exv10w13



 





Exhibit 10.13




Onyx Pharmaceuticals, Inc.




2005 Equity Incentive Plan




Adopted by the Board of Directors: April 18, 2005

Approved by the Stockholders: June 1, 2005

Amended by the Board of Directors: March 6, 2007

Approved by the Stockholders: May 25, 2007

Amended by the Board of Directors: May 25, 2007

Termination Date: April 18, 2015




1. General.




     (a) Successor and Continuation of Prior Plans. The Plan is intended as the successor to and
continuation of the Onyx Pharmaceuticals, Inc. 1996 Equity Incentive Plan and the Onyx
Pharmaceuticals, Inc. 1996 Non-Employee Directors’ Stock Option Plan (collectively, the “Prior
Plans”). Following the effective date of this Plan, no additional stock awards shall be granted
under the Prior Plans. Any shares remaining available for issuance pursuant to the exercise of
options or settlement of stock awards under the Prior Plans shall be added to the share reserve of
this Plan and available for issuance pursuant to Stock Awards granted hereunder. All outstanding
stock awards granted under the Prior Plans shall remain subject to the terms of the Prior Plans.
Any shares subject to outstanding stock awards granted under the Prior Plans that expire or
terminate for any reason prior to exercise or settlement shall be added to the share reserve of
this Plan and become available for issuance pursuant to Stock Awards granted hereunder. All Stock
Awards granted subsequent to the effective date of this Plan shall be subject to the terms of this
Plan.



     (b) Eligible Stock Award Recipients. The persons eligible to receive discretionary Stock
Awards are Employees, Directors and Consultants. The persons eligible to receive non-discretionary
Stock Awards under the Non-Discretionary Grant Program are Eligible Directors.



     (c) Available Stock Awards. The Plan provides for the grant of the following Stock Awards:
(i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) Stock Purchase Awards, (iv)
Stock Bonus Awards, (v) Stock Appreciation Rights, (vi) Stock Unit Awards, and (vii) Other Stock
Awards.



     (d) General Purpose. The Company, by means of the Plan, seeks to secure and retain the
services of the group of persons eligible to receive Stock Awards as set forth in Section 1(b), to
provide incentives for such persons to exert maximum efforts for the success of the Company and any
Affiliate and to provide a means by which such eligible recipients may be given an opportunity to
benefit from increases in value of the Common Stock through the granting of Stock Awards.



2. Definitions.




     As used in the Plan, the following definitions shall apply to the capitalized terms indicated
below:



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     (a) “Accountant” means the independent registered public accounting firm appointed by the
Company.



     (b) “Affiliate” means (i) any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company, provided each corporation in the unbroken chain (other than
the Company) owns, at the time of the determination, stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in one of the other corporations in such
chain, and (ii) any corporation (other than the Company) in an unbroken chain of corporations
beginning with the Company, provided each corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in one of the other corporations in such
chain. The Board shall have the authority to determine (i) the time or times at which the
ownership tests are applied, and (ii) whether “Affiliate” includes entities other than corporations
within the foregoing definition.



     (c) “Annual Award” means a Stock Award granted to each Eligible Director pursuant to Section
8(c)(ii).



     (d) “Annual Meeting” means the first meeting of the Company’s stockholders held each calendar
year at which Directors of the Company are selected.



     (e) “Award” means a Stock Award or a Performance Cash Award.



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



     (g) “Capitalization Adjustment” has the meaning ascribed to that term in Section 12(a).



     (h) “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;




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          (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, exclusive 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.




     The term Change in Control shall not include a sale of assets, merger or other transaction
effected exclusively for the purpose of changing the domicile of the Company.



     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; provided, 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.



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



     (j) “Committee” means a committee of one (1) or more members of the Board to whom authority
has been delegated by the Board in accordance with Section 3(d).



     (k) “Common Stock” means the common stock of the Company.



     (l) “Company” means Onyx Pharmaceuticals, Inc., a Delaware corporation.



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



     (n) “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; provided,
however, if the Entity for which a Participant is rendering services ceases to qualify as an
“Affiliate,” as determined by the Board in its sole discretion, such Participant’s Continuous
Service shall be considered to have terminated on the date such Entity ceases to qualify as an
Affiliate. For example, a change in status from an employee of the Company to a consultant of an
Affiliate or to a Director shall not constitute an interruption of Continuous Service. To the
extent permitted by law, 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, a 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.



     (o) “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
sole 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) the consummation of a merger, consolidation or similar transaction following which the
Company is not the surviving corporation; or




          (iv) the consummation of 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.




     (p) “Covered Employee” means the chief executive officer and the four (4) other highest
compensated officers of the Company for whom total compensation is required to be reported to
stockholders under the Exchange Act, as determined for purposes of Section 162(m) of the Code.



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



     (r) “Disability” means the permanent and total disability of a person within the meaning of
Section 22(e)(3) of the Code.



     (s) “Eligible Director” means a Director who is not an Employee and is eligible to participate
in the Non-Discretionary Grant Program.



     (t) “Employee” means any person employed by the Company or an Affiliate. However, service
solely as a Director, or payment of a fee for such services, shall not cause a Director to be
considered an “Employee” for purposes of the Plan.



     (u) “Entity” means a corporation, partnership, limited liability company, or other entity.



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



     (w) “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
(i) the Company or any Subsidiary of the Company, (ii) 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, (iii) an underwriter
temporarily holding securities pursuant to an offering of such securities, (iv) 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; or (v) any natural person, Entity or “group” (within the
meaning of Section 13(d) or 14(d) of the Exchange Act) that, as of the effective date of the Plan
as set forth in Section 15, is 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.



     (x) “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
Global Select Market, Nasdaq Global Market, or the Nasdaq Capital 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 date of determination, as reported in The
Wall Street Journal or such other source as the Board deems reliable. Unless otherwise provided by
the Board, if there is no closing sales price (or closing bid if no sales were reported) for the
Common Stock on the date of determination, then the Fair Market Value shall be the closing selling
price (or closing bid if no sales were reported) on the last preceding date for which such
quotation exists.




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




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     (y) “Incentive Stock Option” means an Option intended to qualify as an incentive stock option
within the meaning of Section 422 of the Code and the regulations promulgated thereunder.



     (z) “Initial Award” means an Option granted to an Eligible Director who meets the specified
criteria pursuant to Section 8(c)(i).



     (aa) “Non-Discretionary Grant Program” means the non-discretionary grant program in effect
under Section 8 of the Plan.



     (bb) “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, either 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 for which disclosure
would be required under Item 404(a) of Regulation S-K, and is not engaged in a business
relationship for which disclosure would be required pursuant to Item 404(b) of Regulation S-K; or
(ii) is otherwise considered a “non-employee director” for purposes of Rule 16b-3.



     (cc) “Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock
Option.



     (dd) “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.



     (ee) “Option” means an Incentive Stock Option or a Nonstatutory Stock Option to purchase
shares of Common Stock granted pursuant to the Plan.



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



     (gg) “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.



     (hh) “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).



     (ii) “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 Other Stock Award grant. Each
Other Stock Award Agreement shall be subject to the terms and conditions of the Plan.



     (jj) “Outside Director” means a Director who either (i) is not a current employee of the
Company or an “affiliated corporation” (within the meaning of Treasury Regulations promulgated
under Section 162(m) of the Code), is not a former employee of the Company or an “affiliated
corporation” who receives compensation for prior services (other than benefits under a



6.









 







tax-qualified retirement plan) during the taxable year, has not been an officer of the Company
or an “affiliated corporation,” and does not receive remuneration from the Company or an
“affiliated corporation,” either directly or indirectly, in any capacity other than as a Director,
or (ii) is otherwise considered an “outside director” for purposes of Section 162(m) of the Code.



     (kk) “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.



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



     (mm) “Performance Cash Award” means an award of cash granted pursuant to the terms and
conditions of Section 11(h)(ii).



     (nn) “Performance Criteria” means the one or more criteria that the Board shall select for
purposes of establishing the Performance Goals for a Performance Period. The Performance Criteria
that shall be used to establish such Performance Goals may be based on any one of, or combination
of, the following: (i) earnings per share; (ii) earnings before interest, taxes and depreciation;
(iii) earnings before interest, taxes, depreciation and amortization (EBITDA); (iv) net earnings;
(v) return on equity; (vi) return on assets, investment, or capital employed; (vii) operating
margin; (viii) gross margin; (ix) operating income; (x) net income (before or after taxes); (xi)
net operating income; (xii) net operating income after tax; (xiii) pre- and after-tax income; (xiv)
pre-tax profit; (xv) operating cash flow; (xvi) sales or revenue targets; (xvii) increases in
revenue or product revenue; (xvii) expenses and cost reduction goals; (xix) improvement in or
attainment of expense levels; (xx) improvement in or attainment of working capital levels; (xxi)
economic value added; (xxii) market share; (xxiii) cash flow; (xxiv) cash flow per share; (xxv)
share price performance; (xxvi) debt reduction; (xxvii) implementation or completion of projects or
processes; (xxviii) customer satisfaction; (xxix) total stockholder return; (xxx) stockholders’
equity; and (xxxi) other measures of performance selected by the Board. Partial achievement of the
specified criteria may result in the payment or vesting corresponding to the degree of achievement
as specified in the Stock Award Agreement or the written terms of a Performance Cash Award. The
Board shall, in its sole discretion, define the manner of calculating the Performance Criteria it
selects to use for a Performance Period.



     (oo) “Performance Goals” means, for a Performance Period, the one or more goals established by
the Board for the Performance Period based upon the Performance Criteria. Performance Goals may be
based on a Company-wide basis, with respect to one or more business units, divisions, Affiliates,
or business segments, and in either absolute terms or relative to the performance of one or more
comparable companies or a relevant index. The Board is authorized to make adjustments in the
method of calculating the attainment of Performance Goals for a Performance Period as follows: (i)
to exclude restructuring and/or other nonrecurring charges; (ii) to exclude exchange rate effects,
as applicable, for non-U.S. dollar denominated net sales and operating earnings; (iii) to exclude
the effects of changes to generally accepted accounting standards required by the Financial
Accounting Standards Board; (iv) to exclude the



7.









 







effects of any statutory adjustments to corporate tax rates; and (v) to exclude the effects of
any “extraordinary items” as determined under generally accepted accounting principles. The Board
also retains the discretion to reduce or eliminate the compensation or economic benefit due upon
attainment of Performance Goals.



     (pp) “Performance Period” means the one or more periods of time, which may be of varying and
overlapping durations, as the Committee may select, over which the attainment of one or more
Performance Goals will be measured for the purpose of determining a Participant’s right to and the
payment of a Stock Award or a Performance Cash Award.



     (qq) “Performance Stock Award” means a Stock Award granted under the terms and conditions of
Section 11(h)(i).



     (rr) “Plan” means this Onyx Pharmaceuticals, Inc. 2005 Equity Incentive Plan.



     (ss) “Prior Plans” means the Company’s 1996 Equity Incentive Plan and 1996 Non-Employee
Directors’ Stock Option Plan as in effect immediately prior to the effective date of the Plan.



     (tt) “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.



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



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



     (ww) “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 a Stock Appreciation
Right grant. Each Stock Appreciation Right Agreement shall be subject to the terms and conditions
of the Plan.



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



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



     (zz) “Stock Bonus Award” means an award of shares of Common Stock which is granted pursuant to
the terms and conditions of Sections 7(b) and 8(c)(ii)(3).



     (aaa) “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 a Stock Bonus Award grant. Each
Stock Bonus Award Agreement shall be subject to the terms and conditions of the Plan.



8.









 





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



     (ccc) “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 a Stock Purchase Award
grant. Each Stock Purchase Award Agreement shall be subject to the terms and conditions of the
Plan.



     (ddd) “Stock Unit Award” means a right to receive shares of Common Stock which is granted
pursuant to the terms and conditions of Sections 7(c) and 8(c)(ii)(3).



     (eee) “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 a Stock Unit Award grant. Each Stock
Unit Award Agreement shall be subject to the terms and conditions of the Plan.



     (fff) “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%).



     (ggg) “Ten Percent Stockholder” means a person who Owns (or is deemed to Own pursuant to
Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or any Affiliate.



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(d). However, the
Board may not delegate administration of the Non-Discretionary Grant Program. Any discretionary
Award granted to a Director under Sections 6, 7, or 11(h) shall be administered by a committee
consisting solely of Non-Employee Directors; provided, however, that such Non-Employee Directors
sitting on the committee may administer and grant discretionary Awards to themselves.



     (b) Powers of Board. Except with respect to the Non-Discretionary Grant Program, the Board
shall have the power, subject to, and within the limitations of, the express provisions of the
Plan:



          (i) To determine from time to time (1) which of the persons eligible under the Plan shall be
granted Awards; (2) when and how each Award shall be granted; (3) what type or combination of
types of Award shall be granted; (4) the provisions of each Award granted (which need not be
identical), including the time or times when a person shall be permitted to

9.









 








receive cash or Common Stock pursuant to an Award; and (5) 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 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 or in
the written terms of a Performance Cash Award, in a manner and to the extent it shall deem
necessary or expedient to make the Plan fully effective.




          (iii) To amend the Plan or an Award as provided in Section 13.




          (iv) To terminate or suspend the Plan as provided in Section 14.




          (v) 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.




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




     (c) Administration of Non-Discretionary Grant Program. The Board shall have the power,
subject to and within the limitations of, the express provisions of the Non-Discretionary Grant
Program:



          (i) To determine the provisions of each Stock Award to the extent not specified in the
Non-Discretionary Grant Program.




          (ii) To construe and interpret the Non-Discretionary Grant Program and the 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
Non-Discretionary Grant Program or in any Stock Award Agreement, in a manner and to the extent it
shall deem necessary or expedient to make the Non-Discretionary Grant Program fully effective.




          (iii) To amend the Non-Discretionary Grant Program or a Stock Award thereunder as provided in
Section 13.




          (iv) 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 Non-Discretionary Grant Program.




     (d) Delegation to Committee.



          (i) General. The Board may delegate some or all of the administration of the Plan (except the
Non-Discretionary Grant Program) to a Committee or Committees. 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

10.









 








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 some or all of the powers previously delegated. Any Committee
administering or granting a discretionary Award to a Director under Sections 6, 7, or 11(h) shall
consist solely of Non-Employee Directors; provided, however, that such Committee may administer and
grant discretionary Awards to members of such Committee.




          (ii) Section 162(m) and Rule 16b-3 Compliance. In the sole discretion of the Board, the
Committee may consist solely of two or more Outside Directors, in accordance with Section 162(m) of
the Code, and/or solely of two or more Non-Employee Directors, in accordance with Rule 16b-3. In
addition, the Board or the Committee, in its sole discretion, may (1) delegate to a committee of
one or more members of the Board who need not be Outside Directors the authority to grant Awards to
eligible persons who are either (a) not then Covered Employees and are not expected to be Covered
Employees at the time of recognition of income resulting from such Award, or (b) not persons with
respect to whom the Company wishes to comply with Section 162(m) of the Code, and/or (2) delegate
to a committee of one or more members of the Board who need not be Non-Employee Directors the
authority to grant Stock Awards to eligible persons who are not then subject to Section 16 of the
Exchange Act.




     (e) Delegation to an Officer. The Board may delegate to one or more Officers of the Company
the authority to do one or both of the following (i) designate Officers and Employees of the
Company or any of its Subsidiaries to be recipients of Options (and, to the extent permitted by
Delaware law, other Stock Awards) and the terms thereof, and (ii) determine the number of shares of
Common Stock to be subject to such Stock Awards granted to such Officers and Employees of the
Company; provided, however, that the Board resolutions regarding such delegation shall specify the
total number of shares of Common Stock that may be subject to the Stock Awards granted by such
Officer and that such Officer may not grant a Stock Award to himself or herself. Notwithstanding
anything to the contrary in this Section 3(e), the Board may not delegate to an Officer authority
to determine the Fair Market Value of the Common Stock pursuant to Section 2(x)(ii) above.



     (f) 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.



     (g) Cancellation and Re-Grant of Stock Awards. Neither the Board nor any Committee shall have
the authority to: (i) reprice any outstanding Stock Awards under the Plan, or (ii) cancel and
re-grant any outstanding Stock Awards under the Plan, unless the stockholders of the Company have
approved such an action within twelve (12) months prior to such an event.



4. Shares Subject to the Plan.




     (a) Share Reserve. Subject to the provisions of Section 12(a) relating to Capitalization
Adjustments, the number of shares of Common Stock that may be issued pursuant



11.









 







to Stock Awards shall not exceed, in the aggregate, nine million one hundred sixty thousand
forty-five (9,160,045) shares of Common Stock. Such number of shares reserved for issuance
consists of (i) the number of shares remaining available for issuance under the Prior Plans,
including shares subject to outstanding stock awards under the Prior Plans, (ii) an additional
3,990,000 shares approved by the stockholders at the 2005 Annual Meeting as part of the approval of
this Plan, plus (iii) an additional 1,600,000 shares approved by the stockholders at the 2007
Annual Meeting. Subject to Section 4(b), the number of shares available for issuance under the
Plan shall be reduced by: (i) one (1) share for each share of stock issued pursuant to (A) an
Option granted under Section 6 or 8, or (B) a Stock Appreciation Right granted under Section 7(d)
with respect to which the strike price is at least one hundred percent (100%) of the Fair Market
Value of the underlying Common Stock on the date of grant; and (ii) one and three tenths (1.3)
shares for each share of Common Stock issued pursuant to (A) a Stock Purchase Award, Stock Bonus
Award, Stock Unit Award, or Other Stock Award granted under Section 7, or (B) a Stock Appreciation
Right granted under Section 7(d) with respect to which the strike price is less than one hundred
percent (100%) of the Fair Market Value of the underlying Common Stock on the date of grant.
Shares may be issued in connection with a merger or acquisition as permitted by NASD Rule
4350(i)(1)(A)(iii) or, if applicable, NYSE Listed Company Manual Section 303A(8) and such issuance
shall not reduce the number of shares available for issuance under the Plan.



     (b) Reversion of Shares to the Share Reserve.



          (i) Shares Available For Subsequent Issuance. If any (i) Stock Award shall for any reason
expire or otherwise terminate, in whole or in part, without having been exercised in full, (ii)
shares of Common Stock issued to a Participant pursuant to a Stock Award (including the Stock
Awards transferred from the Prior Plans on the effective date of this Plan) are forfeited to or
repurchased by the Company at their original exercise or purchase price pursuant to the Company’s
reacquisition or repurchase rights under the Plan, including any forfeiture or repurchase caused by
the failure to meet a contingency or condition required for the vesting of such shares, or (iii)
Stock Award is settled in cash, then the shares of Common Stock not issued under such Stock Award,
or forfeited to or repurchased by the Company, shall revert to and again become available for
issuance under the Plan. To the extent there is issued a share of Common Stock pursuant to a Stock
Award that counted as one and three tenths (1.3) shares against the number of shares available for
issuance under the Plan pursuant to Section 4(a) and such share of Common Stock again becomes
available for issuance under the Plan pursuant to this Section 4(b)(i), then the number of shares
of Common Stock available for issuance under the Plan shall increase by one and three tenths (1.3)
shares.




          (ii) Shares Not Available for Subsequent Issuance. If any shares subject to a Stock Award are
not delivered to a Participant because the Stock Award is exercised through a reduction of shares
subject to the Stock Award (i.e., “net exercised”) or an appreciation distribution in respect of a
Stock Appreciation Right is paid in shares of Common Stock, the number of shares subject to the
Stock Award that are not delivered to the Participant shall not remain available for subsequent
issuance under the Plan. If any shares subject to a Stock Award are not delivered to a Participant
because such shares are withheld in satisfaction of the withholding of taxes incurred in connection
with the exercise of an Option, Stock Appreciation Right, or the issuance of shares under a Stock
Purchase Award, Stock Bonus Award, or Stock

12.









 








Unit Award, the number of shares that are not delivered to the Participant shall not remain
available for subsequent 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 shares so tendered shall not remain available for subsequent
issuance under the Plan.




          (iii) Incentive Stock Option Limit. Notwithstanding anything to the contrary in this Section
4(b), subject to the provisions of Section 12(a) relating to Capitalization Adjustments the
aggregate maximum number of shares of Common Stock that may be issued pursuant to the exercise of
Incentive Stock Options shall be seven million five hundred sixty thousand forty-five (7,560,045)
shares of Common Stock.




     (c) Source of Shares. The stock issuable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock, including shares repurchased by the Company on the open
market.



5. Eligibility.




     (a) Eligibility for Specific Stock Awards. Incentive Stock Options may be granted only to
Employees. Stock Awards other than Incentive Stock Options may be granted to Employees, Directors
and Consultants. Non-discretionary Stock Awards granted under the Non-Discretionary Grant Program
in Section 8 may be granted only to Eligible Directors.



     (b) Ten Percent Stockholders. A Ten Percent Stockholder shall not be granted an Incentive
Stock Option unless the exercise price of such Option is at least one hundred ten percent (110%) of
the Fair Market Value of the Common Stock on the date of grant and the Option is not exercisable
after the expiration of five (5) years from the date of grant.



     (c) Section 162(m) Limitation. Subject to the provisions of Section 12(a) relating to
Capitalization Adjustments, at such time as the Company may be subject to the applicable provisions
of Section 162(m) of the Code, no Employee shall be eligible to be granted during any calendar year
Stock Awards whose value is determined by reference to an increase over an exercise or strike price
of at least one hundred percent (100%) of the Fair Market Value of the Common Stock on the date the
Stock Award is granted covering more than one million (1,000,000) shares of Common Stock.



     (d) Consultants. A Consultant shall not be eligible for the grant of a Stock Award if, at the
time of grant, a Form S-8 Registration Statement under the Securities Act (“Form S-8”) is not
available to register either the offer or the sale of the Company’s securities to such Consultant
because of the nature of the services that the Consultant is providing to the Company, because the
Consultant is not a natural person, or because of any other rule governing the use of Form S-8.



     (e) Limited Exception to Minimum Vesting Restrictions. Up to ten percent (10%) of the total
number of shares of Common Stock subject to the Plan pursuant to Section 4(a) may be issued as
Stock Awards that are not subject to the minimum vesting restrictions imposed by Sections 6(f),
7(a)(iii), 7(b)(ii), 7(c)(ii), 7(d)(iv), 7(e)(ii), and 11(h)(i).



13.









 





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 separately designated Incentive Stock Options or
Nonstatutory Stock Options at the time of grant, and, if certificates are issued, a separate
certificate or certificates shall be issued for shares of Common Stock purchased on exercise of
each type of Option. The provisions of separate Options need not be identical; provided, however,
that each Option Agreement shall include (through incorporation of provisions hereof by reference
in the Option or otherwise) the substance of each of the following provisions:



     (a) Term. No Option shall be exercisable after the expiration of ten (10) years from the date
of grant, or such shorter period specified in the Option Agreement; provided, however, that an
Incentive Stock Option granted to a Ten Percent Stockholder shall be subject to the provisions of
Section 5(b).



     (b) Exercise Price of an Incentive Stock Option. Subject to the provisions of Section 5(b)
regarding Ten Percent Stockholders, the exercise price of each Incentive Stock Option shall be not
less than one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the
Option on the date the Option is granted. Notwithstanding the foregoing, an Incentive Stock Option
may be granted with an exercise price lower than that set forth in the preceding sentence if such
Option is granted pursuant to an assumption or substitution for another option in a manner
consistent with the provisions of Section 424(a) of the Code.



     (c) Exercise Price of a Nonstatutory Stock Option. The exercise price of each Nonstatutory
Stock Option shall be not less than one hundred percent (100%) of the Fair Market Value of the
Common Stock subject to the Option on the date the Option is granted. Notwithstanding the
foregoing, a Nonstatutory Stock Option may be granted with an exercise price lower than that set
forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution
for another option in a manner consistent with the provisions of Section 424(a) of the Code.



     (d) Consideration. The purchase price of Common Stock acquired pursuant to the exercise of an
Option shall be paid, to the extent permitted by applicable law and as determined by the Board in
its sole discretion, by any combination of the methods of payment set forth below. The Board shall
have the authority to grant Options that do not permit all of the following methods of payment (or
otherwise restrict the ability to use certain methods) and to grant Options that require the
consent of the Company to utilize a particular method of payment. The methods of payment permitted
by this Section 6(d) are:



          (i) by cash or check;




          (ii) 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;




14.









 








          (iii) by delivery to the Company (either by actual delivery or attestation) of shares of
Common Stock;




          (iv) by a “net exercise” arrangement pursuant to which the Company will reduce the number of
shares of Common Stock issued upon exercise by the largest whole number of shares with a Fair
Market Value that does not exceed the aggregate exercise price; provided, however, the Company
shall accept a cash or other payment from the Participant to the extent of any remaining balance of
the aggregate exercise price not satisfied by such reduction in the number of whole shares to be
issued; provided, however, that shares of Common Stock will no longer be outstanding under an
Option and will not be exercisable thereafter to the extent that (i) shares are used to pay the
exercise price pursuant to the “net exercise,” (ii) shares are delivered to the Participant as a
result of such exercise, and (iii) shares are withheld to satisfy tax withholding obligations; or




          (v) in any other form of legal consideration that may be acceptable to the Board.




     (e) Transferability of Options. The Board may, in its sole discretion, impose such
limitations on the transferability of Options as the Board shall determine. In the absence of such
a determination by the Board to the contrary, the following restrictions on the transferability of
Options shall apply:



          (i) Restrictions on Transfer. An Option shall not be transferable except by will or by the
laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder
only by the Optionholder.




          (ii) Domestic Relations Orders. Notwithstanding the foregoing, an Option may be transferred
pursuant to a domestic relations order.




          (iii) Beneficiary Designation. Notwithstanding the foregoing, the Optionholder may, by
delivering written notice to the Company, in a form provided by or otherwise satisfactory to the
Company, designate a third party who, in the event of the death of the Optionholder, shall
thereafter be entitled to exercise the Option.




     (f) Vesting of Options Generally. The total number of shares of Common Stock subject to an
Option may vest and therefore become exercisable in periodic installments that may or may not be
equal. The Option may be subject to such other terms and conditions on the time or times when it
may or may not 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(f) are subject to any Option provisions governing the minimum number of shares of Common
Stock as to which an Option may be exercised. Notwithstanding the foregoing or as otherwise
permitted by Section 5(e), no Option granted pursuant to this Section 6 shall vest at a rate more
favorable to the Optionholder than over a one (1)-year period measured from the date of grant (or
the date of hire for newly-hired Optionholders) except in the event of (i) death, (ii) disability,
(iii) retirement, (iv) upon a Corporate Transaction in which such Option is not assumed, continued
or substituted by a successor corporation, or (v) upon a Change in Control.



15.









 





     (g) 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 herein or in the Option Agreement (as applicable), the Option shall terminate.



     (h) Extension of Termination Date. An Optionholder’s Option Agreement may 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 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, or (ii) the
expiration of the term of the Option as set forth in the Option Agreement.



     (i) 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 or in the Option
Agreement (as applicable), the Option shall terminate.



     (j) 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, but only within the period
ending on the earlier of (i) the date eighteen (18) months following the date of death (or such
longer or shorter period specified in the Option Agreement), or (ii) the expiration of the term of
such Option as set forth in the Option Agreement. If, after the Optionholder’s death, the Option
is not exercised within the time specified herein or in the Option Agreement (as applicable), the
Option shall terminate.



16.









 





7. Provisions of Stock Awards other than Options.




     (a) 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. To the extent
consistent with the Company’s Bylaws, 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 or by check at the time of purchase, (ii) by past or future services
rendered to the Company or an Affiliate, or (iii) in any other form of legal consideration that may
be acceptable to the Board in its sole discretion and permissible under applicable law.




          (iii) Vesting. Shares of Common Stock acquired under a Stock Purchase Award may be subject to
a share repurchase right or option in favor of the Company in accordance with a vesting schedule to
be determined by the Board. Notwithstanding the foregoing or as otherwise permitted by Section
5(e), no Stock Purchase Award granted pursuant to this Section 7(a) shall vest at a rate more
favorable to the Participant than over a three (3)-year period measured from the date of grant
except in the event of (i) death, (ii) disability, (iii) retirement, (iv) upon a Corporate
Transaction in which such Stock Purchase Award is not assumed, continued, or substituted by a
successor corporation, or (v) upon a Change in Control.




          (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 price paid for all shares of Common Stock so repurchased
or reacquired by the Company may be at the lesser of: (i) the Fair Market Value on the relevant
date, or (ii) the Participant’s original cost for such shares. The Company shall not be required
to exercise its repurchase or reacquisition option until at least six (6) months (or such longer or
shorter period of time necessary to avoid classification of the Stock Purchase Award as a liability
for financial accounting purposes) have elapsed following the Participant’s




17.









 







purchase of the shares of stock acquired pursuant to the Stock Purchase Award 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 sole
discretion, and so long as Common Stock awarded under the Stock Purchase Award remains subject to
the terms of the Stock Purchase Award Agreement.




     (b) 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. To the extent consistent
with the Company’s Bylaws, 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; provided, however, that 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 (i) past or future
services rendered to the Company or an Affiliate, or (ii) any other form of legal consideration
that may be acceptable to the Board, in its sole discretion, and permissible under applicable law.




          (ii) Vesting. Shares of Common Stock awarded under a Stock Bonus Award Agreement may be
subject to forfeiture to the Company in accordance with a vesting schedule to be determined by the
Board. Notwithstanding the foregoing or as otherwise permitted by Section 5(e), no Stock Bonus
Award granted pursuant to this Section 7(b) shall vest at a rate more favorable to the Participant
than over a three (3)-year period measured from the date of grant except in the event of (i) death,
(ii) disability, (iii) retirement, (iv) upon a Corporate Transaction in which such Stock Bonus
Award is not assumed, continued, or substituted by a successor corporation, or (v) upon a Change in
Control.




          (iii) Termination of Participant’s Continuous Service. In the event a Participant’s
Continuous Service terminates, the Company may 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 sole discretion, so
long as Common Stock awarded under the Stock Bonus Award Agreement remains subject to the terms of
the Stock Bonus Award Agreement.




18.









 








     (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. The consideration to be paid (if any) by the Participant for each
share of Common Stock subject to a Stock Unit Award may be paid in any form of legal consideration
that may be acceptable to the Board in its sole discretion and permissible under applicable law.




          (ii) Vesting. At the time of the grant of a Stock Unit Award, the Board may impose such
restrictions or conditions on the vesting of the Stock Unit Award as it, in its sole discretion,
deems appropriate. Notwithstanding the foregoing or as otherwise permitted by Section 5(e), no
Stock Unit Award granted pursuant to this Section 7(c) shall vest at a rate more favorable to the
Participant than over a three (3)-year period measured from the date of grant except in the event
of (i) death, (ii) disability, (iii) retirement, (iv) upon a Corporate Transaction in which such
Stock Unit Award is not assumed, continued, or substituted by a successor corporation, or (v) upon
a Change in Control.




          (iii) Payment. A Stock Unit Award may be settled by the delivery of shares of Common Stock,
their cash equivalent, any combination thereof or in any other form of consideration, as determined
by the Board and contained in the Stock Unit Award Agreement.




          (iv) Additional Restrictions. At the time of the grant of a Stock Unit Award, the Board, as
it deems appropriate, may impose such restrictions or conditions that delay the delivery of the
shares of Common Stock (or their cash equivalent) subject to a Stock Unit Award to a time following
the vesting of such Stock Unit Award.




          (v) Dividend Equivalents. Dividend equivalents may be credited in respect of shares of Common
Stock covered by a Stock Unit Award, as determined by the Board and contained in the Stock Unit
Award Agreement. At the sole discretion of the Board, such dividend equivalents may be converted
into additional shares of Common Stock 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.




     (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.



19.









 




Stock Appreciation Rights may be granted as stand-alone Stock Awards or in tandem with other
Stock Awards. 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; provided, however, that each Stock Appreciation Right 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) Term. No Stock Appreciation Right shall be exercisable after the expiration of ten (10)
years from the date of grant, or such shorter period specified in the Stock Appreciation Right
Agreement.




          (ii) Strike Price. Each Stock Appreciation Right will be denominated in shares of Common
Stock equivalents. The strike price of each Stock Appreciation Right granted as a stand-alone or
tandem Stock Award shall not be less than one hundred percent (100%) of the Fair Market Value of
the Common Stock equivalents subject to the Stock Appreciation Right on the date of grant.




          (iii) Calculation of Appreciation. The appreciation distribution payable on the exercise of a
Stock Appreciation Right will be not greater than an amount equal to the excess of (i) 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 (ii) the strike price
that will be determined by the Board at the time of grant of the Stock Appreciation Right.




          (iv) 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 Appreciation Right as it, in its sole
discretion, deems appropriate. Notwithstanding the foregoing or as otherwise permitted by Section
5(e), no Stock Appreciation Right granted pursuant to this Section 7(d) shall vest at a rate more
favorable to the Participant than over a one (1)-year period measured from the date of grant (or
the date of hire for newly-hired Participants) except in the event of (i) death, (ii) disability,
(iii) retirement, (iv) upon a Corporate Transaction in which such Stock Appreciation Right is not
assumed, continued, or substituted by a successor corporation, or (v) upon a Change in Control.




          (v) 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.




          (vi) Payment. The appreciation distribution in respect of 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 set forth in the Stock Appreciation Right Agreement evidencing such
Stock Appreciation Right.




20.









 








          (vii) 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 herein or in the Stock Appreciation Right Agreement (as applicable), the Stock
Appreciation Right shall terminate.




     (e) Other Stock Awards.



          (i) General. 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 Other Stock
Awards and all other terms and conditions of such Other Stock Awards.




          (ii) Vesting. Notwithstanding the foregoing or as otherwise permitted by Section 5(e), no
Other Stock Award granted pursuant to this Section 7(e) shall vest at a rate more favorable to the
Participant than over a three (3)-year period measured from the date of grant except in the event
of (i) death, (ii) disability, (iii) retirement, (iv) upon a Corporate Transaction in which such
Other Stock Award is not assumed, continued, or substituted by a successor corporation, or (v) upon
a Change in Control.




8. Non-Discretionary Grants to Eligible Directors.




     (a) General. The Non-Discretionary Grant Program in this Section 8 allows Eligible Directors
to receive Stock Awards automatically at designated intervals over their period of Continuous
Service on the Board. The Non-Discretionary Grant Program is intended as the successor to and
continuation of the Company’s 1996 Non-Employee Directors’ Stock Option Plan.



     (b) Eligibility. The Stock Awards shall automatically be granted to all Eligible Directors
who meet the specified criteria.



     (c) Non-Discretionary Grants.



          (i) Initial Award. Without any further action of the Board, each person who on or after the
Annual Meeting in 2005 is elected or appointed for the first time to be an Eligible Director
automatically shall, upon the date of his or her initial election or appointment as an Eligible
Director, be granted an Option to purchase twenty thousand (20,000) shares of Common Stock on the
terms and conditions set forth in Section 8(d).




21.









 








          (ii) Annual Awards. Without any further action of the Board, on the anniversary date each
year of the date on which an Option is granted to an Eligible Director either (i) pursuant to
Section 8(c)(i), or (ii) pursuant to Subparagraph 5(a) or 5(b) of the 1996 Non-Employee Directors’
Stock Option Plan, each such Eligible Director whose Continuous Service has not then terminated
shall automatically be granted an Annual Award as described below.




               (1) Form of Annual Award. On or before December 31 of any calendar year, the Board
shall
determine if all Annual Awards to be granted in the subsequent calendar year shall be in the form
of Options described in Section 8(d) or in the form of Stock Bonus Awards described in Section
8(e). If the Board does not make such a determination on or before December 31 of a calendar year,
all Annual Awards to be granted in the subsequent calendar year shall be in the form of Options
described in Section 8(d). With respect to all Annual Awards to be granted in 2005, such Annual
Awards shall be in the form of Options described in Section 8(d).



               (2) Option. If the Annual Award is in the form of an Option, the Annual Award shall be a
Nonstatutory Stock Option to purchase ten thousand (10,000) shares of Common Stock on the terms and
conditions set forth in Section 8(d).



               (3) Stock Bonus Award or Stock Unit Award. If the Annual Award is in the form of a Stock
Bonus Award, the Annual Award shall not be more favorable to an Eligible Director than that number
of unvested shares of Common Stock, rounded down to the next whole number of shares, determined as
the quotient obtained by dividing (i) the “fair value” of the Option specified in Section
8(c)(ii)(2) determined under generally accepted accounting principles and using the option pricing
model employed by the Company for purposes of estimating the value of compensatory stock options
for financial reporting purposes as reported in the Annual Report filed on Form 10-K or Form 10-KSB
(or any successor forms) with the Securities and Exchange Commission in the calendar year preceding
the date of grant, by (ii) the Fair Market Value per share of the Common Stock on the date of
grant. In addition, the Board shall have the authority to provide that an Annual Award in the form
of a Stock Bonus Award shall instead be in the form of a Stock Unit Award.



     (d) Non-Discretionary Option Grant Provisions.



          (i) Option Type. Each Option granted hereunder shall be a Nonstatutory Stock Option.




          (ii) Term. No Option shall be exercisable after the expiration of ten (10) years from the
date it was granted.




          (iii) Exercise Price. The exercise price of each Option shall be one hundred percent (100%)
of the Fair Market Value of the Common Stock subject to the Option on the date the Option is
granted.




          (iv) Corporate Transaction. In the event of (i) a Corporate Transaction, or (ii) any Exchange
Act Person becoming the Owner, directly or indirectly, of securities of the Company representing
more than fifty percent (50%) of the combined voting power of the




22.









 







Company’s then outstanding securities, then, to the extent not prohibited by applicable law,
the time during which Options granted to Eligible Directors pursuant to the Non-Discretionary Grant
Program under this Section 8 may be exercised shall (contingent upon the effectiveness of such
transaction) be accelerated in full to a date prior to the effective time of such transaction, and
such Options shall terminate if not exercised at or prior to such effective time.




          (v) Remaining Terms. The remaining terms and conditions of each Option shall be as set forth
in an Option Agreement in the form adopted from time to time by the Board; provided, however, that
the terms of such Option Agreement shall be consistent with the terms of the Plan.




     (e) Non-Discretionary Stock Bonus Award or Stock Unit Award Provisions.



          (i) Consideration. Payment for the Stock Bonus Award or Stock Unit Award shall be for past or
future services rendered to the Company or an Affiliate. In the event that additional
consideration is required to be paid so that the shares of Common Stock subject to the Stock Bonus
Award or Stock Unit Award shall be deemed fully paid and nonassessable, the Board shall determine
the amount and character of such additional consideration.




          (ii) Corporate Transaction. In the event of (i) a Corporate Transaction, or (ii) any Exchange
Act Person becoming 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, then, to the extent not prohibited by applicable law, the vesting of Stock Bonus
Awards and Stock Unit Awards granted to Eligible Directors pursuant to the Non-Discretionary Grant
Program under this Section 8 shall (contingent upon the effectiveness of such transaction)
accelerate in full to a date prior to the effective time of such transaction and, in the case of
Stock Unit Awards, shall be settled on such date.




          (iii) Remaining Terms. The remaining terms and conditions of each grant of Stock Bonus Awards
and Stock Unit Awards shall be as set forth in a Stock Bonus Award Agreement or Stock Unit Award
Agreement in a form adopted from time to time by the Board; provided, however, that the terms of
such Stock Bonus Award Agreement or Stock Unit Award Agreement shall be consistent with the
provisions of the Plan.




9. Covenants of the Company.




     (a) Availability of Shares. During the terms of the Stock Awards, the Company shall keep
available at all times the number of shares of Common Stock required to satisfy such Stock Awards.



     (b) 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 that counsel for the Company deems necessary for the
lawful issuance and sale of Common Stock under the Plan, the



23.









 







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.



10. Use of Proceeds from Sales of Common Stock.




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



11. Miscellaneous.




     (a) Acceleration of Exercisability and Vesting. Except to the extent prohibited by Sections
6(f), 7(a)(iii), 7(b)(ii), 7(c)(ii), 7(d)(iv), 7(e)(ii), and 11(h)(i), 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) Stockholder 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, any Stock Award Agreement or
other instrument executed thereunder or in connection with any Award granted pursuant to the Plan
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) Incentive Stock Option $100,000 Limitation. To the extent that the aggregate Fair Market
Value (determined at the time of grant) of Common Stock with respect to which Incentive Stock
Options are exercisable for the first time by any Optionholder during any calendar year (under all
plans of the Company and any Affiliates) exceeds one hundred thousand dollars ($100,000), the
Options or portions thereof that exceed such limit (according to the order in which they were
granted) shall be treated as Nonstatutory Stock Options, notwithstanding any contrary provision of
the applicable Option Agreement(s).



     (e) 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



24.









 







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 (i) the issuance of the shares 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 (ii) 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.



     (f) Withholding Obligations. To the extent provided by the terms of a Stock Award Agreement,
the Company may, 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) causing the Participant to tender a cash payment; (ii) withholding 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) by such other method as may be set forth in the Stock
Award Agreement.



     (g) Electronic Delivery. Any reference herein to a “written” agreement or document shall
include any agreement or document delivered electronically or posted on the Company’s intranet.



     (h) Performance Awards.



          (i) Performance Stock Awards. A Performance Stock Award is a Stock Award that may be granted,
may vest, or may be exercised based upon the attainment during a Performance Period of certain
Performance Goals. The length of any Performance Period, the Performance Goals to be achieved
during the Performance Period, and the measure of whether and to what degree such Performance Goals
have been attained shall be conclusively determined by the Committee in its sole discretion.
Notwithstanding the foregoing or as otherwise permitted by Section 5(e), each Performance Stock
Award granted pursuant to this Section 11(h)(i) shall require the completion of one (1) year of
Continuous Service measured from the beginning of a Performance Period, except in the event of (i)
death, (ii) disability, (iii) retirement, (iv) upon a Corporate Transaction in which such
Performance Stock Award is not assumed, continued or substituted by a successor corporation, or (v)
upon a Change in Control. The maximum benefit to be received by any Participant in any calendar
year attributable to Stock Awards described in this Section 11(h)(i) shall not exceed the value of
one million (1,000,000) shares of Common Stock.




          (ii) Performance Cash Awards. A Performance Cash Award is a cash award that may be granted
upon the attainment during a Performance Period of certain Performance Goals. A Performance Cash
Award may also require the completion of a specified period of Continuous Service. The length of
any Performance Period, the Performance Goals to be achieved during the Performance Period, and the
measure of whether and to what degree such




25.









 







Performance Goals have been attained shall be conclusively determined by the Committee in its
sole discretion. The maximum benefit to be received by any Participant in any calendar year
attributable to cash awards described in this Section 11(h)(ii) shall not exceed two million
dollars ($2,000,000).




12. Adjustments upon Changes in Common Stock; Corporate Transactions.




     (a) Capitalization Adjustments. If any change is made in, or other events occur with respect
to, the Common Stock subject to the Plan or subject to any Stock Award after the effective date of
the Plan set forth in Section 15 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 Board shall appropriately
and proportionately adjust: (i) the class(es) and maximum number of securities subject to the Plan
pursuant to Section 4(a), (ii) the class(es) and maximum number of securities that may be issued
pursuant to the exercise of Incentive Stock Options pursuant to Section 4(b), (iii) the class(es)
and maximum number of securities that may be awarded to any person pursuant to Sections 5(c) and
11(h), (iv) the class(es) and number of securities subject to each Stock Award under the
Non-Discretionary Grant Program under Section 8, and (v) the class(es) and number of securities and
price per share of stock subject to outstanding Stock Awards. The Board shall make such
adjustments, and its determination shall be final, binding and conclusive. (Notwithstanding the
foregoing, the conversion of any convertible securities of the Company shall not be treated as a
transaction “without the receipt of consideration” by the Company.)



     (b) Dissolution or Liquidation. In the event of a dissolution or liquidation of the Company,
all outstanding Stock Awards (other than Stock Awards consisting of vested and outstanding shares
of Common Stock not subject to the Company’s right of repurchase) shall terminate immediately prior
to the completion of such dissolution or liquidation, and the shares of Common Stock subject to the
Company’s repurchase option may be repurchased by the Company notwithstanding the fact that the
holder of such Stock Award is providing Continuous Service, provided, however, that the Board may,
in its sole discretion, cause some or all Stock Awards to become fully vested, exercisable and/or
no longer subject to repurchase or forfeiture (to the extent such Stock Awards have not previously
expired or terminated) before the dissolution or liquidation is completed but contingent on its
completion.



     (c) Corporate Transaction. The following provisions shall apply to Stock Awards (except those
granted under the Non-Discretionary Grant Program) in the event of a Corporate Transaction unless
otherwise provided in a written agreement between the Company or any Affiliate and the holder of
the Stock Award:



          (i) Stock Awards May Be Assumed. In the event of a Corporate Transaction, any surviving
corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company)
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 (including, but not limited to, awards to
acquire the same consideration paid to the stockholders of the Company pursuant to the Corporate
Transaction), and any reacquisition or




26.









 







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. A surviving corporation or
acquiring corporation may choose to assume or continue only a portion of a Stock Award or
substitute a similar stock award for only a portion of a Stock Award. The terms of any assumption,
continuation or substitution shall be set by the Board in accordance with the provisions of Section
3(b).




          (ii) Stock Awards Held by Current Participants. In the event of a Corporate Transaction in
which the surviving corporation or acquiring corporation (or its parent company) does not assume or
continue such outstanding Stock Awards or substitute similar stock awards for such outstanding
Stock Awards, then with respect to Stock Awards that have not been 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 (referred to as the “Current Participants”), 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), and such Stock Awards shall terminate if
not exercised (if applicable) at or prior to the effective time of the Corporate Transaction, and
any reacquisition or repurchase rights held by the Company with respect to such Stock Awards shall
lapse (contingent upon the effectiveness of the Corporate Transaction).




          (iii) Stock Awards Held by Former Participants. In the event of a Corporate Transaction in
which the surviving corporation or acquiring corporation (or its parent company) does not assume or
continue such outstanding Stock Awards or substitute similar stock awards for such outstanding
Stock Awards, then with respect to Stock Awards that have not been assumed, continued or
substituted and that are held by persons other than Current Participants, the vesting of such Stock
Awards (and, if applicable, the time at which such Stock Award may be exercised) shall not be
accelerated and such Stock Awards (other than a Stock Award consisting of vested and outstanding
shares of Common Stock not subject to the Company’s right of repurchase) shall terminate if not
exercised (if applicable) prior to the effective time of the Corporate Transaction; provided,
however, that any reacquisition or repurchase rights held by the Company with respect to such Stock
Awards shall not terminate and may continue to be exercised notwithstanding the Corporate
Transaction.




          (iv) Payment for Stock Awards in Lieu of Exercise. Notwithstanding the foregoing, in the
event a Stock Award will terminate if not exercised prior to the effective time of a Corporate
Transaction, the Board may provide, in its sole discretion, that the holder of such Stock Award may
not exercise such Stock Award but will receive a payment, in such form as may be determined by the
Board, equal in value to the excess, if any, of (i) the value of the property the holder of the
Stock Award would have received upon the exercise of the Stock Award, over (ii) any exercise price
payable by such holder in connection with such exercise.




     (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



27.









 







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.



     (e) Parachute Payments.



          (i) Except as otherwise provided in a written agreement between the Company and a Participant,
if the acceleration of the vesting and exercisability of Stock Awards provided for in Sections
8(d)(iv), 8(e)(ii) and 12(c)(ii), together with payments and other benefits of a Participant,
(collectively, the “Payment”) (i) constitute a “parachute payment” within the meaning of Section
280G of the Code, or any comparable successor provisions, and (ii) but for this Section 12(e) would
be subject to the excise tax imposed by Section 4999 of the Code, or any comparable successor
provisions (the “Excise Tax”), then such Payment shall be either (1) provided to such Participant
in full, or (2) provided to such Participant as to such lesser extent that would result in no
portion of such Payment being subject to the Excise Tax, whichever of the foregoing amounts, when
taking into account applicable federal, state, local and foreign income and employment taxes, the
Excise Tax, and any other applicable taxes, results in the receipt by such Participant, on an
after-tax basis, of the greatest amount of the Payment, notwithstanding that all or some portion of
the Payment may be subject to the Excise Tax.




          (ii) Except as otherwise provided in a written agreement between the Company and a
Participant, any determination required under this Section 12(e) shall be made in writing in good
faith by the Accountant. If a reduction in the Payment is to be made as provided above, reductions
shall occur in the following order unless the Participant elects in writing a different order
(provided, however, that such election shall be subject to Company approval if made on or after the
date that triggers the Payment or a portion thereof): (i) reduction of cash payments; (ii)
cancellation of accelerated vesting of Stock Awards other than Options; (iii) cancellation of
accelerated vesting of Options; and (iv) reduction of other benefits paid to the Participant. If
acceleration of vesting of Stock Awards is to be reduced, such acceleration of vesting shall be
cancelled in the reverse order of date of grant of Stock Awards (i.e., the earliest granted Stock
Award cancelled last) unless the Participant elects in writing a different order for cancellation.




          (iii) For purposes of making the calculations required by this Section 12(e), the Accountant
may make reasonable assumptions and approximations concerning applicable taxes and may rely on
reasonable, good faith interpretations concerning the application of the Code and other applicable
legal authority. The Company and the Participant shall furnish to the Accountant such information
and documents as the Accountant may reasonably request in order to make such a determination. The
Company shall bear all costs the Accountant may reasonably incur in connection with any
calculations contemplated by this Section 12(e).




          (iv) If, notwithstanding any reduction described above, the Internal Revenue Service (the
“IRS”) determines that the Participant is liable for the Excise Tax as a result of the Payment,
then the Participant shall be obligated to pay back to the Company, within thirty (30) days after a
final IRS determination or, in the event that the Participant challenges the final IRS
determination, a final judicial determination, a portion of the Payment (the “Repayment Amount”).
The Repayment Amount with respect to the Payment shall be the smallest such




28.









 







amount, if any, as shall be required to be paid to the Company so that the Participant’s net
after-tax proceeds with respect to the Payment (after taking into account the payment of the Excise
Tax and all other applicable taxes imposed on the Payment) shall be maximized. The Repayment
Amount with respect to the Payment shall be zero if a Repayment Amount of more than zero would not
result in the Participant’s net after-tax proceeds with respect to the Payment being maximized. If
the Excise Tax is not eliminated pursuant to this paragraph, the Participant shall pay the Excise
Tax.




          (v) Notwithstanding any other provision of this Section 12(e), if (i) there is a reduction in
the Payment as described above, (ii) the IRS later determines that the Participant is liable for
the Excise Tax, the payment of which would result in the maximization of the Participant’s net
after-tax proceeds of the Payment (calculated as if the Payment had not previously been reduced),
and (iii) the Participant pays the Excise Tax, then the Company shall pay or otherwise provide to
the Participant that portion of the Payment that was reduced pursuant to this Section 12(e)
contemporaneously or as soon as administratively possible after the Participant pays the Excise Tax
so that the Participant’s net after-tax proceeds with respect to the Payment are maximized.




          (vi) If the Participant either (i) brings any action to enforce rights pursuant to this
Section 12(e), or (ii) defends any legal challenge to his or her rights under this Section 12(e),
the Participant shall be entitled to recover attorneys’ fees and costs incurred in connection with
such action, regardless of the outcome of such action; provided, however, that if such action is
commenced by the Participant, the court finds that the action was brought in good faith.




13. Amendment of the Plan and Awards.




     (a) Amendment of Plan. Subject to the limitations of applicable law, the Board at any time,
and from time to time, may amend the Plan. However, stockholder approval shall be required for any
amendment of the Plan that (i) materially increases the number of shares of Common Stock available
for issuance under the Plan, (ii) materially expands the class of individuals eligible to receive
Awards under the Plan, (iii) materially increases the benefits accruing to Participants under the
Plan or materially reduces the price at which shares of Common Stock may be issued or purchased
under the Plan, (iv) materially extends the term of the Plan, or (v) expands the types of Awards
available for issuance under the Plan.



     (b) Stockholder Approval. The Board, in its sole discretion, may submit any other amendment
to the Plan for stockholder approval, including, but not limited to, amendments to the Plan
intended to satisfy the requirements of Section 162(m) of the Code and the regulations thereunder
regarding the exclusion of performance-based compensation from the limit on corporate deductibility
of compensation paid to Covered Employees.



     (c) Contemplated Amendments. It is expressly contemplated that the Board may amend the Plan
in any respect the Board deems necessary or advisable to provide eligible Employees with the
maximum benefits provided or to be provided under the provisions of the Code and the regulations
promulgated thereunder relating to Incentive Stock Options and/or to bring the Plan and/or
Incentive Stock Options granted under it into compliance therewith.



29.









 





     (d) No Impairment of Rights. Rights under any 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 affected Participant, and (ii) such Participant consents in writing.



     (e) Amendment of Awards. The Board, at any time and from time to time, may amend the terms of
any one or more Awards, including, but not limited to, amendments to provide terms more favorable
than previously provided in the Stock Award Agreement or the written terms of a Performance Cash
Award, subject to any specified limits in the Plan that are not subject to Board discretion;
provided, however, that the rights under any Award shall not be impaired by any such amendment
unless (i) the Company requests the consent of the affected Participant, and (ii) such Participant
consents in writing.



14. Termination or Suspension of the Plan.




     (a) Plan Term. The Board may suspend or terminate the Plan at any time. Unless sooner
terminated, the Plan shall terminate on the day before the tenth (10th) anniversary of the earlier
of (i) the date the Plan is adopted by the Board, or (ii) the date the Plan is approved by the
stockholders of the Company. No 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 Award granted while the Plan is in effect except with the written consent
of the affected Participant.



15. Effective Date of Plan.




     The Plan shall become effective upon approval by the stockholders at the 2005 Annual Meeting.



16. Choice of Law.




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




30.