but unissued, or reacquiredCommon Stock.

 

If an Awardexpires or becomes unexercisable without having been exercised in full theunpurchased Shares which were subject thereto shall become available for futuregrant or sale under the Plan (unless the Plan has terminated); provided,however, that Shares that have actually been issued under the Plan, whetherupon exercise of an Option, Stock Purchase Right or Restricted Stock Unit, shallnot be returned to the Plan and shall not become available for futuredistribution under the Plan, except that if Shares of Restricted Stock arerepurchased by the Company at their original purchase price, such Shares shallbecome available for future grant under the Plan.

 

**4.****             Administrationof the Plan**.

 

**(a)****          **Procedure.

 

**(i)****           **MultipleAdministrative Bodies. The Plan may be administered by differentCommittees with respect to different groups of Service Providers.

 

**(ii)****          **Section 162(m).To the extent that the Administrator determines it to be desirable to qualifyOptions or Stock Purchase Rights granted hereunder as “performance-basedcompensation” within the meaning of Section 162(m) of the Code, the Planshall be administered by a Committee of two or more “outside directors” withinthe meaning of Section 162(m) of the Code.

 

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

 

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

 

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authorize one ormore Officers of the Company to grant Awards to Employees or Consultants whoare neither Directors nor Officers of the Company.

 

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

 

**(i)****           **todetermine Fair Market Value;

 

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

 

**(iii)****        **todetermine the number of shares of Common Stock to be covered by each Awardgranted hereunder;

 

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

 

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

 

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

 

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

 

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

 

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unless thecancellation and exchange occurs in connection with a merger or other corporatetransaction;

 

**(ix)****         **toallow Grantees to satisfy withholding tax obligations by electing to have theCompany withhold from the Shares to be issued upon exercise or vesting of an Awardthat number of Shares having a Fair Market Value equal to the amount requiredto be withheld. The Fair Market Value of the Shares to be withheld shall bedetermined on the date that the amount of tax to be withheld is to bedetermined. All elections by a Grantee to have Shares withheld for this purposeshall be made in such form and under such conditions as the Administrator may deemnecessary or advisable;

 

**(x)****          **toauthorize any person to execute on behalf of the Company any instrumentrequired to effect the grant of an Award previously granted by theAdministrator;

 

**(xi)****         **tomake all other determinations deemed necessary or advisable for administeringthe Plan.

 

**(c)****          **Effectof Administrator’s Decision. The Administrator’s decisions, determinations andinterpretations shall be final and binding on all Grantees and any otherholders of Options or Stock Purchase Rights.

 

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

 

**6.****             Limitations**.

 

**(a)****          **EachOption shall be designated in the Option Agreement as either an Incentive StockOption or a Nonstatutory Stock Option. However, notwithstanding suchdesignation, to the extent that the aggregate Fair Market Value of the Shareswith respect to which Incentive Stock Options are exercisable for the firsttime by the Grantee during any calendar year (under all plans of the Companyand any Parent or Subsidiary) exceeds $100,000, such Options shall be treatedas Nonstatutory Stock Options. For purposes of this Section 6(a),Incentive Stock Options shall be taken into account in the order in which theywere granted. The Fair Market Value of the Shares shall be determined as of thetime the Option with respect to such Shares is granted.

 

**(b)****          **Neitherthe Plan nor any Award shall confer upon a Grantee any right with respect tocontinuing the Grantee’s relationship as a Service Provider with the Company,nor shall they interfere in any way with the Grantee’s right or the Company’sright to terminate such relationship at any time, with or without cause.

 

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

 

**(i)****           **NoService Provider shall be granted, in any fiscal year of the Company, Optionsto purchase more than 500,000 Shares.

 

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**(ii)****          **Inconnection with his or her initial service, a Service Provider may begranted Options to purchase up to an additional 100,000 Shares, which shall notcount against the limit, set forth in subsection (i) above.

 

**(iii)****        **Theforegoing limitations shall be adjusted proportionately in connection with anychange in the Company’s capitalization as described in Section 14.

 

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

 

**(d)****          **Forawards of Restricted Stock that are intended to qualify as “performance-basedcompensation” within the meaning of Section 162(m) of the Code, themaximum number of Shares that may be granted to any Grantee in any fiscalyear of the Company shall be 500,000. The foregoing limitation shall beadjusted proportionately in connection with any change in the Company’scapitalization as described in Section 14.

 

**7.****             Termof Plan**. Subject to Section 20 of the Plan, the Plan shall becomeeffective upon its adoption by the Board. It shall continue in effect for aterm of ten (10) years unless terminated earlier under Section 16 ofthe Plan.

 

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

 

**9.****             OptionExercise Price and Consideration**.

 

**(a)****          **ExercisePrice. The per share exercise price for the Shares to be issued pursuant toexercise of an Option shall be determined by the Administrator, subject to thefollowing:

 

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

 

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

 

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

 

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**(ii)****          **Inthe case of a Nonstatutory Stock Option, the per Share exercise price shall beno less than 100% of the Fair Market Value per Share on the date of grant.

 

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

 

**(b)****          **WaitingPeriod and Exercise Dates. At the time an Option is granted, the Administratorshall fix the period within which the Option may be exercised and shalldetermine any conditions that must be satisfied before the Option may beexercised.

 

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

 

**(i)****           **cash;

 

**(ii)****          **check;

 

**(iii)****        **otherShares which (A) in the case of Shares acquired upon exercise of anoption, have been owned by the Grantee for more than six (6) months on thedate of surrender, and (B) have a Fair Market Value on the date ofsurrender equal to the aggregate exercise price of the Shares as to which saidOption shall be exercised;

 

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

 

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

 

**(vi)****         **anycombination of the foregoing methods of payment; or

 

**(vii)****        **suchother consideration and method of payment for the issuance of Shares to theextent permitted by Applicable Laws.

 

**10.****          Exerciseof Option**.

 

**(a)****          **Procedurefor Exercise; Rights as a Shareholder. Any Option granted hereunder shall beexercisable according to the terms of the Plan and at such times and under suchconditions as determined by the Administrator and set forth in the OptionAgreement. Unless the Administrator provides otherwise, vesting of Optionsgranted hereunder shall be tolled during any unpaid leave of absence. An Optionmay not be exercised for a fraction of a Share.

 

An Optionshall be deemed exercised when the Company receives: (i) written orelectronic notice of exercise (in accordance with the Option Agreement) fromthe person entitled to exercise the Option, and (ii) full payment for theShares with respect to which the Option is

 

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exercised. Fullpayment may consist of any consideration and method of payment authorizedby the Administrator and permitted by the Option Agreement and the Plan. Sharesissued upon exercise of an Option shall be issued in the name of the Granteeor, if requested by the Grantee, in the name of the Grantee and his or herspouse. Until the Shares are issued (as evidenced by the appropriate entry onthe 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 ashareholder shall exist with respect to the Optioned Stock, notwithstanding theexercise of the Option. The Company shall issue (or cause to be issued) suchShares promptly after the Option is exercised. No adjustment will be made for adividend or other right for which the record date is prior to the date theShares are issued, except as provided in Section 14 of the Plan.

 

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

 

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

 

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

 

**(d)****          **Deathof Grantee. If a Grantee dies while a Service Provider, the Option may beexercised at any time within twelve (12) months following the date of death(but in no event later than the expiration of the term of such Option as setforth in the Notice of Grant), by the Grantee’s estate or by a person whoacquires the right to exercise the Option by bequest or inheritance, but onlyto the extent that the Option is vested on the date of death. If, at the timeof death, the Grantee is not vested as to his or her entire Option, the Sharescovered by the unvested portion of the Option shall immediately revert to thePlan. The Option may be exercised by the executor or administrator of the Grantee’sestate or, if none, by the person(s) entitled to exercise

 

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the Option underthe Grantee’s will or the laws of descent or distribution. If the Option is notso exercised within the time specified herein, the Option shall terminate, and theShares covered by such Option shall revert to the Plan.

 

**(e)****          **BuyoutProvisions. The Administrator may at any time offer to buy out for apayment in cash or Shares an Option previously granted based on such terms andconditions as the Administrator shall establish and communicate to the Granteeat the time that such offer is made.

 

**11.****          StockPurchase Rights and Restricted Stock Units**.

 

**(a)****          **Rightsto Purchase. Stock Purchase Rights may be issued either alone, in additionto, or in tandem with other awards granted under the Plan and/or cash awardsmade outside of the Plan. After the Administrator determines that it will offerStock Purchase Rights under the Plan, it shall advise the offeree in writing orelectronically, by means of a Notice of Grant, of the terms, conditions andrestrictions related to the offer, including the number of Shares that theofferee shall be entitled to purchase, the price to be paid, and the timewithin which the offeree must accept such offer. The offer shall be accepted byexecution of a Restricted Stock Purchase Agreement in the form determinedby the Administrator.

 

**(b)****          **RepurchaseOption. Unless the Administrator determines otherwise, the Restricted StockPurchase Agreement shall grant the Company a repurchase option exercisable uponthe voluntary or involuntary termination of the purchaser’s service with theCompany for any reason (including death or Disability). The purchase price forShares repurchased pursuant to the Restricted Stock Purchase Agreement shall bethe original price paid by the purchaser and may be paid by cancellationof any indebtedness of the purchaser to the Company. The repurchase optionshall lapse at a rate determined by the Administrator.

 

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

 

**(d)****          **OtherProvisions. The Restricted Stock Purchase Agreement and Restricted Stock UnitAgreement (as applicable) shall contain such other terms, provisions andconditions not inconsistent with the Plan as may be determined by theAdministrator in its sole discretion.

 

**(e)****          **Rightsas a Shareholder. Once the Stock Purchase Right is exercised, the purchasershall have the rights equivalent to those of a shareholder, and shall be ashareholder when his or her purchase is entered upon the records of the dulyauthorized transfer agent of the Company. No adjustment will be made for adividend or other right for which the record date is prior to the date theStock Purchase Right is exercised, except as provided in Section 14 of thePlan.

 

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**12.****          Non-Transferabilityof Awards**. Unless determined otherwise by the Administrator, an Award may notbe sold, pledged, assigned, hypothecated, transferred, or disposed of in anymanner other than by will or by the laws of descent or distribution and may beexercised, during the lifetime of the Grantee, only by the Grantee. If theAdministrator makes an Award transferable, such Award shall contain suchadditional terms and conditions as the Administrator deems appropriate.

 

**13.****          FormulaOption Grants to Outside Directors**. Outside Directors shall beautomatically granted Options each year in accordance with the followingprovisions:

 

**(a)****          **AllOptions granted pursuant to this Section shall be Nonstatutory StockOptions and, except as otherwise provided herein, shall be subject to the otherterms and conditions of the Plan.

 

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

 

**(c)****          **Anyexercise of an Option granted before the Company has obtained stockholderapproval of the Plan in accordance with Section 20 hereof shall beconditioned upon obtaining such stockholder approval of the Plan in accordancewith Section 20 hereof.

 

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

 

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

 

**(ii)****          **theexercise price per Share shall be 100% of the Fair Market Value per Share onthe date of grant of the Option.

 

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

 

**14.****          AdjustmentsUpon Changes in Capitalization, Dissolution, Merger or Asset Sale**.

 

**(a)****          **Changesin Capitalization. Subject to any required action by the shareholders of theCompany, the number of shares of Common Stock covered by each outstanding Award,the number of shares of Common Stock covered by formula options to be grantedto Outside Directors under Section 13 of the Plan, the maximum number ofshares that may be granted in any fiscal year to subject to Options andStock Purchase Rights, the number of shares of Common Stock which have beenauthorized for issuance under the Plan but as to which no Awards have yet beengranted or which have been returned to the Plan upon cancellation or expirationof an Award and the number of shares of Common Stock which may be added tothe Plan each fiscal year (pursuant to Section 3), as well as the priceper share of Common Stock covered by each such outstanding Award, shall beproportionately adjusted for (i) any increase or decrease in the number ofissued Shares resulting from a stock split, reverse stock split, stockdividend, combination or reclassification of the Shares, or similar transactionaffecting the Shares, (ii) any other increase or decrease in the number ofissued Shares effected without receipt of consideration by the Company, or (iii) asthe Administrator may determine in its discretion,

 

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any othertransaction with respect to Common Stock including a corporate merger,consolidation, acquisition of property or stock, separation (including aspin-off or other distribution of stock or property), reorganization,liquidation (whether partial or complete) or any similar transaction; provided,however that conversion of any convertible securities of the Company shall notbe deemed to have been “effected without receipt of consideration.”  In the event of any distribution of cash orother assets to stockholders other than a normal cash dividend, theAdministrator may also, in its discretion, make adjustments in connection withthe events described in (i)-(iii) of this Section 14(a) orsubstitute, exchange or grant Awards with respect to the shares of any Parentor Subsidiary of the Company (collectively “adjustments”). In determiningadjustments to be made under this Section 14(a), the Administrator may takeinto account such factors as it deems appropriate, including (x) therestrictions of Applicable Law, (y) the potential tax, accounting or otherconsequences of an adjustment and (z) the possibility that some Grantees mightreceive an adjustment and a distribution or other unintended benefit, and inlight of such factors or circumstances may make adjustments that are notuniform or proportionate among outstanding Awards, modify vesting dates,defer the delivery of stock certificates or make other equitable adjustments. Anysuch adjustments to outstanding Awards will be effected in a manner thatprecludes the material enlargement of rights and benefits under such Awards. Adjustments,if any, and any determinations or interpretations, including any determinationof whether a distribution is other than a normal cash dividend, shall be madeby the Administrator and its determination shall be final, binding andconclusive. In connection with the foregoing adjustments, the Administrator may,in its discretion, prohibit the exercise of Awards during certain periods oftime. Except as the Administrator determines, no issuance by the Company ofshares of any class, or securities convertible into shares of any class, shallaffect, and no adjustment by reason hereof shall be made with respect to, thenumber or price of Shares subject to an Award.

 

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

 

**(c)****          **Mergeror Asset Sale. In the event of a merger of the Company with or into anothercorporation, or the sale of substantially all of the assets of the Company,each outstanding Award shall be assumed or an equivalent option or rightsubstituted by the successor corporation or a Parent or Subsidiary of thesuccessor corporation. In the event that the successor corporation refuses toassume or substitute for the Award, the Grantee shall fully vest in and havethe right to exercise the Award as to all of the Optioned Stock, includingShares as to which it would not otherwise be vested or exercisable. If an Awardbecomes fully vested and exercisable in lieu of assumption or substitution inthe event of a merger or sale of assets, the Administrator shall notify the Granteein writing or electronically that the Award shall be fully vested andexercisable for a period of fifteen (15) days from the date of such notice, andthe Award shall terminate upon the expiration of such period. For the purposesof this paragraph, the Award shall be considered assumed if, following themerger or sale of assets, the option or right confers the right to purchase orreceive, for each Share of Optioned Stock subject to the Award immediatelyprior to the merger or sale of assets, the consideration (whether stock, cash,or other securities or property) received in the merger or sale of assets byholders of Common Stock for each Share held on the effective date of thetransaction (and if holders were offered a

 

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

 

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

 

**16.****          Amendmentand Termination of the Plan**.

 

**(a)****          **Amendmentand Termination. The Board may at any time amend, alter, suspend orterminate the Plan.

 

**(b)****          **ShareholderApproval. The Company shall obtain shareholder approval of any Plan amendmentto the extent necessary and desirable to comply with Applicable Laws.

 

**(c)****          **Effectof Amendment or Termination. No amendment, alteration, suspension ortermination of the Plan shall impair the rights of any Grantee, unless mutuallyagreed otherwise between the Grantee and the Administrator, which agreementmust be in writing and signed by the Grantee and the Company. Termination ofthe Plan shall not affect the Administrator’s ability to exercise the powersgranted to it hereunder with respect to Awards granted under the Plan prior tothe date of such termination.

 

**17.****          ConditionsUpon Issuance of Shares**.

 

**(a)****          **LegalCompliance. Shares shall not be issued pursuant to the exercise of an Award unlessthe exercise of such Award and the issuance and delivery of such Shares shallcomply with Applicable Laws and shall be further subject to the approval ofcounsel for the Company with respect to such compliance.

 

**(b)****          **InvestmentRepresentations. As a condition to the exercise of an Award, the Company may requirethe person exercising such Award to represent and warrant at the time of anysuch exercise that the Shares are being acquired only for investment andwithout any present intention to sell or distribute such Shares if, in theopinion of counsel for the Company, such a representation is required.

 

**18.****          Inabilityto Obtain Authority**. The inability of the Company to obtain authority fromany regulatory body having jurisdiction, which authority is deemed by theCompany’s counsel to be necessary to the lawful issuance and sale of any Shareshereunder, shall relieve the Company of any liability in respect of the failureto issue or sell such Shares as to which such requisite authority shall nothave been obtained.

 

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**19.****          Reservationof Shares**. The Company, during the term of this Plan, will at all timesreserve and keep available such number of Shares as shall be sufficient tosatisfy the requirements of the Plan.

 

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

 

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