exh10_39.htm


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Exhibit
10.39

    


    MICRUS
ENDOVASCULAR CORPORATION

    AMENDED
AND RESTATED

    2005
EQUITY INCENTIVE PLAN

    


    
      	
              1.  

            	
              Purpose
      of this Plan

            


    

     

    The
purpose of this 2005 Equity Incentive Plan is to enhance the long-term
stockholder value of Micrus Endovascular Corporation by offering opportunities
to eligible individuals to participate in the growth in value of the equity of
Micrus Endovascular Corporation.

     

    
      	
              2.  

            	
              Definitions
      and Rules of Interpretation

            


    

     

    2.1 Definitions.  

     

    This Plan
uses the following defined terms:

     

    (a) “Administrator” means the Board or the
Committee, or any officer or employee of the Company to whom the Board or the
Committee delegates authority to administer this Plan.

     

    (b) “Affiliate”
means a “parent” or “subsidiary” (as each is defined in Section 424 of the Code)
of the Company and any other entity that the Board or Committee designates as an
“Affiliate” for purposes of this Plan.

     

    (c) “Applicable
Law” means any and all laws of whatever jurisdiction, within or without
the United States, and the rules of any stock exchange or quotation system on
which Shares are listed or quoted, applicable to the taking or refraining from
taking of any action under this Plan, including the administration of this Plan
and the issuance or transfer of Awards or Award Shares.

     

    (d) “Award” means a Stock Award (e.g.
restricted stock unit award), SAR, Cash Award, or Option granted in accordance
with the terms of this Plan.

     

    (e) “Award Agreement”
means the document evidencing the grant of an Award.

     

    (f) “Award Shares”
means Shares covered by an outstanding Award or purchased under an
Award.

     

    (g) “Awardee”
means: (i) a person to whom an Award has been granted, including a holder
of a Substitute Award, (ii) a person to whom an Award has been transferred in
accordance with all applicable requirements of Sections 6.5, 7(h), and
17.

     

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

     

    (i) “Cash
Award” means
the right to receive cash as described in Section 8.3.

     

    (j) “Cause” shall mean: (i) an Awardee’s
gross negligence or willful failure substantial to perform his or her duties and
responsibilities to the Company or deliberate violation of a Company policy;
(ii) an Awardee’s commission of any act of fraud, embezzlement, dishonesty or
any other willful misconduct that has caused or is reasonably unexpected to
result in material injury to the Company; (iii) unauthorized use or disclosure
by an Awardee of any proprietary information or trade secrets of the Company or
any other party to whom an Awardee owes an obligation of nondisclosure as a
result of his or her relationship with the Company; or (iv) an Awardee’s willful
breach of any of his or her obligations under any written agreement or covenant
with the Company.  The determination as to whether an Awardee is being
terminated for Cause shall be made in good faith by the Company and shall be
final and binding on the Awardee.

     

    (k) “Change in
Control” means any transaction or event that the Board specifies as a
Change in Control under Section 10.4. 

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

     

    (l) “Code”
means the Internal Revenue Code of 1986.

     

    (m) “Committee”
means a committee composed of Company Directors appointed in accordance with the
Company’s charter documents and Section 4.

     

    (n) “Company”
means Micrus Endovascular Corporation, a Delaware corporation.

     

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

     

    (p) “Consultant”
means an individual who, or an employee of any entity that, provides bona fide
services to the Company or an Affiliate not in connection with the offer or sale
of securities in a capital-raising transaction, but who is not an
Employee.

     

    (q) “Corporate
Transaction” means any transaction or event described in Section
10.3.

     

    (r)  “Director”
means a member of the Board of Directors of the Company or an
Affiliate.

     

    (s) “Domestic
Relations Order”
means a “domestic relations order” as defined in, and otherwise meeting the
requirements of, Section 414(p) of the Code, except that reference to a “plan”
in that definition shall be to this Plan.

     

    (t) “Effective
Date” means the
first date of the sale by the Company of shares of its capital stock in an
initial public offering pursuant to a registration statement on Form S-1 filed
with the SEC.

     

    (u) “Employee”
means a regular employee of the Company or an Affiliate, including an officer or
Director, who is treated as an employee in the personnel records of the Company
or an Affiliate, but not individuals who are classified by the Company or an
Affiliate as: (i) leased from or otherwise employed by a third party, (ii)
independent contractors, or (iii) intermittent or temporary
workers.  The Company’s or an Affiliate’s classification of an
individual as an “Employee” (or as not an “Employee”) for purposes of this Plan
shall not be altered retroactively even if that classification is changed
retroactively for another purpose as a result of an audit, litigation or
otherwise.  An Awardee shall not cease to be an Employee due to
transfers between locations of the Company, or between the Company and an
Affiliate, or to any successor to the Company or an Affiliate that assumes the
Awardee’s Options under Section 10.  Neither service as a Director nor
receipt of a director’s fee shall be sufficient to make a Director an
“Employee.”

     

    (v) “Exchange Act”
means the Securities Exchange Act of 1934.

     

    (w) “Executive”
means, if the Company has any class of any equity security registered
under Section 12 of the Exchange Act, an individual who is subject to Section 16
of the Exchange Act or who is a “covered employee” under Section 162(m) of the
Code, in either case because of the
individual’s relationship with the Company or an Affiliate.  If the
Company does not have any class of any equity security registered under Section
12 of the Exchange Act, “Executive” means any (i) Director, (ii) officer elected
or appointed by the Board, or (iii) beneficial owner of more than 10% of any
class of the Company’s equity securities.

     

    (x) “Expiration Date”
means, with respect to an Award, the date stated in the Award Agreement
as the expiration date of the Award or, if no such date is stated in the Award
Agreement, then the last day of the maximum exercise period for the Award,
disregarding the effect of an Awardee’s Termination or any other event that
would shorten that period.

     

    (y) “Fair Market
Value” means the value of Shares as determined under Section
18.2.

     

    (z) “Grant Date”
means the date the Administrator approves the grant of an
Award.  However, if the Administrator specifies that an Award’s Grant
Date is a future date or the date on which a condition is satisfied, the Grant
Date for such Award is that future date or the date that the condition is
satisfied.

     

    (aa) “Incentive Stock
Option” means an Option intended to qualify as an incentive stock option
under Section 422 of the Code and designated as an Incentive Stock Option in the
Award Agreement for that Option.

     

    (bb) “Nonstatutory
Option” means any Option other than an Incentive Stock
Option.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

     

    (cc) “Non-Employee
Director” means any person who is a member of the Board but is not an
Employee of the Company or any Affiliate of the Company and has not been an
Employee of the Company or any Affiliate of the Company at any time during the
preceding twelve months. Service as a Director does not in itself constitute
employment for purposes of this definition.

     

    (dd) “Objectively
Determinable Performance Condition” shall mean a performance
condition (i) that is established (A) at the time an Award is granted or (B) no
later than the earlier of (1) 90 days after the beginning of the period of
service to which it relates, or (2) before the elapse of 25% of the period of
service to which it relates, (ii) that is uncertain of achievement at the time
it is established, and (iii) the achievement of which is determinable by a third
party with knowledge of the relevant facts.  Examples of measures that
may be used in Objectively Determinable Performance Conditions include net order
dollars, net profit dollars, net profit growth, net revenue dollars, revenue
growth, individual performance, earnings per share, return on assets, return on
equity, and other financial objectives, objective customer satisfaction
indicators and efficiency measures, each with respect to the Company and/or an
Affiliate or individual business unit.

     

    (ee) “Officer”
means an officer of the Company as defined in Rule 16a-1 adopted under
the Exchange Act.

     

    (ff) “Option”
means a right to purchase Shares of the Company granted under this
Plan.

     

    (gg) “Option Price”
means the price payable under an Option for Shares, not including any
amount payable in respect of withholding or other taxes.

     

    (hh) “Option Shares”
means Shares covered by an outstanding Option or purchased under an
Option.

     

    (ii) “Plan”
means this 2005 Equity Incentive Plan of Micrus Endovascular
Corporation

     

    (jj) “Prior
Plans” means the Company’s 1998 Stock Plan and 1996 Stock Option
Plan.

     

    (kk) “Purchase
Price” means the price payable under a Stock Award for Shares, not
including any amount payable in respect of withholding or other
taxes.

     

    (ll) “Rule 16b-3”
means Rule 16b-3 adopted under Section 16(b) of the Exchange
Act.

     

    (mm) “SAR” or “Stock
Appreciation Right” means a right to receive cash based on a change in
the Fair Market Value of a specific number of Shares pursuant to an Award
Agreement, as described in Section 8.1.

     

    (nn) “Securities Act”
means the Securities Act of 1933.

     

    (oo) “Share”
means a share of the common stock of the Company or other securities
substituted for the common stock under Section 10.

     

    (pp) “Stock
Award” means
an offer by the Company to sell shares subject to certain restrictions pursuant
to the Award Agreement as described in Section 8.2 or, as determined by the
Committee, a notional account representing the right to be paid an amount based
on Shares.

     

    (qq) “Substitute
Award” means a Substitute Option, Substitute SAR or Substitute Stock
Award granted in accordance with the terms of this Plan.

     

    (rr) “Substitute
Option” means an Option granted in substitution for, or upon the
conversion of, an option granted by another entity to purchase equity securities
in the granting entity.

     

    (ss) “Substitute SAR”
means a SAR granted in substitution for, or upon the conversion of, a
stock appreciation right granted by another entity with respect to equity
securities in the granting entity.

     

    (tt) “Substitute Stock
Award” means a Stock Award granted in substitution for, or upon the
conversion of, a stock award granted by another entity to purchase equity
securities in the granting entity.

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

     

    (uu) “Termination”
means that the Awardee has ceased to be, with or without any cause or
reason, an Employee, Director or Consultant.  However, unless so
determined by the Administrator, or otherwise provided in this Plan,
“Termination” shall not include a change in status from an Employee, Consultant
or Director to another such status.  An event that causes an Affiliate
to cease being an Affiliate shall be treated as the “Termination” of that
Affiliate’s Employees, Directors, and Consultants.

     

    2.2 Rules
of Interpretation.  

     

    Any
reference to a “Section,” without more, is to a Section of this
Plan.  Captions and titles are used for convenience in this Plan and
shall not, by themselves, determine the meaning of this Plan.  Except
when otherwise indicated by the context, the singular includes the plural and
vice versa.  Any reference to a statute is also a reference to the
applicable rules and regulations adopted under that statute.  Any
reference to a statute, rule or regulation, or to a section of a statute, rule
or regulation, is a reference to that statute, rule, regulation, or section as
amended from time to time, both before and after the Effective Date and
including any successor provisions.

     

    
      	
              3.  

            	
              Shares
      Subject to this Plan; Term of this
Plan

            


    

     

    3.1 Number
of Award Shares.

     

      The
Shares issuable under this Plan shall be authorized but unissued or reacquired
Shares, including Shares repurchased by the Company on the open market. The
number of Shares initially reserved for
issuance over the term of this Plan shall be 2,222,220 increased by (i) the
number of Shares available for issuance, as of the Effective Date, under the
Prior Plans as last
approved by the Company's stockholders, including
the Shares subject to outstanding options under the Prior Plans, plus (ii) those
Shares issued under the Prior Plans that are forfeited or repurchased by the
Company or that are issuable upon exercise of options granted pursuant to the
Prior Plans that expire or become unexercisable for any reason without having
been exercised in full after the Effective Date, plus (iii) those Shares that
are restored pursuant to the decision of the Board or Committee pursuant to
Section 6.4(a) to deliver only such Shares as are necessary to award the net
Share appreciation.  The maximum number of Shares shall be
cumulatively increased on the first April 1 after the Effective Date and each
April 1 thereafter for 9 more years, by a number of Shares equal to the lesser
of (a) five percent (5%) of the number of Shares issued and outstanding on the
immediately preceding March 31, (b) 666,666 Shares, and (c) a number of Shares
set by the Board.  Except as required by applicable law, the number of
Shares reserved for issuance under this Plan shall not be reduced until the
earlier of the date such Shares are vested pursuant to the terms of the
applicable Award or the actual date of delivery of the Shares to the
Awardee.  Also, if an Award later terminates or expires without having
been exercised in full, the maximum number of Shares that may be issued under
this Plan shall be increased by the number of Shares that were covered by, but
not purchased under, that Award.  By contrast, the repurchase of
Shares by the Company shall not increase the maximum number of Shares that may
be issued under this Plan.

     

    3.2 Source of Shares.  

     

    Award
Shares may be:  (a) Shares that have never been issued, (b) Shares
that have been issued but are no longer outstanding, or (c) Shares that are
outstanding and are acquired to discharge the Company’s obligation to deliver
Award Shares.

     

    3.3 Term
of this Plan.

     

    (a) This Plan
shall be effective on, and Awards may be granted under this Plan on and after,
the effectiveness of the Company’s initial public offering.

     

    (b) Subject
to the provisions of Section 14, Awards may be granted under this Plan for a
period of ten years from the effectiveness of the Company’s initial public
offering.  Accordingly, Awards may not be granted under this Plan
after such date.

     

    
      	
              4.  

            	
              Administration

            


    

     

    4.1 General.

     

    (a) The Board
shall have ultimate responsibility for administering this Plan.  The
Board may delegate certain of its responsibilities to a Committee, which shall
consist of at least two members of the Board.  The Board or the
Committee may further delegate its responsibilities to any Employee of the
Company or any Affiliate.  Where this Plan specifies that an action is
to be taken or a determination made by the Board, only the Board may take that
action or make that determination.  Where this Plan specifies that an
action is to be taken or a determination made by the Committee, only the
Committee may take that action or make that determination.  Where this
Plan references the “Administrator,” the action may be taken or determination
made by the Board, the Committee, or other Administrator.  However,
only the Board or the Committee may approve grants of Awards to Executives, and
an Administrator other than the Board or the Committee may grant Awards only
within the guidelines established by the Board or
Committee.  Moreover, all actions and determinations by any
Administrator are subject to the provisions of this Plan.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    (b) So long
as the Company has registered and outstanding a class of equity securities under
Section 12 of the Exchange Act, the Committee shall consist of Company Directors
who are “Non-Employee Directors” as defined in Rule 16b-3 and, after the
expiration of any transition period permitted by Treasury Regulations Section
1.162-27(h)(3), who are “outside directors” as defined in Section 162(m) of the
Code.

     

    4.2 Authority of the Board or the
Committee.  

     

    Subject
to the other provisions of this Plan, the Board or the Committee shall have the
authority to:

     

    (a) Grant
Awards, including Substitute Awards;

     

    (b) Determine
the Fair Market Value of Shares;

     

    (c) Determine
the Option Price and the Purchase Price of Awards;

     

    (d) Select
the Awardees;

     

    (e) Determine
the times Awards are granted;

     

    (f) Determine
the number of Shares subject to each Award;

     

    (g) Determine
the methods of payment that may be used to purchase Award Shares;

     

    (h) Determine
the methods of payment that may be used to satisfy withholding tax
obligations;

     

    (i) Determine
the other terms of each Award, including but not limited to the time or times at
which Awards may be exercised, conditions intended
to comply with Section 409A of the Code, whether and under what
conditions an Award is assignable, and whether an Option is a Nonstatutory
Option or an Incentive Stock Option;

     

    (j) Modify or
amend any Award;

     

    (k) Authorize
any person to sign any Award Agreement or other document related to this Plan on
behalf of the Company;

     

    (l) Determine
the form of any Award Agreement or other document related to this Plan, and
whether that document, including signatures, may be in electronic
form;

     

    (m) Interpret
this Plan and any Award Agreement or document related to this Plan;

     

    (n) Correct
any defect, remedy any omission, or reconcile any inconsistency in this Plan,
any Award Agreement or any other document related to this Plan;

     

    (o) Adopt,
amend, and revoke rules and regulations under this Plan, including rules and
regulations relating to sub-plans and Plan addenda;

     

    (p) Adopt,
amend, and revoke special rules and procedures which may be inconsistent with
the terms of this Plan, set forth (if the Administrator so chooses) in sub-plans
regarding (for example) the operation and administration of this Plan and the
terms of Awards, if and to the extent necessary or useful to accommodate
non-U.S. Applicable Laws and practices as they apply to Awards and Award Shares
held by, or granted or issued to, persons working or resident outside of the
United States or employed by Affiliates incorporated outside the United
States;

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

     

    (q) Determine
whether a transaction or event should be treated as a Change in
Control;

     

    (r) Determine
the effect of a Corporate Transaction and, if the Board determines that a
transaction or event should be treated as a Change in Control, then the effect
of that Change in Control; and

     

    (s) Make all
other determinations the Administrator deems necessary or advisable for the
administration of this Plan.

     

    4.3 Scope of Discretion.  

     

    Subject
to the provisions of this Section 4.3, on all matters for which this Plan
confers the authority, right or power on the Board, the Committee, or other
Administrator to make decisions, that body may make those decisions in its sole
and absolute discretion.  Those decisions will be final, binding and
conclusive.  In making its decisions, the Board, Committee or other
Administrator need not treat all persons eligible to receive Awards, all
Awardees, all Awards or all Award Shares the same
way.  Notwithstanding anything herein to the contrary, and except as
provided in Section 14.3, the discretion of the Board, Committee or other
Administrator is subject to the specific provisions and specific limitations of
this Plan, as well as all rights conferred on specific Awardees by Award
Agreements and other agreements.

     

    
      	
              5.  

            	
              Persons
      Eligible to Receive Awards

            


    

     

    5.1 Eligible Individuals.  

     

    Awards
(including Substitute Awards) may be granted to, and only to, Employees,
Directors and Consultants, including to prospective Employees, Directors and
Consultants conditioned on the beginning of their service for the Company or an
Affiliate.  However, Incentive Stock Options may only be granted to
Employees, as provided in Section 7(g).

     

    5.2 Section
162(m) Limitation.

     

    (a) Options and
SARs.  Subject to the
provisions of this Section 5.2, for so long as the Company is a "publicly held
corporation" within the meaning of Section 162(m) of the Code:  (i) no
Employee may be granted one or more SARs and Options within any fiscal year of
the Company under this Plan to purchase more than 1,333,332 Shares under Options
or to receive compensation calculated with reference to more than that number of
Shares under SARs, subject to adjustment pursuant to Section 10, (ii) Options
and SARs may be granted to an Executive only by the Committee (and,
notwithstanding anything to the contrary in Section 4.1(a), not by the
Board).  If an Option or SAR is cancelled without being exercised or
of the Option Price of an Option is reduced, that cancelled or repriced Option
or SAR shall continue to be counted against the limit on Awards that my be
granted to any individual under this Section 5.2.

     

    (b) Cash Awards and
Stock Awards.  Any Cash Award or
Stock Award intended as "qualified performance-based compensation" within the
meaning of Section 162(m) of the Code must vest or become exercisable contingent
on the achievement of one or more Objectively Determinable Performance
Conditions.  The Committee shall have the discretion to determine the
time and manner of compliance with Section 162(m) of the Code.

     

    
      	
              6.  

            	
              Terms
      and Conditions of Options

            


    

     

    The
following rules apply to all Options:

     

    6.1 Price.  

     

    Except as
specifically provided herein or as otherwise determined by the Administrator, a
Nonstatutory Option shall have an Option Price that is not less than 85% of the
Fair Market Value of the Shares on the Grant Date.  No Option intended
as "qualified incentive-based compensation" within the meaning of Section 162(m)
of the Code may have an Option Price less than 100% of the Fair Market Value of
the Shares on the Grant Date.  In no event will the Option Price of
any Option be less than the par value of the Shares issuable under the Option if
that is required by Applicable Law.  The Option Price of an Incentive
Stock Option shall be subject to Section 7(f).

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

     

    6.2 Term.  

     

    No Option
shall be exercisable after its Expiration Date.  No Option may have an
Expiration Date that is more than ten years after its Grant
Date.  Additional provisions regarding the term of Incentive Stock
Options are provided in Sections 7(a) and 7(e).

     

    6.3 Vesting.  

     

    Options
shall be exercisable: (a) on the Grant Date, or (b) in accordance with a
schedule related to the Grant Date, the date the Optionee’s directorship,
employment or consultancy begins, or a different date specified in the Option
Agreement.  Additional provisions regarding the vesting of Incentive
Stock Options are provided in Section 7(d).  No Option granted to an
individual who is subject to the overtime pay provisions of the Fair Labor
Standards Act may be exercised before the expiration of six months after the
Grant Date.

     

    6.4 Form
and Method of Payment.

     

    (a) The Board
or Committee shall determine the acceptable form and method of payment for
exercising an Option.

     

    (b) Acceptable
forms of payment for all Option Shares are cash, check or wire transfer,
denominated in U.S. dollars except as specified by the Administrator for
non-U.S. Employees or non-U.S. sub-plans.

     

    (c) In
addition, the Administrator may permit payment to be made by any of the
following methods:

     

    (i) Other
Shares, or the designation of other Shares, which (A) are “mature” shares for
purposes of avoiding variable accounting treatment under generally accepted
accounting principles (generally mature shares are those that have been owned by
the Optionee for more than six months on the date of surrender), and (B) have a
Fair Market Value on the date of surrender equal to the Option Price of the
Shares as to which the Option is being exercised;

     

    (ii) Provided
that a public market exists for the Shares, consideration received by the
Company under a procedure under which a licensed broker-dealer advances funds on
behalf of an Optionee or sells Option Shares on behalf of an Optionee (a “Cashless Exercise
Procedure”), provided that if the Company extends or arranges for the
extension of credit to an Optionee under any Cashless Exercise Procedure, no
Officer or Director may participate in that Cashless Exercise
Procedure;

     

    (iii) Cancellation
of any debt owed by the Company or any Affiliate to the Optionee by the Company
including without limitation waiver of compensation due or accrued for services
previously rendered to the Company; and

     

    (iv) Any
combination of the methods of payment permitted by any paragraph of this Section
6.4.

     

    (d) The
Administrator may also permit any other form or method of payment for Option
Shares permitted by Applicable Law.

     

    6.5 Nonassignability of
Options.  

     

    Except as
determined by the Administrator, no Option shall be assignable or otherwise
transferable by the Optionee except by will or by the laws of descent and
distribution.  However, Options may be transferred and exercised in
accordance with a Domestic Relations Order and may be exercised by a guardian or
conservator appointed to act for the Optionee.  Incentive Stock
Options may only be assigned in compliance with Section 7(h).

     

    6.6 Substitute
Options.

     

    The Board
may cause the Company to grant Substitute Options in connection with the
acquisition by the Company or an Affiliate of equity securities of any entity
(including by merger, tender offer, or other similar transaction) or of all or a
portion of the assets of any entity.  Any such substitution shall be
effective on the effective date of the acquisition.  Substitute
Options may be Nonstatutory Options or Incentive Stock Options. Unless and to
the extent specified otherwise by the Board, Substitute Options shall have the
same terms and conditions as the options they replace, except that (subject to
the provisions of Section 10) Substitute Options shall be Options to purchase
Shares rather than equity securities of the granting entity and shall have an
Option Price determined by the Board.

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
       

      6.7 Repricings.

       

      In
furtherance of, and not in limitation of the provisions of Section 10, Options
may be repriced, replaced or regranted through cancellation or modification
without stockholder approval.

    

     

    
      	
              7.  

            	
              Incentive
      Stock Options.

            


    

     

    The
following rules apply only to Incentive Stock Options and only to the extent
these rules are more restrictive than the rules that would otherwise apply under
this Plan.  With the consent of the Optionee, or where this Plan
provides that an action may be taken notwithstanding any other provision of this
Plan, the Administrator may deviate from the requirements of this Section,
notwithstanding that any Incentive Stock Option modified by the Administrator
will thereafter be treated as a Nonstatutory Option.

     

    (a) The
Expiration Date of an Incentive Stock Option shall not be later than ten years
from its Grant Date, with the result that no Incentive Stock Option may be
exercised after the expiration of ten years from its Grant Date.

     

    (b) Any
Incentive Stock Option granted to a Ten Percent Stockholder, must have an
Expiration Date that is not later than five years from its Grant Date, with the
result that no such Option may be exercised after the expiration of five years
from the Grant Date. A "Ten Percent
Stockholder" is any person who, directly or by attribution under Section
424(d) of the Code, owns stock possessing more than ten percent of the total
combined voting power of all classes of stock of the Company or of any Affiliate
on the Grant Date.

     

    (c) No
Incentive Stock Option may be granted more than ten years from the date this
Plan was approved by the Board.

     

    (d) Options
intended to be incentive stock options under Section 422 of the Code that are
granted to any single Optionee under all incentive stock option plans of the
Company and its Affiliates, including incentive stock options granted under this
Plan, may not vest at a rate of more than $100,000 in Fair Market Value of stock
(measured on the grant dates of the options) during any calendar year. For this
purpose, an option vests with respect to a given share of stock the first time
its holder may purchase that share, notwithstanding any right of the Company to
repurchase that share. Unless the administrator of that option plan specifies
otherwise in the related agreement governing the option, this vesting limitation
shall be applied by, to the extent necessary to satisfy this $ 100,000 rule,
treating certain stock options that were intended to be incentive stock options
under Section 422 of the Code as Nonstatutory Options. The stock options or
portions of stock options to be reclassified as Nonstatutory Options shall be determined in accordance with applicable IRS
guidelines. This Section 7(d) shall not cause an Incentive Stock Option
to vest before its original vesting date or cause an Incentive Stock Option that
has already vested to cease to be vested.

     

    (e) In order
for an Incentive Stock Option to be exercised for any form of payment other than
those described in Section 6.4(b), that right must be stated at the time of
grant in the Option Agreement relating to that Incentive Stock
Option.

     

    (f) The
Option Price of an Incentive Stock Option shall never be less than the Fair
Market Value of the Shares at the Grant Date. The Option Price for the Shares
covered by an Incentive Stock Option granted to a Ten Percent Stockholder shall
never be less than 110% of the Fair Market Value of the Shares at the Grant
Date.

     

    (g) Incentive
Stock Options may be granted only to Employees. If an Optionee changes status
from an Employee to a Consultant, that Optionee's Incentive Stock Options become
Nonstatutory Options if not exercised within the time period described in
Section 7(i) (determined by treating that change in status as a Termination
solely for purposes of this Section 7(g)).

     

    (h) No rights
under an Incentive Stock Option may be transferred by the Optionee, other than
by will or the laws of descent and distribution. During the life of the
Optionee, an Incentive Stock Option may be exercised only by the Optionee. The
Company's compliance with a Domestic Relations Order, or the exercise of an
Incentive Stock Option by a guardian or conservator appointed to act for the
Optionee, shall not violate this Section 7(h).

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

     

    (i) An
Incentive Stock Option shall be treated as a Nonstatutory Option if it remains
exercisable after, and is not exercised within, the three-month period beginning
with the Optionee's Termination for any reason other than the Optionee's death
or disability (as defined in Section 22(e) of the Code). In the case of
Termination due to death, an Incentive Stock Option shall continue to be treated
as an Incentive Stock Option if it remains exercisable after, and is not
exercised within, the three month period after the Optionee's Termination
provided it is exercised before the Expiration Date. In the case of Termination
due to disability, an Incentive Stock Option shall be treated as a Nonstatutory
Option if it remains exercisable after, and is not exercised within, one year
after the Optionee's Termination.

     

    (j) An
Incentive Stock Option may only be modified by the Board.

     

    
      	
              8.  

            	
              Stock
      Appreciation Rights, Stock Awards and Cash
  Awards

            


    

     

    8.1 Stock
Appreciation Rights.

     

      The
following rules apply to SARs:

     

    (a) General.  SARs
may be granted either alone, in addition to, or in tandem with other Awards
granted under this Plan. The Administrator may grant SARs to eligible
participants subject to terms and conditions not inconsistent with this Plan and
determined by the Administrator. The specific terms and conditions applicable to
the Awardee shall be provided for in the Award Agreement. SARs shall be
exercisable, in whole or in part, at such times as the Administrator shall
specify in the Award Agreement.  The grant or vesting of a SAR may be
made contingent on the achievement of Objectively Determinable Performance
Conditions.

     

    (b) Exercise of
SARs.  Upon the exercise of an SAR, in whole or in part, an
Awardee shall be entitled to a payment in an amount equal to the excess of the
Fair Market Value of a fixed number of Shares covered by the exercised portion
of the SAR on the date of exercise, over the Fair Market Value of the Shares
covered by the exercised portion of the SAR on the Grant Date.  The
amount due to the Awardee upon the exercise of a SAR shall be paid in cash,
Shares or a combination thereof, over the period or periods specified in the
Award Agreement.  An Award Agreement may place limits on the amount
that may be paid over any specified period or periods upon the exercise of a
SAR, on an aggregate basis or as to any Awardee.  A SAR shall be
considered exercised when the Company receives written notice of exercise in
accordance with the terms of the Award Agreement from the person entitled to
exercise the SAR.  If a SAR has been granted in tandem with an Option,
upon the exercise of the SAR, the number of shares that may be purchased
pursuant to the Option shall be reduced by the number of shares with respect to
which the SAR is exercised.

     

    (c) Nonassignability
of SARs.  Except as determined by the Administrator, no SAR
shall be assignable or otherwise transferable by the Awardee except by will or
by the laws of descent and distribution.  Notwithstanding anything
herein to the contrary, SARs may be transferred and exercised in accordance with
a Domestic Relations Order.

     

    (d) Substitute
SARs.  The Board may cause the Company to grant Substitute SARs
in connection with the acquisition by the Company or an Affiliate of equity
securities of any entity (including by merger) or all or a portion of the assets
of any entity.  Any such substitution shall be effective on the
effective date of the acquisition.  Unless and to the extent specified
otherwise by the Board, Substitute SARs shall have the same terms and conditions
as the options they replace, except that (subject to the provisions of Section
9) Substitute SARs shall be exercisable with respect to the Fair Market Value of
Shares rather than equity securities of the granting entity and shall be on
terms that, as determined by the Board in its sole and absolute discretion,
properly reflects the substitution.

     

    (e) Repricings.  A
SAR may not be repriced, replaced or regranted, through cancellation or
modification without stockholder approval.

     

    8.2 Stock Awards.  

     

    The
following rules apply to all Stock Awards:

     

    (a) General.  The
specific terms and conditions of a Stock Award applicable to the Awardee shall
be provided for in the Award Agreement. The Award Agreement shall state the
number of Shares that the Awardee shall be entitled to receive or purchase, the
terms and conditions on which the Shares shall vest, the price to be paid,
whether Shares are to be delivered at the time of grant or at some deferred date
specified in the Award Agreement (e.g. a restricted stock unit award agreement),
whether the Award is payable solely in Shares, cash or either and, if
applicable, the time within which the Awardee must accept such offer. The offer
shall be accepted by execution of the Award Agreement.  The
Administrator may require that all Shares subject to a right of repurchase or
risk of forfeiture be held in escrow until such repurchase right or risk of
forfeiture lapses.  The grant or vesting of a Stock Award may be made
contingent on the achievement of Objectively Determinable Performance
Conditions.

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

     

    (b) Right of
Repurchase.  If so provided in the Award Agreement, Award
Shares acquired pursuant to a Stock Award may be subject to repurchase by the
Company or an Affiliate if not vested in accordance with the Award
Agreement.

     

    (c) Form of
Payment.  The Administrator shall determine the acceptable form
and method of payment for exercising a Stock Award.  Acceptable forms
of payment for all Award Shares are cash, check or wire transfer, denominated in
U.S. dollars except as specified by the Administrator for non-U.S.
sub-plans.  In addition, the Administrator may permit payment to be
made by any of the methods permitted with respect to the exercise of Options
pursuant to Section 6.4.

     

    (d) Nonassignability
of Stock Awards.  Except as
determined by the Administrator, no Stock Award shall be assignable or otherwise
transferable by the Awardee except by will or by the laws of descent and
distribution.  Notwithstanding anything to the contrary herein, Stock
Awards may be transferred and exercised in accordance with a Domestic Relations
Order.

     

    (e) Substitute Stock
Award.  The Board may cause the Company to grant Substitute
Stock Awards in connection with the acquisition by the Company or an Affiliate
of equity securities of any entity (including by merger) or all or a portion of
the assets of any entity.  Unless and to the extent specified
otherwise by the Board, Substitute Stock Awards shall have the same terms and
conditions as the stock awards they replace, except that (subject to the
provisions of Section 10) Substitute Stock Awards shall be Stock Awards to
purchase Shares rather than equity securities of the granting entity and shall
have a Purchase Price that, as determined by the Board in its sole and absolute
discretion, properly reflects the substitution.  Any such Substituted
Stock Award shall be effective on the effective date of the
acquisition.

     

    8.3 Cash Awards.

     

    The
following rules apply to all Cash Awards:

     

    Cash
Awards may be granted either alone, in addition to, or in tandem with other
Awards granted under this Plan. After the Administrator determines that it will
offer a Cash Award, it shall advise the Awardee, by means of an Award Agreement,
of the terms, conditions and restrictions related to the Cash
Award.

     

    
      	
              9.  

            	
              Exercise
      of Awards

            


    

     

    9.1 In General.  

     

    An Award
shall be exercisable in accordance with this Plan and the Award Agreement under
which it is granted.

     

    9.2 Time
of Exercise.

     

    Options
and Stock Awards shall be considered exercised when the Company receives: (a)
written notice of exercise from the person entitled to exercise the Option or
Stock Award, (b) full payment, or provision for payment, in a form and method
approved by the Administrator, for the Shares for which the Option or Stock
Award is being exercised, and (c) with respect to Nonstatutory Options, payment,
or provision for payment, in a form approved by the Administrator, of all
applicable withholding taxes due upon exercise.  An Award may not be
exercised for a fraction of a Share.  SARs shall be considered
exercised when the Company receives written notice of the exercise from the
person entitled to exercise the SAR.

     

    9.3 Issuance
of Award Shares.

     

    The
Company shall issue Award Shares in the name of the person properly exercising
the Award.  If the Awardee is that person and so requests, the Award
Shares shall be issued in the name of the Awardee and the Awardee’s
spouse.  The Company shall endeavor to issue Award Shares promptly
after an Award is exercised or after the Grant Date of a Stock Award, as
applicable.  Until Award Shares are actually issued, as evidenced by
the appropriate entry on the stock register of the Company or its transfer
agent, the Awardee will not have the rights of a stockholder with respect to
those Award Shares, even though the Awardee has completed all the steps
necessary to exercise the Award.  No adjustment shall be made for any
dividend, distribution, or other right for which the record date precedes the
date the Award Shares are issued, except as provided in Section 10.

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

     

    9.4 Termination

     

    (a) In
General.  Except as provided in an Award Agreement or in
writing by the Administrator, including in an Award Agreement, and as otherwise
provided in Sections 9.4(b), (c), (d) and (e) after an Awardee’s Termination,
the Awardee’s Awards shall be exercisable to the extent (but only to the extent)
they are vested on the date of that Termination and only during the ninety (90)
days after the Termination, but in no event after the Expiration
Date.  To the extent the Awardee does not exercise an Award within the
time specified for exercise, the Award shall automatically
terminate.

     

    (b) Leaves of
Absence.  Unless otherwise provided in the Award Agreement, no
Award may be exercised more than three months after the beginning of a leave of
absence, other than a personal or medical leave approved by an authorized
representative of the Company with employment guaranteed upon
return.  Awards shall not continue to vest during a leave of absence,
unless otherwise determined by the Administrator with respect to an approved
personal or medical leave with employment guaranteed upon return.

     

    (c) Death or
Disability.  Unless otherwise provided by the Administrator, if
an Awardee’s Termination is due to death or disability (as determined by the
Administrator with respect to all Awards other than Incentive Stock Options and
as defined by Section 22(e) of the Code with respect to Incentive Stock
Options), all Awards of that Awardee to the extent exercisable at the date of
that Termination may be exercised for one year after that Termination, but in no
event after the Expiration Date.  In the case of Termination due to
death, an Award may be exercised as provided in Section 17.  In the
case of Termination due to disability, if a guardian or conservator has been
appointed to act for the Awardee and been granted this authority as part of that
appointment, that guardian or conservator may exercise the Award on behalf of
the Awardee.  Death or disability occurring after an Awardee’s
Termination shall not cause the Termination to be treated as having occurred due
to death or disability.  To the extent an Award is not so exercised
within the time specified for its exercise, the Award shall automatically
terminate.

     

    (d) Administrator
Discretion.  Notwithstanding the provisions of Section 9.4
(a)-(d), the Plan Administrator shall have complete discretion, exercisable
either at the time an Award is granted or at any time while the Award remains
outstanding, to:

     

    (i) Extend
the period of time for which the Award is to remain exercisable, following the
Awardee's Termination, from the limited exercise period otherwise in effect for
that Award to such greater period of time as the Administrator shall deem
appropriate, but in no event beyond the Expiration Date; and/or

     

    (ii) Permit
the Award to be exercised, during the applicable post-Termination exercise
period, not only with respect to the number of vested Shares for which such
Award may be exercisable at the time of the Awardee's Termination but also with
respect to one or more additional installments in which the Awardee would have
vested had the Awardee not been subject to Termination.

     

    (e) Consulting or
Employment Relationship.  Nothing in this Plan or in any Award
Agreement, and no Award or the fact that Award Shares remain subject to
repurchase rights, shall:  (A) interfere with or limit the right of
the Company or any Affiliate to terminate the employment or consultancy of any
Awardee at any time, whether with or without cause or reason, and with or
without the payment of severance or any other compensation or payment, or (B)
interfere with the application of any provision in any of the Company’s or any
Affiliate’s charter documents or Applicable Law relating to the election,
appointment, term of office, or removal of a Director.

     

    
      	
              10.  

            	
              Certain
      Transactions and Events

            


    

     

    10.1 In General.  

     

    Except as
provided in this Section 10, no change in the capital structure of the Company,
merger, sale or other disposition of assets or a subsidiary, change in control,
issuance by the Company of shares of any class of securities or securities
convertible into shares of any class of securities, exchange or conversion of
securities, or other transaction or event shall require or be the occasion for
any adjustments of the type described in this Section 10.  Additional
provisions with respect to the foregoing transactions are set forth in Section
14.3.

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

     

    10.2 Changes in Capital Structure.  

     

    In the
event of any stock split, reverse stock split, recapitalization, combination or
reclassification of stock, stock dividend, extraordinary cash dividend, spin-off, or similar
change to the capital structure of the Company (not including a Corporate
Transaction or Change in Control), the Committee shall proportionate, equitable adjustments to: (a) the
number and type of Awards that may be granted under this Plan, (b) the number
and type of Options that may be granted to any individual under this Plan, (c)
the terms of any SAR, (d) the Purchase Price of any Stock Award, (e) the Option
Price and number and class of securities issuable under each outstanding Option,
and (f) the repurchase price of any securities substituted for Award Shares that
are subject to repurchase rights.  The specific adjustments shall be
determined by the Committee.  Unless the Committee specifies otherwise, any securities
issuable as a result of any such adjustment shall be rounded down to the next
lower whole security.

     

    10.3 Corporate Transactions.  

     

    Except
for grants to Non-Employee Directors pursuant to Section 11 herein, in the event
of (a) a merger or consolidation in which the Company is not the surviving
corporation (other than a merger or consolidation with a wholly-owned
subsidiary, a reincorporation of the Company in a different jurisdiction, or
other transaction in which there is no substantial change in the stockholders of
the Company or their relative stock holdings and the Awards granted under this
Plan are assumed, converted or replaced by the successor corporation, which
assumption shall be binding on all Participants), (b) a merger in which the
Company is the surviving corporation but after which the stockholders of the
Company immediately prior to such merger (other than any stockholder that
merges, or which owns or controls another corporation that merges, with the
Company in such merger) cease to own their shares or other equity interest in
the Company, (c) the sale of all or substantially all of the assets of the
Company, or (d) the acquisition, sale, or transfer of more than 50% of the
outstanding shares of the Company by tender offer or similar transaction (each,
a “Corporate
Transaction”), any or all outstanding Awards may be assumed, converted or
replaced by the successor corporation (if any), which assumption, conversion or
replacement shall be binding on all participants under this Plan.  In
the alternative, the successor corporation may substitute equivalent Awards or
provide substantially similar consideration to participants as was provided to
stockholders (after taking into account the existing provisions of the
Awards).  The successor corporation may also issue, in place of
outstanding Shares held by the participants, substantially similar shares or
other property subject to repurchase restrictions no less favorable to the
participant.  In the event such successor corporation (if any) does
not assume or substitute Awards, as provided above, pursuant to a transaction
described in this Subsection 10.3, the vesting with respect to such Awards shall
fully and immediately accelerate or the repurchase rights of the Company shall
fully and immediately terminate, as the case may be, so that the Awards may be
exercised or the repurchase rights shall terminate before, or otherwise in
connection with the closing or completion of the Corporate Transaction or event,
but then terminate.  Notwithstanding anything in this Plan to the
contrary, the Committee may, in its sole discretion, provide that the vesting of
any or all Award Shares subject to vesting or right of repurchase shall
accelerate or lapse, as the case may be, upon a transaction described in this
Section 10.3.  If the Committee exercises such discretion with respect
to Options, such Options shall become exercisable in full prior to the
consummation of such event at such time and on such conditions as the Committee
determines, and if such Options are not exercised prior to the consummation of
the Corporate Transaction, they shall terminate at such time as determined by
the Committee.  Subject to any greater rights granted to participants
under the foregoing provisions of this Section 10.3, in the event of the
occurrence of any Corporate Transaction, any outstanding Awards shall be treated
as provided in the applicable agreement or plan of merger, consolidation,
dissolution, liquidation, or sale of assets.

     

    10.4 Changes
in Control.  

     

    The Board
may also, but need not, specify that other transactions or events constitute a
“Change in
Control”.  The Board may do that either before or after the
transaction or event occurs.  Examples of transactions or events that
the Board may treat as Changes in Control are: (a) any person or entity,
including a “group” as contemplated by Section 13(d)(3) of the Exchange Act,
acquires securities holding 30% or more of the total combined voting power or
value of the Company, or (b) as a result of or in connection with a contested
election of Company Directors, the persons who were Company Directors
immediately before the election cease to constitute a majority of the
Board.  In connection with a Change in Control, notwithstanding any
other provision of this Plan, the Board may, but need not, take any one or more
of the actions described in Section 10.3;
provided, however, that no payment of an Award shall be accelerated to the
extent such payment would cause such Award to be subject to the adverse
consequences described in Section 409A of the Code.  In
addition, the Board may extend the date for the exercise of Awards (but not
beyond their original Expiration Date).  The Board need not adopt the
same rules for each Award or each Awardee.

     

    10.5 Dissolution.  

     

    If the
Company adopts a plan of dissolution, the Board may cause Awards to be fully
vested and exercisable (but not after their Expiration Date) before the
dissolution is completed but contingent on its completion and may cause the
Company’s repurchase rights on Award Shares to lapse upon completion of the
dissolution.  The Board need not adopt the same rules for each Award
or each Awardee.  Notwithstanding anything herein to the contrary, in
the event of a dissolution of the Company, to the extent not exercised before
the earlier of the completion of the dissolution or their Expiration Date,
Awards shall terminate immediately prior to the dissolution.

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

     

    10.6 Cut-Back to Preserve Benefits.  

     

    If the
Administrator determines that the net after-tax amount to be realized by any
Awardee, taking into account any accelerated vesting, termination of repurchase
rights, or cash payments to that Awardee in connection with any transaction or
event set forth in this Section 10 would be greater if one or more of those
steps were not taken or payments were not made with respect to that Awardee’s
Awards or Award Shares, then, at the election of the Awardee, to such extent,
one or more of those steps shall not be taken and payments shall not be
made.

     

    
      	
              11.  

            	
              Automatic Option Grants to Non-Employee Directors
      

            


    

     

    11.1 Automatic
Option Grants to Non-Employee Directors

     

    (a) Grant
Dates.  Option grants to Non-Employee Directors shall be made
on the dates specified below:

     

    (i) Each
Non-Employee Director who is first elected or appointed to the Board at any time
after the effective date of this Plan shall automatically be granted, on the
date of such initial election or appointment, an Option to purchase 25,000
Shares (the “Initial
Grant”).

     

    (ii) Commencing
in 2006, on the date of each annual stockholders meeting, each individual who is
to continue to serve as a Non-Employee Director shall automatically be granted
an Option to purchase 10,000 Shares (the “Annual
Grant”), provided, however, that such individual has served as a
Non-Employee Director for at least six (6) months.

     

    (b) Exercise
Price.

     

    (i) The
Option Price shall be equal to one hundred percent (100%) of the Fair Market
Value of the Shares on the Option grant date.

     

    (ii) The
Option Price shall be payable in one or more of the alternative forms authorized
pursuant to Section 6.4.  Except to the extent the sale and remittance
procedure specified thereunder is utilized, payment of the Option Price must be
made on the date of exercise.

     

    (c) Option
Term.  Each Option shall have a term of ten (10) years measured
from the Option grant date.

     

    (d) Exercise and
Vesting of Options.  Except as otherwise determined by the
whole Board, the Shares underlying each Option granted pursuant to Section 11.1
shall vest and be exercisable as set forth below.

     

    (i) Initial
Grant.  The Shares underlying each Option issued pursuant to
the Initial Grant shall vest and be exercisable as to 2.0833% of the Shares at
the end of each full succeeding month from the date of grant, rounded down to
the nearest whole Share, for so long as the Non-Employee Director continuously
remains a Director of, or a Consultant to, the Company.

     

    (ii) Annual
Grant.  The Shares underlying each Option issued pursuant to
the Annual Grant shall vest and be exercisable as to 8.3333% of the Shares at
the end of each full succeeding month from the date of grant, rounded down to
the nearest whole Share, for so long as the Non-Employee Director continuously
remains a Director of, or a Consultant to, the Company.

     

    (e) Termination of
Service.  The following provisions shall govern the exercise of
any Options held by the Awardee at the time the Awardee ceases to serve as a
Non-Employee Director, Employee or Consultant:

     

    (i) In
General.  Except as otherwise provided in Section 10.3, after
cessation of service (the “Cessation
Date”), the Awardee’s Options shall be exercisable to the extent (but
only to the extent) they are vested on the Cessation Date and only during the
three months after such Cessation Date, but in no event after the Expiration
Date.  To the extent the Awardee does not exercise an Option within
the time specified for exercise, the Option shall automatically
terminate.

     

    (ii) Death or
Disability.  If an Awardee’s cessation of service is due to
death or disability (as determined by the Board), all Options of that Awardee,
to the extent exercisable upon such Cessation Date, may be exercised for one
year after the Cessation Date, but in no event after the Expiration
Date.  In the case of a cessation of service due to death, an Option
may be exercised as provided in Section 16.  In the case of a
cessation of service due to disability, if a guardian or conservator has been
appointed to act for the Awardee and been granted this authority as part of that
appointment, that guardian or conservator may exercise the Option on behalf of
the Awardee.  Death or disability occurring after an Awardee’s
cessation of service shall not cause the cessation of service to be treated as
having occurred due to death or disability.  To the extent an Option
is not so exercised within the time specified for its exercise, the Option shall
automatically terminate.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      (f) Board
Discretion.  The Awards under
this Section 11.1 are not intended as the exclusive Awards that may be made to
Non-Employee Directors under this Plan.  The Board may, in its
discretion, amend the Plan with respect to the terms of the Awards herein, may
add or substitute other types of Awards or may temporarily or permanently
suspend Awards hereunder, all without approval of the Company's
stockholders.

    

     

    11.2 Certain
Transactions and Events

     

    (a) In the
event of a Corporate Transaction while the Awardee remains a Non-Employee
Director, the Shares at the time subject to each outstanding Option held by such
Awardee pursuant to Section 11, but not otherwise vested, shall automatically
vest in full so that each such Option shall, immediately prior to the effective
date of the Corporate Transaction, become exercisable for all the Shares as
fully vested Shares and may be exercised for any or all of those vested Shares.
Immediately following the consummation of the Corporate Transaction, each Option
shall terminate and cease to be outstanding, except to the extent assumed by the
successor corporation (or Affiliate thereof).

     

    (b) In the
event of a Change in Control while the Awardee remains a Non-Employee Director,
the Shares at the time subject to each outstanding Option held by such Awardee
pursuant to Section 11, but not otherwise vested, shall automatically vest in
full so that each such Option shall, immediately prior to the effective date of
the Change in Control, become exercisable for all the Shares as fully vested
Shares and may be exercised for any or all of those vested Shares. Each such
Option shall remain exercisable for such fully vested Shares until the
expiration or sooner termination of the Option term in connection with a Change
in Control.

     

    (c) Each
Option which is assumed in connection with a Corporate Transaction shall be
appropriately adjusted, immediately after such Corporate Transaction, to apply
to the number and class of securities which would have been issuable to the
Awardee in consummation of such Corporate Transaction had the Option been
exercised immediately prior to such Corporate Transaction. Appropriate
adjustments shall also be made to the Option Price payable per share under each
outstanding Option, provided the aggregate Option Price payable for such
securities shall remain the same. To the extent the actual holders of the
Company's outstanding Common Stock receive cash consideration for their Common
Stock in consummation of the Corporate Transaction, the successor corporation
may, in connection with the assumption of the outstanding Options granted
pursuant to Section 11, substitute one or more shares of its own common stock
with a fair market value equivalent to the cash consideration paid per share of
Common Stock in such Corporate Transaction.

     

    (d) The grant
of Options pursuant to Section 11 shall in no way affect the right of the
Company to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.

     

    (e) The
remaining terms of each Option granted pursuant to Section 11 shall, as
applicable, be the same as terms in effect for Awards granted under this Plan.
Notwithstanding the foregoing, the provisions of Section 9.4 and Section 10
shall not apply to Options granted pursuant to Section 11.

     

    11.3 Limited
Transferability of Options.  

     

    Each
Option granted pursuant to Section 11 may be assigned in whole or in part during
the Awardee's lifetime to one or more members of the Awardee's family or to a
trust established exclusively for one or more such family members or to an
entity in which the Awardee is majority owner or to the Awardee 's former
spouse, to the extent such assignment is in connection with the Awardee 's
estate or financial plan or pursuant to a Domestic Relations Order. The assigned
portion may only be exercised by the person or persons who acquire a proprietary
interest in the Option pursuant to the assignment. The terms applicable to the
assigned portion shall be the same as those in effect for the Option immediately
prior to such assignment and shall be set forth in such documents issued to the
assignee as the Administrator may deem appropriate. The Awardee may also
designate one or more persons as the beneficiary or beneficiaries of his or her
outstanding Options under Section 11, and those Options shall, in accordance
with such designation, automatically be transferred to such beneficiary or
beneficiaries upon the Awardee 's death while holding those Options. Such
beneficiary or beneficiaries shall take the transferred Options subject to all
the terms and conditions of the applicable Award Agreement evidencing each such
transferred Option, including (without limitation) the limited time period
during which the Option may be exercised following the Awardee 's
death.

     

    
      	
              12.  

            	
              Withholding
      and Tax Reporting

            


    

     

    12.1 Tax
Withholding Alternatives.

     

    (a) General.  Whenever
Award Shares are issued or become free of restrictions, the Company may require
the Awardee to remit to the Company an amount sufficient to satisfy any
applicable tax withholding requirement, whether the related tax is imposed on
the Awardee or the Company.  The Company shall have no obligation to
deliver Award Shares or release Award Shares from an escrow or permit a transfer
of Award Shares until the Awardee has satisfied those tax withholding
obligations.  Whenever payment in satisfaction of Awards is made in
cash, the payment will be reduced by an amount sufficient to satisfy all tax
withholding requirements.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
       

      (b) Method of
Payment.  The Awardee shall pay any required withholding using
the forms of consideration described in Section 6.4(b), except that, in the
discretion of the Administrator, the Company may also permit the Awardee to use
any of the forms of payment described in Section 6.4(c).  The
Administrator, in its sole discretion, may also permit Award Shares to be
withheld to pay required withholding.  If the Administrator permits
Award Shares to be withheld, the Fair Market Value of the Award Shares withheld,
as determined as of the date of withholding, shall not exceed the amount
determined by the applicable minimum statutory withholding
rates.

    

     

    12.2 Reporting
of Dispositions.

     

    Any
holder of Option Shares acquired under an Incentive Stock Option shall promptly
notify the Administrator, following such procedures as the Administrator may
require, of the sale or other disposition of any of those Option Shares if the
disposition occurs during:  (a) the longer of two years after the
Grant Date of the Incentive Stock Option and one year after the date the
Incentive Stock Option was exercised, or (b) such other period as the
Administrator has established.

     

    
      	
              13.  

            	
              Compliance
      with Law

            


    

     

    The grant
of Awards and the issuance and subsequent transfer of Award Shares shall be
subject to compliance with all Applicable Law, including all applicable
securities laws.  Awards may not be exercised, and Award Shares may
not be transferred, in violation of Applicable Law.  Thus, for
example, Awards may not be exercised unless:  (a) a registration
statement under the Securities Act is then in effect with respect to the related
Award Shares, or (b) in the opinion of legal counsel to the Company, those Award
Shares may be issued in accordance with an applicable exemption from the
registration requirements of the Securities Act and any other applicable
securities laws.  The failure or inability of the Company to obtain
from any regulatory body the authority considered by the Company’s legal counsel
to be necessary or useful for the lawful issuance of any Award Shares or their
subsequent transfer shall relieve the Company of any liability for failing to
issue those Award Shares or permitting their transfer.  As a condition
to the exercise of any Award or the transfer of any Award Shares, the Company
may require the Awardee to satisfy any requirements or qualifications that may
be necessary or appropriate to comply with or evidence compliance with any
Applicable Law.

     

    
      	
              14.  

            	
              Amendment
      or Termination of this Plan or Outstanding
  Awards

            


    

     

    14.1 Amendment and Termination.  

     

    The Board
may at any time amend, suspend, or terminate this Plan; provided, however, that any Plan amendment or
termination will not accelerate the timing of any payments that constitute
deferred compensation under Section 409A of the Code unless such acceleration of
payment is permitted by Section 409A of the Code.

     

    14.2 Stockholder Approval.  

     

    The
Company shall obtain the approval of the Company’s stockholders for any
amendment to this Plan if stockholder approval is necessary or desirable to
comply with any Applicable Law or with the requirements applicable to the grant
of Awards intended to be Incentive Stock Options.  The Board may also,
but need not, require that the Company’s stockholders approve any other
amendments to this Plan.

     

    14.3 Effect.

     

    No
amendment, suspension, or termination of this Plan, and no modification of any
Award even in the absence of an amendment, suspension, or termination of this
Plan, shall impair any existing contractual rights of any Awardee unless the
affected Awardee consents to the amendment, suspension, termination, or
modification.  Notwithstanding anything herein to the contrary, no
such consent shall be required if the Board determines, in its sole and absolute
discretion, that the amendment, suspension, termination, or
modification:  (a) is required or advisable in order for the Company,
this Plan or the Award to satisfy Applicable Law, to meet the requirements of
any accounting standard or to avoid any adverse accounting treatment, or (b) in
connection with any transaction or event described in Section 10, is in the best
interests of the Company or its stockholders.  The Board may, but need
not, take the tax or accounting consequences to affected Awardees into
consideration in acting under the preceding sentence.  Those decisions
shall be final, binding and conclusive.  Termination of this Plan
shall not affect the Administrator’s ability to exercise the powers granted to
it under this Plan with respect to Awards granted before the termination of
Award Shares issued under such Awards even if those Award Shares are issued
after the termination.

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

     

    
      	
              15.  

            	
              Reserved
      Rights

            


    

     

    15.1 Nonexclusivity
of this Plan.

     

    This Plan
shall not limit the power of the Company or any Affiliate to adopt other
incentive arrangements including, for example, the grant or issuance of stock
options, stock, or other equity-based rights under other plans.

     

    15.2 Unfunded
Plan.

     

    This Plan
shall be unfunded.  Although bookkeeping accounts may be established
with respect to Awardees, any such accounts will be used merely as a
convenience.  The Company shall not be required to segregate any
assets on account of this Plan, the grant of Awards, or the issuance of Award
Shares.  The Company and the Administrator shall not be deemed to be a
trustee of stock or cash to be awarded under this Plan.  Any
obligations of the Company to any Awardee shall be based solely upon contracts
entered into under this Plan, such as Award Agreements.  No such
obligations shall be deemed to be secured by any pledge or other encumbrance on
any assets of the Company.  Neither the Company nor the Administrator
shall be required to give any security or bond for the performance of any such
obligations.

     

    
      	
              16.  

            	
              Special
      Arrangements Regarding Award Shares

            


    

     

    16.1 Escrow of Stock Certificates.  

     

    To
enforce any restrictions on Award Shares, the Administrator may require their
holder to deposit the certificates representing Award Shares, with stock powers
or other transfer instruments approved by the Administrator endorsed in blank,
with the Company or an agent of the Company to hold in escrow until the
restrictions have lapsed or terminated.  The Administrator may also
cause a legend or legends referencing the restrictions to be placed on the
certificates.

     

    16.2 Repurchase
Rights.

     

    (a) General. If a Stock Award is
subject to vesting conditions, the Company shall have the right, during the
seven months after the Awardee’s Termination, to repurchase any or all of the
Award Shares that were unvested as of the date of that
Termination.  The repurchase price shall be determined by the
Administrator in accordance with this Section 16.2 which shall be either (i) the
Purchase Price for the Award Shares (minus the amount of any cash dividends paid
or payable with respect to the Award Shares for which the record date precedes
the repurchase) or (ii) the lower of (A) the Purchase Price for the Shares or
(B) the Fair Market Value of those Award Shares as of the date of the
Termination.  The repurchase price shall be paid in
cash.  The Company may assign this right of repurchase.

     

    (b) Procedure.  The
Company or its assignee may choose to give the Awardee a written notice of
exercise of its repurchase rights under this Section 16.2.  However,
the Company’s failure to give such a notice shall not affect its rights to
repurchase Award Shares.  The Company must, however, tender the
repurchase price during the period specified in this Section 16.2 for exercising
its repurchase rights in order to exercise such rights.

     

    
      	
              17.  

            	
              Beneficiaries

            


    

     

    An
Awardee may file a written designation of one or more beneficiaries who are to
receive the Awardee’s rights under the Awardee’s Awards after the Awardee’s
death.  An Awardee may change such a designation at any time by
written notice.  If an Awardee designates a beneficiary, the
beneficiary may exercise the Awardee’s Awards after the Awardee’s
death.  If an Awardee dies when the Awardee has no living beneficiary
designated under this Plan, the Company shall allow the executor or
administrator of the Awardee’s estate to exercise the Award or, if there is
none, the person entitled to exercise the Option under the Awardee’s will or the
laws of descent and distribution.  In any case, no Award may be
exercised after its Expiration Date.

     

    
      
        	
                18.  

              	
                Miscellaneous

              


      

       

      18.1 Governing
Law.  

       

      This
Plan, the Award Agreements and all other agreements entered into under this
Plan, and all actions taken under this Plan or in connection with Awards or
Award Shares, shall be governed by the laws of the State of
Delaware.

       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    18.2 Determination of Value.  

     

    Fair
Market Value shall be determined as follows:

     

    (a) Listed
Stock.  If the Shares are traded on any established stock
exchange or quoted on a national market system, Fair Market Value shall be the
closing sales price for the Shares as quoted on that stock exchange or system
for the date the value is to be determined (the “Value
Date”) as reported in The Wall Street Journal or a
similar publication.  If no sales are reported as having occurred on
the Value Date, Fair Market Value shall be that closing sales price for the last
preceding trading day on which sales of Shares are reported as having
occurred.  If no sales are reported as having occurred during the five
trading days before the Value Date, Fair Market Value shall be the closing bid
for Shares on the Value Date.  If Shares are listed on multiple
exchanges or systems, Fair Market Value shall be based on sales or bid prices on
the primary exchange or system on which Shares are traded or
quoted.

     

    (b) Stock Quoted by
Securities Dealer.  If Shares are regularly quoted by a
recognized securities dealer but selling prices are not reported on any
established stock exchange or quoted on a national market system, Fair Market
Value shall be the mean between the high bid and low asked prices on the Value
Date.  If no prices are quoted for the Value Date, Fair Market Value
shall be the mean between the high bid and low asked prices on the last
preceding trading day on which any bid and asked prices were
quoted.

     

    (c) No Established
Market.  If Shares are not traded on any established stock
exchange or quoted on a national market system and are not quoted by a
recognized securities dealer, the Administrator (following guidelines
established by the Board or Committee) will determine Fair Market Value in good
faith.  The Administrator will consider the following factors, and any
others it considers significant, in determining Fair Market Value: (i) the price
at which other securities of the Company have been issued to purchasers other
than Employees, Directors, or Consultants, (ii) the Company’s stockholder’s
equity, prospective earning power, dividend-paying capacity, and non-operating
assets, if any, and (iii) any other relevant factors, including the economic
outlook for the Company and the Company’s industry, the Company’s position in
that industry, the Company’s goodwill and other intellectual property, and the
values of securities of other businesses in the same industry.

     

    18.3 Reservation
of Shares.

     

    During
the term of this Plan, the Company shall at all times reserve and keep available
such number of Shares as are still issuable under this Plan.

     

    18.4 Electronic
Communications.  

     

    Any Award
Agreement, notice of exercise of an Award, or other document required or
permitted by this Plan may be delivered in writing or, to the extent determined
by the Administrator, electronically.  Signatures may also be
electronic if permitted by the Administrator.

     

    18.5 Notices.

     

    Unless
the Administrator specifies otherwise, any notice to the Company under any
Option Agreement or with respect to any Awards or Award Shares shall be in
writing (or, if so authorized by Section 18.4, communicated electronically),
shall be addressed to the Secretary of the Company, and shall only be effective
when received by the Secretary of the Company.

     

    18.6 Section 409A.  

     

    To the extent applicable and notwithstanding any other
provision of this Plan, this Plan and Awards hereunder shall be administered,
operated and interpreted in accordance with Section 409A of the Code and
Department of Treasury regulations and other interpretive guidance issued
thereunder, including without limitation any such regulations or other guidance
that may be issued after the date on which the Board approves the Plan;
provided, however, in the event that the Committee determines that any amounts
payable hereunder may be taxable to a Awardee under Section 409A of the Code and
related Department of Treasury guidance prior to the payment and/or delivery to
such Awardee of such amount, the Company may (i) adopt such amendments to the
Plan and related Award, and appropriate policies and procedures, including
amendments and policies with retroactive effect, that the Committee determines
necessary or appropriate to preserve the intended tax treatment of the benefits
provided by the Plan and Awards hereunder and/or (ii) take such other actions as
the Committee determines necessary or appropriate to comply with or exempt the
Plan and/or Awards from the requirements of Section 409A of the Code and related
Department of Treasury guidance, including such Department of Treasury guidance
and other interpretive materials as may be issued after the date on which the
Board approves the Plan.  The Company and its Affiliates make no
guarantees to any Person regarding the tax treatment of Awards or payments made
under the Plan, and, notwithstanding the above provisions and any agreement or
understanding to the contrary, if any Award, payments or other amounts due to a
Awardee (or his or her beneficiaries, as applicable) results in, or causes in
any manner, the application of an accelerated or additional tax, fine or penalty
under Section 409A of the Code or otherwise to be imposed, then the Awardee (or
his or her beneficiaries, as applicable) shall be solely liable for the payment
of, and the Company and its Affiliates shall have no obligation or liability to
pay or reimburse (either directly or otherwise) the Awardee (or his or her
beneficiaries, as applicable) for, any such additional taxes, fines or
penalties.