exv10w1






Exhibit 10.1




PIXELWORKS, INC.

AMENDED AND RESTATED 2006 STOCK INCENTIVE PLAN




1. Purposes of the Plan. The purposes of this Stock Incentive Plan are to attract, retain and
reward individuals who can and do contribute to the Company’s success by providing Employees and
Consultants an opportunity to share in the equity of the Company and to more closely align their
interests with the Company and its shareholders.




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




          2.1. Administrator” shall mean the Board or any of its Committees appointed to
administer the Plan, in accordance with Section 4.1.



          2.2. “Award” shall mean an award of an Option, SAR or Sale of Shares under the Plan.



          2.3. “Award Agreement” shall mean a written agreement between the Company and a
Grantee evidencing the terms and conditions of an individual Award grant. The Award Agreement is
subject to the terms and conditions of the Plan.



          2.4. “Board” shall mean the Board of Directors of the Company.



          2.5. “Code” shall mean the Internal Revenue Code of 1986, as amended.



          2.6. “Committee” shall mean a committee appointed by the Board in accordance with
Section 4.1 of the Plan.



          2.7. “Common Stock” shall mean the common stock of the Company.



          2.8. “Company” shall mean Pixelworks, Inc., an Oregon corporation.



          2.9. “Consultant” shall mean any non-Employee who is engaged by the Company or any
Parent or Subsidiary to render consulting services and is compensated for such consulting services
and any Director of the Company whether compensated for such services or not.



          2.10. “Continuous Status as an Employee or Consultant” shall mean the absence of any
interruption or termination of service as an Employee or Consultant. Continuous Status as an
Employee or Consultant shall not be considered interrupted in the case of: (i) any sick leave,
military leave, or any other leave of absence approved by the Company; provided, however, that for
purposes of Incentive Stock Options, any such leave is for a period of not more than ninety days or
reemployment upon the expiration of such leave is guaranteed by contract or statute, provided,
further, that on the ninety-first day of such leave (where re-employment is not guaranteed by
contract or statute) the Grantee’s Incentive Stock Option shall automatically convert to a
Nonqualified Stock Option; or (ii) transfers between locations of the Company or between the
Company, its Parent, its Subsidiaries or its successor.



          2.11. “Director” shall mean a member of the Board.



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



          2.13. “Employee” shall mean any person, including Officers and Directors, employed
by the Company or any Parent or Subsidiary. Neither the payment of a director’s fee by the Company
nor service as a Director or Consultant shall be sufficient to constitute “employment” by the
Company.



          2.14. “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.



          2.15. “Fair Market Value” shall mean, as of any date, the value of a Share
determined as follows:



          2.15.1. If the Common Stock is listed on any established stock exchange or a
national market system, including without limitation the Nasdaq National Market or the Nasdaq
SmallCap Market of the Nasdaq Stock Market, Fair Market Value shall be the closing sales price for
a Share (or the closing bid, if no sales were reported) as quoted on such exchange or system on the
date of determination, as reported in The Wall Street Journal or such other source as the
Administrator deems reliable; provided, if the date of determination does not fall on a day on
which the Common Stock has traded on such securities exchange or market system, the date on which
the Fair Market Value shall be established shall be the last day on which the Common Stock was so
traded prior to the date of determination, or such other appropriate day as shall be determined by
the Administrator, in its sole discretion;



          2.15.2. If the Common Stock is regularly quoted by a recognized securities dealer
but selling prices are not reported, Fair Market Value shall be the mean between the high bid and
low asked prices for a Share on the date of determination, as reported in The Wall Street Journal
or such other source as the Administrator deems reliable; provided, if the date of determination
does not fall on a day on which the Common Stock has been so quoted, the date on which the Fair
Market Value shall be established shall be



 









 







the last day on which the Common Stock was so quoted prior to the date of determination, or such
other appropriate day as shall be determined by the Administrator, in its sole discretion;



          2.15.3. In the absence of an established market for the Common Stock, the Fair
Market Value of a Share shall be determined in good faith by the Administrator.



          2.16. “Grantee” shall mean an Employee or Consultant who holds an Option or Stock
Appreciation Right, or their permitted successor or legal representative.



          2.17. “Incentive Stock Option” shall mean an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.



          2.18. “Nonqualified Stock Option” shall mean an Option not intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.



          2.19. “Notice of Grant” shall mean a written notice evidencing certain terms and
conditions of an individual Award. The Notice of Grant is part of the Award Agreement.



          2.20. “Officer” shall mean a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.



          2.21. “Option” shall mean an Incentive Stock Option or a Nonqualified Stock Option
granted pursuant to the Plan.



          2.22. “Optioned Stock” shall mean the Shares subject to an Option or Stock
Appreciation Right.



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



          2.24. “Plan” shall mean this Amended and Restated 2006 Stock Incentive Plan.



          2.25. “Rule 16b-3” shall mean 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.



          2.26. “Sale” or “Sold” shall include, with respect to the sale of Shares under the
Plan, the sale of Shares for any form of consideration specified in Section 8.2, as well as a grant
of Shares for consideration in the form of past or future services. For purposes of clarity, a
“Sale“of Shares or Shares “Sold” shall include, without limitation, awards of stock bonuses,
restricted stock, stock units, performance stock, performance units or similar rights to acquire
Shares, whether upon the passage of time, the occurrence of one or more events, the satisfaction of
performance criteria or other conditions, or any combination thereof.



          2.27. “Share” shall mean a share of the Common Stock, as adjusted in accordance with
Section 11 of the Plan.



          2.28. “Stock Appreciation Right” or “SAR” shall mean a right to receive from the
Company, with respect to each Share as to which the SAR is exercised, payment in an amount equal to
the excess of the Share’s Fair Market Value on the exercise date over its Fair Market Value on the
date the SAR was granted. Such payment will be made solely in Shares valued at Fair Market Value on
the exercise date.



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



3. Stock Subject to the Plan.




     3.1. Subject to the provisions of Section 3.2 below and the provisions of Section 11 of
the Plan, the maximum aggregate number of Shares which may be subject to Awards under the Plan is
3,483,333 shares. (All share limits in the Plan are presented after giving effect to the Company’s
1-for-3 stock split in June 2008.) The Shares may be authorized, but unissued, or reacquired Common
Stock. Shares issued in respect of any “full-value award” granted under the Plan shall be counted
against the foregoing share limit for the Plan as 1.33 shares for every one share issued in
connection with such award. (For example, if a stock bonus of 100 shares of Common Stock is granted
under the Plan, 133 shares shall be charged against the share limit in connection with that award.)
For this purpose, a “full-value award” means any Award under the Plan that is not an Option
or SAR.



     3.2. If an Option or SAR should expire, or become unexercisable for any reason, or is
otherwise terminated or forfeited, without having been exercised in full, the Optioned Stock which
was subject thereto shall, unless the Plan shall have been terminated, become available for future
Option or SAR grants and/or Sales under the Plan. If any Shares issued pursuant to a Sale or
exercise of an Option or SAR shall be reacquired, canceled or forfeited for any reason, such Shares
shall become available for future Option or SAR grants and/or Sales under the Plan, unless the Plan
shall have been terminated. If any reacquired, canceled or forfeited Shares were originally issued
upon exercise of an Incentive Stock Option, then once so reacquired, canceled or forfeited, such
Shares shall not be considered to have been issued for purposes of applying the limitation set
forth in Section 3.3 below. Notwithstanding the foregoing, the following shares



 









 







of Stock may not again be made available for issuance as awards under the Plan: (i) shares of Stock
not issued or delivered as a result of the net settlement of an outstanding Option or SAR,
(ii) shares of Stock used to pay the exercise price or withholding taxes related to an outstanding
award, or (iii) shares of Stock repurchased on the open market with the proceeds of the exercise
price of an Option.



     3.3. Notwithstanding any other provision of this Section 3, the maximum number of Shares
that may be issued upon the exercise of Incentive Stock Options shall be 3,483,333.



4. Administration of the Plan.




     4.1. Procedure.



     4.1.1. Multiple Administrative Committees. If permitted by Rule 16b-3, the Plan may be
administered by different Committees with respect to Directors, Officers who are not Directors, and
Employees who are neither Directors nor Officers.



     4.1.2. Administration With Respect to Directors and Officers Subject to Section 16(b).
With respect to Award grants to Employees who are also Officers or Directors subject to Section
16(b) of the Exchange Act, the Plan shall be administered by (A) the Board, if the Board may
administer the Plan in compliance with the rules governing a plan intended to qualify as a
discretionary plan under Rule 16b-3, or (B) a Committee designated by the Board to administer the
Plan, which Committee shall be constituted to comply with the rules, if any, governing a plan
intended to qualify as a discretionary plan under Rule 16b-3. Once appointed, such Committee shall
continue to serve in its designated capacity until otherwise directed by the Board. From time to
time the Board may increase the size of the Committee and appoint additional members, remove
members (with or without cause) and substitute new members, fill vacancies (however caused), and
remove all members of the Committee and thereafter directly administer the Plan, all to the extent
permitted by the rules, if any, governing a plan intended to qualify as a discretionary plan under
Rule 16b-3. With respect to persons subject to Section 16 of the Exchange Act, transactions under
the Plan are intended to comply with all applicable conditions of Rule 16b-3. To the extent any
provision of the Plan or action by the Administrator fails to so comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the Administrator.



     4.1.3. Administration With Respect to Other Persons. With respect to Award grants to
Employees or Consultants who are neither Directors nor Officers of the Company, the Plan shall be
administered by the Board or a Committee designated by the Board, which Committee shall be
constituted to satisfy the legal requirements relating to the administration of stock option plans
under applicable corporate and securities laws and the Code. Once appointed, such Committee shall
serve in its designated capacity until otherwise directed by the Board. The Board may increase the
size of the Committee and appoint additional members, remove members (with or without cause) and
substitute new members, fill vacancies (however caused), and remove all members of the Committee
and thereafter directly administer the Plan, all to the extent permitted by the legal requirements
relating to the administration of stock option plans under state corporate and securities laws and
the Code.



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



     4.2.1. to grant Awards or SARs;



     4.2.2. to authorize Sales of Shares hereunder;



     4.2.3. to determine, upon review of relevant information, the Fair Market Value of a
Share;



     4.2.4. to determine the exercise/purchase price per Share of Options or SARs to be
granted or Shares to be Sold, which exercise/purchase price shall be determined in accordance with
Section 8.1 of the Plan;



     4.2.5. to determine the Employees or Consultants to whom, and the time or times at which,
Options or SARs shall be granted and the number of Shares to be represented by each Option or SAR;



     4.2.6. to determine the Employees or Consultants to whom, and the time or times at which,
Shares shall be Sold and the number of Shares to be Sold;



     4.2.7. to administer and interpret the Plan;



     4.2.8. to prescribe, amend and rescind rules and regulations relating to the Plan;



     4.2.9. to determine the terms and provisions of each Option or SAR granted (which need
not be identical) and, with the consent of the holder thereof, modify or amend each Option or SAR;



     4.2.10. to determine the terms and provisions of each Sale of Shares (which need not be
identical) and, with the consent of the purchaser thereof, modify or amend each Sale;



     4.2.11. to accelerate (with the consent of the Grantee) the exercise date of any Option;



 









 





     4.2.12. to accelerate (with the consent of the Grantee or purchaser of Shares) the
vesting restrictions applicable to Shares Sold or Options or SARs granted under the Plan;



     4.2.13. to authorize any person to execute on behalf of the Company any instrument
required to effectuate the grant of an Option, SAR or Sale of Shares previously granted or
authorized by the Administrator;



     4.2.14. to determine the transfer or vesting restrictions, repurchase rights or other
restrictions applicable to Shares issued under the Plan;



     4.2.15. to establish, on a case-by-case basis, different terms and conditions pertaining
to exercise or vesting rights upon termination of employment, but only at the time of an Option or
SAR grant or Sale of Shares;



     4.2.16. to approve forms for use under the Plan; and



     4.2.17. to make all other determinations deemed necessary or advisable for the
administration of the Plan.



Notwithstanding any other provision herein, except in connection with a corporate transaction
involving the Company (including, without limitation, any stock dividend, stock split,
extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up,
spin-off, combination, or exchange of shares), the terms of outstanding awards may not be amended
to reduce the exercise price of outstanding Options or SARs or cancel outstanding Options or SARs
in exchange for cash, other awards or Options or SARs with an exercise price that is less than the
exercise price of the original Options or SARs without stockholder approval.



     4.3. Effect of Administrator’s Decision. All decisions, determinations and
interpretations of the Administrator shall be final and binding on all Grantees and any other
holders of any Shares Sold under the Plan.



5. Eligibility.




     5.1. Persons Eligible. Awards may be granted only to Employees and Consultants. Incentive
Stock Options may be granted only to Employees. An Employee or Consultant who has been granted an
Award may, if he or she is otherwise eligible, be granted additional Awards.



     5.2. ISO Limitation. To the extent that the aggregate Fair Market Value of Shares subject
to a Grantee’s Incentive Stock Options granted by the Company, any Parent or Subsidiary which
become exercisable for the first time during any calendar year (under all plans of the Company or
any Parent or Subsidiary) exceeds $100,000, such excess Options shall be treated as Nonqualified
Stock Options. For purposes of this Section 5.2, Incentive Stock Options shall be taken into
account in the order in which they were granted, and the Fair Market Value of the Shares shall be
determined as of the time of grant.



     5.3. Section 5.2 Limitations. Section 5.2 of the Plan shall apply only to an Option
evidenced by an Award Agreement which sets forth the intention of the Company and the Grantee that
such Option shall qualify as an Incentive Stock Option. Section 5.2 of the Plan shall not apply to
any Option evidenced by an Award Agreement which sets forth the intention of the Company and the
Grantee that such Option shall be a Nonqualified Stock Option.



     5.4. No Right to Continued Employment. The Plan shall not confer upon any Grantee any
right with respect to continuation of employment or consulting relationship with the Company, nor
shall it interfere in any way with his or her right or the Company’s right to terminate their
employment or consulting relationship at any time, with or without cause.



     5.5. Other Limitations. The following limitations shall apply to grants of Options or
SARs to Employees:



     5.5.1. No Employee shall be granted, in any fiscal year of the Company, Options or SARs
to acquire more than 100,000 Shares.



     5.5.2. In connection with his or her initial employment, an Employee may be granted
Options or SARs for up to an additional 100,000 Shares which shall not count against the limit set
forth in subsection 5.5.1 above.



     5.5.3. The foregoing limitations shall be adjusted proportionately in connection with any
change in the Company’s capitalization as described in Section 11.



     5.5.4. If an Option or SAR is canceled in the same fiscal year of the Company in which it
was granted (other than in connection with a transaction described in Section 11), the canceled
Option or SAR shall be counted against the limits set forth in subsections 5.5.1 and 5.5.2 above.



 









 





6. Term of Plan. The Plan shall become effective upon the earlier to occur of its adoption by the
Board or its approval by the shareholders of the Company as described in Section 17 of the Plan. It
shall continue in effect for a term of ten (10) years, unless sooner terminated under Section 13 of
the Plan. However, if the Company’s shareholders approve an increase in the number of Shares
available for issuance under section 3.1, such approval shall be deemed the adoption of a new plan
with respect to the increased number of Shares, which may be issued for a term of ten (10) years
following the date of such shareholder approval.




7. Term of Options and SARs. The term of each Option and SAR shall be stated in the Notice of
Grant; provided, however, that in no event shall the term of any Option or SAR exceed six (6) years
from the date of grant. However, in the case of an Incentive Stock Option granted to a Grantee who,
on the date the Incentive Stock Option is granted, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the
term of the Incentive Stock Option shall be five (5) years from the date of grant thereof or such
shorter term as may be provided in the Notice of Grant.




8. Exercise/Purchase Price and Consideration.




     8.1. Exercise/Purchase Price. The per Share exercise/purchase price for the Shares to be
issued pursuant to exercise of an Option or SAR or a Sale of Shares shall be such price as is
determined by the Administrator, but shall be subject to the following:



     8.1.1. In the case of an Incentive Stock Option



          (1) granted to an Employee who, at the time of the grant of such Incentive Stock
Option, owns more than ten percent (10%) of the voting power of all classes of stock of the Company
or any Parent or Subsidiary, the per Share exercise price shall be at least one hundred ten percent
(110%) of the Fair Market Value on the date of the grant.



          (2) granted to any other Employee, the per Share exercise price shall be at least
one hundred percent (100%) of the Fair Market Value on the date of grant.



     8.1.2. In the case of a Nonqualified Stock Option, SAR or Sale, the per Share
exercise/purchase price shall be at least one hundred percent (100%) of the Fair Market Value on
the date of grant or Sale, as the case may be.



     8.2. Consideration. The consideration to be paid for the Shares to be issued upon
exercise of an Option or pursuant to a Sale, including the method of payment, shall be determined
by the Administrator. In the case of an Incentive Stock Option, the Administrator shall determine
the acceptable form of consideration at the time of grant. Such consideration may consist of:



     8.2.1. cash;



     8.2.2. check;



     8.2.3. promissory note;



     8.2.4. transfer to the Company of Shares which



          (1) in the case of Shares acquired upon exercise of an Option, have been owned by
the Grantee for more than six months on the date of transfer, and



          (2) have a Fair Market Value on the date of transfer equal to the aggregate exercise
price of the Shares to be acquired;



     8.2.5. if and so long as the Common Stock is registered under Section 12(b) or 12(g) of
the Exchange Act, delivery of a properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company the amount of sale or loan proceeds
required to pay the exercise price;



     8.2.6. such other consideration and method of payment for the issuance of Shares to the
extent permitted by legal requirements relating to the administration of stock option plans and
issuances of capital stock under applicable corporate and securities laws and the Code; or



     8.2.7. any combination of the foregoing methods of payment.



     If the Fair Market Value of the number of whole Shares transferred or the number of whole
Shares surrendered is less than the total exercise price of the Option, the shortfall must be made
up in cash or by check. Notwithstanding the foregoing provisions of this Section 8.2, the
consideration for Shares to be issued pursuant to a Sale may not include, in whole or in part, the
consideration set forth in subsection 8.2.5 above.



9. Exercise of Option or SAR.




 









 








     9.1. Procedure for Exercise; Rights as a Shareholder. Any Option or SAR granted hereunder
shall be exercisable at such times and under such conditions as determined by the Administrator,
including performance criteria with respect to the Company and/or the Grantee, and as shall be
permissible under the terms of the Plan.



     An Option or SAR may not be exercised for a fraction of a Share. If the exercise of a SAR
would result in the issuance of a fractional Share, the Shares to be issued shall be rounded to the
nearest whole Share.



     An Option or SAR shall be deemed to be exercised when written notice of such exercise has
been given to the Company in accordance with the terms of the Option or SAR by the Grantee and full
payment for the Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Administrator, consist of any consideration and
method of payment allowable under the Award Agreement and Section 8.2 of the Plan. Each Grantee who
exercises an Option or SAR shall, upon notification of the amount due (if any) and prior to or
concurrent with delivery of the certificate representing the Shares, pay to the Company amounts
necessary to satisfy applicable federal, state and local tax withholding requirements. A Grantee
must also provide a duly executed copy of any stock transfer agreement then in effect and
determined to be applicable by the Administrator. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer agent of the
Company) of the stock certificate evidencing such Shares, no right to vote or receive dividends or
any other rights as a shareholder shall exist with respect to the Optioned Stock represented by
such stock certificate, notwithstanding the exercise of the Option or SAR. No adjustment will be
made for a dividend or other right for which the record date is prior to the date the stock
certificate is issued, except as provided in Section 11 of the Plan. Subject to section 3, exercise
of an Option or settlement of a SAR shall decrease the number of Shares thereafter available, both
for purposes of the Plan and for issuance under the Option or SAR by the number of Shares issued
upon such exercise.



     9.2. Termination of Employment or Consulting Relationship. In the event that a Grantee’s
Continuous Status as an Employee or Consultant terminates (other than upon the Grantee’s death or
Disability), the Grantee may exercise his or her Option or SAR, but only within such period of time
as is determined by the Administrator, and only to the extent that the Grantee was entitled to
exercise it at the date of termination (but in no event later than the expiration of the term of
such Option or SAR as set forth in the Notice of Grant). In the case of an Incentive Stock Option,
the Administrator shall determine such period of time (in no event to exceed three (3) months from
the date of termination) when the Option is granted. If, at the date of termination, the Grantee is
not entitled to exercise his or her entire Option or SAR, the unexercisable portion of the Option
or SAR shall, unless otherwise expressly provided by the Administrator, terminate on the date of
such termination and the Shares covered by such portion shall revert to the Plan. If, after
termination, the Grantee does not exercise the remaining portion of his or her Option or SAR within
the time specified by the Administrator, such portion of the Option or SAR shall terminate, and the
Shares covered by such portion shall revert to the Plan.



     9.3. Disability of Grantee. In the event that a Grantee’s Continuous Status as an
Employee or Consultant terminates as a result of the Grantee’s Disability, the Grantee may exercise
his or her Option or SAR at any time within twelve (12) months from the date of such termination,
but only to the extent that the Grantee was entitled to exercise it at the date of such termination
(but in no event later than the expiration of the term of such Option or SAR as set forth in the
Notice of Grant). If, at the date of termination, the Grantee is not entitled to exercise his or
her entire Option or SAR, the unexercisable portion of the Option or SAR shall, unless otherwise
expressly provided by the Administrator, terminate on the date of such termination and the Shares
covered by such portion shall revert to the Plan. If, after termination, the Grantee does not
exercise the remaining portion of his or her Option or SAR within the time specified herein, such
portion of the Option or SAR shall terminate, and the Shares covered by such portion shall revert
to the Plan.



     9.4. Death of Grantee. In the event of the death of a Grantee, the Option or SAR may be
exercised at any time within twelve (12) months following the date of death (but in no event later
than the expiration of the term of such Option or SAR as set forth in the Notice of Grant), by the
Grantee’s estate or by a person who acquired the right to exercise the Option or SAR by bequest or
inheritance, but only to the extent that the Grantee was entitled to exercise the Option or SAR at
the date of death. If, at the time of death, the Grantee was not entitled to exercise his or her
entire Option or SAR, the unexercisable portion of the Option or SAR shall, unless otherwise
expressly provided by the Administrator, terminate on the date of such termination and the Shares
covered by such portion shall revert to the Plan. If, after death, the



 









 





Grantee’s estate or a person who acquired the right to exercise the Option or SAR by bequest or
inheritance does not exercise the remaining portion of the Option or SAR within the time specified
herein, such
portion of the Option or SAR shall terminate, and the Shares covered by such portion shall revert
to the Plan.




     9.5. Rule 16b-3. Options or SARs, as well as Sales of Shares, granted to persons subject
to Section 16(b) of the Exchange Act must comply with Rule 16b-3 and shall contain such additional
conditions or restrictions as may be required thereunder to qualify for the maximum exemption from
Section 16 of the Exchange Act with respect to Plan transactions.



10. Nontransferability of Awards. Except as otherwise specifically provided in the Award Agreement,
an Award may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner
other than by will, or by the laws of descent and distribution, and may be exercised during the
lifetime of the Grantee only by the Grantee or, if incapacitated, by his or her legal guardian or
legal representative.




11. Adjustments Upon Changes in Capitalization or Merger.




     11.1. Changes in Capitalization. Subject to any required action by the shareholders of
the Company, the number of shares of Common Stock covered by each outstanding Award and the number
of shares of Common Stock which have been authorized for issuance under the Plan but as to which no
Awards have yet been granted or which have been returned to the Plan upon cancellation or
expiration of an Award, as well as the price per share of Common Stock covered by each such
outstanding Award, shall be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company shall not be deemed
to have been “effected without receipt of consideration.” Such adjustment shall be made by the
Administrator, whose determination in that respect shall be final, binding and conclusive. Except
as expressly provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of Shares subject to an Award.



     11.2. Dissolution or Liquidation. In the event of the proposed dissolution or liquidation
of the Company, each outstanding Award will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Administrator. The Administrator may, in the
exercise of its sole discretion in such instances, declare that any Award shall terminate as of a
date fixed by the Board and, in the case of Options and SARs, give each Grantee the right to
exercise Grantee’s Option or SAR as to all or any part of the Optioned Stock subject to the Option
or SAR, including Shares as to which the Option or SAR would not otherwise be exercisable.



     11.3. Merger or Asset Sale. Except as otherwise provided in an Award Agreement, in the
event of a proposed sale of all or substantially all of the assets of the Company, or the merger of
the Company with or into another corporation, each outstanding Award shall be assumed or an
equivalent award shall be substituted by such successor corporation or a Parent or Subsidiary of
such successor corporation, unless the Administrator determines, in the exercise of its sole
discretion and in lieu of such assumption or substitution, that, in the case of Options and SARs,
each Grantee shall have the right to exercise the Grantee’s Options or SARs as to all or any part
of the Optioned Stock subject to the Option or SAR, including Shares as to which the Option or SAR
would not otherwise be exercisable. If the Administrator determines that an Option or SAR shall be
exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Grantee that the Option or SAR shall be so exercisable for a period
of thirty (30) days from the date of such notice or such shorter period as the Administrator may
specify in the notice, and the Option or SAR will terminate upon the expiration of such period. For
the purposes of this paragraph, the Option or SAR shall be considered assumed or substituted if,
following the merger or sale of assets, the Option or SAR confers the right to purchase, for each
Share of Optioned Stock subject to the Option or SAR immediately prior to the merger or sale of
assets, the consideration (whether stock, cash, or other securities or property) received in the
merger or sale of assets by holders of Common Stock for each Share held on the effective date of
the transaction (and if holders were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding Shares); provided, however, that if such
consideration received in the merger or sale of assets



 









 





was not solely common stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation, provide for the consideration to be received upon the
exercise of the Option or SAR, for each Share of Optioned Stock subject to the Option or SAR, to be
solely common stock of the successor corporation or its Parent substantially equal in Fair Market
Value to the per share consideration received by holders of Common Stock in the merger or sale of
assets. The determination of such substantial equality of value of consideration shall be made by
the Administrator and its determination shall be conclusive and binding.




12. Time of Granting Awards. The date of grant of an Award shall, for all purposes, be the date on
which the Administrator makes the determination granting such Award (or such later date as the
Administrator may establish at the time of granting the Award). Notice of the determination shall
be given to each Grantee within a reasonable time after the date of such grant.




13. Amendment and Termination of the Plan.




     13.1. Amendment and Termination. The Board may amend or terminate the Plan from time to
time in such respects as the Board may deem advisable.



     13.2. Shareholder Approval. The Company shall obtain shareholder approval of any Plan
amendment to the extent necessary and desirable to comply with Rule 16b-3 or with Section 422 of
the Code (or any successor rule or statute or other applicable law, rule or regulation, including
the requirements of any exchange or quotation system on which the Common Stock is listed or
quoted). Such shareholder approval, if required, shall be obtained in such a manner and to such a
degree as is required by the applicable law, rule or regulation.



     13.3. Effect of Amendment or Termination. Any such amendment or termination of the Plan
shall not affect Awards already granted, and such Awards shall remain in full force and effect as
if this Plan had not been amended or terminated, unless mutually agreed otherwise between the
Grantee and the Administrator, which agreement must be in writing and signed by the Grantee and the
Administrator.



14. Conditions Upon Issuance of Shares. Shares shall not be issued pursuant to the exercise of an
Option, SAR or a Sale unless the exercise of such Option, SAR or consummation of the Sale and the
issuance and delivery of such Shares pursuant thereto shall comply with all relevant provisions of
law, including, without limitation, the Securities Act of 1933, as amended, applicable state
securities laws, the Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange (including NASDAQ) upon which the Shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect to such
compliance.




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




16. Liability of Company.




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



     As a condition to the exercise of an Option or SAR or a Sale, the Company may require the
person exercising such Option or SAR or to whom Shares are being Sold to represent and warrant at
the time of any such exercise or Sale that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the opinion of counsel for
the Company, such a representation is required by any of the aforementioned relevant provisions of
law.



     16.2. Grants Exceeding Allotted Shares. If the grant of an Award causes the aggregate
number of Shares previously issued under the Plan and subject to then-outstanding Awards under the
Plan to exceed, as of the date of grant, the number of Shares which may be issued under the Plan
without additional shareholder approval, such Award shall be void with respect to such excess
Shares, unless shareholder approval of an amendment sufficiently increasing the number of Shares
subject to the Plan is timely obtained in accordance with Section 13 of the Plan.



 









 





17. Shareholder Approval. Continuance of the Plan shall be subject to approval by the shareholders
of the Company within twelve (12) months before or after the date the Plan is adopted. Such
shareholder approval shall be obtained in the manner and to the degree required under applicable
federal and state law.




18. Market Standoff.




     In connection with any underwritten public offering by the Company of its equity
securities pursuant to an effective registration statement filed under the Securities Act,
including the Company’s initial public offering, a Grantee or other participant in the Plan shall
not sell, make any short sale of, loan, hypothecate, pledge, grant any option for the purchase of,
or otherwise dispose or transfer for value or otherwise agree to engage in any of the foregoing
transactions with respect to, any shares issuable or issued under the Plan, whether pursuant to an
Option, SAR or a Sale, without the prior written consent of the Company or its underwriters. Such
limitations shall be in effect for such period of time as may be requested by the Company or such
underwriters and agreed to by the Company’s officers and directors with respect to their shares;
provided, however, that in no event shall such period exceed 180 days. The limitations of this
paragraph shall in all events terminate five years after the effective date of the Company’s
initial public offering. Participants shall be subject to the market standoff provisions of this
Section 18 only if the officers and directors of the Company are also subject to similar
arrangements.



     In the event of any stock split, stock dividend, recapitalization, combination of shares,
exchange of shares or other change affecting the Company’s outstanding Common Stock effected as a
class without the Company’s receipt of consideration, then any new, substituted or additional
securities distributed with respect to the purchased shares shall be immediately subject to the
provisions of this Section 18, to the same extent the purchased shares are at such time covered by
such provisions.



     In order to enforce the limitations of this Section 18, the Company may impose
stop-transfer instructions with respect to the purchased shares until the end of the applicable
standoff period.