Exhibit 4.03


 


ADAPTEC,
INC.


 


2004
EQUITY INCENTIVE PLAN


 


1.                      Purposes of the Plan.  The purposes of this Adaptec, Inc. 2004
Equity Incentive Plan (the “Plan”)
are to attract and retain the best available personnel, to compete effectively
for the best personnel, and to promote the success of the Company’s business by
motivating Employees, Directors and consultants to superior performance. Awards
granted under the Plan may be Nonstatutory Stock Options, Incentive Stock
Options, Stock Appreciation Rights, Restricted Stock, Stock Awards or
Restricted Stock Units, as determined by the Administrator at the time of
grant.


 


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


 


(a)                                  “Administrator” means the Board or any of
its delegates, including committees, administering the Plan, in accordance with
Section 4 of the Plan.


 


(b)                                 “Affiliate” means any corporation,
partnership or joint venture or other entity in which the Company (or a
successor in interest of the Company) holds an equity, profits or voting
interest of twenty (20%) percent or more.


 


(c)                                  “Applicable Laws” means the requirements
relating to the administration of equity compensation plans under U. S. state
corporate laws, U.S. federal and state securities laws, the Code, any stock
exchange or quotation system on which the Common Stock is listed or quoted and
the applicable laws of any foreign country or jurisdiction where Awards are, or
will be, granted under the Plan.


 


(d)                                 “Award” means, individually or
collectively, a grant under the Plan of NSOs, ISOs, SARs, Restricted Stock,
Stock Awards or RSUs.


 


(e)                                  “Award Documentation” means any written
agreement or documentation published by the Company setting forth the terms and
provisions applicable to each Award granted under the Plan.  Any Award Documentation is subject to the
terms and conditions of the Plan.


 


(f)                                    “Awarded Stock” means the Common Stock
subject to an Award.


 


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


 


(h)                                 “Change of
Control”  means
any of the following events, unless otherwise defined in Award
Documentation or a Participant’s employment agreement:


 


(i)             any “person” (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act) (other than the
Company, a Subsidiary or a Company employee benefit plan, including any trustee
of such plan acting as trustee) is or becomes the beneficial owner (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company 


 

















 


representing fifty
percent (50%) or more of either the then outstanding shares of the Common Stock
of the Company or the combined voting power of the Company’s then outstanding
securities;


 


(ii)          a change in the
composition of the Board occurring within a two-year period, as a result of
which fewer than a majority of the Directors are Incumbent Directors.  “Incumbent
Directors” shall mean Directors who either (I) are Directors as of
the date hereof, or (II) are elected, or nominated for election, to the Board
with the affirmative votes of at least a majority of the Incumbent Directors at
the time of such election or nomination (but shall not include an individual
whose election or nomination is in connection with an actual or threatened
proxy contest relating to the election of directors to the Company);


 


(iii)       the consummation of a
merger or consolidation of the Company with any other corporation, other than a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into voting securities of the
surviving entity) at least fifty percent (50%) of the then outstanding shares
of the Common Stock of the Company and the combined voting power of the
Company’s then outstanding securities; or


 


(iv)      the consummation of the sale
or disposition by the Company of all or substantially all the Company’s assets.


 


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


 


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


 


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


 


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


 


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


 


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


 


(o)                                 “Employee” means any person, including
Officers and Directors, who is an employee of the Company or any Affiliate or
Parent.  An Employee shall not cease to
be treated as an Employee in the case of (i) any leave of absence approved
by the Company or (ii) transfers between locations of the Company or
between the Company, any Affiliate, any Parent or any successor
corporation.  Neither service as a
Director nor payment of a director’s fee by the Company or any Affiliate or
Parent shall be sufficient to constitute status as an Employee.


 


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


 


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


 


(i)             If the Common Stock
is listed on any established stock exchange or a national market system,
including without limitation the National Market System of the National
Association of Securities Dealers, Inc. Automated Quotation (“NASDAQ”) System, its Fair Market Value
shall be the closing sales price for such stock (or the closing bid, if no
sales were reported) as quoted on such exchange or system for the last market
trading day prior to the time of determination or, in the case of a Withholding
Election under Section 6(e) on the day of the determination, as reported
in such source as the Administrator deems reliable;


 


(ii)          If the Common Stock is
regularly quoted on the NASDAQ System (but not the National Market System
thereof) or regularly quoted by a recognized securities dealer but selling
prices are not reported, the Fair Market Value of a Share of Common Stock shall
be the mean between the high bid and low asked prices for the Common Stock on
the last market trading day prior to the day of determination or, in the case
of a Withholding Election under Section 6(e) on the day or the
determination, as reported in such source as the Administrator deems reliable;
or


 


(iii)       In the absence of an
established market for the Common Stock, the Fair Market Value shall be
determined in good faith by the Administrator.


 


(r)                                    “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.


 


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


 


(t)                                    “Notice of Grant” means a written or
electronic notice evidencing certain terms and conditions of an individual
Award.  The Notice of Grant is part of
the Award Documentation.


 


(u)                                 “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.


 


(v)                                 “Option” means an NSO or ISO granted
pursuant to Section 8 of the Plan.


 


(w)                               “Option Agreement” means an agreement
between the Company and a Participant evidencing the terms and conditions of an
individual Option grant.  The Option
Agreement is subject to the terms and conditions of the Plan.


 


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


 


(y)                                 “Participant” means the holder of an
outstanding Award granted under the Plan.


 


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(z)                                   “Performance
Goals” means the goal(s) (or combined goal(s)) determined by the
Administrator (in its discretion) to be applicable to a Participant with
respect to an Award.  As determined by
the Administrator, the Performance Goals applicable to an Award may provide for
a targeted level or levels of achievement relating to annual revenue, cash
position, earnings per share, operating cash flow, market share, new product
releases, net income, operating income, return on assets, return on equity,
return on investment, other financial measures or any other performance related
goal that the Administrator deems appropriate. The Performance Goals may differ
from Participant to Participant and from Award to Award.


 


(aa)                            “Plan” means this Adaptec, Inc. 2004 Equity
Incentive Plan.


 


(bb)                          “Restricted Stock” means shares of Common
Stock granted pursuant to Section 10 of the Plan that are subject to
vesting based on continuing as a Service Provider and/or based on satisfaction
of Performance Goals.


 


(cc)                            “Restricted Stock Unit” or “RSU” means an Award, granted pursuant to
Section 11 of the Plan.


 


(dd)                          “Stock Appreciation Right” or “SAR” means an Award granted, either alone
or in connection with a related Option, pursuant to Section 9 of the Plan.


 


(ee)                            “Service Provider” means an Employee,
Director or consultant.


 


(ff)                                “Share” means each share of Common Stock
reserved under the Plan or subject to an Award, and as adjusted in accordance
with Section 13(a) of the Plan.


 


(gg)                          “Stock Award” means shares of Common Stock
granted pursuant to Section 10 of the Plan.


 


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


 


3.                      Stock Subject to the Plan.


 


(a)                                  Reserve.
Subject to the provisions of Section 13(a) of the Plan, the maximum
aggregate number of Shares that may be issued under the Plan is 10,000,000
Shares (adjusted in proportion to any adjustments under Section 13(a) of
the Plan) plus (i) the number of shares of Common Stock reserved under the
Company’s 1999 Stock Option Plan and 2000 Nonstatutory Stock Option Plan (the “Prior Plans”) that are not subject to
outstanding awards under the Prior Plans on the date this Plan is first
approved by the Company’s stockholders, and (ii) the number of shares of Common
Stock that are released from, or reacquired by the Company from, awards
outstanding under the Prior Plans on the date this Plan is first approved by
the Company’s stockholders.  Shares
reserved under this Plan that correspond to shares of common stock covered by
part (ii) of the immediately preceding sentence shall not be available for
grant and issuance pursuant to this Plan except as such shares of Common Stock
cease to be subject to such outstanding awards, 


 


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or are repurchased at the
original issue price by the Company, or are forfeited; provided, however, that
in no event shall more than 5,000,000 of the Shares (adjusted in proportion to
any adjustments under Section 13(a) of the Plan) issuable under the Plan
be granted pursuant to Awards with an exercise price or purchase price that is
less than 100% of Fair Market Value on the date of grant.  The Shares may be authorized, but unissued,
or reacquired Common Stock.  In no event
shall the total number of Shares issued as ISOs exceed 35,000,000 Shares
(adjusted in proportion to any adjustments under Section 13(a) of the
Plan).


 


(b)                                 Reissuance.
If Shares are:  (i) subject to an
Award that terminates without such Shares being issued, or (ii) issued
pursuant to an Award, but are repurchased at the original issue price by the
Company, or (iii) forfeited; then such Shares will again be available for grant
and issuance under this Plan.  At all
times the Company will reserve and keep available the number of Shares
necessary to satisfy the requirements of all Awards then vested and outstanding
under this Plan.  To the extent an Award
under the Plan is paid out in cash rather than stock at the discretion of the
Administrator, such cash payment shall not result in reducing the number of
Shares available for issuance under the Plan.


 


4.                      Administration of the Plan.


 


(a)                                  Powers
of the Administrator.  Subject to
the provisions of the Plan, including, without limitation Section 15, and
in the case of a Board delegate, subject to the specific duties delegated by
the Board to such Board delegate, the Administrator shall have the authority,
in its discretion:


 


(i)                                   to
determine the Fair Market Value as defined above;


 


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


 


(iii)                             to
determine the number of shares of Common Stock to be covered by each Award
granted hereunder;


 


(iv)                            to
approve forms of agreement and documentation for use under the Plan;


 


(v)                               to
determine the terms and conditions, not inconsistent with the terms of the
Plan, of any Award granted hereunder. 
Such terms and conditions include, but are not limited to, the exercise
price, the time or times when Options or SARs may be exercised (which may be
based on performance criteria), transferability, any vesting acceleration or
waiver of forfeiture or repurchase restrictions, and any restriction or
limitation regarding any Award or the shares of Common Stock relating thereto,
based in each case on such factors as the Administrator, in its sole
discretion, shall determine;


 


(vi)                            to
construe and interpret the terms of the Plan and awards granted pursuant to the
Plan;


 


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


 


(viii)                      to modify or
amend each Award (subject to Section 15 of the Plan), including the
discretionary authority to extend the post-termination exercisability period of
Options or SARs longer than is otherwise provided for in the Plan;


 


(ix)                              to
allow Participants to satisfy withholding tax obligations by electing to have
the Company withhold from the Shares or cash to be issued upon exercise or
vesting of an Award that number of Shares or cash having a Fair Market Value
equal to the amount required to be withheld. 
The Fair Market Value of any Shares to be withheld shall be determined
on the date that the amount of tax to be withheld is to be determined.  All elections by a Participant to have
Shares or cash withheld for this purpose shall be made in such form and under such
conditions as the Administrator may deem necessary or advisable;


 


(x)                                 to
authorize any person to execute on behalf of the Company any instrument
required to effect the grant of an Award previously granted by the
Administrator;


 


(xi)                              to
make all other determinations deemed necessary or advisable for administering
the Plan.


 


(b)                                 Effect
of Administrator’s Decision.  The
Administrator’s decisions, determinations and interpretations shall be final
and binding on all Participants.


 


5.                      Eligibility.  Nonstatutory Stock Options, Restricted Stock, Stock Awards,
Restricted Stock Units and Stock Appreciation Rights may be granted to Service
Providers.  Incentive Stock Options may
only be granted to Employees. 
Non-Employee Directors shall not be eligible for the benefits of the
Plan.


 


6.                      Limitations on Awards.


 


(a)                                  No
Rights as a Service Provider. 
Neither the Plan nor any Award shall confer upon a Participant any right
with respect to continuing such Participant’s relationship as a Service
Provider, nor shall they interfere in any way with the right of the Participant
or the right of the Company or any Affiliate or Parent to terminate such
relationship at any time, with or without cause, or to adjust the compensation
of any Participant.


 


(b)                                 Exercise;
Rights as a Stockholder; Effect of Exercise.


 


(i)                                   Any
Award granted hereunder shall be exercisable or vest according to the terms of
the Plan and at such times and under such conditions as determined by the
Administrator and set forth in the Award Documentation, including, without
limitation, Participant’s continuous status as a Service Provider and/or
Participant’s satisfaction of Performance Goals.  An Award may not be exercised for a fraction of a Share. An Award
shall be deemed exercised when 


 


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the Company receives written or electronic notice of
exercise (in accordance with the Award Documentation) from the person entitled
to exercise the Award.  The Participant
must remit to the Company full payment for the Shares with respect to which the
Award is exercised.  Full payment may
consist of any consideration and method of payment authorized by the
Administrator and permitted by the Award Documentation and the Plan.  Shares issued upon exercise of an Award
shall be issued in the name of the Participant or, if requested by the
Participant, in the name of the Participant and Participant’s spouse, or after
the death of the Participant in the name of the Participant’s beneficiaries or
heirs or as directed by the executor of Participant’s estate under applicable law.


 


(ii)                                Until
the Shares are issued (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company), no right to
vote or receive dividends or any other rights as a stockholder shall exist with
respect to the Awarded Stock, notwithstanding the exercise of the Award.  The Company shall issue (or cause to be
issued) such Shares promptly after the Award is exercised or vests.  No adjustment of an Award will be made for a
dividend or other right for which the record date is prior to the date the
Shares are issued, except as provided in Section 13(a) of the Plan or
specified in any Award Documentation.


 


(iii)                             Exercising
an Award in any manner that results in the issuance of Shares shall decrease
the number of Shares thereafter available, both for purposes of the Plan and
for issuance under the Award, by the number of Shares as to which the Award is
exercised.


 


(c)                                  162(m)
Limitations.  In any calendar year,
no Service Provider shall be granted Awards covering in the aggregate more than
2,000,000 Shares; provided, however, that in the first twelve (12) months
following the commencement of a Service Provider’s service with the Company or
an Affiliate or Parent, such Service Provider may be granted Awards covering in
the aggregate up to 3,000,000 Shares. 
These foregoing limitations shall be adjusted proportionately in
connection with any change in the Company’s capitalization as described in
Section 13(a).  If an Award is
cancelled in the same fiscal year of the Company in which it was granted (other
than in connection with a transaction described in Section 13(b), the
cancelled Award will be counted against the limits set forth in this
Section 6(c).


 


(d)                                 Tax
Withholding.


 


(i)                                   Where,
in the opinion of counsel to the Company, the Company has or will have an
obligation to withhold foreign, federal, state or local taxes relating to the
exercise of any Award, the Administrator may in its discretion require that
such tax obligation be satisfied in a manner satisfactory to the Company. With
respect to the exercise of an Award, the Company may require the payment of
such taxes before Shares deliverable pursuant to such exercise are transferred
to the holder of the Award.


 


(ii)                                With
respect to the exercise of an Award, a Participant may elect (a “Withholding Election”) to pay the minimum
statutory withholding tax obligation by the withholding of Shares from the
total number of Shares deliverable pursuant to the exercise of such Award, or
by delivering to the Company a sufficient number of previously acquired shares
of Common Stock, and 


 


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may elect to have
additional taxes paid by the delivery of previously acquired shares of Common
Stock, in each case in accordance with rules and procedures established by the
Administrator. Previously owned shares of Common Stock delivered in payment for
such additional taxes must have been owned for at least six months prior to the
delivery or must not have been acquired directly or indirectly from the Company
and may be subject to such other conditions as the Administrator may require.
The value of each Share withheld, or share of Common Stock delivered, shall be
the Fair Market Value per share of Common Stock on the date the Award becomes taxable.
All Withholding Elections are subject to the approval of the Administrator must
be made in compliance with rules and procedures established by the
Administrator.


 


7.                      Term of Plan.  The Plan shall become effective upon its adoption by the Board
(the “Effective Date”), subject
to stockholder approval.  It shall
continue in effect for a term of ten (10) years unless terminated earlier under
Section 15 of the Plan.


 


8.                      Options.


 


(a)                                  Term
of Options.  The term of each Option
shall be not greater than seven (7) years from the date it was granted, and in
no event shall the term of any ISO granted to an Employee who at the time of
such grant owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company, or of any Subsidiary or Parent,
be longer than five (5) years from the date the ISO was granted.


 


(b)                                 Exercise
Price.  The per share exercise price
for the Shares to be issued pursuant to exercise of an Option shall be
determined by the Administrator, subject to the following:


 


(i)                                   In
the case of an ISO granted to any Employee who at the time the ISO is granted
owns stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or of any Subsidiary or Parent, the per Share
exercise price shall be no less than 110% of the Fair Market Value per Share on
the date of grant.


 


(ii)                                In
the case of an ISO granted to any Employee other than an Employee described in
subsection (i) immediately above, the per Share price shall be no less
than 100% of the Fair Market Value per Share on the date of the grant.


 


(iii)                             In
the case of a NSO, the per Share exercise price shall be no less than 100% of
the Fair Market Value per Share on the date of grant; however, subject to the
overall limitation on the number of below fair market value Awards, Shares may
be granted at 85% of Fair Market Value on the date of grant, so long as the
discount is granted in lieu of some portion of salary or cash bonus.


 


(iv)                            The
exercise price for the Shares to be issued pursuant to an already granted
Option may not be changed without the consent of the Company’s
stockholders.  This shall include,
without limitation, a repricing of the Option as well as an option exchange program
whereby the Participant agrees to cancel an existing Option in exchange for an
Option, SAR or other Award.


 


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(c)                                  Form
of Consideration;  The Administrator
shall determine the acceptable form of consideration for exercising an Option,
including the method of payment.  In the
case of an Incentive Stock Option, the Administrator shall determine the
acceptable form of consideration at the time of grant.  Such consideration, to the extent permitted
by Applicable Laws, may consist entirely of:


 


(i)                                   check;


 


(ii)                                other
Shares which (A) in the case of Shares acquired upon exercise of an Option,
have been owned by the Participant for more than six months on the date of
surrender, and (B) have a Fair Market Value on the date of surrender equal to
the aggregate exercise price of the Shares as to which said Option shall be
exercised;


 


(iii)                             broker
assisted cashless exercise;


 


(iv)                            any
combination of the foregoing methods of payment; or


 


(v)                               such
other consideration and method of payment for the issuance of Shares to the
extent permitted by Applicable Laws.


 


(d)                                 Termination
of Relationship as Service Provider. 
When a Participant’s status as a Service Provider terminates, other than
from death or Disability, the Participant’s Option may be exercised within the
period of time specified in the Option Agreement to the extent that the Option
is vested on the date of termination or such longer period of time determined
by the Administrator (which may so specify after the date of the termination
but before expiration of the Option) not to exceed five (5) years (but in no
event later than the expiration of the term of such Option as set forth in the
Option Agreement).  In the absence of a
specified period of time in the Plan or the Option Agreement, the Option shall
remain exercisable for three (3) months following the date Participant ceased
to be a Service Provider.


 


(e)                                  Death
or Disability of Participant.  If a
Participant’s status as a Service Provider terminates as a result of the
Participant’s Disability, then the Participant or the Participant’s estate,
shall have the right for a period of six (6) months following the date of
termination of status as a Service Provider for Disability, or for such other
period as the Administrator may fix, to exercise the Option to the extent the
Participant was entitled to exercise such Option on the date of termination of
status as a Service Provider for Disability, or to such extent as may otherwise
be specified by the Administrator (which may so specify after the date of Disability
but before expiration of the Option), provided the actual date of exercise is
in no event after the expiration of the term of the Option.  If a Participant’s status as a Service
Provider terminates as a result of the Participant’s death, then the Option
held by the Participant shall become vested and exercisable in full as of the
date of such Participant’s death and the Participant’s estate shall have the
right for a period of twelve (12) months following the date of death, or for
such other period as the Administrator may fix, to exercise the Option.


 


(f)                                    ISO
Rules.  The Option Agreement for
each ISO shall contain a statement that the Option it documents is an ISO.  However, notwithstanding such designation,
to the extent that the 


 


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aggregate Fair Market Value of the Shares with respect
to which all ISOs held by a Participant are exercisable for the first time by
such Participant during any calendar year exceeds $100,000, such excess Shares
shall be treated as Shares subject to an NSO. 
For purposes of this Section 8(f), ISOs shall be taken into account
in the order in which they were granted. 
The Fair Market Value of the Shares subject to an ISO shall be
determined as of the time the ISO with respect to such Shares is granted.


 


(g)                                 Buyout
Provisions. The Administrator may at any time offer to buy out for a
payment in cash or Shares an Option previously granted based on such terms and
conditions as the Administrator shall establish and communicate to the
Participant at the time that such offer is made.


 


9.                      Stock Appreciation Rights.


 


(a)                                  Grant
of SARs.  Subject to the terms and
conditions of the Plan, SARs may be granted to Service Providers at any time
and from time to time as shall be determined by the Administrator, in its sole
discretion.  The Administrator shall
have complete discretion to determine the number of SARs granted to any
Participant.


 


(b)                                 Exercise
Price and other Terms.  Subject to
the provisions of the Plan (including this subsection 9(b)), the
Administrator shall have complete discretion to determine the terms and
conditions (including but not limited to the exercise price, the term and the
conditions of exercise) of SARs.  Such
terms and conditions shall be set forth in an Award Documentation evidencing
the SAR grant (a “SAR Agreement”).  Notwithstanding the foregoing, a SAR shall
not have a term of more than seven (7) years from the date of grant, and the
per Share exercise price of a SAR shall be no less than 100% of the Fair Market
Value per Share on the date of grant. 
The exercise price for the Shares or cash to be issued pursuant to an
already granted SAR may not be changed without the consent of the Company’s
stockholders.  This shall include,
without limitation, a repricing of the SAR as well as a SAR exchange program
whereby the Participant agrees to cancel an existing SAR in exchange for an
Option, SAR or other Award.


 


(c)                                  Payment
of SAR Amount.  Upon exercise of a
SAR, a Participant shall be entitled to receive payment from the Company in an
amount determined by multiplying: (i) the difference between the Fair Market
Value of a Share on the date of exercise over the exercise price; times (ii)
the number of Shares with respect to which the SAR is exercised.  At the discretion of the Administrator,
payment for a SAR may be in cash, Shares or a combination thereof.


 


(d)                                 Termination
of Relationship as Service Provider. 
When a Participant’s status as a Service Provider terminates, other than
from death or Disability, the Participant’s SAR may be exercised within the
period of time specified in the SAR Agreement to the extent that the SAR is
vested on the date of termination or such longer period of time determined by
the Administrator (which may so specify after the date of the termination but
before expiration of the SAR) not to exceed five (5) years (but in no event
later than the expiration of the term of such SAR as set forth in the SAR
Agreement).  In the absence of a
specified period of time in the Plan or the SAR Agreement, the SAR shall remain
exercisable for three (3) months following the date Participant ceased to be a
Service Provider.


 


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(e)                                  Death
or Disability of Participant.  If a
Participant’s status as a Service Provider terminates as a result of the
Participant’s Disability, then the Participant or the Participant’s estate,
shall have the right for a period of six (6) months following the date of
termination of status as a Service Provider for Disability, or for such other
period as the Administrator may fix, to exercise the SAR to the extent the
Participant was entitled to exercise such SAR on the date of termination of
status as a Service Provider for Disability, or to such extent as may otherwise
be specified by the Administrator (which may so specify after the date of
Disability but before expiration of the SAR), provided the actual date of
exercise is in no event after the expiration of the term of the SAR.  If a Participant’s status as a Service
Provider terminates as a result of the Participant’s death, then the SAR held
by the Participant shall become vested and exercisable in full and the
Participant’s estate shall have the right for a period of twelve (12) months
following the date of death or for such other period as the Administrator may
fix, to exercise the SAR.


 


(f)                                    Buyout
Provisions.  The Administrator may
at any time offer to buy out for a payment in cash or Shares a SAR previously
granted based on such terms and conditions as the Administrator shall establish
and communicate to the Participant at the time that such offer is made.


 


10.                Restricted Stock or Stock Awards.


 


(a)                                  Grant
of Restricted Stock.  Subject to the
terms and conditions of the Plan, Restricted Stock or Stock Awards may be
granted to Service Providers at any time and from time to time as shall be
determined by the Administrator, in its sole discretion.  The Administrator shall have complete
discretion to determine (i) the number of Shares subject to a Restricted
Stock award or a Stock Award granted to any Participant, and (ii) the
conditions that must be satisfied, the vesting of which typically will be based
on continued provision of services and/or satisfaction of Performance
Goals.  Restricted Stock may not vest
for at least one year from the date of grant. 
Once the Shares are issued, voting, dividend and other rights as a
stockholder shall exist with respect to Restricted Stock or Stock Awards.


 


(b)                                 Other
Terms.  Subject to the provisions of
the Plan, the Administrator shall have complete discretion to determine the
terms and conditions, including the purchase price (provided it is at least
$0.001 per Share of Restricted Stock or Stock Award to be issued to the extent
required by Delaware law), of Awards of Restricted Stock.  Such terms and conditions shall be set forth
in the Award Documentation evidencing the Restricted Stock or Stock Award grant
(the “Stock Award Documentation”).  Any certificates representing the Restricted
Stock or Stock Award shall bear such legends as shall be determined by the
Administrator.


 


11.                Restricted Stock Units.


 


(a)                                  Grant
of Restricted Stock Units.  Subject
to the terms and conditions of the Plan, RSUs may be granted to Service
Providers at any time and from time to time as shall be determined by the
Administrator, in its sole discretion. 
The Administrator shall have complete discretion to determine
(i) the number of Shares subject to each RSUs award, and (ii) the
conditions that must be satisfied, the vesting of which typically will be based
on continued provision of services and/or satisfaction of Performance
Goals.  Any RSUs award may not vest for
one year from the date of 


 


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grant.  RSUs shall be denominated in
units with each unit equivalent to one Share for purposes of determining the
number of Shares subject to any RSUs award. 
Until the Shares are issued, no right to vote or receive dividends or
any other rights as a stockholder shall exist with respect to RSUs.


 


(b)                                 Other
Terms.  Subject to the provisions of
the Plan, the Administrator shall have complete discretion to determine the
terms and conditions, including the purchase price (provided it is at least
$0.001 per Share issued to the extent required by Delaware law), of Awards of
RSUs.  Such terms and conditions shall
be set forth in an Award Documentation evidencing the RSU grant (a “Restricted Stock Units Agreement”).  A
Restricted Stock Units Agreement may provide for dividend equivalent units.


 


(c)                                  Settlement.
Settlement of vested RSUs may be made in the form of: (i) cash, (ii) Shares or
(iii) any combination, as determined by the Administrator and may be settled in a lump sum or in
installments. Distribution to a Participant of an amount (or amounts) from
settlement of vested RSUs may be deferred to a date after settlement as
determined by the Administrator.


 


12.                Non-Transferability of Awards.  Unless determined otherwise by the
Administrator, an Award may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
recipient, only by the recipient.  If
the Administrator makes an Award transferable, the Award Documentation for such
Award shall contain such additional terms and conditions as the Administrator
deems appropriate.


 


13.                Adjustments Upon Changes in Capitalization,
Dissolution, Merger or Asset Sale.


 


(a)                                  Changes
in Capitalization.  Subject to any
required action by the stockholders of the Company, each of (i) the number of
shares of Common Stock covered by each outstanding Award, (ii) the number of
shares of Common Stock which have been authorized for issuance under the Plan
but as to which no Awards have yet been granted or which have been returned to
the Plan upon cancellation or expiration of an Award, in each case as set forth
in Section 3, (iii) the price per share of Common Stock covered by each
such outstanding Award, and (iv) the share issuance limits under
Section 3(a) and Section 6(c), shall be proportionately adjusted
for any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split, reverse stock split, stock dividend, combination
or reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company (including, without limitation, a spin-off or
split-up); provided, however, that conversion of any convertible securities of
the Company shall not be deemed to have been “effected without receipt of
consideration.”  Such adjustment shall
be made by the Compensation Committee of the Board, whose determination in that
respect shall be final, binding and conclusive. In making such adjustment,
fractions of a Share will not be issued but will either be replaced by a cash
payment equal to the Fair Market Value of such fraction of a Share or will be
rounded up to the nearest whole Share, as determined by the Compensation
Committee of the Board. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to an Award.


 


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(b)                                 Dissolution
or Liquidation.  In the event of the
proposed dissolution or liquidation of the Company, the Administrator shall
notify each Participant as soon as practicable prior to the effective date of
such proposed transaction.  The
Administrator in its discretion may provide for a Participant to have the right
to exercise his or her Award prior to such transaction as to all or any part of
the Awarded Stock covered thereby, including Shares as to which the Award would
not otherwise be exercisable.  In
addition, the Administrator may provide that any Company repurchase option or
forfeiture rights applicable to any Award shall lapse 100%, and that any Award
vesting shall accelerate 100%, provided the proposed dissolution or liquidation
takes place at the time and in the manner contemplated.  To the extent it has not been previously
exercised or vested an Award will terminate immediately prior to the
consummation of such proposed action.


 


(c)                                  Merger
or Asset Sale.


 


(i)             Stock Options and
SARs.  In the event of a merger of
the Company with or into another corporation, or the sale of substantially all
of the assets of the Company, each outstanding Option and SAR shall be assumed
or an equivalent option or SAR substituted by the successor corporation or
related corporation.  In the event that
the successor corporation refuses to assume or substitute for the Option or
SAR, the Participant shall fully vest in and have the right to exercise the
Option or SAR as to all of the Awarded Stock, including Shares as to which it
would not otherwise be vested or exercisable. 
If an Option or SAR becomes fully vested and exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Participant in writing or electronically that
the Option or SAR shall be fully vested and exercisable for a period determined
by the Administrator from the date of such notice, and the Option or SAR shall
terminate upon the expiration of such period. 
For the purposes of this subsection, the Option or SAR shall be
considered assumed if, following the merger or sale of assets, the Option or
SAR confers the right to purchase or receive, for each Share of Awarded Stock
subject to the Option or SAR immediately prior to the merger or sale of assets,
the consideration (whether stock, cash, or other securities or property)
received in the merger or sale of assets by holders of Common Stock for each
Share held on the effective date of the transaction (and if holders were
offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if
such consideration received in the merger or sale of assets is not solely
common stock of the successor corporation or related corporation, the
Administrator may, with the consent of the successor corporation and the
Participant, provide for the consideration to be received upon the exercise of
the Option or SAR, for each Share of Awarded Stock subject to the Option or
SAR, to be solely common stock of the successor corporation or related
corporation equal in fair market value to the per share consideration received
by holders of Common Stock in the merger or sale of assets.


 


(ii)          Restricted Stock and
Restricted Stock Units.  In the
event of a merger of the Company with or into another corporation, or the sale
of substantially all of the assets of the Company, repurchase rights on Shares
of Restricted Stock, or any consideration into which such Shares of Restricted
Stock are converted as part of such merger or sale, may be assigned to the
successor corporation or related corporation, and each outstanding RSU award
shall be assumed or an equivalent award substituted by the successor
corporation or related corporation of the successor 


 


13

















 


corporation. 
If the successor corporation refuses to assume or substitute for such
Awards, then Participants shall fully vest in such Awards.  If RSUs become fully vested and exercisable
in lieu of assumption or substitution in the event of a merger or sale of
assets, the Administrator shall notify Participants in writing or electronically
that their RSUs shall be fully vested and exercisable for a period determined
by the Administrator from the date of such notice, and such RSUs shall
terminate upon the expiration of such period. 
RSUs shall be considered assumed if, following the merger or sale of
assets, such RSUs confer the right to purchase or receive, for each Share
subject to such RSUs immediately prior to the merger or sale of assets, the
consideration (whether stock, cash, or other securities or property) received
in the merger or sale of assets by holders of Common Stock for each share of
Common Stock held on the effective date of the transaction (and if holders were
offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding shares of Common Stock); provided, however,
that if such consideration received in the merger or sale of assets is not
solely common stock of the successor corporation or related corporation, then
the Administrator may, with the consent of the successor corporation and the
Participant, provide for the consideration to be received, for each Share
subject to such RSUs, to be solely in the form of common stock of the successor
corporation or related corporation equal in fair market value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.


 


(d)                                 Change
of Control. Unless otherwise provided in a Participant’s agreement for
services as an Employee of the Company, in the event of a Change of Control,
any Award outstanding upon the date of such Change of Control that is not yet
exercisable or vested, as applicable, on such date shall have its
exercisability and vesting, as applicable, accelerated as to an additional
twenty-five percent (25%) of the Shares subject to any such Award as of the
date of such Change of Control, and any remaining unvested portion of any such
Award shall thereafter continue to otherwise vest (subject to (i) the
Participant’s remaining a Service Provider and (ii) accelerated vesting as
provided for in this Section 13(d)) at the same rate and as to the same
number of Shares per vesting period as immediately prior to the Change of
Control.  For example, if a Participant
holds an Option that is fifty percent (50%) vested immediately prior to the
date of a Change of Control, which Option ordinarily vests so as to be one
hundred percent (100%) vested four years after the date of grant (subject to
the Participant’s remaining a Service Provider), the Option would become
seventy-five percent (75%) vested upon the date of the Change of Control and
would resume vesting (subject to (i) the Participant’s remaining a Service
Provider and (ii) accelerated vesting as provided for in this
Section 13(d)) so as to be one hundred percent (100%) vested three years
following the date of grant. Additionally, if, within one year after a Change
of Control has occurred, a Employee Participant’s status as an Employee is
terminated by the Company (including for this purpose any successor to the
Company due to such Change of Control and any employer that is an Affiliate of
such successor) for any reason, then all Awards held by such Participant shall
become fully vested for exercise upon the date of termination of such status,
irrespective of the vesting provisions of such Participant’s applicable Award
Documentation.


 


14.                Date of Grant.  The date of grant of an Award shall be, for all purposes, the
date on which the Administrator makes the determination granting such Award, or
such other later date as is 


 


14

















 


determined by the
Administrator.  Notice of the
determination shall be provided to each recipient within a reasonable time
after the date of such grant.


 


15.                Amendment and Termination of the Plan.


 


(a)                                  Amendment
and Termination.  The Board may at
any time amend, alter, suspend or terminate the Plan.


 


(b)                                 Stockholder
Approval.  The Company shall obtain
stockholder approval of any Plan amendment to the extent necessary and
desirable to comply with Applicable Laws.


 


(c)                                  Effect
of Amendment or Termination.  No
amendment, alteration, suspension or termination of the Plan shall impair the
rights of any Participant, unless mutually agreed otherwise between the
Participant and the Administrator, which agreement must be in writing and
signed by the Participant and the Company. 
Termination of the Plan shall not affect the Administrator’s ability to
exercise the powers granted to it hereunder with respect to Awards granted
under the Plan prior to the date of such termination.


 


16.                Conditions Upon Issuance of Shares.  Shares shall not be issued pursuant to the
exercise of an Award unless the exercise of the Award or the issuance and
delivery of such Shares (or with respect to Restricted Stock Units or SARs, the
cash equivalent thereof) shall comply with Applicable Laws and shall be further
subject to the approval of counsel for the Company with respect to such
compliance. Notwithstanding any other provision in this Plan, the Company will
have no obligation to issue or deliver certificates for Shares under this Plan
prior to: (a) obtaining any approvals from governmental agencies that the
Company determines are necessary or advisable; and/or (b) completion of any
registration or other qualification of such Shares under Applicable Laws. The
Company will be under no obligation to register the Shares with the United
States Securities and Exchange Commission or to effect compliance with the
registration, qualification or listing requirements of any state securities
laws, stock exchange or automated quotation system, and the Company will have
no liability for any inability or failure to do so.


 


17.                Inability to Obtain Authority.  The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company’s counsel to be necessary to the lawful issuance and sale
of any Shares hereunder (or with respect to Restricted Stock Units or SARs, the
cash equivalent thereof), shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares (or with respect to Restricted
Stock Units or SARs, the cash equivalent thereof) as to which such requisite
authority shall not have been obtained.


 


18.                Stockholder Approval.  This Plan shall be subject to approval by
the stockholders of the Company within twelve (12) months after the date of
adoption by the Board.  Such stockholder
approval shall be obtained in the manner and to the degree required under
Applicable Laws.


 


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