EXHIBIT 10.21.4


 


MCDATA CORPORATION


 


2004 INDUCEMENT
EQUITY GRANT PLAN


 


ADOPTED BY THE BOARD
OF DIRECTORS:  MAY 25, 2004


 


1.             PURPOSES. 


 


(a)            General
Purpose.  The Company, by means of the Plan, seeks to
retain the services of persons not previously an employee or director of the
Company, or following a bona fide
period of non-employment, as an inducement material to the individual’s
entering into employment with the Company within the meaning of Rule
4350(i)(1)(A)(iv) of the NASD Marketplace Rules, and to provide incentives for
such persons to exert maximum efforts for the success of the Company and its
Affiliates.


 


(b)           Eligible
Stock Award Recipients.  The
persons eligible to receive Stock Awards are the Employees of the Company and
its Affiliates subject to the limitations set forth in Section 5.


 


(c)           Available
Stock Awards.  The purpose of
the Plan is to provide a means by which eligible recipients of Stock Awards may
be given an opportunity to benefit from increases in value of the Common Stock
through the granting of the following Stock Awards:  (i) Options, (ii) Stock Bonus Awards, (iii) Stock Purchase
Awards, (iv) Stock Appreciation Rights, (v) Stock Unit Awards and
(vi) Other Stock Awards.


 


2.             DEFINITIONS. 


 


(a)            “Affiliate” means any parent corporation or
subsidiary corporation of the Company, whether now or hereafter existing, as
those terms are defined in Sections 424(e) and (f), respectively, of the Code.


 


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


 


(c)            “Capitalization
Adjustment”
has the meaning ascribed to that term in Section 11(a).


 


(d)            “Change in
Control”
means the occurrence, in a single transaction or in a series of related
transactions, of any one or more of the following events:


 


(i)           any Exchange Act Person becomes the
Owner, directly or indirectly, of securities of the Company representing more
than fifty percent (50%) of the
combined voting power of the Company’s then outstanding securities other than
by virtue of a merger, consolidation or similar transaction.  Notwithstanding
the foregoing, a Change in Control shall not be deemed to occur (A) on account
of the acquisition of securities of the Company by an investor, any affiliate
thereof or any other Exchange Act Person from the Company in a transaction or
series of related transactions the primary purpose of which is to obtain
financing for the Company through the issuance of equity securities or (B)  solely because the level of Ownership held by
any Exchange Act Person (the “Subject Person”) exceeds the designated percentage threshold
of the outstanding voting securities as a result of a repurchase or other
acquisition of voting securities by the Company reducing the number of shares
outstanding, provided that if a Change in Control would occur (but for the
operation of this sentence) as a result of the acquisition of voting securities
by the Company, and after such share acquisition, the Subject Person becomes
the Owner of any additional voting securities that, assuming the repurchase or
other acquisition had not occurred, increases the percentage of the then
outstanding voting securities Owned by the Subject Person over the designated
percentage threshold, then a Change in Control shall be deemed to occur;


 


(ii)         there is consummated a merger,
consolidation or similar transaction involving (directly or indirectly) the
Company and, immediately after the consummation of such merger, consolidation
or similar 


 

















 


transaction, the stockholders of the Company
immediately prior thereto do not Own, directly or indirectly, either (A) outstanding
voting securities representing more than fifty percent (50%) of the combined outstanding voting power of
the surviving Entity in such merger, consolidation or similar transaction or
(B) more than fifty percent (50%) of
the combined outstanding voting power of the parent of the surviving Entity in
such merger, consolidation or similar transaction, in each case in
substantially the same proportions as their Ownership of the outstanding voting
securities of the Company immediately prior to such transaction;


 


(iii)        the stockholders of the Company approve
or the Board approves a plan of complete dissolution or liquidation of the
Company, or a complete dissolution or liquidation of the Company shall
otherwise occur;


 


(iv)         there is consummated a sale, lease,
license or other disposition of all or substantially all of the consolidated
assets of the Company and its Subsidiaries, other than a sale, lease, license
or other disposition of all or substantially all of the consolidated assets of
the Company and its Subsidiaries to an Entity, more than fifty percent (50%) of the combined
voting power of the voting securities of which are Owned by stockholders of the
Company in substantially the same proportions as their Ownership of the
outstanding voting securities of the Company immediately prior to such sale,
lease, license or other disposition; or


 


(v)          individuals who, on the date this Plan is
adopted by the Board, are members of the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the members of the
Board; provided,
however, that if the appointment or election (or nomination for
election) of any new Board member was approved or recommended by a majority
vote of the members of the Incumbent Board then still in office, such new
member shall, for purposes of this Plan, be considered as a member of the
Incumbent Board.


 


Notwithstanding the foregoing or
any other provision of this Plan, the definition of Change in Control (or any
analogous term) in an individual written agreement between the Company or any
Affiliate and the Participant shall supersede the foregoing definition with
respect to Stock Awards subject to such agreement (it being understood,
however, that if no definition of Change in Control or any analogous term is set
forth in such an individual written agreement, the foregoing definition shall
apply).


 


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


 


(f)            “Committee” means a committee of one (1) or more
members of the Board appointed by the Board in accordance with
Section 3(c).


 


(g)           “Common
Stock”
means the Class B common stock of the Company.


 


(h)           “Company” means McDATA Corporation, a Delaware
corporation.


 


(i)            “Consultant” means any person, including an advisor,
(i) engaged by the Company or an Affiliate to render consulting or advisory
services and who is compensated for such services or (ii) serving as a member
of the Board of Directors of an Affiliate and who is compensated for such
services.  However, the term
“Consultant” shall not include Directors who are not compensated by the Company
for their services as Directors, and the payment of a director’s fee by the
Company solely for services as a Director shall not cause a Director to be
considered a “Consultant” for purposes of the Plan.


 


(j)            “Continuous
Service”
means that the Participant’s service with the Company or an Affiliate, whether
as an Employee, Director or Consultant, is not interrupted or terminated.  A change in the capacity in which the
Participant renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Participant
renders such service, provided that there is no interruption or termination of
the Participant’s service with the Company or an Affiliate, shall not terminate
a Participant’s Continuous Service.  For
example, a change in status from an Employee of the Company to a Consultant of
an 


 

















 


Affiliate or a Director shall not constitute an
interruption of Continuous Service.  The
Board or the chief executive officer of the Company, in that party’s sole
discretion, may determine whether Continuous Service shall be considered
interrupted in the case of any leave of absence approved by that party,
including sick leave, military leave or any other personal leave.  Notwithstanding the foregoing, an approved
leave of absence shall be treated as Continuous Service for purposes of vesting
in a Stock Award only to such extent as may be provided in the Company’s leave
of absence policy or in the written terms of the Participant’s leave of
absence.


 


(k)           “Corporate
Transaction” means the occurrence, in a single transaction or in a series of
related transactions, of any one or more of the following events:


 


(i)           a sale  or other disposition of all
or substantially all, as determined by the Board in its discretion, of the
consolidated assets of the Company and its Subsidiaries;


 


(ii)         a sale or other disposition of at least ninety percent (90%) of the
outstanding securities of the Company;


 


(iii)        a merger, consolidation or similar transaction
following which the Company is not the surviving corporation; or


 


(iv)         a merger, consolidation or similar
transaction following which the Company is the surviving corporation but the
shares of Common Stock outstanding immediately preceding the merger,
consolidation or similar transaction are converted or exchanged by virtue of
the merger, consolidation or similar transaction into other property, whether
in the form of securities, cash or otherwise.


 


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


 


(m)          “Disability” means, with respect to a Participant,
such Participant’s permanent and total disability within the meaning of the
Company’s long-term disability plan, as it may be amended from time to time,
or, if there is no such plan, as determined by the Board.


 


(n)           “Employee” means any person employed by the Company
or an Affiliate.  Service as a Director
or as a Consultant shall not be sufficient to constitute “employment” by the
Company or an Affiliate.


 


(o)            “Entity” means a corporation, partnership or other
entity.


 


(p)            “Exchange
Act”
means the Securities Exchange Act of 1934, as amended.


 


(q)            “Exchange
Act Person” means any natural person, Entity or “group” (within the meaning of
Section 13(d) or 14(d) of the Exchange Act), except that “Exchange Act Person”
shall not include (A) the Company or any Subsidiary of the Company, (B) any
employee benefit plan of the Company or any Subsidiary of the Company or any
trustee or other fiduciary holding securities under an employee benefit plan of
the Company or any Subsidiary of the Company, (C) an underwriter temporarily
holding securities pursuant to an offering of such securities, or (D) an Entity
Owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their Ownership of stock of the Company.


 


(r)            Fair Market
Value”
means, as of any date, the value of the Common Stock determined as follows:


 


(i)           If the Common Stock is listed on any
established stock exchange or traded on the Nasdaq National Market or the
Nasdaq SmallCap Market, the Fair Market Value of a share of Common Stock shall
be the closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such exchange or market (or the exchange or market with
the greatest volume of trading in the Common Stock) on the last 


 

















 


market trading day prior to the day of determination,
as reported in The Wall Street Journal  or such other source as the
Board deems reliable.


 


(ii)         In the absence of such markets for the
Common Stock, the Fair Market Value shall be determined in good faith by the
Board.


 


(s)            “Non-Employee
Director”  means a Director who either (i) is not a current Employee or Officer of
the Company or an Affiliate, does not receive compensation (directly or
indirectly) from the Company or an Affiliate for services rendered as a
Consultant or in any capacity other than as a Director (except for an amount as
to which disclosure would not be required under Item 404(a) of Regulation S-K
promulgated pursuant to the Securities Act (“Regulation S-K”)), does not
possess an interest in any other transaction as to which disclosure would be
required under Item 404(a) of Regulation S-K and is not engaged in a business
relationship as to which disclosure would be required under Item 404(b) of
Regulation S-K; or (ii) is otherwise considered a “non-employee director” for
purposes of Rule 16b-3.


 


(t)            “Officer” means 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.


 


(u)           “Option” means a nonstatutory stock option
granted pursuant to the Plan that is not intended to qualify as an incentive
stock option under Section 422 of the Code and the regulations promulgated
thereunder.


 


(v)            “Option
Agreement” means a written agreement between the Company and an Optionholder
evidencing the terms and conditions of an individual Option grant.  Each Option Agreement shall be subject to
the terms and conditions of the Plan.


 


(w)           “Optionholder” means a person to whom an Option is
granted pursuant to the Plan or, if applicable, such other person who holds an
outstanding Option.


 


(x)            “Other Stock Award” means an award based in whole or in part
by reference to the Common Stock which is granted pursuant to the terms and
conditions of Section 7(e).


 


(y)            “Other Stock
Award Agreement” means a written agreement between the Company and a
holder of an Other Stock Award evidencing the terms and conditions of an
individual Other Stock Award grant. 
Each Other Stock Award Agreement shall be subject to the terms and
conditions of the Plan.


 


(z)            “Own,”
“Owned,” “Owner,” “Ownership” 
A person
or Entity shall be deemed to “Own,” to have “Owned,” to be the “Owner” of, or
to have acquired “Ownership” of securities if such person or Entity, directly
or indirectly, through any contract, arrangement, understanding, relationship
or otherwise, has or shares voting power, which includes the power to vote or
to direct the voting, with respect to such securities.


 


(aa)          “Participant” means a person to whom a Stock Award is
granted pursuant to the Plan or, if applicable, such other person who holds an
outstanding Stock Award.


 


(bb)          “Plan” means this 2004 Inducement Equity Grant
Plan.


 


(cc)          “Rule 16b-3” means Rule 16b-3 promulgated under the
Exchange Act or any successor to Rule 16b-3, as in effect from time to time.


 


(dd)          “Securities
Act”
means the Securities Act of 1933, as amended.


 


(ee)          “Stock
Appreciation Right” means a right to receive the appreciation of Common
Stock which is granted pursuant to the terms and conditions of Section 7(d).


 

















 


(ff)           “Stock
Appreciation Right Agreement” means a written agreement between the Company and a
holder of a Stock Appreciation Right evidencing the terms and conditions of an
individual Stock Appreciation Right grant.  Each Stock Appreciation Right Agreement shall be subject to the
terms and conditions of the Plan.


 


(gg)         “Stock
Award”
means any right granted under the Plan, including an Option,  Stock Purchase Award, Stock Bonus Award,
Stock Unit Award, a Stock Appreciation Right and an Other Stock Award.


 


(hh)         “Stock Award
Agreement” means a written agreement between the Company and a Participant
evidencing the terms and conditions of an individual Stock Award grant.  Each Stock Award Agreement shall be subject
to the terms and conditions of the Plan.


 


(ii)           “Stock Bonus Award” means an award of shares of Common Stock
which is granted pursuant to the terms and conditions of Section 7(a).


 


(jj)           “Stock Bonus
Award Agreement” means a written agreement between the Company and a
holder of a Stock Bonus Award evidencing the terms and conditions of an
individual Stock Bonus Award grant. 
Each Stock Bonus Award Agreement shall be subject to the terms and
conditions of the Plan.


 


(kk)        “Stock
Purchase Award” means an award of shares of Common Stock which is
granted pursuant to the terms and conditions of Section 7(b).


 


(ll)           “Stock
Purchase Award Agreement” means a written agreement between the Company and a
holder of a Stock Purchase Award evidencing the terms and conditions of an individual
Stock Purchase Award grant.  Each Stock
Purchase Award Agreement shall be subject to the terms and conditions of the
Plan.


 


(mm)       “Stock Unit
Award” means
a right to receive shares of Common Stock which is granted pursuant to the
terms and conditions of Section 7(c).


 


(nn)         “Stock Unit
Award Agreement” means a written agreement between the Company and a
holder of a Stock Unit Award evidencing the terms and conditions of an
individual Stock Unit Award grant.  Each
Stock Unit Award Agreement shall be subject to the terms and conditions of the
Plan.


 


(oo)          “Subsidiary” means, with respect to the Company, (i)
any corporation of which more than fifty percent (50%) of the outstanding
capital stock having ordinary voting power to elect a majority of the board of
directors of such corporation (irrespective of whether, at the time, stock of
any other class or classes of such corporation shall have or might have voting
power by reason of the happening of any contingency) is at the time, directly
or indirectly, Owned by the Company, and (ii) any partnership in which the
Company has a direct or indirect interest (whether in the form of voting or
participation in profits or capital contribution) of more than fifty percent
(50%).


 


3.             ADMINISTRATION. 


 


(a)            Administration
by Board.  The Board shall administer the Plan unless
and until the Board delegates administration of the Plan to a committee, as
provided in Section 3(c).


 


(b)            Powers of
Board.  The Board shall have the power, subject to,
and within the limitations of, the express provisions of the Plan:


 


(i)           Subject to Section 5 herein, to determine
from time to time which of the persons eligible under the Plan shall be granted
Stock Awards; when and how each Stock Award shall be granted; what type or
combination of types of Stock Award shall be granted; the provisions of each
Stock Award granted (which need not be identical), including the time or times
when a person shall be permitted to receive Common Stock 


 

















 


pursuant to a Stock Award; and the number of shares of
Common Stock with respect to which a Stock Award shall be granted to each such
person.


 


(ii)         To construe and interpret the Plan and
Stock Awards granted under it, and to establish, amend and revoke rules and
regulations for its administration.  The
Board, in the exercise of this power, may correct any defect, omission or
inconsistency in the Plan or in any Stock Award Agreement, in a manner and to
the extent it shall deem necessary or expedient to make the Plan fully
effective.


 


(iii)        To effect, at any time and from time to
time, with the consent of any adversely affected Optionholder, (1) the
reduction of the exercise price of any outstanding Option under the Plan or (2)
any other action that is treated as a repricing under generally accepted
accounting principles to the extent such action complies with Rule
4350(i)(1)(A)(iv) of the NASD Marketplace Rules.


 


(iv)         To amend the Plan or a Stock Award as
provided in Section 12.


 


(v)          To terminate or suspend the Plan as
provided in Section 13.


 


(vi)         Generally, to exercise such powers and to
perform such acts as the Board deems necessary or expedient to promote the best
interests of the Company and that are not in conflict with the provisions of
the Plan.


 


(vii)        To adopt such procedures and sub-plans as
are necessary or appropriate to permit participation in the Plan by employees
who are foreign nationals or employed outside the United States.


 


(c)            DELEGATION TO COMMITTEE.


 


(i)           General. 
The Board may delegate some or all of the administration of the Plan to
a Committee or Committees of one (1) or more members of the Board, and the term
“Committee”
shall apply to any person or persons to whom such authority has been
delegated.  If administration is
delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board that
have been delegated to the Committee, including the power to delegate to a
subcommittee any of the administrative powers the Committee is authorized to
exercise (and references in this Plan to the Board shall thereafter be to the
Committee or subcommittee), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board.  The Board may retain
the authority to concurrently administer the Plan with the Committee and may,
at any time, revest in the Board the administration of the Plan.


 


(ii)         Rule 16b-3
Compliance.  In the discretion of the Board, the
Committee may consist solely of two (2) or more Non-Employee Directors, in
accordance with Rule 16b-3.


 


(d)            Effect
of Board’s Decision. All determinations, interpretations and constructions
made by the Board in good faith shall not be subject to review by any person
and shall be final, binding and conclusive on all persons.


 


4.             SHARES SUBJECT TO THE PLAN. 


 


(a)            Share
Reserve.  Subject to the provisions of Section 11(a)
relating to Capitalization Adjustments, the shares of Common Stock that may be
issued pursuant to Stock Awards shall not exceed in the aggregate three million
(3,000,000) shares of Common Stock.


 


(b)            Reversion
of Shares to the Share Reserve.  If any Stock
Award shall for any reason expire or otherwise terminate, in whole or in part,
without having been exercised in full, or if any shares of Common 


 

















 


Stock issued to a Participant pursuant to a Stock
Award are forfeited back to or repurchased by the Company, including, but not
limited to, any repurchase or forfeiture caused by the failure to meet a
contingency or condition required for the vesting of such shares, then the
shares of Common Stock not acquired under such Stock Award shall revert to and
again become available for issuance under the Plan.  If any shares subject to a Stock Award are not delivered to a
Participant because such shares are withheld for taxes or the Stock Award is
exercised through a reduction of shares subject to the Stock Award (i.e., “net
exercised”), then the shares that are not delivered shall revert to and again
become available for issuance under the Plan. 
If the exercise price of any Stock Award is satisfied by tendering
shares of Common Stock held by the Participant (either by actual delivery or
attestation), then the number of such tendered shares shall revert to and again
become available for issuance under the Plan.


 


(c)            Source of
Shares.  The shares of Common Stock subject to the
Plan may be unissued shares or reacquired shares, bought on the market or
otherwise.


 


5.             ELIGIBILITY. 
Persons
eligible for Stock Awards shall consist of Employees whose potential contribution,
in the judgment of the Board, will benefit the future success of the Company
and/or an Affiliate.   Stock Awards may
be granted only to persons not previously an Employee or Director of the
Company, or following a bona fide
period of non-employment, as an inducement material to the individual’s
entering into employment with the Company within the meaning of Rule
4350(i)(1)(A)(iv) of the NASD Marketplace Rules.  In addition, notwithstanding any other provision of the Plan to
the contrary, all Stock Awards must be granted either by a majority of the
Company’s independent directors or a committee comprised of a majority of
independent directors.


 


6.             OPTION PROVISIONS. 


 


Each Option shall
be in such form and shall contain such terms and conditions as the Board shall
deem appropriate.  All Options shall be
designated as nonstatutory stock options at the time of grant.  The provisions of separate Options need not
be identical, but each Option shall include (through incorporation of
provisions hereof by reference in the Option or otherwise) the substance of
each of the following provisions:


 


(a)            Term. 
The Board shall determine the term of an Option.


 


(b)            Exercise
Price of an Option.  The Board, in its discretion, shall
determine the exercise price of each Option.


 


(c)            Consideration.  The purchase price of Common Stock acquired
pursuant to an Option shall be paid, to the extent permitted by applicable law,
either (i) in cash at the time the Option is exercised or (ii) at the
discretion of the Board (1) by delivery to the Company of other Common Stock,
(2) by a “net exercise” of the Option (as further described below), (3)
pursuant to a program developed under Regulation T as promulgated by the
Federal Reserve Board that, prior to the issuance of Common Stock, results in
either the receipt of cash (or check) by the Company or the receipt of
irrevocable instructions to pay the aggregate exercise price to the Company
from the sales proceeds, (4) according to a deferred payment or other similar
arrangement with the Optionholder or (5) in any other form of legal
consideration that may be acceptable to the Board.  Unless otherwise specifically provided in the Option, the
purchase price of Common Stock acquired pursuant to an Option that is paid by
delivery to the Company of other Common Stock acquired, directly or indirectly
from the Company, shall be paid only by shares of the Common Stock of the
Company that have been held for more than six (6) months (or such longer or
shorter period of time required to avoid a charge to earnings for financial
accounting purposes).


 


In the case of a
“net exercise” of an Option, the Company will not require a payment of the
exercise price of the Option from the Participant but will reduce the number of
shares of Common Stock issued upon the exercise by the largest number of whole
shares that has a Fair Market Value that does not exceed the aggregate 


 

















 


exercise price. 
With respect to any remaining balance of the aggregate exercise price,
the Company shall accept a cash payment from the Participant.  The shares of Common Stock so used to pay
the exercise price of an Option under a “net exercise” and any shares withheld
for taxes will be considered to have been withheld from the exercise of the Option.  Accordingly, the Option will not again be
exercisable with respect to the shares deemed withheld to satisfy the exercise
price, the shares actually delivered to the Participant or any shares withheld
for purposes of tax withholding.


 


In the case of any
deferred payment arrangement, interest shall be compounded at least annually
and shall be charged at the minimum rate of interest necessary to avoid the
treatment as interest, under any applicable provisions of the Code, of any
amounts other than amounts stated to be interest under the deferred payment
arrangement.


 


(c)            Transferability
of an Option.  An Option shall be transferable to the
extent provided in the Option Agreement. 
If the Option does not provide for transferability, then the Option
shall not be transferable except by (i) will, (ii) the laws of descent and
distribution, or (iii) upon dissolution of the Optionholder’s marriage pursuant
to a domestic relations order.  Also,
during the Optionholder’s lifetime, only the Optionholder is entitled to
exercise his or her Option.  Notwithstanding
the foregoing, by delivering written notice to the Company, in a form
satisfactory to the Company, an Optionholder may designate a third party who,
in the event of such Optionholder’s death, shall thereafter be entitled to
exercise the Option.


 


(d)            Vesting
Generally.  The total number of shares of Common Stock
subject to an Option may, but need not, vest and therefore become exercisable
in periodic installments that may, but need not, be equal.  The Option may be subject to such other
terms and conditions on the time or times when it may be exercised (which may
be based on performance or other criteria) as the Board may deem
appropriate.  The vesting provisions of
individual Options may vary.  The
provisions of this Section 6(e) are subject to any Option provisions governing
the minimum number of shares of Common Stock as to which an Option may be
exercised.


 


(e)            Termination
of Continuous Service.  In the event that an
Optionholder’s Continuous Service terminates (other than upon the
Optionholder’s death or Disability), the Optionholder may exercise his or her
Option (to the extent that the Optionholder was entitled to exercise such
Option as of the date of termination of Continuous Service) but only within
such period of time ending on the earlier of (i) the date three (3) months
following the termination of the Optionholder’s Continuous Service (or such
longer or shorter period specified in the Option Agreement) or (ii) the
expiration of the term of the Option as set forth in the Option Agreement.  If, after termination of Continuous Service,
the Optionholder does not exercise his or her Option within the time specified
in the Option Agreement, the Option shall terminate.


 


(f)            Extension
of Termination Date.  An Optionholder’s Option Agreement may (but
need not) provide that if the exercise of the Option following the termination
of the Optionholder’s Continuous Service (other than upon the Optionholder’s
death or Disability) would be prohibited at any time solely because the
issuance of shares of Common Stock would violate the registration requirements
under the Securities Act, then the Option shall terminate on the earlier of (i)
the expiration of the term of the Option set forth in the Option Agreement or
(ii) the expiration of a period of three (3) months after the termination of
the Optionholder’s Continuous Service during which the exercise of the Option
would not be in violation of such registration requirements.


 


(g)           Disability
of Optionholder.  In the event that an Optionholder’s
Continuous Service terminates as a result of the Optionholder’s Disability, the
Optionholder may exercise his or her Option (to the extent that the
Optionholder was entitled to exercise such Option as of the date of termination
of Continuous Service), but only within such period of time ending on the
earlier of (i) the date twelve (12) months following such termination of
Continuous Service (or such longer or shorter period specified in the Option
Agreement) or (ii) the expiration of the term of the Option as set forth in the
Option Agreement.  If, after termination
of


 

















 


Continuous Service, the Optionholder does not exercise
his or her Option within the time specified herein, the Option shall terminate.


 


(h)           Death of
Optionholder.  In the event that (i) an Optionholder’s
Continuous Service terminates as a result of the Optionholder’s death or (ii)
the Optionholder dies within the period (if any) specified in the Option
Agreement after the termination of the Optionholder’s Continuous Service for a
reason other than death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise such Option as of the date of death) by
the Optionholder’s estate, by a person who acquired the right to exercise the
Option by bequest or inheritance or by a person designated to exercise the
option upon the Optionholder’s death pursuant to Section 6(d), but only within
the period ending on the earlier of (1) the date eighteen (18) months following
the date of death (or such longer or shorter period specified in the Option
Agreement) or (2) the expiration of the term of such Option as set forth in the
Option Agreement.  If, after death, the
Option is not exercised within the time specified herein, the Option shall
terminate.


 


(i)            Early
Exercise.  The Option may, but need not, include a
provision whereby the Optionholder may elect at any time before the
Optionholder’s Continuous Service terminates to exercise the Option as to any
part or all of the shares of Common Stock subject to the Option prior to the
full vesting of the Option.  Any
unvested shares of Common Stock so purchased may be subject to a repurchase
option in favor of the Company or to any other restriction the Board determines
to be appropriate.  The Company shall
not be required to exercise its repurchase option until at least six (6) months
(or such longer or shorter period of time required to avoid a charge to
earnings for financial accounting purposes) have elapsed following exercise of
the Option unless the Board otherwise specifically provides in the Option.


 


7.             PROVISIONS OF STOCK AWARDS OTHER
THAN OPTIONS. 


 


(a)            Stock
Bonus Awards.  Each Stock Bonus Award Agreement shall be in
such form and shall contain such terms and conditions as the Board shall deem
appropriate.  At the Board’s election,
shares of Common Stock may be (i) held in book entry form subject to the
Company’s instructions until any restrictions relating to the Stock Bonus Award
lapse; or (ii) evidenced by a certificate, which certificate shall be held in
such form and manner as determined by the Board.  The terms and conditions of Stock Bonus Award Agreements may
change from time to time, and the terms and conditions of separate Stock Bonus
Award Agreements need not be identical, but each Stock Bonus Award Agreement
shall include (through incorporation of provisions hereof by reference in the
agreement or otherwise) the substance of each of the following provisions:


 


(i)           Consideration. 
A Stock Bonus Award may be awarded in consideration for past services
actually rendered to the Company or an Affiliate for its benefit or in any
other form of legal consideration that may be acceptable to the Board in its
discretion.


 


(ii)         Vesting. 
Shares of Common Stock awarded under the Stock Bonus Award Agreement
may, but need not, be subject to forfeiture to the Company or a share
repurchase option in favor of the Company in accordance with a vesting schedule
to be determined by the Board.


 


(iii)        Termination
of Participant’s Continuous Service.  In the event
a Participant’s Continuous Service terminates, the Company may reacquire (or
receive via  a forfeiture condition) any
or all of the shares of Common Stock held by the Participant which have not
vested as of the date of termination of Continuous Service under the terms of
the Stock Bonus Award Agreement.


 


(iv)         Transferability. 
Rights to acquire shares of Common Stock under the Stock Bonus Award
Agreement shall be transferable by the Participant only upon such terms and
conditions as are set forth in the Stock Bonus Award Agreement, as the Board
shall determine in its discretion, so long as Common Stock awarded under the
Stock Bonus Award Agreement remains subject to the terms of the Stock Bonus
Award Agreement.


 

















 


(b)            Stock
Purchase Awards.  Each Stock Purchase Award Agreement shall be
in such form and shall contain such terms and conditions as the Board shall
deem appropriate.  At the Board’s
election, shares of Common Stock may be (i) held in book entry form subject to
the Company’s instructions until any restrictions relating to the Stock
Purchase Award lapse; or (ii) evidenced by a certificate, which certificate
shall be held in such form and manner as determined by the Board.  The terms and conditions of Stock Purchase
Award Agreements may change from time to time, and the terms and conditions of
separate Stock Purchase Award Agreements need not be identical, provided, however, that each Stock
Purchase Award Agreement shall include (through incorporation of the provisions
hereof by reference in the agreement or otherwise) the substance of each of the
following provisions:


 


(i)           Purchase
Price.  At the time of the grant of a Stock Purchase
Award, the Board will determine the price to be paid by the Participant for
each share subject to the Stock Purchase Award. To the extent required by
applicable law, the price to be paid by the Participant for each share of the
Stock Purchase Award will not be less than the par value of a share of Common
Stock.


 


(ii)         Consideration. 
At the time of the grant of a Stock Purchase Award, the Board will
determine the consideration permissible for the payment of the purchase price
of the Stock Purchase Award.  The
purchase price of Common Stock acquired pursuant to the Stock Purchase Award
shall be paid either: (i) in cash at the time of purchase or (ii) in any other
form of legal consideration that may be acceptable to the Board in its
discretion.


 


(iii)        Vesting. Shares of Common Stock acquired under a
Stock Purchase Award may, but need not, be subject to forfeiture to the Company
or a share repurchase option in favor of the Company in accordance with a
vesting schedule to be determined by the Board.


 


(iv)         Termination
of Participant’s Continuous Service. In the event that a Participant’s Continuous Service
terminates, the Company shall have the right, but not the obligation, to
repurchase or otherwise reacquire, any or all of the shares of Common Stock
held by the Participant that have not vested as of the date of termination
under the terms of the Stock Purchase Award Agreement.  At the Board’s election, the repurchase
price, if any, paid by the Company may be at the lower of: (i) the Fair Market
Value on the relevant date; or (ii) the Participant’s original cost.  The Company shall not be required to
exercise its repurchase option until at least six (6) months (or such longer or
shorter period of time required to avoid a charge to earnings for financial
accounting purposes) have elapsed following the purchase of the restricted
stock unless otherwise determined by the Board or provided in the Stock
Purchase Award Agreement.


 


(v)          Transferability. Rights to purchase or receive shares of
Common Stock granted under a Stock Purchase Award shall be transferable by the
Participant only upon such terms and conditions as are set forth in the Stock
Purchase Award Agreement, as the Board shall determine in its discretion, and
so long as Common Stock awarded under the Stock Purchase Award remains subject
to the terms of the Stock Purchase Award Agreement.


 


(c)            Stock Unit Awards.  Each Stock Unit Award Agreement shall be in such form
and shall contain such terms and conditions as the Board shall deem
appropriate.  The terms and conditions
of Stock Unit Award Agreements may change from time to time, and the terms and
conditions of separate Stock Unit Award Agreements need not be identical, provided, however, that each Stock Unit
Award Agreement shall include (through incorporation of the provisions hereof
by reference in the agreement or otherwise) the substance of each of the
following provisions:


 


(i)           Consideration. 
At the time of grant of a Stock Unit Award, the Board will determine the
consideration, if any, to be paid by the Participant upon delivery of each
share of Common Stock subject to the Stock Unit Award. To the extent required
by applicable law, the consideration to be paid by the Participant for 


 

















 


each share of Common Stock subject to a Stock Unit
Award will not be less than the par value of a share of Common Stock.  The consideration may be paid in any form
permitted under applicable law.


 


(ii)         Vesting.  At the time of the grant of a Stock Unit Award, the
Board may impose such restrictions or conditions to the vesting of the Stock
Unit Award as it, in its absolute discretion, deems appropriate.


 


(iii)        Additional
Restrictions.  At the time of the grant of Stock Unit,
the Board may impose such restrictions or conditions that delay the delivery of
the consideration after its vesting as the Board, in its absolute discretion,
deems appropriate, with such terms to be contained in the Stock Unit agreement.


 


(iv)         Payment.  Stock Unit
Awards may be settled in Common Stock or in cash or any combination of the two,
or in any other form of consideration as determined by the Board and contained
in the Stock Unit Award Agreement.


 


(v)          Dividend
Equivalents.  Dividend equivalents may be credited in
respect of shares covered by a Stock Unit Award, as determined by the Board and
contained in the Stock Unit Award Agreement. 
At the discretion of the Board, such dividend equivalents may be
converted into additional shares covered by the Stock Unit Award in such manner
as determined by the Board.  Any
additional shares covered by the Stock Unit Award credited by reason of such
dividend equivalents will be subject to all the terms and conditions of the
underlying Stock Unit Award Agreement to which they relate.


 


(vi)         Termination
of Participant’s Continuous Service.  Except as otherwise provided in the
applicable Stock Unit Award Agreement, such portion of the Stock Unit Award
that has not vested will be forfeited upon the Participant’s termination of
Continuous Service for any reason.


 


(d)            Stock Appreciation Rights.  Each Stock Appreciation Right Agreement shall be in
such form and shall contain such terms and conditions as the Board shall deem
appropriate.  The terms and conditions
of Stock Appreciation Right Agreements may change from time to time, and the
terms and conditions of separate Stock Appreciation Right Agreements need not
be identical, but each Stock Appreciation Right Agreement shall include
(through incorporation of provisions hereof by reference in the agreement or
otherwise) the substance of each of the following provisions:


 


(i)           Strike
Price and Calculation of Appreciation. 
Each Stock Appreciation Right will be denominated in share of Common
Stock equivalents.  The appreciation
distribution payable on the exercise of a Stock Appreciation Right will be not
greater than an amount equal to the excess of (A) the aggregate Fair Market
Value (on the date of the exercise of the Stock Appreciation Right) of a number
of shares of Common Stock equal to the number of share of Common Stock
equivalents in which the Participant is vested under such Stock Appreciation
Right and with respect to which the Participant is exercising the Stock
Appreciation Right on such date, over (B) an amount that will be determined by
the Board at the time of grant of the Stock Appreciation Right.


 


(ii)         Vesting.  At the time of the grant of a Stock Appreciation
Right, the Board may impose such restrictions or conditions to the vesting of
such Stock Appreciate Right as it, in its absolute discretion, deems
appropriate.


 


(iii)        Exercise. 
To exercise any outstanding Stock Appreciation Right, the Participant
must provide written notice of exercise to the Company in compliance with the
provisions of the Stock Appreciation Right Agreement evidencing such Stock
Appreciation Right.


 


(iv)         Payment.  The
appreciation distribution in respect to a Stock Appreciation Right may be paid
in Common Stock, in cash, in any combination of the two or in any other form of
consideration as 


 

















 


determined by the Board and contained in the Stock
Appreciation Right Agreement evidencing such Stock Appreciation Right.


 


(v)          Termination
of Continuous Service.  In the event that a
Participant’s Continuous Service terminates, the Participant may exercise his
or her Stock Appreciation Right (to the extent that the Participant was
entitled to exercise such Stock Appreciation Right as of the date of
termination) but only within such period of time ending on the earlier of (i)
the date three (3) months following the termination of the Participant’s
Continuous Service (or such longer or shorter period specified in the Stock
Appreciation Right Agreement) or (ii) the expiration of the term of the Stock
Appreciation Right as set forth in the Stock Appreciation Right Agreement.  If, after termination, the Participant does
not exercise his or her Stock Appreciation Right within the time specified in
the Stock Appreciation Right Agreement, the Stock Appreciation Right shall
terminate.


 


(e)            Other Stock Awards. 
Other forms of Stock Awards valued in whole or in part by reference to,
or otherwise based on, Common Stock may be granted either alone or in addition
to Stock Awards provided for under Section 6 and the preceding provisions of
this Section 7.  Subject to the
provisions of the Plan, the Board shall have sole and complete authority to
determine the persons to whom and the time or times at which such Other Stock
Awards will be granted, the number of shares of Common Stock (or the cash
equivalent thereof) to be granted pursuant to such Awards and all other terms
and conditions of such Awards.


 


8.             SECURITIES LAW COMPLIANCE. 


 


The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such authority as may be
required to grant Stock Awards and to issue and sell shares of Common Stock
upon exercise of the Stock Awards; provided, however, that this undertaking
shall not require the Company to register under the Securities Act the Plan,
any Stock Award or any Common Stock issued or issuable pursuant to any such
Stock Award.  If, after reasonable
efforts, the Company is unable to obtain from any such regulatory commission or
agency the authority which counsel for the Company deems necessary for the
lawful issuance and sale of Common Stock under the Plan, the Company shall be
relieved from any liability for failure to issue and sell Common Stock upon
exercise of such Stock Awards unless and until such authority is obtained.


 


9.             USE OF PROCEEDS FROM STOCK. 


 


Proceeds from the sale of Common Stock pursuant to Stock Awards shall
constitute general funds of the Company.


 


10.          MISCELLANEOUS. 


 


(a)            Acceleration
of Exercisability and Vesting.  The Board
shall have the power to accelerate the time at which a Stock Award may first be
exercised or the time during which a Stock Award or any part thereof will vest
in accordance with the Plan, notwithstanding the provisions in the Stock Award
stating the time at which it may first be exercised or the time during which it
will vest.


 


(b)            Shareholder
Rights.  No Participant shall be deemed to be the
holder of, or to have any of the rights of a holder with respect to, any shares
of Common Stock subject to such Stock Award unless and until such Participant
has satisfied all requirements for exercise of the Stock Award pursuant to its
terms.


 


(c)            No
Employment or other Service Rights.  Nothing in
the Plan or any instrument executed or Stock Award granted pursuant thereto
shall confer upon any Participant any right to continue to serve the Company or
an Affiliate in the capacity in effect at the time the Stock Award was granted
or shall affect the right of the Company or an Affiliate to terminate (i) the
employment of an Employee with or without notice and with or without cause,
(ii) the service of a Consultant pursuant to the terms of such Consultant’s
agreement with 


 

















 


the Company or an Affiliate or (iii) the service of a
Director pursuant to the Bylaws of the Company or an Affiliate, and any
applicable provisions of the corporate law of the state in which the Company or
the Affiliate is incorporated, as the case may be.


 


(d)            Investment
Assurances.  The Company may require a Participant, as a
condition of exercising or acquiring Common Stock under any Stock Award, (i) to
give written assurances satisfactory to the Company as to the Participant’s
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (ii) to
give written assurances satisfactory to the Company stating that the
Participant is acquiring Common Stock subject to the Stock Award for the
Participant’s own account and not with any present intention of selling or
otherwise distributing the Common Stock. 
The foregoing requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (1) the issuance of the shares of Common
Stock upon the exercise or acquisition of Common Stock under the Stock Award
has been registered under a then currently effective registration statement
under the Securities Act or (2) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws.  The Company may, upon advice of counsel to the
Company, place legends on stock certificates issued under the Plan as such
counsel deems necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends restricting the
transfer of the Common Stock.


 


(e)            Withholding
Obligations.  To the extent provided by the terms of a
Stock Award Agreement, the Participant shall, as may be determined by the
Company in its sole discretion, satisfy any federal, state or local tax
withholding obligation relating to a Stock Award by any of the following means
(in addition to the Company’s right to withhold from any compensation paid to
the Participant by the Company) or by a combination of such means:  (i) tendering a cash payment; (ii)
authorizing the Company to withhold shares of Common Stock from the shares of
Common Stock issued or otherwise issuable to the Participant in connection with
the Stock Award; or (iii) such other consideration as may be set forth in the
Stock Award Agreement.


 


11.          ADJUSTMENTS UPON CHANGES IN STOCK. 


 


(a)            Capitalization
Adjustments.  If any change is made in, or other event
occurs with respect to, the Common Stock subject to the Plan or subject to any
Stock Award without the receipt of consideration by the Company (through
merger, consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by
the Company (each a “Capitalization Adjustment”), the Plan will be
appropriately adjusted in the class(es) and maximum number of securities
subject to the Plan pursuant to Section 4(a) and the outstanding Stock Awards
will be appropriately adjusted in the class(es) and number of securities and
price per share of Common Stock subject to such outstanding Stock Awards.  The Board shall make such adjustments, and
its determination shall be final, binding and conclusive.  (The conversion of any convertible
securities of the Company shall not be treated as a transaction “without
receipt of consideration” by the Company.)


 


(b)            Dissolution
or Liquidation.  In the event of a dissolution or liquidation
of the Company, then all outstanding Stock Awards shall terminate immediately
prior to the completion of such dissolution or liquidation


 


(c)            Corporate
Transaction.  In the event of
a Corporate Transaction, any surviving corporation or acquiring corporation may
assume or continue any or all Stock Awards outstanding under the Plan or may
substitute similar stock awards for Stock Awards outstanding under the Plan (it
being understood that similar stock awards include, but are not limited to,
awards to acquire the same consideration paid to the stockholders or the
Company, as the case may be, pursuant to the Corporate Transaction), and any
reacquisition or repurchase 


 

















 


rights held by the Company in respect of Common Stock
issued pursuant to Stock Awards may be assigned by the Company to the successor
of the Company (or the successor’s parent company), if any, in connection with
such Corporate Transaction.  In the
event that any surviving corporation or acquiring corporation does not assume
or continue all such outstanding Stock Awards or substitute similar stock
awards for all such outstanding Stock Awards, then with respect to Stock Awards
that have been not assumed, continued or substituted and that are held by
Participants whose Continuous Service has not terminated prior to the effective
time of the Corporate Transaction, the vesting of such Stock Awards (and, if
applicable, the time at which such Stock Awards may be exercised) shall
(contingent upon the effectiveness of the Corporate Transaction) be accelerated
in full to a date prior to the effective time of such Corporate Transaction as
the Board shall determine (or, if the Board shall not determine such a date, to
the date that is five (5) days prior to the effective time of the Corporate
Transaction), the Stock Awards shall terminate if not exercised (if applicable)
at or prior to such effective time, and any reacquisition or repurchase rights
held by the Company with respect to such Stock Awards held by Participants
whose Continuous Service has not terminated shall (contingent upon the
effectiveness of the Corporate Transaction) lapse.


 


(d)            Change in Control.  A Stock Award
may be subject to additional acceleration of vesting and exercisability upon or
after a Change in Control as may be provided in the Stock Award Agreement for
such Stock Award or as may be provided in any other written agreement between
the Company or any Affiliate and the Participant, but in the absence of such
provision, no such acceleration shall occur.


 


12.          AMENDMENT OF THE PLAN AND STOCK
AWARDS. 


 


(a)            Amendment
of Plan.  Subject to the limitations, if any, of
applicable law, the Board at any time, and from time to time, may amend the
Plan.  The Board may, in its discretion,
provide that any such amendment is effective upon obtaining the approval of the
stockholders of the Company.


 


(b)            No
Impairment of Rights.  Rights under any Stock Award
granted before amendment of the Plan shall not be impaired by any amendment of
the Plan unless (i) the Company requests the consent of the Participant and
(ii) the Participant consents in writing.


 


(c)            Amendment
of Stock Awards.  The Board at any time, and from time to
time, may amend the terms of any one or more Stock Awards; provided, however, that the
rights under any Stock Award shall not be impaired by any such amendment unless
(i) the Company requests the consent of the Participant and (ii) the
Participant consents in writing.


 


13.          TERMINATION OR SUSPENSION OF THE PLAN.



 


(a)            Plan
Term.  The Board may suspend or terminate the Plan
at any time.  No Stock Awards may be
granted under the Plan while the Plan is suspended or after it is terminated.


 


(b)            No
Impairment of Rights.  Suspension or termination of
the Plan shall not impair rights and obligations under any Stock Award granted
while the Plan is in effect except with the consent of the Participant.


 


14.          EFFECTIVE DATE OF PLAN. 


 


The
Plan shall become effective as determined by the Board.


 


15.          CHOICE OF LAW. 


 


The law of the
State of Colorado shall govern all questions concerning the construction,
validity and interpretation of this Plan, without regard to such state’s conflict
of laws rules.